8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 2, 2004

PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.

(Exact name of Registrant as specified in its charter)

North Carolina

(State or other jurisdiction of incorporation)

0-27570	56-1640186
(Commission file Number)	(IRS Employer ID Number)

3151 South 17th Street, Wilmington, North Carolina 28412
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code 919-251-0081

NA

(Former name or former address, if changed since last report)

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

(c) Exhibits

Exhibit No.	Description
99.1	Press release dated February 2, 2004 of Pharmaceutical Product Development, Inc. (the “Company”), announcing its operating and financial results for the quarter and year ended December 31, 2003. (Furnished pursuant to Item 12, not filed; see Item 12 below.)

Item 12. Results of Operations and Financial Condition.

On February 2, 2004, the Company issued a press release announcing its operating and financial results for the quarter and year ended December 31, 2003. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.

The information furnished in this Item 12, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

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 hereunto duly authorized.

Date: February 2, 2004 Pharmaceutical Product Development, Inc. By: /s/ Fredric N. Eshelman Name: Fredric N. Eshelman Title: Chief Executive Officer

EX-99.1

Exhibit 99.1

Contacts:

Linda Baddour

+910 772 6999

linda.baddour@wilm.ppdi.com

Steve Smith

+910 772 7585

stephen.smith@wilm.ppdi.com

FOR IMMEDIATE RELEASE

PPD REPORTS FOURTH QUARTER AND YEAR END 2003 FINANCIAL RESULTS;

POSTS SECOND CONSECUTIVE QUARTER OF RECORD NEW AUTHORIZATIONS

WILMINGTON, NC, February 2, 2004—PPD, Inc. (Nasdaq: PPDI) today reported its financial and operating results under U.S. generally accepted accounting principles, or GAAP, for the fourth quarter and full year ended December 31, 2003.

For the fourth quarter of 2003, PPD recorded net revenue of $192.6 million, an increase of 13.8 percent over net revenue of $169.2 million for the fourth quarter of 2002. Net revenue on a GAAP basis for fourth quarter 2003 includes reimbursed out-of-pockets of $17.4 million, compared to $14.9 million for the same period in 2002. Fourth quarter 2003 development and discovery sciences revenue totaled $175.2 million, an increase of 13.5 percent compared to the same period last year.

Fourth quarter 2003 loss from operations was $26.3 million, compared to income from operations of $33.0 million for the same period in 2002. The fourth quarter 2003 loss from operations includes the previously disclosed $65.0 million cash payment to Eli Lilly & Company to acquire the patents for dapoxetine. The $65.0 million payment was recorded to research and development expense in the fourth quarter 2003.

Fourth quarter 2003 net loss per diluted share was $0.30, compared to earnings per diluted share of $0.36 for the same period last year. Fourth quarter 2003 net loss per diluted share includes the $65.0 million payment to Lilly for the dapoxetine patents and a non-cash charge of $0.7 million related to impairment of equity investments. The $65.0 million payment and the $0.7 million charge resulted in a $0.74 impact on earnings per diluted share for the quarter, net of tax.

For the year ending December 31, 2003, net revenue was $727.0 million, an increase of 19.4 percent over net revenue of $608.7 for 2002. Full year 2003 net revenue includes reimbursed out-of-pockets of $57.5 million, compared to $46.0 million in 2002. Full year 2003 development and discovery sciences revenue totaled $669.5 million, an increase of 19.0 percent compared to 2002.

Income from operations for 2003 was $78.8 million. Full year 2003 income from operations includes the $65.0 million payment to Lilly, a $5.7 million gain on the sale of assets and a $1.9 million charge related to the restructuring of the discovery sciences business. The aggregate

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impact of these items was a $61.2 million reduction in income from operations for the full year 2003.

Earnings per diluted share for the year ending December 31, 2003 was $0.82. Earnings per diluted share for 2003 includes $10.1 million of charges for the impairment of equity investments. This charge, together with the payment to Lilly, the gain on sale of assets and the discovery sciences restructuring charge, resulted in an aggregate impact of $0.80 to 2003 earnings per diluted share, net of tax.

New business authorizations for the fourth quarter of 2003 were a record $310.0 million, resulting in total new authorizations for 2003 of nearly $1.1 billion. Net days sales outstanding for the full year 2003 was 42 days, which remained unchanged from the year-to-date days sales outstanding of 42 days as of September 30, 2003. At December 31, 2003, PPD had $110.1 million in cash and minimal debt.

“This year has been both a transitional and challenging one for PPD,” stated Fred Eshelman, chief executive officer of PPD. “We invested significantly in our near to long term strategy of developing a pipeline of partnered compounds to drive future earnings growth, which we believe is a positive development for PPD. In addition, we delivered two consecutive quarters of record authorizations in the second half and four consecutive quarters of backlog growth in a very competitive market environment.”

PPD will conduct a live conference call and audio Webcast tomorrow, February 3, 2004, at 9:00 a.m. EST to discuss its fourth quarter and full year 2003 results. To access the Webcast, please visit http://www.ppdi.comand follow the directions on PPD’s investors page. A replay of the Webcast will be available shortly after the call. If you have difficulty accessing the Webcast via the Internet, PPD has established a direct dial number, +800 915 4836, for telephone access.

As a leading global provider of discovery and development services and products for pharmaceutical, biotechnology and medical device companies, PPD applies innovative technologies, therapeutic expertise and a commitment to quality to help clients maximize the return on their R&D investments. With proven early discovery through post-market resources, the company also offers compound partnering opportunities. PPD has more than 5,700 professionals in 26 countries around the world. For more information on PPD, visit our Web site at http://www.ppdi.com.

Except for historical information, all of the statements, expectations and assumptions contained in this news release are forward-looking statements that involve a number of risks and uncertainties. Although PPD attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors which could cause results to differ materially include the following: continued success in sales growth; loss of large contracts; increased cancellation rates; economic conditions and outsourcing trends in the pharmaceutical, biotechnology and medical device industries; competition within the outsourcing industry; risks associated with and dependence on collaborative relationships; risks associated with the development and commercialization of drugs; risks associated with acquisitions and investments, such as impairments; rapid technological advances that make our products and services less competitive; the ability to attract and retain key personnel; and the other risk factors set forth from time to time in the SEC filings for PPD, copies of which are available free of charge upon request from the PPD investor relations department.

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Exhibit 99.1

PPD, Inc.

Statement of Operations Data

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended Dec. 31,						Twelve Months Ended Dec. 31,
	2003			2002			2003			2002
Net revenue:
Development	$	172,526		$	151,093		$	654,019		$	545,139
Discovery sciences		2,671			3,267			15,479			17,510
Reimbursed out-of-pockets		17,424			14,864			57,485			46,008
Total net revenue		192,621			169,224			726,983			608,657
Direct costs:
Development		84,520			71,664			316,942			261,169
Discovery sciences		1,346			1,634			7,741			7,831
Reimbursable out-of-pocket expenses		17,424			14,864			57,485			46,008
Total direct costs		103,290			88,162			382,168			315,008
Research and development		66,368			3,258			74,941			10,540
Selling, general and administrative		42,134			38,218			166,253			150,433
Depreciation		6,735			6,125			26,968			23,189
Amortization		442			412			1,633			1,042
Gain on sale of assets		—			—			(5,738	)		—
Restructuring charges		—			—			1,917			—
(Loss) income from operations		(26,348	)		33,049			78,841			108,445
Impairment of equity investments, net		(705	)		(1,781	)		(10,078	)		(33,787	)
Other income, net		20			469			2,482			3,989
(Loss) income before income taxes		(27,033	)		31,737			71,245			78,647
Income tax (benefit) expense		(10,511	)		11,766			24,935			38,645
(Loss) income before equity in net loss of investee		(16,522	)		19,971			46,310			40,002
Equity in net loss of investee, net of income taxes		—			—			—			105
Net (loss) income	$	(16,522	)	$	19,971		$	46,310		$	39,897
Net (loss) income per share:
Basic	$	(0.30	)	$	0.36		$	0.83		$	0.73
Diluted	$	(0.30	)	$	0.36		$	0.82		$	0.72
Weighted average number of shares outstanding:
Basic		55,955			55,303			55,774			54,710
Diluted		55,955			55,905			56,286			55,343

Exhibit 99.1

PPD, Inc.

Balance Sheet Data

(in thousands)

(unaudited)

	December 31,		December 31,
	2003		2002
Cash and cash equivalents	$	110,102	$	181,224
Accounts receivable and unbilled services, net	$	242,470	$	199,936
Working capital	$	156,112	$	187,696
Total assets	$	774,443	$	692,120
Unearned income	$	129,818	$	114,494
Long-term debt, including current portion	$	7,662	$	8,406
Shareholders’ equity	$	512,521	$	440,337