Pharmaceutical Product Development 8K/A Results of Operations and Financial Condition | PPDI 27 Oct 10

A leading global CRO

GAAP / Non-GAAP Reconciliation

Exhibit 99.3

A leading global CRO

Regulation G

From time to time, PPD discloses selected non-GAAP financial measures. For

example, we disclose net revenue excluding reimbursed out-of-pockets because these

third party expenses are reimbursed to us by our clients, are not directly related to the

services we provide and do not have any impact on our operating income, net income or

earnings per share. In addition, we present certain financial measures excluding non-

cash stock option expense and in some cases special items that are not related to our

core service businesses. While non-GAAP financial measures are not superior to or a

substitute for the comparable GAAP measures, we believe certain non-GAAP

information is useful to investors for historical comparison purposes and because it

provides

additional

information

the

performance

PPD’s

core

service

businesses.

PPD management also uses this information to measure the Company’s operating

performance

and

compare

that

performance

against

results

from

prior

periods

and

the

performance of PPD’s

competitors.

For the non-GAAP financial measures that have been disclosed by us, the

following is a presentation of and reconciliation to the most directly comparable GAAP

financial measure.

A leading global CRO

GAAP/Non-GAAP Reconciliation

Net Revenue, Net Income and EPS (2005-2009)

(in thousands, except per share data)

2005

2006

2007

2008

2009

Net Revenue:

Net Revenue, per GAAP

1,037,090

1,247,682

1,414,465

1,551,384

1,416,770

Less: Reimbursed out-of-pockets

75,074

101,383

119,087

117,132

101,003

Net Revenue less reimbursed out-of-pockets

962,016

1,146,299

1,295,378

1,434,252

1,315,767

Net Income:

Net Income, per GAAP

119,897

156,652

163,401

187,519

159,295

Plus: Impairment of investments, net of recoveries

5,928

690

17,741

2,076

Plus: Impairment of intangible asset

1,607

10,361

Plus: Restructuring charges

3,892

Plus: Bad debt expense associated with Accentia

4,708

Less: Gain on sale/exchange of assets

(5,144)

Less: Tax benefit on impairment of investments, net of recoveries

(2,118)

(235)

(5,810)

(569)

Less: Tax benefit on impairment of intangible asset

(526)

(2,839)

Less: Tax benefit on bad debt expense associated with Accentia

(1,542)

Plus: Tax expense on gain on sale/exchange of assets

1,800

Less: Tax benefit on restructuring charges

(1,067)

Less: Tax benefit associated with release of capital loss carryforwards

(774)

Net Income excluding above items, including stock option expense

119,589

156,652

163,856

203,697

171,149

Diluted EPS:

EPS, per GAAP

1.03

1.32

1.36

1.56

1.34

Plus: Impairment of investments, net of recoveries

0.05

0.01

0.15

0.02

Plus: Impairment of intangible asset

0.01

0.09

Plus: Restructuring charges

0.03

Plus: Bad debt expense associated with Accentia

0.04

Less: Gain on sale/exchange of assets

(0.04)

Less: Tax benefit on impairment of investments, net of recoveries

(0.02)

(0.01)

(0.05)

Less: Tax benefit on impairment of intangible asset

(0.02)

Less: Tax benefit on bad debt expense associated with Accentia

(0.01)

Less: Tax benefit on restructuring charge

(0.01)

Plus: Tax expense on gain on sale/exchange of assets

0.01

Less: Tax benefit associated with release of capital loss carryforwards

EPS excluding above items, including stock option expense

1.03

1.32

1.36

1.70

1.45

Diluted Shares Outstanding, per GAAP

116,434

118,536

119,953

120,097

118,769

Note:

2008 revenue has been restated to exclude discontinued operations

A leading global CRO

GAAP/Non-GAAP Reconciliation

Net Revenue, Net Income and EPS (2000-2004)

(in thousands, except per share data)

2000

2001

2002

2003

2004

Net Revenue:

Net Revenue, per GAAP

372,650

460,633

608,657

726,983

841,256

Less: Reimbursed out-of-pockets

27,332

29,092

46,008

57,485

67,316

Net Revenue less reimbursed out-of-pockets

345,318

431,541

562,649

669,498

773,940

Net Income:

Net Income, per GAAP

28,934

44,666

33,681

41,410

91,684

Plus:

Costs

acquire

dapoxetine

patents

65,000

Plus: Impairment of equity investments

33,787

10,078

2,000

Plus: Restructuring charges

1,917

2,619

Less: Gain on sale/exchange of assets

(5,738)

Less:

Tax

benefit

costs

acquire

dapoxetine

patents

(24,179)

Less: Tax benefit on impairments and restructuring charges

(2,300)

(4,312)

(907)

Plus: Tax expense on gain on sale/exchange of assets

2,065

Plus: Tax expense on gain on exchange of assets

Less: Tax benefit associated with release of capital loss carryforwards

(3,721)

Net Income excluding above items, including stock option expense

28,934

44,666

65,168

86,241

91,675

Diluted EPS:

EPS, per GAAP

0.29

0.43

0.30

0.37

0.81

Plus:

Costs

acquire

dapoxetine

patents

0.58

Plus: Impairment of equity investments

0.30

0.09

0.02

Plus: Restructuring charges

0.02

Less: Gain on sale/exchange of assets

(0.05)

Less:

Tax

benefit

costs

acquire

dapoxetine

patents

(0.22)

Less: Tax benefit on impairments and restructuring charges

(0.02)

(0.04)

(0.01)

Plus: Tax expense on gain on sale/exchange of assets

0.02

Plus: Tax expense on gain on exchange of assets

Less: Tax benefit associated with release of capital loss carryforwards

(0.03)

EPS excluding above items, including stock option expense

0.29

0.43

0.58

0.77

0.81

Diluted Shares Outstanding, per GAAP

100,708

104,988

110,686

112,572

113,808

A leading global CRO

GAAP/Non-GAAP Reconciliation

Gross Margin and Operating Margin (FY’08 & FY’09)

(in thousands)

Item

2008

2009

Net Revenue:

Net Revenue, per GAAP

1,551,384

1,416,770

Less: Reimbursed out-of-pockets

117,132

101,003

Net Revenue less reimbursed out-of-pockets

1,434,252

1,315,767

Direct Costs:

Direct Costs, per GAAP

807,170

731,755

Less: Reimbursable out-of-pocket expenses

117,132

101,003

Less: Stock option expense

9,694

8,271

Direct Costs excluding reimbursables and stock option expense

680,344

622,481

Gross Margin ($):

Gross Margin, per GAAP

744,214

685,015

Item #1- Item #4

Gross Margin, excluding reimbursables and stock option expense

753,908

693,286

Item #3- Item #6

Gross Margin (%):

Gross Margin, per GAAP

48.0%

48.4%

Item #7/ Item #1

Gross Margin, excluding reimbursables and stock option expense

52.6%

52.7%

Item #8/ Item #3

Operating Income:

Operating Income, per GAAP

282,397

192,890

Plus: Stock option expense

23,381

18,108

Plus: Impairment of intangible asset

1,607

10,361

Plus: Restructuring charges

3,892

Plus: Bad debt expense associated with Accentia

4,708

Operating Income, excluding reimbursables and above items

312,093

225,251

Operating Margin (%):

Operating Margin, per GAAP

18.2%

13.6%

Item #9/ Item #1

Operating Margin, excluding reimbursables and above items

21.8%

17.1%

Item #10/ Item #3

Note:

2008 has been restated to exclude discontinued operations

Twelve Months Ended

December 31,

A leading global CRO

GAAP/Non-GAAP Reconciliation

Development Segment

Gross Margin and Operating Margin (FY’08 & FY’09)

(in thousands)

Item

2008

2009

Net Revenue:

Net Revenue, per GAAP

1,532,679

1,410,294

Less: Reimbursed out-of-pockets

116,850

100,840

Net Revenue less reimbursed out-of-pockets

1,415,829

1,309,454

Direct Costs:

Direct Costs, per GAAP

806,274

730,962

Less: Reimbursable out-of-pocket expenses

116,850

100,840

Less: Stock option expense

9,239

7,875

Direct

Costs,

excluding

reimbursables

and

stock

option

expense

680,185

622,247

Gross Margin ($):

Gross Margin, per GAAP

726,405

679,332

Item #1-

Item #4

Gross

Margin,

excluding

reimbursables

and

stock

option

expense

735,644

687,207

Item #3-

Item #6

Gross Margin (%):

Gross Margin, per GAAP

47.4%

48.2%

Item #7/ Item #1

Gross

Margin,

excluding

reimbursables

and

stock

option

expense

52.0%

52.5%

Item #8/ Item #3

Operating Income:

Operating Income, per GAAP

272,540

223,165

Plus: Stock option expense

23,074

17,763

Plus: Restructuring charges

3,892

Plus: Bad debt expense associated with Accentia

4,708

Operating

Income,

excluding

reimbursables

and

above

items

300,322

244,820

Operating Margin (%):

Operating Margin, per GAAP

17.8%

15.8%

Item #9/ Item #1

Operating

Margin,

excluding

reimbursables

and

above

items

21.2%

18.7%

Item #10/ Item #3

Note:

2008 has been restated to exclude discontinued operations

Twelve Months Ended

December 31,

A leading global CRO

GAAP/Non-GAAP Reconciliation

Gross Margin and Operating Margin (Q1’09 & Q1’10)

(in thousands)

Item

2009

2010

Net Revenue:

Net Revenue, per GAAP

364,370

346,769

Less: Reimbursed out-of-pockets

23,854

22,649

Net Revenue less reimbursed out-of-pockets

340,516

324,120

Direct Costs:

Direct Costs, per GAAP

188,318

182,802

Less: Reimbursable out-of-pocket expenses

23,854

22,649

Less: Stock option expense

2,636

2,173

Direct Costs, excluding reimbursables

and stock option expense

161,828

157,980

Gross Margin ($):

Gross Margin, per GAAP

176,052

163,967

Item #1-

Item #4

Gross Margin, excluding reimbursables

and stock option expense

178,688

166,140

Item #3-

Item #6

Gross Margin (%):

Gross Margin, per GAAP

48.3%

47.3%

Item #7/ Item #1

Gross Margin, excluding reimbursables

and stock option expense

52.5%

51.3%

Item #8/ Item #3

Operating Income:

Operating Income, per GAAP

66,588

26,071

Plus: Stock option expense

4,805

5,420

Operating Income, excluding reimbursables

and stock option expense

71,393

31,491

Operating Margin (%):

Operating Margin, per GAAP

18.3%

7.5%

Item #9/ Item #1

Operating Margin, excluding reimbursables

and stock option expense

21.0%

9.7%

Item #10/ Item #3

Note:2009 has been restated to exclude discontinued operations

Three Months Ended

March 31,

A leading global CRO

GAAP/Non-GAAP Reconciliation

Development Segment

Gross Margin and Operating Margin (Q1’09 & Q1’10)

(in thousands)

Item

2009

2010

Net Revenue:

Net Revenue, per GAAP

359,208

346,476

Less: Reimbursed out-of-pockets

23,854

22,649

Net Revenue less reimbursed out-of-pockets

335,354

323,827

Direct Costs:

Direct Costs, per GAAP

188,023

182,650

Less: Reimbursable out-of-pocket expenses

23,854

22,649

Less: Stock option expense

2,442

2,036

161,727

157,965

Gross Margin ($):

Gross Margin, per GAAP

171,185

163,826

Item #1-

Item #4

173,627

165,862

Item #3-

Item #6

Gross Margin (%):

Gross Margin, per GAAP

47.7%

47.3%

Item #7/ Item #1

51.8%

51.2%

Item #8/ Item #3

Operating Income:

Operating Income, per GAAP

62,612

36,811

Plus: Stock option expense

4,656

5,282

67,268

42,093

Operating Margin (%):

Operating Margin, per GAAP

17.4%

10.6%

Item #9/ Item #1

20.1%

13.0%

Item #10/ Item #3

Note:

2009 has been restated to exclude discontinued operations

Three Months Ended

March 31,

Direct Costs, excluding reimbursables and stock option expense

Gross Margin, excluding reimbursables and stock option expense

Operating Income, excluding reimbursables and stock option expense

Operating Margin, excluding reimbursables and stock option expense

A leading global CRO

GAAP/Non-GAAP Reconciliation

Gross Margin and Operating Margin (Q2’09 & Q2’10)

(in thousands)

Item

2009

2010

Net Revenue:

Net Revenue, per GAAP

354,598

369,919

Less: Reimbursed out-of-pockets

24,257

28,423

Net Revenue less reimbursed out-of-pockets

330,341

341,496

Direct Costs:

Direct Costs, per GAAP

182,888

192,170

Less: Reimbursable out-of-pocket expenses

24,257

28,423

Less: Stock option expense

1,867

1,211

Direct Costs, excluding reimbursables

and stock option expense

156,764

162,536

Gross Margin ($):

Gross Margin, per GAAP

171,710

177,749

Item #1-

Item #4

Gross Margin, excluding reimbursables

and stock option expense

173,577

178,960

Item #3-

Item #6

Gross Margin (%):

Gross Margin, per GAAP

48.4%

48.1%

Item #7/ Item #1

Gross Margin, excluding reimbursables

and stock option expense

52.5%

52.4%

Item #8/ Item #3

Operating Income:

Operating Income, per GAAP

58,264

40,084

Plus: Stock option expense

4,397

3,768

Operating Income, excluding reimbursables

and stock option expense

62,661

43,852

Operating Margin (%):

Operating Margin, per GAAP

16.4%

10.8%

Item #9/ Item #1

Operating Margin, excluding reimbursables

and stock option expense

19.0%

12.8%

Item #10/ Item #3

Note:

2009 has been restated to exclude discontinued operations

Three Months Ended

June 30,

A leading global CRO

GAAP/Non-GAAP Reconciliation

Development Segment

Gross Margin and Operating Margin (Q2’09 & Q2’10)

(in thousands)

Item

2009

2010

Net Revenue:

Net Revenue, per GAAP

354,436

362,202

Less: Reimbursed out-of-pockets

24,257

28,423

Net Revenue less reimbursed out-of-pockets

330,179

333,779

Direct Costs:

Direct Costs, per GAAP

182,743

192,196

Less: Reimbursable out-of-pocket expenses

24,257

28,423

Less: Stock option expense

1,788

1,242

Direct Costs, excluding reimbursables and stock option expense

156,698

162,531

Gross Margin ($):

Gross Margin, per GAAP

171,693

170,006

Item #1-

Item #4

Gross Margin, excluding reimbursables and stock option expense

173,481

171,248

Item #3-

Item #6

Gross Margin (%):

Gross Margin, per GAAP

48.4%

46.9%

Item #7/ Item #1

Gross Margin, excluding reimbursables and stock option expense

52.5%

51.3%

Item #8/ Item #3

Operating Income:

Operating Income, per GAAP

58,942

43,085

Plus: Stock option expense

4,319

3,799

Operating Income, excluding reimbursables and stock option expense

63,261

46,884

Operating Margin (%):

Operating Margin, per GAAP

16.6%

11.9%

Item #9/ Item #1

Operating Margin, excluding reimbursables and stock option expense

19.2%

14.0%

Item #10/ Item #3

Note:

2009 has been restated to exclude discontinued operations

Three Months Ended

June 30,

A leading global CRO

GAAP/Non-GAAP Reconciliation

Operating Margin (Q3’09 & Q3’10)

(in thousands)

Item

2009

2010

Net Revenue:

Net Revenue, per GAAP

340,400

365,375

Less: Reimbursed out-of-pockets

24,117

25,985

Net Revenue less reimbursed out-of-pockets

316,283

339,390

Operating Income:

Operating Income, per GAAP

51,627

56,835

Plus: Stock option expense

4,324

3,889

Plus: Restructuring costs

3,892

Operating Income, excluding reimbursables, stock option expense

and restructuring costs

59,843

60,724

Operating Margin (%):

Operating Margin, per GAAP

15.2%

15.6%

Item #4/ Item #1

Operating Margin, excluding reimbursables, stock option expense

and restructuring costs

18.9%

17.9%

Item #5/ Item #3

Note:

2009 has been restated to exclude discontinued operations

Three Months Ended

September 30,

A leading global CRO

GAAP/Non-GAAP Reconciliation

Net

Revenue,

Operating

Income

and

Operating

Margin

(Q1'09

Q4'09)

(in thousands)

Item

Q1'09

Q2'09

Q3'09

Q4'09

Net Revenue:

Net Revenue, per GAAP

364,370

354,598

340,400

357,239

Less: Reimbursed out-of-pockets

23,854

24,257

24,117

28,612

Less: Discovery Sciences revenue

5,162

162

442

547

Net Revenue less above items

335,354

330,179

315,841

328,080

Net Revenue by segment (less above items):

Clinical Development Services Net Revenue

268,092

260,079

249,981

256,713

Laboratory Services Net Revenue

67,262

70,100

65,860

71,367

Net Revenue less above items

335,354

330,179

315,841

328,080

Operating Income:

Operating Income, per GAAP

66,588

58,264

51,627

37,826

Less: Discovery Sciences operating (income) loss

(4,125)

600

323

11,426

Plus: Stock option expense

4,805

4,397

4,324

4,572

Plus: Restructuring costs

3,892

Operating Income excluding above items

67,268

63,261

60,166

53,824

Operating Income by segment (excluding above items):

Clinical Development Services Operating Income

51,866

48,030

46,986

41,037

Laboratory Services Operating Income

15,402

15,231

13,180

12,787

Operating Income excluding above items

67,268

63,261

60,166

53,824

Operating Margin (%):

Operating Margin, per GAAP

18.3%

16.4%

15.2%

10.6%

Item 5/Item 1

Operating Margin, excluding above items

20.1%

19.2%

19.0%

16.4%

Item 6/Item 2

Clinical Development Services Operating Margin, excluding above items

19.3%

18.5%

18.8%

16.0%

Item 7/Item 3

Laboratory Services Operating Margin, excluding above items

22.9%

21.7%

20.0%

17.9%

Item 8/Item 4

A leading global CRO

GAAP/Non-GAAP Reconciliation

Net

Revenue,

Operating

Income

and

Operating

Margin

Segment

Information (Q1'09 -

Q4'09)

(in thousands)

Item

Q1'09

Q2'09

Q3'09

Q4'09

Net Revenue:

Net Revenue, per GAAP

364,370

354,598

340,400

357,239

Less: Reimbursed out-of-pockets

23,854

24,257

24,117

28,612

Less: Discovery Sciences revenue

5,162

162

442

547

Net Revenue less above items

335,354

330,179

315,841

328,080

Net Revenue by segment (less above items):

Clinical Development Services Net Revenue

268,092

260,079

249,981

256,713

Laboratory Services Net Revenue

67,262

70,100

65,860

71,367

Net Revenue less above items

335,354

330,179

315,841

328,080

Operating Income -

Clinical Development Segment:

Operating Income, per GAAP -

Clinical Development Segment

47,634

44,103

39,202

36,919

Plus: Stock option expense

4,232

3,927

3,892

4,118

Plus: Restructuring costs

3,892

Operating Income excluding above items

51,866

48,030

46,986

41,037

Operating Income -

Laboratory Services Segment:

Operating Income, per GAAP -

Laboratory Services Segment

14,978

14,838

12,813

12,377

Plus: Stock option expense

424

393

367

410

Operating Income excluding above items

15,402

15,231

13,180

12,787

Operating Margin (%):

Clinical Development Services Operating Margin, per GAAP

17.8%

17.0%

15.7%

14.4%

Item 5/Item 3

Clinical Development Services Operating Margin, excluding above items

19.3%

18.5%

18.8%

16.0%

Item 6/Item 3

Laboratory Services Operating Margin, per GAAP

22.3%

21.2%

19.5%

17.3%

Item 7/Item 4

Laboratory Services Operating Margin, excluding above items

22.9%

21.7%

20.0%

17.9%

Item 8/Item 4

A leading global CRO

GAAP/Non-GAAP Reconciliation

Net

Revenue,

Operating

Income

and

Operating

Margin

(Q1'10

Q3'10)

(in thousands)

Item

Q1'10

Q2'10

Q3'10

Net Revenue:

Net Revenue, per GAAP

346,769

369,919

365,375

Less: Reimbursed out-of-pockets

22,649

28,423

25,985

Less: Discovery Sciences revenue

293

7,717

Net Revenue less above items

323,827

333,779

339,390

Net Revenue by segment (less above items):

Clinical Development Services Net Revenue

249,294

255,436

260,345

Laboratory Services Net Revenue

74,533

78,343

79,045

Net Revenue less above items

323,827

333,779

339,390

Operating Income:

Operating Income, per GAAP

27,682

40,084

56,835

Less: Discovery Sciences operating (income) loss

8,725

3,032

Plus: Stock option expense

5,420

3,768

3,889

Operating Income excluding above items

41,827

46,884

60,724

Operating Income by segment (excluding above items):

Clinical Development Services Operating Income

31,749

34,628

47,186

Laboratory Services Operating Income

10,078

12,256

13,538

Operating Income excluding above items

41,827

46,884

60,724

Operating Margin (%):

Operating Margin, per GAAP

8.0%

10.8%

15.6%

Item 5/Item 1

Operating Margin, excluding above items

12.9%

14.0%

17.9%

Item 6/Item 2

Clinical Development Services Operating Margin, excluding above items

12.7%

13.6%

18.1%

Item 7/Item 3

Laboratory Services Operating Margin, excluding above items

13.5%

15.6%

17.1%

Item 8/Item 4

A leading global CRO

GAAP/Non-GAAP Reconciliation

Net

Revenue,

Operating

Income

and

Operating

Margin

Segment

Information

(Q1'10

Q3'10)

(in thousands)

Item

Q1'10

Q2'10

Q3'10

Net Revenue:

Net Revenue, per GAAP

346,769

369,919

365,375

Less: Reimbursed out-of-pockets

22,649

28,423

25,985

Less: Discovery Sciences revenue

293

7,717

Net Revenue less above items

323,827

333,779

339,390

Net Revenue by segment (less above items):

Clinical Development Services Net Revenue

249,294

255,436

260,345

Laboratory Services Net Revenue

74,533

78,343

79,045

Net Revenue less above items

323,827

333,779

339,390

Operating Income -

Clinical Development Segment:

Operating Income, per GAAP

27,006

31,142

43,681

Plus: Stock option expense

4,743

3,486

3,505

Operating Income excluding above items

31,749

34,628

47,186

Operating Income -

Laboratory Services Segment:

Operating Income, per GAAP

9,533

11,944

13,154

Plus: Stock option expense

545

312

384

Operating Income excluding above items

10,078

12,256

13,538

Operating Margin (%):

Clinical Development Services Operating Margin, per GAAP

10.8%

12.2%

16.8%

Item 5/Item 3

Clinical Development Services Operating Margin, excluding above items

12.7%

13.6%

18.1%

Item 6/Item 3

Laboratory Services Operating Margin, per GAAP

12.8%

15.2%

16.6%

Item 7/Item 4

Laboratory Services Operating Margin, excluding above items

13.5%

15.6%

17.1%

Item 8/Item 4

A leading global CRO

GAAP/Non-GAAP Reconciliation

Gross Margin and Operating Margin (Q4’08 & Q4’09)

(in thousands)

Item

2008

2009

Net Revenue:

Net Revenue, per GAAP

363,139

357,402

Less: Reimbursed out-of-pockets

24,321

28,775

Net Revenue less reimbursed out-of-pockets

338,818

328,627

Direct Costs:

Direct Costs, per GAAP

179,510

185,952

Less: Reimbursable out-of-pocket expenses

24,321

28,775

Less: Stock option expense

2,334

1,994

Direct Costs, excluding reimbursables

and stock option expense

152,855

155,183

Gross Margin ($):

Gross Margin, per GAAP

183,629

171,450

Item #1-

Item #4

Gross Margin, excluding reimbursables

and stock option expense

185,963

173,444

Item #3-

Item #6

Gross Margin (%):

Gross Margin, per GAAP

50.6%

48.0%

Item #7/ Item #1

Gross Margin, excluding reimbursables

and stock option expense

54.9%

52.8%

Item #8/ Item #3

Operating Income:

Operating Income, per GAAP

71,709

23,907

Plus: Stock option expense

5,159

4,572

Plus: Bad debt expense associated with Accentia

4,708

Plus: Impairment on intangible asset

10,361

Operating Income, excluding reimbursables

and above items

81,576

38,840

Operating Margin (%):

Operating Margin, per GAAP

19.8%

6.7%

Item #9/ Item #1

Operating Margin, excluding reimbursables

and above items

24.1%

11.8%

Item #10/ Item #3

Note:

2008 has been restated to exclude discontinued operations

Three Months Ended

December 31,

A leading global CRO

GAAP/Non-GAAP Reconciliation

Development Segment

Gross Margin and Operating Margin (Q4’08 & Q4’09)

(in thousands)

Item

2008

2009

Net Revenue:

Net Revenue, per GAAP

362,814

356,692

Less: Reimbursed out-of-pockets

24,105

28,612

Net Revenue less reimbursed out-of-pockets

338,709

328,080

Direct Costs:

Direct Costs, per GAAP

179,046

185,732

Less: Reimbursable out-of-pocket expenses

24,105

28,612

Less: Stock option expense

2,132

1,954

Direct Costs, excluding reimbursables and stock option expense

152,809

155,166

Gross Margin ($):

Gross Margin, per GAAP

183,768

170,960

Item #1- Item #4

Gross Margin, excluding reimbursables and stock option expense

185,900

172,914

Item #3- Item #6

Gross Margin (%):

Gross Margin, per GAAP

50.7%

47.9%

Item #7/ Item #1

Gross Margin, excluding reimbursables and stock option expense

54.9%

52.7%

Item #8/ Item #3

Operating Income:

Operating Income, per GAAP

72,636

49,406

Plus: Stock option expense

4,960

4,528

Plus: Bad debt expense associated with Accentia

4,708

Operating Income, excluding reimbursables and above items

82,304

53,934

Operating Margin (%):

Operating Margin, per GAAP

20.0%

13.9%

Item #9/ Item #1

Operating Margin, excluding reimbursables and above items

24.3%

16.4%

Item #10/ Item #3

Note:

2008 has been restated to exclude discontinued operations

Three Months Ended

December 31,

A leading global CRO

GAAP/Non-GAAP Reconciliation

Net Income and EPS (Q4’08 & Q4’09)

(in thousands, except per share data)

2008

2009

Net Income, per GAAP

47,198

18,991

Plus: Impairment of investments

2,306

2,076

Plus: Impairment of intangibles

10,361

Plus: Bad debt expense associated with Accentia

4,708

Less: Tax benefit on impairment of investments

(738)

(411)

Less: Tax benefit on impairment of intangibles

(2,052)

Less: Tax benefit on bad debt expense associated with Accentia

(1,507)

Net income excluding above items

51,967

28,965

Diluted EPS, per GAAP

0.40

0.16

Plus: Impairment of investments

0.02

Plus: Impairment of intangibles

0.08

Plus: Bad debt expense associated with Accentia

0.04

Less: Tax benefit on impairment of investments

(0.01)

Less: Tax benefit on impairment of intangibles

(0.02)

Less: Tax benefit on bad debt expense associated with Accentia

(0.01)

Diluted EPS excluding above items

0.44

0.24

Diluted Shares Outstanding, per GAAP

118,837

118,918

Three Months Ended

December 31,

Pharmaceutical Product Development (PPDI) 8-K/AResults of Operations and Financial Condition