SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): August 12, 2002
PDI, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 0-24249 22-2919486
(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification No.)
10 Mountainview Road,
Upper Saddle River, NJ 07458
(Address of principal executive office) (Zip Code)
(201) 258-8450
Registrant's telephone number, including area code:
Professional Detailing, Inc.
(Former name or former address, if changed since last report)
Item 5. Other Events
On October 12, 2002 the Registrant issued the following press release:
"PDI REPORTS SECOND QUARTER 2002 FINANCIAL RESULTS
Revenue of $66.5 million; Operating Loss of $14.9 million; and Net Loss per
share of $0.66
Upper Saddle River, New Jersey (Monday, August 12, 2002). PDI, Inc.
(Nasdaq:PDII) today announced revenue, an operating loss, a net loss and a net
loss per share for the quarter and six months ended June 30, 2002.
Quarterly Results
Net total revenue for the quarter ended June 30, 2002 was $66.5 million, 53.8%
less than net total revenue of $143.9 million for the quarter ended June 30,
2001. Net product revenue for the quarter ended June 30, 2002 was $0.5 million
compared to $79.2 million in the comparable prior year period. Net service
revenue for the quarter ended June 30, 2002 was $66.0 million, 1.9% more than
net service revenue of $64.8 million for the quarter ended June 30, 2001. There
was an operating loss of $14.9 million for the quarter ended June 30, 2002
compared to operating income of $6.4 million for the quarter ended June 30,
2001. There was a net loss of $9.2 million for the quarter ended June 30, 2002
compared to net income of $4.4 million for the quarter ended June 30, 2001. The
net loss per share for the quarter ended June 30, 2002 was $0.66 versus net
income per share of $0.31 for the quarter ended June 30, 2001.
Year-to-Date Results
Net total revenue for the six months ended June 20, 2002 was $140.4 million,
55.7% lower than net total revenue of $317.0 million for the six months ended
June 20, 2001. Net product revenue for the six months ended June 30, 2002 was
$6.2 million compared to $174.1 million in the comparable prior year period. Net
service revenue for the six months ended June 30, 2002 was $134.2 million versus
$142.9 million for the six months ended June 20, 2001. There was an operating
loss of $19.4 million for the six months ended June 30, 2002 versus operating
income of $23.1 million for the six months ended June 30, 2001. There was a net
loss of $11.5 million for the six months ended June 30, 2002 versus net income
of $15.3 million for the six months ended June 20, 2001. There was a net loss
per share of $0.82 for the six months ended June 20, 2002 compared to diluted
net income per share of $1.08 for the six months ended June 20, 2001.
Performance Based Contracts
The net loss for the three and six month periods included a negative gross
profit of approximately $8.9 and $17.6 million, respectively, related to the
Company's Evista performance based contract as a result of sales not exceeding
contract baselines resulting in no revenues during these periods. PDI expects
the Evista program to yield a $7.0 million to $10.0 million negative gross
profit in the third quarter of 2002 as the baseline is cumulative and sales of
Evista are not expected to exceed the baseline through the first nine months of
2002. PDI further announced that it currently anticipates that revenues over the
remaining life of the Evista contract will exceed the future costs associated
with the contract. However, PDI will continue to monitor underlying prescription
trends. Any adverse development in prescription
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trends could require the Company to book a reserve with respect to this contract
and could have a material adverse impact on PDI's results of operations, cash
flows and liquidity.
Charles T. Saldarini, Chief Executive Officer of PDI, Inc. commented, "We are
disappointed with our second quarter results which were adversely impacted by
operating losses attributable to our Evista and Lotensin performance based
contracts. The Lotensin program was restructured during the quarter to provide
for incremental promotion of both Lotrel and Diovan. We believe that this will
result in a successful promotional effort for all three Novartis products.
Evista was the major contributor to our loss for the quarter and we are
carefully monitoring this program. Current prescription trends are encouraging
and may further benefit from the release in early July of studies by the Women's
Health Initiative and the National Cancer Institute highlighting new risks
associated with hormone replacement therapy." Saldarini continued, "On a
brighter note, we are encouraged by our new business development efforts and the
progress in our medical device and diagnostics unit."
Webcast and Conference Call
PDI will conduct a live webcast of its Earnings Release Briefing at 9:00 AM EDT
on Tuesday, August 13, 2002. The live webcast of the event will be accessible
through PDI's website, www.pdi-inc.com and will be archived on the website for
future on-demand replay. For those without Internet access, the call can be
accessed by dialing 1-877-423-4030 and asking for the PDI Earnings Release
Conference Call.
About PDI
PDI is a commercial partner providing sales and marketing solutions to the
pharmaceutical, biotech, and medical devices & diagnostics industries. PDI can
either provide customized solutions for our partner clients or license, acquire
or develop a product outright. With an infrastructure of over 3,000 sales and
marketing professionals, PDI has demonstrated the ability to deliver sales and
marketing solutions for products at any stage of their lifecycles, from
pre-launch through maturity.
Depending on the needs of a product, PDI can provide services, such as contract
sales with both dedicated and shared teams, marketing research, medical
education and communications, managed markets and trade relations, and after
sales support.
For more information, visit the Company's website at www.pdi-inc.com.
This press release contains forward-looking statements regarding the timing and
financial impact of the Company's ability to implement its business plan,
expected revenues, earnings per share and success during the year 2002. These
statements involve a number of risks and uncertainties and are based on
assumptions involving judgments with respect to future economic, competitive and
market conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond PDI's control.
Some of the important factors that could cause actual results to differ
materially from those indicated by the forward-looking statements are general
economic conditions, changes in our operating expenses, adverse patent
developments, competitive pressures, changes in customer and market requirements
and standards, and the risk factors detailed from time to time in PDI's periodic
filings with the Securities and Exchange Commission, including without
limitation PDI's Annual Report on Form 10-K for the year ended December 31,
2001. The forward looking-statements in this press release are based upon
management's reasonable belief as of the date hereof. PDI disclaims any
obligation to update these statements.
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PDI, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
June 30, December 31,
2002 2001
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(unaudited)
ASSETS
Current assets:
Cash and cash equivalents ............................................. $ 68,925 $ 160,043
Short-term investments ................................................ 19,680 7,387
Inventory, net ........................................................ -- 442
Accounts receivable, net of allowance for doubtful accounts of
$1,396 and $3,692 as of June 30, 2002 and December 31, 2001,
respectively ...................................................... 26,669 52,640
Unbilled costs and accrued profits on contracts in progress ........... 10,568 6,898
Deferred training ..................................................... 5,099 5,569
Other current assets .................................................. 4,734 8,101
Deferred tax asset .................................................... 24,041 24,041
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Total current assets ..................................................... 159,716 265,121
Net property, plant & equipment .......................................... 22,152 21,044
Other long-term assets ................................................... 16,342 16,506
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Total assets ............................................................. $ 198,210 $ 302,671
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ...................................................... $ 5,119 $ 9,493
Accrued returns, rebates and sales discounts .......................... 20,456 68,403
Accrued contract losses ............................................... -- 12,256
Accrued incentives .................................................... 14,639 22,213
Accrued salaries and wages ............................................ 5,170 7,167
Unearned contract revenue ............................................. 5,658 10,878
Other accrued expenses ................................................ 5,442 21,026
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Total current liabilities ................................................ 56,484 151,436
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Long-term liabilities:
Deferred tax liability .............................................. 300 300
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Total long-term liabilities .............................................. 300 300
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Total liabilities ........................................................ $ 56,784 $ 151,736
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Stockholders' equity:
Common stock, $.01 par value, 100,000,000 shares authorized:
shares issued and outstanding, June 30, 2002 - 14,063,438,
December 31, 2001 - 13,968,097; restricted $.01 shares
issued and outstanding, June 30, 2002 - 27,937,
December 31, 2001 - 15,388 .......................................... $ 141 $ 140
Preferred stock, $.01 par value, 5,000,000 shares authorized, no
shares issued and outstanding ....................................... -- --
Additional paid-in capital ............................................... 104,252 102,757
Additional paid-in capital, restricted ................................... 1,547 954
Retained earnings ........................................................ 36,550 48,008
Accumulated other comprehensive loss ..................................... (88) (79)
Unamortized compensation costs ........................................... (866) (735)
Treasury stock, at cost: 5,000 shares .................................... (110) (110)
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Total stockholders' equity ............................................... $ 141,426 $ 150,935
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Total liabilities & stockholders' equity ................................. $ 198,210 $ 302,671
========= =========
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PDI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- --------------------------
2002 2001 2002 2001
-------- -------- --------- --------
(unaudited)
Revenue
Service, net ............................................ $ 66,033 $ 64,789 $ 134,192 $142,876
Product, net ............................................ 500 79,155 6,224 174,133
-------- -------- --------- --------
Total revenue, net ................................... 66,533 143,944 140,416 317,009
-------- -------- --------- --------
Cost of goods and services
Program expenses (including related party amounts of
$8 and $426 for the quarters ended June 30, 2002
and 2001, and $105 and $585 for the six months
ended June 30, 2002 and 2001, respectively) ........... 65,721 53,321 132,998 108,716
Cost of goods sold ...................................... -- 51,523 -- 115,738
-------- -------- --------- --------
Total cost of goods and services ..................... 65,721 104,844 132,998 224,454
-------- -------- --------- --------
Gross profit ............................................... 812 39,100 7,418 92,555
Compensation expense ....................................... 9,294 9,162 17,053 20,177
Other selling, general & administrative expenses ........... 6,450 23,546 9,775 49,273
-------- -------- --------- --------
Total selling, general & administrative expenses ........ 15,744 32,708 26,828 69,450
-------- -------- --------- --------
Operating (loss) income .................................... (14,932) 6,392 (19,410) 23,105
Other income, net .......................................... 356 1,537 1,245 3,407
-------- -------- --------- --------
(Loss) income before provision for taxes ................... (14,576) 7,929 (18,165) 26,512
Provision for income taxes ................................. (5,385) 3,527 (6,707) 11,181
-------- -------- --------- --------
Net (loss) income .......................................... $ (9,191) $ 4,402 $ (11,458) $ 15,331
======== ======== ========= ========
Basic net (loss) income per share .......................... $ (0.66) $ 0.32 $ (0.82) $ 1.11
======== ======== ========= ========
Diluted net (loss) income per share ........................ $ (0.66) $ 0.31 $ (0.82) $ 1.08
======== ======== ========= ========
Basic weighted average number of shares outstanding ........ 14,003 13,856 13,986 13,849
======== ======== ========= ========
Diluted weighted average number of shares outstanding ...... 14,003 14,246 13,986 14,189
======== ======== ========= ========
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SIGNATURE
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.
PDI, INC.
By: /s/ Charles T. Saldarini
-----------------------------------
Charles T. Saldarini, Vice Chairman
and Chief Executive Officer
Date: August 13, 2002
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