<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
---------------------
FORM 10-Q
<TABLE>
<C> <S>
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM --------------- TO
---------------.
</TABLE>
COMMISSION FILE NUMBER
0-27570
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
NORTH CAROLINA 56-1640186
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
115 NORTH THIRD STREET,
WILMINGTON, NORTH CAROLINA 28401
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (910) 251-0081
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AS OF JULY 31, 1996
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<S> <C>
COMMON STOCK, PAR VALUE $0.10 9,245,295 SHARES
</TABLE>
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Part I Financial Information................................................... 3
Item 1 Financial Statements.................................................... 3
Consolidated Balance Sheets as of June 30, 1996 (Unaudited) and December
31, 1995................................................................ 3
Consolidated Statements of Operations for the three and six months ended
June 30, 1996 and 1995 (Unaudited)...................................... 4
Consolidated Statements of Cash Flows for the six months ended June 30,
1996 and 1995 (Unaudited)............................................... 5
Notes to Consolidated Financial Statements.............................. 6
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 7-10
Part II Other Information....................................................... 11
Item 1 Legal Proceedings....................................................... 11
Item 2 Changes in Securities................................................... 11
Item 3 Defaults Upon Senior Securities......................................... 11
Item 4 Submission of Matters to a Vote of Security Holders..................... 11
Item 5 Other Information....................................................... 11
Item 6 Exhibits and Reports on Form 8-K........................................ 11
Signatures ........................................................................ 12
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................... $ 6,117 $ 2,261
Marketable securities........................................ 22,636 242
Accounts receivable and unbilled services.................... 20,447 15,837
Investigator advances........................................ 718 648
Prepaid expenses and other current assets.................... 253 125
------------ ------------
Total current assets.................................... 50,171 19,113
------------ ------------
Furniture and equipment, net...................................... 6,528 4,538
Goodwill, net..................................................... 2,849 2,949
Other assets...................................................... 505 904
------------ ------------
$ 60,053 $ 27,504
========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt......................... $ 4,237 $ 1,879
Accounts payable............................................. 2,318 1,991
Payables to investigators.................................... 4,549 3,588
Other accrued expenses....................................... 3,255 2,380
Unearned income.............................................. 2,767 5,346
------------ ------------
Total current liabilities............................... 17,126 15,184
------------ ------------
Long-term debt, less current maturities........................... 0 2,899
------------ ------------
Shareholders' equity:
Preferred stock..............................................
Common stock................................................. 924 694
Additional paid-in capital................................... 39,886 1,317
Unrealized gain on marketable securities..................... 6
Foreign currency translation adjustment...................... (9)
Retained earnings............................................ 2,126 7,477
------------ ------------
42,927 9,494
Unearned compensation........................................ (73)
------------ ------------
Total shareholders' equity.............................. 42,927 9,421
------------ ------------
$ 60,053 $ 27,504
========= ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
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PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
1996 1995 1996 1995
--------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Professional fee income........................... $ 17,329 $ 13,530 $ 36,369 $ 25,333
Less reimbursed costs............................. 4,241 4,672 11,328 7,723
--------- --------- --------- ---------
Net revenue.................................. 13,088 8,858 25,041 17,610
Operating expenses:
Direct costs.................................... 6,765 4,606 13,149 9,134
Selling, general and administrative............. 4,135 3,064 7,963 5,707
Depreciation and amortization................... 523 333 990 618
--------- --------- --------- ---------
11,423 8,003 22,102 15,459
Income from operations....................... 1,665 855 2,939 2,151
Other income (expense), net....................... 381 (35) 665 (82)
--------- --------- --------- ---------
Income before income tax expense.................. 2,046 820 3,604 2,069
Income tax expense................................ 839 1,478
--------- --------- --------- ---------
Net income........................................ $ 1,207 $ 820 $ 2,126 $ 2,069
======== ======== ======== ========
Earnings per share................................ $ 0.13 $ 0.24
======== ========
Weighted average number of shares outstanding..... 9,242,500 8,951,488
======== ========
Pro forma data:
Net income, as reported......................... $ 820 $ 2,069
Pro forma income tax expense.................... 359 911
--------- ---------
Pro forma net income............................ $ 461 $ 1,158
======== ========
Pro forma earnings per share.................... $ 0.06 $ 0.16
======== ========
Pro forma weighted average number of shares
outstanding.................................. 7,278,942 7,278,942
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
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PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
JUNE 30,
----------------------
1996 1995
-------- -------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income.......................................................... $ 2,126 $ 2,069
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
Depreciation and amortization.................................... 990 618
Accretion of investment discounts................................ (252)
Stock compensation amortization.................................. 73 49
Minority interest in equity share of loss........................ 40
Loss on sale of equipment........................................ 20
Gain on sale of investments...................................... (8)
Changes in assets and liabilities:
Receivables and unbilled services.............................. (4,610) (2,041)
Advance payments and payables to investigators................. 891 1,210
Prepaid expenses and other current assets...................... (128) (1,047)
Goodwill and other assets...................................... 381 (37)
Accounts payable............................................... 327 (657)
Other accrued expenses......................................... 875 627
Unearned income................................................ (2,579) 2,982
-------- -------
Net cash provided by (used in) operating activities......... (1,894) 3,813
-------- -------
Cash flows from investing activities:
Purchase of equipment............................................... (2,885) (1,097)
Proceeds from sale of assets........................................ 3 9
Purchase of investments, net of maturities.......................... (22,385) (7)
Sale of investments................................................. 244
-------- -------
Net cash used in investing activities....................... (25,023) (1,095)
-------- -------
Cash flows from financing activities:
Repayment of long-term debt, net.................................... (541) (70)
Cash dividends paid................................................. (5,937) (100)
Net proceeds from issuance of common stock.......................... 37,242
-------- -------
Net cash provided by (used in) financing activities......... 30,764 (170)
-------- -------
Effect of exchange rate changes on cash............................... 9
--------
Net increase in cash and cash equivalents............................. 3,856 2,548
Beginning of period................................................. 2,261 1,637
-------- -------
End of Period....................................................... $ 6,117 $ 4,185
======== =======
Supplemental disclosure for cash flow information:
Cash payments for interest.......................................... $ 103 $ 107
======== =======
Cash payments for taxes............................................. $ 1,172 $ 0
======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES: The significant accounting policies followed by
Pharmaceutical Product Development, Inc. (the "Company") for interim financial
reporting are consistent with the accounting policies followed for annual
financial reporting. These unaudited consolidated financial statements have been
prepared in accordance with Rule 10-01 of Regulation S-X, and in management's
opinion, all adjustments of a normal recurring nature necessary for a fair
presentation have been included. The accompanying financial statements do not
purport to contain all the necessary financial disclosures that might otherwise
be necessary in the circumstances and should be read in conjunction with the
consolidated financial statements and notes thereto in the Company's Annual
report for the year ended December 31, 1995. The results of operations for the
six month period ended June 30, 1996 are not necessarily indicative of the
results to be expected for the full year.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS: The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. BASIS OF PRESENTATION: The accompanying unaudited consolidated
financial statements include the accounts of Pharmaceutical Product Development,
Inc., and its wholly owned subsidiaries, Pharmaceutical Product
Development-Clinical Research Unit, Inc. and Gabbay Group Limited. All
significant intercompany items have been eliminated.
RECLASSIFICATIONS: Certain 1995 financial statement amounts have been
reclassified to conform with the 1996 presentation.
3. EARNINGS PER SHARE: Earnings per share are calculated by dividing net
income by the weighted average number of shares outstanding during the period.
Outstanding stock options have not been included in the computation of net
income per share since the effect is not material.
4. PRO FORMA NET INCOME AND NET INCOME PER SHARE: Prior to January 1996,
the Company had elected to be treated as an S Corporation for income tax
purposes and accordingly did not incur any expense or liability for corporate
income taxes. Effective January 1, 1996, the Company revoked its S Corporation
election and began reporting as a C Corporation. For the three and six month
periods ended June 30, 1995 the Statement of Operations includes a pro forma
income tax provision as well as a pro forma earnings per share computation. Pro
forma weighted average shares outstanding assumes the issuance of sufficient
shares at the net per share proceeds of the Company's initial public offering in
January 1996 ($16.18) to repay the indebtedness ($5.5 million) incurred by the
Company in making the final S Corporation distribution.
5. SIGNIFICANT EVENT: On June 21, 1996, the Company announced a proposed
merger with Applied Bioscience International Inc. ("APBI"). See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
6
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Pharmaceutical Product Development, Inc. (the "Company") is a leading
contract research organization ("CRO") providing a range of integrated product
development services across the globe to complement the research and development
activities of many of the world's largest companies in the pharmaceutical and
biotechnology industries. The Company's professional services include Phase I
clinical testing, laboratory services, Phase II-IV clinical trial management,
clinical data management and biostatistical analysis, treatment Investigational
New Drug Applications, medical writing and regulatory services and health care
economics and outcomes research.
The Company has broadened its range of services in the United States and
facilitated its offering of certain services in Europe through acquisitions and
internal growth. In 1990, the Company opened its Phase I Clinical Research Unit
("PPD-CRU"), located near Research Triangle Park, North Carolina. In May 1994,
PPD-CRU acquired Wisconsin Analytical and Research Services, Ltd. ("WARS"), an
analytical laboratory located in Madison, Wisconsin. In August 1995, the Company
acquired Southampton, England-based Gabbay, which specializes in clinical
research services and training. Each of the acquisitions was accounted for under
the purchase method with the acquired company's results being included in the
Company's results from the effective date of acquisition.
On June 20, 1996, the Company entered into an Agreement and Plan of
Reorganization with Applied Bioscience International Inc. ("APBI"), pursuant to
which it is proposed that a wholly owned subsidiary of the Company merge with
and into APBI such that APBI will become a wholly owned subsidiary of the
Company. In the Merger, each outstanding share of APBI Common Stock will be
converted into the right to receive shares of PPD Common Stock based upon a
ratio (the "Exchange Ratio") computed as follows: (i) if the Average PPD Stock
Price (as defined below) is equal to or less than $48.00 per share, then the
Exchange Ratio shall be equal to the quotient of $15.00 divided by the Average
PPD Stock Price, provided, however, that in such event the Exchange Ratio shall
not be less than 0.3125 nor greater than 0.4054; and (ii) if the Average PPD
Stock Price is greater than $48.00 per share, then the Exchange Ratio shall be
equal to the quotient of (x) divided by (y), where (x) is $15.00 per share and
where (y) is the Average PPD Stock Price less the product of 0.5 and the
difference between the Average PPD Stock Price and $48.00. The "Average PPD
Stock Price" means the average of the last sale prices of a share of PPD Common
Stock for the 10 most recent days that PPD Common Stock has traded ending on the
day which is five days immediately prior to the effective date of the Merger, as
reported on the Nasdaq National Market, rounded to the nearest cent. If the
Average PPD Stock Price is less than $30.00, either party may elect not to
consummate the transaction. It currently is expected that the transaction will
close in September 1996, subject to approval of the shareholders of the Company
and APBI, as well as certain other closing conditions. The transaction currently
is expected to be treated as a "pooling of interests" for accounting purposes.
The Company has filed with the Securities and Exchange Commission a Registration
Statement on Form S-4 (File No. 333-08207), which contains more detailed
information regarding the proposed transaction.
The Company's clinical research and development service contracts generally
have terms ranging from several months to several years. A portion of the
contractual fee is generally payable at the time the contract is entered into,
with the balance payable in installments over the contract's term. Revenues from
the contracts are generally recognized on a percentage of completion basis as
work is performed, except for the contracts which the Company performs on a
cost-plus basis. As is customary in the CRO industry, the Company routinely
subcontracts with third party investigators in connection with clinical trials
and with other third party service providers for laboratory analysis and other
specialized services. These costs and other reimbursable costs are passed
through to clients and are included in gross revenue, but, in accordance with
industry practice, are deducted to arrive at net revenue. Reimbursed costs vary
from contract to contract. Consistent with industry practice, the Company views
growth in net revenue as its primary measure of revenue growth.
7
<PAGE> 8
RESULTS OF OPERATIONS
Quarter ended June 30, 1996 compared with the quarter ended June 30, 1995
Net income for the quarter ended June 30, 1996 was $1.2 million, or $0.13
per share, compared to pro forma net income of $0.5 million, or $0.06 per share
in the second quarter of 1995. Pro forma net income for the second quarter of
1995 includes a pro forma income tax provision. See Note 4 of "Notes to
Consolidated Financial Statements." The Company's improvement in net income is
attributable to the growth in net revenues, management of selling, general and
administrative expenses and investment earnings of proceeds from the Company's
initial public offering in January 1996.
Net revenue for the quarter ended June 30, 1996 was $13.1 million, an
increase of $4.2 million, or 47.8%, from $8.9 million for the comparable period
in 1995. The increase was primarily the result of the performance of services
pursuant to the large number of contracts which were entered into as a result of
the Company's enhanced business development efforts during 1994 and 1995.
Direct costs increased by $2.2 million, or 46.9%, to $6.8 million for the
quarter ended June 30, 1996 from $4.6 million for the same period in 1995.
Direct costs as percentage of net revenue remain relatively stable decreasing
slightly from 52.0% for the quarter ended June 30, 1995 to 51.7% for the
comparable period in 1996. Direct costs include compensation and related fringe
benefits for non-administrative employees and any other expenses directly
related to contracts which are not included as reimbursed costs.
Selling, general and administrative expenses were $4.1 million for the
quarter ended June 30, 1996, an increase of $1.1 million, or 35.0%, from $3.1
million in the quarter ended 1995. As a percentage of net revenue, selling,
general and administrative expenses decreased to 31.6% in the second quarter of
1996 from 34.6% during the same period in 1995. This represents the continued
efforts of management to leverage the Company's infrastructure with continued
growth in net revenues.
Depreciation and amortization increased by 57.1%, rising to $523,000 for
the quarter ended June 30, 1996 from $333,000 for the same period in 1995. The
increase was principally related to purchases of furniture, fixtures and
equipment as a result of significant increases in the Company's operations and
amortization of goodwill related to acquisitions.
Other income (expense), net, improved by $416,000, rising to $381,000 in
net other income for the quarter ended June 30, 1996 from $35,000 in net other
expense for the quarter ended June 30, 1995. The improvement was primarily the
result net interest income of $309,000 in the second quarter of 1996, compared
to net interest expense of $62,000 for the quarter ended June 30, 1995. Interest
income during the second quarter of 1996 is primarily the result of investment
of funds received in connection with the Company's initial public offering in
January 1996.
Six months ended June 30, 1996 compared with the six months ended June 30,
1995
Net income for the six months ended June 30, 1996 was $2.1 million, or
$0.24 per share, compared to pro forma net income of $1.2 million, or $0.16 per
share in the second quarter of 1995. Pro forma net income for the six months
ended June 30, 1995, includes a pro forma income tax provision. See Note 4 of
"Notes to Consolidated Financial Statements." The increase in net income during
the six months ended June 30, 1996 is primarily attributable to the increase in
net revenues over the same period in 1995 and continued management of the
Company's infrastructure growth.
Net revenue for the six months ended June 30, 1996 was $25.0 million, an
increase of $7.4 million, or 42.2%, from $17.6 million for the comparable period
in 1995. The increase was primarily the result of the performance of services
pursuant to the large number of contracts which were entered into as a result of
the Company's enhanced business development efforts during 1994 and 1995.
Direct costs increased by $4.0 million, or 44.0%, to $13.1 million for the
six months ended June 30, 1996 from the $9.1 million for the same period in
1995. Direct costs remain relatively stable as a percentage of net revenue
increasing slightly from 51.9% for the six months ended June 30, 1995 to 52.5%
for the comparable
8
<PAGE> 9
period in 1996. Direct costs include compensation and related fringe benefits
for non-administrative employees and any other expenses directly related to
contracts which are not included as reimbursed costs.
Selling, general and administrative expenses were $8.0 million for the six
months ended June 30, 1996, an increase of $2.3 million, or 39.5%, from $5.7
million in the six months ended 1995. As a percentage of net revenue, selling,
general and administrative expenses remain relatively stable reflecting
continued efforts to leverage the Company's infrastructure with continued growth
in net revenues. Selling, general and administrative expenses as a percentage of
net revenue for the six month period ended June 30, 1996 were 31.8%, compared to
32.4% for the same period in 1995.
Depreciation and amortization increased by 60.2%, rising to $990,000 for
the six month period ended June 30, 1996 from $618,000 for the same period in
1995. The increase was principally related to purchases of furniture, fixtures
and equipment as a result of significant increases in the Company's operations
and amortization of goodwill related to acquisitions.
Other income (expense), net, improved by $747,000, rising to $665,000 in
net other income for the six months ended June 30, 1996 from $82,000 in net
other expense for the six months ended June 30, 1995. The improvement was
primarily the result of net interest income of $544,000 in the first six months
of 1996, compared to net interest expense of $132,000 for the same period in
1995. Interest income during the first six months of 1996 is primarily the
result of investment of funds received in connection with the Company's initial
public offering in January 1996.
QUARTERLY RESULTS
The Company's quarterly results have been, and are expected to continue to
be, subject to fluctuations. Quarterly results can fluctuate as a result of a
number of factors, including the commencement, completion or cancellation of
large contracts, progress of ongoing contracts, acquisitions, the timing of
start-up expenses for new offices and changes in the mix of services. Since a
large percentage of the Company's operating costs are relatively fixed,
variations in the timing and progress of large contracts can materially affect
quarterly results. To the extent the Company's international business increases,
exchange rate fluctuations may also influence these results. The Company
believes that comparisons of its quarterly financial results are not necessarily
meaningful and should not be relied upon as an indication of future performance.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its operations and growth, including
acquisitions, with cash flow from operations and borrowings. Prior to January
24, 1996, the only issuances of equity securities over the last few years have
been in connection with the acquisition of WARS, the sale of stock to the
Company's Chairman of the Board and stock awards to the Company's President.
Equity issued in the WARS transaction accounted for approximately 20% of the
total purchase price. In January 1996, the Company completed an initial public
offering of its common stock. Proceeds of the offering, after expenses, were
approximately $37.2 million and a portion thereof was used to repay a $5.5
million loan.
Total capital expenditures were approximately $2.9 million and $1.1 million
for the six month periods ended June 30, 1996 and 1995, respectively. Facilities
expansion, additional furniture and a phone system and information system
upgrade accounted for a significant portion of the purchases in 1996.
Cash and marketable securities, increased during the six months ended June
30, 1996 primarily as a result of the Company's initial public offering. The
Company invested most of the proceeds from its initial public offering in
marketable securities. Marketable securities primarily consists of investments
in U. S. Government or U. S. Government agencies debt. At June 30, 1996 total
cash and marketable securities were $28.8 million.
Accounts receivable and unbilled services increased to $20.5 million at
June 30, 1996 compared to $15.8 million at December 31, 1995. Most of the
Company's contracts for its services call for bills to be rendered based upon
the achievement of certain project goals, or milestones. These milestones, while
related to work performed, may call for installment payments that are not
reflective of work performed for purposes of revenue
9
<PAGE> 10
recognition by the Company. As a result, billing by the Company (and therefore
collection of receivables) and recognition of revenue do not necessarily
coincide.
The Company has a credit facility with Wachovia Bank of North Carolina,
N.A. The facility consists of a $10 million Line of Credit with an additional
discretionary line of credit for $20 million. Terms of the $10 million Line are
for one year, rates at LIBOR plus 120 basis points or the Bank's Prime rate,
with selection at the Company's option, and interest payable quarterly.
Indebtedness under the Line is unsecured and subject to certain covenants
relating to financial ratios and tangible net worth.
The Company expects to continue expanding its operations through internal
growth and strategic acquisitions. The Company expects such activities will be
funded from existing cash and marketable securities, cash flow from operations
and borrowings under its credit facility. The Company believes that such sources
of cash will be sufficient to fund the Company's current operations for the
foreseeable future. The Company is currently evaluating a number of acquisitions
including those of certain international companies with whom the Company has
letters of intent: Medisys (Barcelona, Spain); TriLife (Nuremberg, Germany); and
Q&Q (Sao Paulo, Brazil) and other growth opportunities which may require
additional external financing, and the Company may from time to time seek to
obtain funds from public or private issuances of equity or debt securities.
INFLATION
The Company believes the effects of inflation generally do not have a
material adverse effect on its results of operations or financial condition.
10
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES
(a) Not applicable
(b) Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a) Not applicable
(b) Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The Annual Meeting of Stockholders of the Company was held on February 23,
1996. The following is a brief description of the matter which was voted upon at
the meeting and the number of affirmative votes and the number of negative votes
cast.
The stockholders elected the following persons as directors of the Company:
W. Travis Porter; Patti S. Manuel; Peter J. Wise; Ronald B. McNeill; Stuart
Bondurant; Ernest Mario; Fredric N. Eshelman; John A. McNeill, Jr. The votes for
and against (withheld) each nominee were as follows:
<TABLE>
<CAPTION>
VOTES VOTES VOTES
NOMINEE FOR WITHHELD ABSTAINED
---------------------------------------------------- --------- -------- ---------
<S> <C> <C> <C>
W. Travis Porter (Class I -- term expires in
1997)............................................. 8,918,491 3,600 320,004
Patti S. Manuel (Class I -- term expires in 1997)... 8,918,371 3,720 320,004
Peter J. Wise (Class II -- term expires in 1998).... 8,918,491 3,600 320,004
Ronald B. McNeill (Class II -- term expires in
1998)............................................. 8,918,491 3,600 320,004
Stuart Bondurant (Class II -- term expires in
1998)............................................. 8,918,391 3,700 320,004
Ernest Mario (Class III -- term expires in 1999).... 8,918,491 3,600 320,004
Fredric N. Eshelman (Class III -- term expires in
1999)............................................. 8,918,491 3,600 320,004
John A. McNeill, Jr. (Class III -- term expires in
1999)............................................. 8,918,491 3,600 320,004
</TABLE>
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11. Computation of Earnings Per Share
Exhibit 27. Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June 30, 1996.
11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C>
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
Date: August 13, 1996 /s/ FRED N. ESHELMAN
---------------------------------------------
Fred N. Eshelman
Chief Executive Officer
Date: August 13, 1996 /s/ RUDY C. HOWARD
---------------------------------------------
Rudy C. Howard
Chief Financial Officer
</TABLE>
12
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EXHIBIT 11
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
NET INCOME.................................... $ 1,207 $ 2,126
======== ========
EARNINGS PER SHARE:
Weighted average shares outstanding........... 9,242,500 8,951,488
======== ========
NET INCOME PER SHARE.......................... $ 0.13 $ 0.24
======== ========
PRO FORMA NET INCOME.......................... $ 461 $ 1,158
======== ========
PRO FORMA EARNINGS PER SHARE:
Actual weighted average shares outstanding.... 6,938,981 6,938,981
Pro forma weighted average shares assuming the
occurrence of the events pursuant to the
initial public offering and the issuance of
sufficient shares at net proceeds of $16.18
per share to repay the $5.5 million debt
incurred by the Company in making the final
S corporation distribution.................. 339,961 339,961
--------- ---------
TOTAL......................................... 7,278,942 7,278,942
======== ========
PRO FORMA NET INCOME PER SHARE................ $ 0.06 $ 0.16
======== ========
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,117
<SECURITIES> 22,636
<RECEIVABLES> 21,165
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 50,171
<PP&E> 6,528
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0
0
<COMMON> 924
<OTHER-SE> 42,003
<TOTAL-LIABILITY-AND-EQUITY> 60,053
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<CGS> 13,149
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<OTHER-EXPENSES> 9,618
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<INCOME-PRETAX> 3,604
<INCOME-TAX> 1,478
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<NET-INCOME> 2,126
<EPS-PRIMARY> .24
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