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PPD reports 2010 financial results; Net revenue almost $1.5 billion

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WILMINGTON, NC (NEWS RELEASE) - PPD, Inc. (Nasdaq: PPDI) today reported its financial and operating results for the fourth quarter and full year ended December 31, 2010.

PPD recorded net revenue of $388.5 million for the fourth quarter of 2010, an increase of 8.7 percent over net revenue of $357.4 million for the fourth quarter of 2009. Fourth quarter 2010 income from operations was $62.9 million, compared to $37.8 million for the same period in 2009. Fourth quarter 2010 diluted earnings per share were $0.40, compared to $0.16 for the fourth quarter of 2009. Fourth quarter 2010 diluted earnings per share included a gain of $7.7 million related to the company's investment in Celtic Therapeutics, impairments of equity investments totaling $4.2 million related to the company's investment portfolio, and non-recurring building impairment and lease termination costs totaling $2.9 million.

Net revenue for the full year 2010 was $1.47 billion, compared to $1.42 billion for the full year 2009. Full year 2010 income from operations was $187.5 million, compared to $214.3 million for the full year 2009. Diluted earnings per share for the full year 2010 were $1.04, compared to $1.34 for the full year 2009.

"We were pleased to deliver on our commitment to shareholders by achieving our full year 2010 net revenue and diluted earnings per share guidance," said David Grange, chief executive officer of PPD. "In the fourth quarter of 2010, we delivered solid net revenue growth year-over-year, while continuing to expand our operating margin and generating strong cash flow from operations. We intend to remain focused on our business development efforts, global productivity improvement, and cost control to create value for our shareholders."

Clinical Development Services

Clinical Development Services segment net revenue for the fourth quarter of 2010 was $276.9 million, compared to $256.7 million for the fourth quarter of 2009. Fourth quarter 2010 income from operations for this segment was $50.7 million, compared to $36.9 million for the fourth quarter of 2009.

Full year 2010 Clinical Development Services segment net revenue was $1.04 billion, compared to $1.03 billion for the full year 2009. Full year 2010 income from operations for this segment was $152.5 million, compared to $167.9 million for the full year 2009.

Laboratory Services

Laboratory Services segment net revenue for the fourth quarter of 2010 was $81.2 million, compared to $71.4 million for the fourth quarter of 2009. Fourth quarter 2010 income from operations for this segment was $12.2 million, compared to $12.4 million for the fourth quarter of 2009.

Full year 2010 Laboratory Services segment net revenue was $313.1 million, compared to $274.6 million for the full year 2009. Full year 2010 income from operations for this segment was $46.8 million, compared to $55.0 million for the full year 2009.

Other Financial Information

Gross authorizations for the fourth quarter of 2010 totaled $602.3 million. Backlog at December 31, 2010, was $3.4 billion. Contract cancellations and adjustments for the fourth quarter of 2010 were $167.9 million.

Cash flow from operations for the full year 2010 was $240.7 million. At December 31, 2010, PPD had $638.3 million in cash and investments. The effective tax rate for continuing operations in the fourth quarter of 2010 was 29.2 percent.

Accelerated Share Repurchase Program

PPD also announced today that it intends to enter into an accelerated share repurchase agreement with Barclays Capital Inc. under which PPD will repurchase shares of its common stock. The company will use approximately $200 million of cash on hand to repurchase shares. The majority of the shares to be repurchased under the program are expected to be retired during the first quarter of 2011.

"In 2010, we made several strategic investments to differentiate our services, strengthen our client relationships, and improve our operational execution," said Fred Eshelman, executive chairman of PPD. "In the year ahead, we intend to leverage our investments, global infrastructure, and financial strength to enhance our position in the industry and drive value for our shareholders."

PPD will conduct a live conference call and webcast tomorrow, February 9, 2011, at 9:00 a.m. ET to discuss its fourth quarter and full year 2010 results. A Q&A session will follow. All interested parties can access the webcast through the Presentations & Events link in the Investors section of the PPD Web site at www.ppdi.com. The webcast will be archived shortly after the call for on-demand replay. The conference call will be broadcast live over the Internet, and the live call may be accessed via the following direct dial numbers:

Participant dial-in: +1 877 644 0692 (U.S./Canada)
+1 973 200 3387 (International)
Conference ID: 31274697

PPD is a leading global contract research organization providing drug discovery, development and lifecycle management services. Our clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations. With offices in 43 countries and more than 11,000 professionals worldwide, PPD applies innovative technologies, therapeutic expertise and a commitment to quality to help clients and partners accelerate the delivery of safe and effective therapeutics and maximize the returns on their R&D investments. For more information, visit www.ppdi.com.

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