eResearch Technology Inc. (ERES, Financial) filed Annual Report for the period ended 2011-12-31.
Eresearch Technology Inc. has a market cap of $558.25 million; its shares were traded at around $0 with a P/E ratio of 30.4.
The cost of services revenues included $14.1 million and $25.6 million for the years ended December 31, 2010 and 2011, respectively, from the operations of RS. RS cost of services as a percentage of RS services revenue was 66.8% in 2010 and 77.6% in 2011. The higher percentage in 2011 was largely due to higher labor costs for study setup, customization, and other operations. We intentionally incurred these costs in order to deliver against aggressive study timelines for key strategic customers in our Respiratory and ePRO business lines. Apart from the impact of RS, the cost of services revenues increased $1.2 million for the year ended December 31, 2011 as compared to the year ended December 31, 2010. This increase, both in absolute terms and as a percentage of services revenues, was due to a $0.9 million increase in labor costs associated with additional headcount, a $0.4 million increase in consulting costs related to Cardiac Safety consulting revenue and ePRO translation services and $0.3 million increase in depreciation associated with new ePRO functionality for our EXPERT technology platform. These increases were partially offset by decreases in several areas including incentive compensation and amortization.
The cost of site support revenues included $17.4 million and $39.1 million for the years ended December 31, 2010 and 2011, respectively, from the operations of RS. RS cost of site support revenue as a percentage of RS site support revenue was 66.9% in 2010 and 71.2% in 2011. The higher percentage in 2011 was largely due to costs for freight and other pass-through items, which have little or no margins on the associated revenue, negative manufacturing variances and increased manufacturing activity. Apart from the impact of RS, there was a $1.5 million increase in the cost of site support for the year ended December 31, 2011 as compared to the year ended December 31, 2010. This increase, both in absolute terms and as a percentage of site support revenues, was primarily due to a $0.7 million increase in labor that was largely a result of a change in the classification of the costs associated with the customer support center to report these as additional costs of site support in 2010 to better align costs with related revenue. Also contributing to the increase was a $0.6 million increase in depreciation resulting from purchases of rental equipment and the implementation of a new logistics management system and $0.3 million of additional freight.
General and administrative expenses included $6.8 million and $10.5 million for the years ended December 31, 2010 and 2011, respectively, from the operations of RS. RS general and administrative expense as a percentage of RS total revenue was 14.4% in 2010 and 11.9% in 2011. The higher percentage in 2010 was largely due to labor and severance for a former employee who was terminated in 2010. Apart from the impact of RS, general and administrative expenses decreased $3.3 million for the year ended December 31, 2011 as compared to the year ended December 31, 2010. This decrease, both in absolute terms and as a percentage of total revenues, was due primarily to $4.1 million of professional fees related to our acquisition of RS in 2010, for which there was no corresponding expense in 2011. Additionally, in 2010, we added $0.6 million to the reserve for losses on the lease of our Reno, Nevada facility. There was also a decrease in office rent of $0.7 million for the year ended December 31, 2011 as compared to the year ended December 31, 2010 due to the new facility in Bridgewater, NJ. Partially offsetting these decreases was a $0.7 million increase in labor costs resulting from a reduction in the capitalized labor for IT staff who worked on development projects in 2010 but not in 2011, an increase in 401(k) company matches due to the increase in incentive compensation payments in 2011, and the impact of salary merit increases. Other expense increases included $0.5 million for professional fees not related to the RS acquisition compared to 2010, $0.5 million of depreciation related to computer equipment and internal-use software that went into production in 2011 and $0.2 million for software licenses.
For the year ended December 31, 2010, our operations provided cash of $35.9 million as compared to $42.5 million during the year ended December 31, 2011, an increase of $6.6 million compared. The increase was primarily the result of a $10.3 million increase for the year ended December 31, 2011 as compared to the year ended December 31, 2010 in net income before depreciation and amortization. Additionally, changes in deferred income taxes and deferred revenue had a positive impact on cash of $3.4 million and $1.9 million, respectively, in 2011 and a negative impact on cash of $0.7 million and $0.4 million, respectively, in 2010. A number of items partially offset this increase, primarily decreases in the impact of accounts payable and accrued expenses. There was a $4.1 million and an $8.1 million increase in accounts payable and accrued expenses, respectively, in 2010 and a $0.1 decrease and $0.6 million increase, respectively in 2011. The increases in 2010 were largely due to the addition of RS. While inventory increased $4.2 million at December 31, 2011 as compared to December 31, 2010, only $1.9 million of the change resulted in a negative cash impact. The remainder of the inventory increase was primarily related to non-cash transfers from rental equipment into inventory for decommissioned device components.
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Eresearch Technology Inc. has a market cap of $558.25 million; its shares were traded at around $0 with a P/E ratio of 30.4.
Highlight of Business Operations:
Net revenues were $141.0 million in 2010 as compared to $184.9 million in 2011, an increase of $43.9 million or 31.2%. This increase was primarily due to the acquisition of RS, which contributed $47.2 million of revenues during 2010 after the May 2010 acquisition date and $87.9 million for the full year 2011. Revenues from our legacy business, which primarily includes our cardiac safety business, grew $3.2 million, or 3.4%, primarily due to increased demand for our Thorough QTc cardiac safety product offering. Our legacy business experienced revenues of $27.7 million in the fourth quarter of 2011, its highest quarterly level since the fourth quarter of 2008. New bookings were $212.2 million for the year ended December 31, 2010 as compared to a record $303.5 million for the year ended December 31, 2011, and backlog was $357.4 million as of December 31, 2011.The cost of services revenues included $14.1 million and $25.6 million for the years ended December 31, 2010 and 2011, respectively, from the operations of RS. RS cost of services as a percentage of RS services revenue was 66.8% in 2010 and 77.6% in 2011. The higher percentage in 2011 was largely due to higher labor costs for study setup, customization, and other operations. We intentionally incurred these costs in order to deliver against aggressive study timelines for key strategic customers in our Respiratory and ePRO business lines. Apart from the impact of RS, the cost of services revenues increased $1.2 million for the year ended December 31, 2011 as compared to the year ended December 31, 2010. This increase, both in absolute terms and as a percentage of services revenues, was due to a $0.9 million increase in labor costs associated with additional headcount, a $0.4 million increase in consulting costs related to Cardiac Safety consulting revenue and ePRO translation services and $0.3 million increase in depreciation associated with new ePRO functionality for our EXPERT technology platform. These increases were partially offset by decreases in several areas including incentive compensation and amortization.
The cost of site support revenues included $17.4 million and $39.1 million for the years ended December 31, 2010 and 2011, respectively, from the operations of RS. RS cost of site support revenue as a percentage of RS site support revenue was 66.9% in 2010 and 71.2% in 2011. The higher percentage in 2011 was largely due to costs for freight and other pass-through items, which have little or no margins on the associated revenue, negative manufacturing variances and increased manufacturing activity. Apart from the impact of RS, there was a $1.5 million increase in the cost of site support for the year ended December 31, 2011 as compared to the year ended December 31, 2010. This increase, both in absolute terms and as a percentage of site support revenues, was primarily due to a $0.7 million increase in labor that was largely a result of a change in the classification of the costs associated with the customer support center to report these as additional costs of site support in 2010 to better align costs with related revenue. Also contributing to the increase was a $0.6 million increase in depreciation resulting from purchases of rental equipment and the implementation of a new logistics management system and $0.3 million of additional freight.
General and administrative expenses included $6.8 million and $10.5 million for the years ended December 31, 2010 and 2011, respectively, from the operations of RS. RS general and administrative expense as a percentage of RS total revenue was 14.4% in 2010 and 11.9% in 2011. The higher percentage in 2010 was largely due to labor and severance for a former employee who was terminated in 2010. Apart from the impact of RS, general and administrative expenses decreased $3.3 million for the year ended December 31, 2011 as compared to the year ended December 31, 2010. This decrease, both in absolute terms and as a percentage of total revenues, was due primarily to $4.1 million of professional fees related to our acquisition of RS in 2010, for which there was no corresponding expense in 2011. Additionally, in 2010, we added $0.6 million to the reserve for losses on the lease of our Reno, Nevada facility. There was also a decrease in office rent of $0.7 million for the year ended December 31, 2011 as compared to the year ended December 31, 2010 due to the new facility in Bridgewater, NJ. Partially offsetting these decreases was a $0.7 million increase in labor costs resulting from a reduction in the capitalized labor for IT staff who worked on development projects in 2010 but not in 2011, an increase in 401(k) company matches due to the increase in incentive compensation payments in 2011, and the impact of salary merit increases. Other expense increases included $0.5 million for professional fees not related to the RS acquisition compared to 2010, $0.5 million of depreciation related to computer equipment and internal-use software that went into production in 2011 and $0.2 million for software licenses.
For the year ended December 31, 2010, our operations provided cash of $35.9 million as compared to $42.5 million during the year ended December 31, 2011, an increase of $6.6 million compared. The increase was primarily the result of a $10.3 million increase for the year ended December 31, 2011 as compared to the year ended December 31, 2010 in net income before depreciation and amortization. Additionally, changes in deferred income taxes and deferred revenue had a positive impact on cash of $3.4 million and $1.9 million, respectively, in 2011 and a negative impact on cash of $0.7 million and $0.4 million, respectively, in 2010. A number of items partially offset this increase, primarily decreases in the impact of accounts payable and accrued expenses. There was a $4.1 million and an $8.1 million increase in accounts payable and accrued expenses, respectively, in 2010 and a $0.1 decrease and $0.6 million increase, respectively in 2011. The increases in 2010 were largely due to the addition of RS. While inventory increased $4.2 million at December 31, 2011 as compared to December 31, 2010, only $1.9 million of the change resulted in a negative cash impact. The remainder of the inventory increase was primarily related to non-cash transfers from rental equipment into inventory for decommissioned device components.
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