Pharmaceutical Product Development Inc. (PPDI, Financial) filed Quarterly Report for the period ended 2011-03-31.
Pharmaceutical Product Development Inc. has a market cap of $3.56 billion; its shares were traded at around $30.94 with a P/E ratio of 24.6 and P/S ratio of 2.4. The dividend yield of Pharmaceutical Product Development Inc. stocks is 1.9%. Pharmaceutical Product Development Inc. had an annual average earning growth of 12.2% over the past 10 years.
SG&A expenses decreased $8.0 million to $104.9 million in the first three months of 2011. The decrease in SG&A expenses was primarily related to a $3.3 million decrease in SG&A expenses related to the spin-off of the compound partnering business, $1.5 million decrease in non-billable travel and training costs, a $0.9 million decrease from receipt of a government grant, a $0.8 million decrease in personnel costs due to an increase in direct utilization, a $0.6 million decrease in accounting and legal costs, a $0.6 million decrease in contract labor and subcontractor costs and a $0.5 million reduction in loss on disposal of assets.
Other income (expense), net decreased $1.3 million to a net expense of $47,000 in the first three months of 2011. Changes in exchange rates from the time we recognize revenue until the client pays resulted in a net loss of $2.5 million in the first three months of 2011, down from a net gain of $0.5 million in the first three months of 2010. This loss was partially offset by a $1.2 million increase in interest income.
Net income of $37.6 million in the first three months of 2011 represents an increase of 118.6% from $17.2 million in the first three months of 2010. Net income per diluted share of $0.32 in the first three months of 2011 represents a 128.6% increase from $0.14 net income per diluted share in the first three months of 2010. Net income changed for various reasons as explained above.
We held $78.7 million and $77.6 million, net of unrealized losses, in auction rate securities at December 31, 2010 and March 31, 2011, respectively. Our portfolio of investments in auction rate securities consists principally of interests in government-guaranteed student loans, insured municipal debt obligations and municipal preferred auction rate securities. We classified our entire balance of auction rate securities as long-term investments as of March 31, 2011 due to continuing uncertainties about the liquidity of the auction rate securities market. We also recorded unrealized losses on these investments of $14.2 million and $15.3 million as of December 31, 2010 and March 31, 2011, respectively. We concluded that this impairment was temporary because of our ability to hold the auction rate securities until the fair value recovers and we have no current plans to sell the securities. We will continue to review the classification and valuation of these securities on a quarterly basis.
In the first three months of 2011, our operating activities provided $41.9 million in cash as compared to $62.0 million for the same period last year. The change in operating cash flow was due primarily to a net change in operating cash receipts and payments totaling $35.8 million, a net-of-tax gain from equity investment of $1.6 million in the current period as compared to a net-of-tax loss from equity investment of $1.3 million in the three months ended March 31, 2010 partially offset by a $20.2 million increase in net income in the first three months of 2011 compared to the same period of 2010. The change in adjustments for accruals of expected future operating cash receipts and payments includes unearned income of $23.0 million, accrued income taxes of $11.9 million and other assets of $2.3 million. The change in adjustments to deferrals of past operating cash receipts and payments includes accounts receivable and unbilled services, net of ($57.1) million, other accrued expenses and deferred rent of ($9.6) million and payables to investigators of ($6.4) million. Fluctuations in receivables and unearned income occur on a regular basis as we perform services, achieve billing criteria, send invoices to clients and collect outstanding accounts receivable. This activity varies by individual client and contract. We attempt to negotiate payment terms that provide for payment of services prior to or soon after the provision of services, but the levels of unbilled services and unearned revenue can vary significantly from period to period.
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Pharmaceutical Product Development Inc. has a market cap of $3.56 billion; its shares were traded at around $30.94 with a P/E ratio of 24.6 and P/S ratio of 2.4. The dividend yield of Pharmaceutical Product Development Inc. stocks is 1.9%. Pharmaceutical Product Development Inc. had an annual average earning growth of 12.2% over the past 10 years.
Highlight of Business Operations:
Total direct costs increased $24.0 million to $206.8 million in the first three months of 2011. The increase was mainly attributable to a $17.2 million increase in direct personnel costs, a $4.4 million increase in reimbursable out-of-pocket expenses, a $1.8 million reduction in research credits and a $1.3 million increase in contract labor and consulting. Direct personnel costs increased due to an increase in direct utilization and due to approximately 350 additional headcount added to support revenue growth.SG&A expenses decreased $8.0 million to $104.9 million in the first three months of 2011. The decrease in SG&A expenses was primarily related to a $3.3 million decrease in SG&A expenses related to the spin-off of the compound partnering business, $1.5 million decrease in non-billable travel and training costs, a $0.9 million decrease from receipt of a government grant, a $0.8 million decrease in personnel costs due to an increase in direct utilization, a $0.6 million decrease in accounting and legal costs, a $0.6 million decrease in contract labor and subcontractor costs and a $0.5 million reduction in loss on disposal of assets.
Other income (expense), net decreased $1.3 million to a net expense of $47,000 in the first three months of 2011. Changes in exchange rates from the time we recognize revenue until the client pays resulted in a net loss of $2.5 million in the first three months of 2011, down from a net gain of $0.5 million in the first three months of 2010. This loss was partially offset by a $1.2 million increase in interest income.
Net income of $37.6 million in the first three months of 2011 represents an increase of 118.6% from $17.2 million in the first three months of 2010. Net income per diluted share of $0.32 in the first three months of 2011 represents a 128.6% increase from $0.14 net income per diluted share in the first three months of 2010. Net income changed for various reasons as explained above.
We held $78.7 million and $77.6 million, net of unrealized losses, in auction rate securities at December 31, 2010 and March 31, 2011, respectively. Our portfolio of investments in auction rate securities consists principally of interests in government-guaranteed student loans, insured municipal debt obligations and municipal preferred auction rate securities. We classified our entire balance of auction rate securities as long-term investments as of March 31, 2011 due to continuing uncertainties about the liquidity of the auction rate securities market. We also recorded unrealized losses on these investments of $14.2 million and $15.3 million as of December 31, 2010 and March 31, 2011, respectively. We concluded that this impairment was temporary because of our ability to hold the auction rate securities until the fair value recovers and we have no current plans to sell the securities. We will continue to review the classification and valuation of these securities on a quarterly basis.
In the first three months of 2011, our operating activities provided $41.9 million in cash as compared to $62.0 million for the same period last year. The change in operating cash flow was due primarily to a net change in operating cash receipts and payments totaling $35.8 million, a net-of-tax gain from equity investment of $1.6 million in the current period as compared to a net-of-tax loss from equity investment of $1.3 million in the three months ended March 31, 2010 partially offset by a $20.2 million increase in net income in the first three months of 2011 compared to the same period of 2010. The change in adjustments for accruals of expected future operating cash receipts and payments includes unearned income of $23.0 million, accrued income taxes of $11.9 million and other assets of $2.3 million. The change in adjustments to deferrals of past operating cash receipts and payments includes accounts receivable and unbilled services, net of ($57.1) million, other accrued expenses and deferred rent of ($9.6) million and payables to investigators of ($6.4) million. Fluctuations in receivables and unearned income occur on a regular basis as we perform services, achieve billing criteria, send invoices to clients and collect outstanding accounts receivable. This activity varies by individual client and contract. We attempt to negotiate payment terms that provide for payment of services prior to or soon after the provision of services, but the levels of unbilled services and unearned revenue can vary significantly from period to period.
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