FORM
10-Q
|
|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
PDI,
Inc.
|
||||||
(Exact
name of registrant as specified in its charter)
|
||||||
|
Delaware
|
22-2919486
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S
Employer
Identification
No.)
|
Saddle
River Executive Centre
1
Route 17 South
Saddle
River, New Jersey 07458
|
(Address
of principal executive offices and zip code)
|
(201)
258-8450
|
(Registrant's
telephone number, including area
code)
|
Large
accelerated filer o
|
Accelerated
filer ý
|
Non-accelerated
filer o
|
Class
|
Shares
Outstanding
November
2, 2007
|
Common
stock, $0.01 par value
|
14,184,454
|
PDI,
Inc.
|
|||
Form
10-Q for Period Ended September 30, 2007
|
|||
TABLE
OF CONTENTS
|
|||
Page
No.
|
|||
PART
I - FINANCIAL INFORMATION
|
|||
Item
1.
|
Condensed
Consolidated Financial Statements
|
||
Condensed
Consolidated Balance Sheets
at
September 30, 2007 (unaudited) and December 31, 2006
|
3
|
||
Condensed
Consolidated Statements of Operations
for
the three and nine month periods ended September 30, 2007 and 2006
(unaudited)
|
4
|
||
Condensed
Consolidated Statements of Cash Flows
for
the nine month periods ended September 30, 2007 and 2006
(unaudited)
|
5
|
||
Notes
to Condensed Consolidated Financial Statements
|
6
|
||
Item
2.
|
Management's
Discussion and Analysis of Financial
Condition
and Results of Operations
|
15
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
24
|
|
Item
4.
|
Controls
and Procedures
|
24
|
|
PART
II - OTHER INFORMATION
|
|||
Item
1.
|
Legal
Proceedings
|
25
|
|
Item
1A.
|
Risk
Factors
|
25
|
|
Item
6.
|
Exhibits
|
28
|
|
Signatures
|
28
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|||||||
(in
thousands, except share and per share data)
|
|||||||
September
30,
|
|
|
December
31,
|
|
|||
|
|
|
2007
|
|
|
2006
|
|
(unaudited)
|
|||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
110,822
|
$
|
45,221
|
|||
Short-term
investments
|
6,383
|
69,463
|
|||||
Accounts
receivable, net of allowance for doubtful accounts of
|
|||||||
$0
and $36, respectively
|
7,018
|
25,416
|
|||||
Unbilled
costs and accrued profits on contracts in progress
|
3,814
|
4,224
|
|||||
Income
tax receivable
|
1,896
|
1,888
|
|||||
Other
current assets
|
8,823
|
10,528
|
|||||
Total
current assets
|
138,756
|
156,740
|
|||||
Property
and equipment, net
|
9,722
|
12,809
|
|||||
Goodwill
|
13,612
|
13,612
|
|||||
Other
intangible assets, net
|
14,989
|
15,950
|
|||||
Other
long-term assets
|
2,350
|
2,525
|
|||||
Total
assets
|
$
|
179,429
|
$
|
201,636
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
1,524
|
$
|
3,915
|
|||
Accrued
income taxes
|
2,544
|
1,761
|
|||||
Unearned
contract revenue
|
7,280
|
14,252
|
|||||
Accrued
incentives
|
5,886
|
9,009
|
|||||
Accrued
payroll and related benefits
|
945
|
1,475
|
|||||
Other
accrued expenses
|
12,218
|
14,142
|
|||||
Total
current liabilities
|
30,397
|
44,554
|
|||||
Long-term
liabilities
|
7,574
|
7,885
|
|||||
Total
liabilities
|
37,971
|
52,439
|
|||||
Commitments
and contingencies (Note 7)
|
|||||||
Stockholders’
equity:
|
|||||||
Preferred
stock, $.01 par value; 5,000,000 shares authorized, no
|
|||||||
shares
issued and outstanding
|
-
|
-
|
|||||
Common
stock, $.01 par value; 100,000,000 shares authorized;
|
|||||||
15,222,594
and 15,096,976 shares issued, respectively;
|
|||||||
14,184,454
and 14,078,970 shares outstanding, respectively
|
152
|
151
|
|||||
Additional
paid-in capital
|
120,089
|
119,189
|
|||||
Retained
earnings
|
34,537
|
42,992
|
|||||
Accumulated
other comprehensive income
|
101
|
79
|
|||||
Treasury
stock, at cost (1,038,140 and 1,018,006 shares, respectively)
|
(13,421
|
)
|
(13,214
|
)
|
|||
Total
stockholders' equity
|
141,458
|
149,197
|
|||||
Total
liabilities and stockholders' equity
|
$
|
179,429
|
$
|
201,636
|
|||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|||||||||||||
(unaudited,
in thousands, except for per share data)
|
|||||||||||||
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||
|
|
September
30,
|
September
30,
|
||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Revenue,
net
|
$
|
23,969
|
$
|
51,317
|
$
|
84,555
|
$
|
183,412
|
|||||
Cost
of services
|
18,203
|
38,914
|
62,664
|
140,347
|
|||||||||
Gross
profit
|
5,766
|
12,403
|
21,891
|
43,065
|
|||||||||
Compensation
expense
|
5,861
|
7,589
|
18,287
|
21,216
|
|||||||||
Other
selling, general and administrative expenses
|
5,155
|
5,425
|
14,985
|
14,918
|
|||||||||
Total
operating expenses
|
11,016
|
13,014
|
33,272
|
36,134
|
|||||||||
Operating
(loss) income
|
(5,250
|
)
|
(611
|
)
|
(11,381
|
)
|
6,931
|
||||||
Other
income, net
|
1,488
|
1,304
|
4,425
|
3,495
|
|||||||||
(Loss)
income before income tax
|
(3,762
|
)
|
693
|
(6,956
|
)
|
10,426
|
|||||||
Provision
for income tax
|
295
|
284
|
1,499
|
3,888
|
|||||||||
(Loss)
income from continuing operations
|
(4,057
|
)
|
409
|
(8,455
|
)
|
6,538
|
|||||||
Income
from discontinued operations, net of tax
|
-
|
54
|
-
|
441
|
|||||||||
Net
(loss) income
|
$
|
(4,057
|
)
|
$
|
463
|
$
|
(8,455
|
)
|
$
|
6,979
|
|||
(Loss)
income per share of common stock:
|
|||||||||||||
Basic:
|
|||||||||||||
Continuing
operations
|
$
|
(0.29
|
)
|
$
|
0.03
|
$
|
(0.61
|
)
|
$
|
0.47
|
|||
Discontinued
operations
|
-
|
0.00
|
-
|
0.03
|
|||||||||
$
|
(0.29
|
)
|
$
|
0.03
|
$
|
(0.61
|
)
|
$
|
0.50
|
||||
Diluted:
|
|||||||||||||
Continuing
operations
|
$
|
(0.29
|
)
|
$
|
0.03
|
$
|
(0.61
|
)
|
$
|
0.47
|
|||
Discontinued
operations
|
-
|
0.00
|
-
|
0.03
|
|||||||||
$
|
(0.29
|
)
|
$
|
0.03
|
$
|
(0.61
|
)
|
$
|
0.50
|
||||
Weighted
average number of common shares and
|
|||||||||||||
common
share equivalents outstanding:
|
|||||||||||||
Basic
|
13,956
|
13,871
|
13,932
|
13,851
|
|||||||||
Diluted
|
13,956
|
13,987
|
13,932
|
13,968
|
|||||||||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
(unaudited,
in thousands)
|
|||||||
Nine
Months Ended
|
|||||||
September
30,
|
|||||||
2007
|
2006
|
||||||
Cash
Flows From Operating Activities
|
|||||||
Net
(loss) income from operations
|
$
|
(8,455
|
)
|
$
|
6,979
|
||
Adjustments
to reconcile net (loss) income to net cash
|
|||||||
provided
by operating activities:
|
|||||||
Depreciation,
amortization and accretion
|
4,251
|
4,282
|
|||||
Deferred
income taxes, net
|
774
|
3,274
|
|||||
Recovery
of bad debt, net
|
(16
|
)
|
(940
|
)
|
|||
Recovery
of doubtful notes, net
|
(150
|
)
|
-
|
||||
Stock-based
compensation
|
901
|
1,236
|
|||||
Non-cash
facilities realignment
|
18
|
-
|
|||||
Asset
impairment
|
42
|
-
|
|||||
Loss
on disposal of equipment
|
7
|
-
|
|||||
Other
|
-
|
22
|
|||||
Other
changes in assets and liabilities:
|
|||||||
Decrease
in accounts receivable
|
18,414
|
6,240
|
|||||
Decrease
in unbilled costs
|
410
|
2,246
|
|||||
Decrease
in income tax receivable
|
-
|
800
|
|||||
Decrease
(increase) in other current assets
|
1,705
|
(159
|
)
|
||||
Decrease
in other long-term assets
|
175
|
185
|
|||||
Decrease
in accounts payable
|
(2,391
|
)
|
(2,815
|
)
|
|||
Increase
in accrued income taxes
|
783
|
936
|
|||||
(Decrease)
increase in unearned contract revenue
|
(6,972
|
)
|
2,916
|
||||
Decrease
in accrued incentives
|
(3,123
|
)
|
(1,339
|
)
|
|||
Decrease
in accrued payroll and related benefits
|
(530
|
)
|
(390
|
)
|
|||
Decrease
in accrued liabilities
|
(2,451
|
)
|
(7,664
|
)
|
|||
Net
cash provided by operating activities
|
3,392
|
15,809
|
|||||
Cash
Flows From Investing Activities
|
|||||||
Sales
(purchases) of short-term investments, net
|
63,034
|
(66,767
|
)
|
||||
Repayments
of note receivable
|
150
|
200
|
|||||
Purchase
of property and equipment
|
(768
|
)
|
(1,180
|
)
|
|||
Net
cash provided by (used in) investing activities
|
62,416
|
(67,747
|
)
|
||||
Cash
Flows From Financing Activities
|
|||||||
Net
proceeds from exercise of stock options
|
-
|
87
|
|||||
Cash
paid for repurchase of restricted shares
|
(207
|
)
|
-
|
||||
Net
cash (used in) provided by financing activities
|
(207
|
)
|
87
|
||||
Net
increase (decrease) in cash and cash equivalents
|
65,601
|
(51,851
|
)
|
||||
Cash
and cash equivalents - beginning
|
45,221
|
90,827
|
|||||
Cash
and cash equivalents - ending
|
$
|
110,822
|
$
|
38,976
|
|||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
|
1.
|
BASIS
OF PRESENTATION:
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES:
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Basic
weighted average number of
|
13,956
|
13,871
|
13,932
|
13,851
|
|||||||||
of
common shares
|
|||||||||||||
Dilutive
effect of stock options, SARs,
|
|||||||||||||
and
restricted stock
|
-
|
116
|
-
|
117
|
|||||||||
Diluted
weighted average number
|
|||||||||||||
of
common shares
|
13,956
|
13,987
|
13,932
|
13,968
|
3.
|
INVESTMENTS
IN MARKETABLE SECURITIES:
|
September
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
Cash/money
accounts
|
$
|
-
|
$
|
332
|
|||
Municipal
securities
|
-
|
32,843
|
|||||
US
Treasury obligations
|
1,499
|
1,499
|
|||||
Government
agency obligations
|
7,800
|
8,394
|
|||||
Other
securities
|
4,124
|
2,879
|
|||||
Total
|
$
|
13,423
|
$
|
45,947
|
4.
|
GOODWILL
AND OTHER INTANGIBLE
ASSETS:
|
As
of September 30, 2007
|
As
of December 31, 2006
|
||||||||||||||||||
Carrying
|
Accumulated
|
Carrying
|
Accumulated
|
||||||||||||||||
Amount
|
Amortization
|
Net
|
Amount
|
Amortization
|
Net
|
||||||||||||||
Covenant
not to compete
|
$
|
140
|
$
|
86
|
$
|
54
|
$
|
140
|
$
|
65
|
$
|
75
|
|||||||
Customer
relationships
|
16,300
|
3,351
|
12,949
|
16,300
|
2,536
|
13,764
|
|||||||||||||
Corporate
tradename
|
2,500
|
514
|
1,986
|
2,500
|
389
|
2,111
|
|||||||||||||
Total
|
$
|
18,940
|
$
|
3,951
|
$
|
14,989
|
$
|
18,940
|
$
|
2,990
|
$
|
15,950
|
2007
|
2008
|
2009
|
2010
|
2011
|
||||
$
1,281
|
|
$
1,281
|
|
$
1,272
|
|
$
1,253
|
|
$
1,253
|
5.
|
OTHER
ASSETS:
|
6.
|
FACILITIES
REALIGNMENT:
|
Sales
|
Marketing
|
|||||||||
Services
|
Services
|
Total
|
||||||||
Balance
as of December 31, 2006
|
$
|
1,549
|
$
|
763
|
$
|
2,312
|
||||
Accretion
|
11
|
9
|
20
|
|||||||
Adjustments
|
(386
|
)
|
(128
|
)
|
(514
|
)
|
||||
Payments
|
(667
|
)
|
(237
|
)
|
(904
|
)
|
||||
Balance
as of September 30, 2007
|
$
|
507
|
$
|
407
|
$
|
914
|
7.
|
COMMITMENTS
AND CONTINGENCIES:
|
8.
|
OTHER
COMPREHENSIVE (LOSS)
INCOME:
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Net
(loss) income
|
$
|
(4,057
|
)
|
$
|
463
|
$
|
(8,455
|
)
|
$
|
6,979
|
|||
Other
comprehensive income
|
|||||||||||||
Unrealized
holding gain on
|
|||||||||||||
available-for-sale
securities
|
12
|
8
|
22
|
12
|
|||||||||
Reclassification
adjustment for
|
|||||||||||||
realized
losses
|
-
|
-
|
-
|
(12
|
)
|
||||||||
Other
comprehensive (loss) income
|
$
|
(4,045
|
)
|
$
|
471
|
$
|
(8,433
|
)
|
$
|
6,979
|
9.
|
STOCK-BASED
COMPENSATION:
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Restricted
Stock
|
$
|
216
|
$
|
458
|
$
|
562
|
$
|
906
|
|||||
SARs
|
107
|
63
|
263
|
129
|
|||||||||
Stock
Options and Performance Based Shares
|
3
|
122
|
76
|
201
|
|||||||||
Total
Stock-Based Compensation
|
$
|
326
|
$
|
643
|
$
|
901
|
$
|
1,236
|
Weighted-
|
|||||||||||||
Weighted-
|
Average
|
Aggregate
|
|||||||||||
Average
|
Remaining
|
Intrinsic
|
|||||||||||
Exercise
|
Contractual
|
Value
|
|||||||||||
Shares
|
Price
|
Term
(in years)
|
(in
thousands)
|
||||||||||
Outstanding
at January 1, 2007
|
1,016,618
|
$
|
23.44
|
5.23
|
$
|
36
|
|||||||
Granted
|
157,304
|
9.52
|
4.50
|
135
|
|||||||||
Exercised
|
-
|
-
|
|||||||||||
Forfeited
or expired
|
(500,309
|
)
|
26.54
|
||||||||||
Outstanding
at September 30, 2007
|
673,613
|
17.89
|
7.51
|
174
|
|||||||||
Exercisable
at September 30, 2007
|
446,770
|
$
|
21.63
|
4.83
|
$
|
39
|
Weighted-
|
Average
|
Aggregate
|
|||||||||||
Average
|
Remaining
|
Intrinsic
|
|||||||||||
Grant
Date
|
Vesting
|
Value
|
|||||||||||
Shares
|
Fair
Value
|
Period
(in years)
|
(in
thousands)
|
||||||||||
Outstanding
at January 1, 2007
|
196,738
|
$
|
14.57
|
1.31
|
$
|
2,286
|
|||||||
Granted
|
155,503
|
9.88
|
2.58
|
1,614
|
|||||||||
Vested
|
(101,838
|
)
|
16.49
|
||||||||||
Forfeited
|
(30,549
|
)
|
11.85
|
||||||||||
Outstanding
at September 30, 2007
|
219,854
|
$
|
10.75
|
2.54
|
$
|
2,282
|
10.
|
INCOME
TAXES:
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Income
tax expense
|
$
|
295
|
$
|
284
|
$
|
1,499
|
$
|
3,888
|
|||||
Effective
income tax rate
|
(7.8
|
%)
|
41.0
|
%
|
(21.5
|
%)
|
37.3
|
%
|
Jurisdiction
|
Tax
Years
|
|
Federal
|
2006
|
|
State
and Local
|
2002-2006
|
|
11.
|
DISCONTINUED
OPERATIONS:
|
Three
Months
|
Nine
Months
|
||||||
Ended
|
Ended
|
||||||
September
30,
|
September
30,
|
||||||
2006
|
2006
|
||||||
Revenue,
net
|
$
|
-
|
$
|
1,876
|
|||
Income
from discontinued operations
|
|||||||
before
income tax
|
$
|
88
|
$
|
696
|
|||
Income
tax expense
|
34
|
255
|
|||||
Income
from discontinued
|
|||||||
operations
|
$
|
54
|
$
|
441
|
12.
|
SEGMENT
INFORMATION:
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Revenue:
|
|||||||||||||
Sales
services
|
$
|
16,890
|
$
|
43,486
|
$
|
62,595
|
$
|
157,599
|
|||||
Marketing
services
|
7,176
|
7,831
|
22,108
|
25,813
|
|||||||||
PPG
|
-
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
24,066
|
$
|
51,317
|
$
|
84,703
|
$
|
183,412
|
|||||
Revenue,
intersegment:
|
|||||||||||||
Sales
services
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||
Marketing
services
|
97
|
-
|
148
|
-
|
|||||||||
PPG
|
-
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
97
|
$
|
-
|
$
|
148
|
$
|
-
|
|||||
Revenue,
less intersegment:
|
|||||||||||||
Sales
services
|
$
|
16,890
|
$
|
43,486
|
$
|
62,595
|
$
|
157,599
|
|||||
Marketing
services
|
7,079
|
7,831
|
21,960
|
25,813
|
|||||||||
PPG
|
-
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
23,969
|
$
|
51,317
|
$
|
84,555
|
$
|
183,412
|
|||||
Operating
(loss) income:
|
|||||||||||||
Sales
services
|
$
|
(4,822
|
)
|
$
|
(1,064
|
)
|
$
|
(11,252
|
)
|
$
|
4,225
|
||
Marketing
services
|
(428
|
)
|
50
|
(129
|
)
|
2,004
|
|||||||
PPG
|
-
|
403
|
-
|
702
|
|||||||||
Total
|
$
|
(5,250
|
)
|
$
|
(611
|
)
|
$
|
(11,381
|
)
|
$
|
6,931
|
||
Reconciliation
of operating (loss)
|
|||||||||||||
income
to (loss) income from
|
|||||||||||||
continuing
operations before
|
|||||||||||||
income
taxes
|
|||||||||||||
Total
operating (loss) income from
|
|||||||||||||
operating
groups
|
$
|
(5,250
|
)
|
$
|
(611
|
)
|
$
|
(11,381
|
)
|
$
|
6,931
|
||
Other
income, net
|
1,488
|
1,304
|
4,425
|
3,495
|
|||||||||
(Loss)
income from continuing operations
|
|||||||||||||
before
income taxes
|
$
|
(3,762
|
)
|
$
|
693
|
$
|
(6,956
|
)
|
$
|
10,426
|
|||
Capital
expenditures:
|
|||||||||||||
Sales
services
|
$
|
163
|
$
|
246
|
$
|
635
|
$
|
927
|
|||||
Marketing
services
|
39
|
28
|
133
|
253
|
|||||||||
PPG
|
-
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
202
|
$
|
274
|
$
|
768
|
$
|
1,180
|
|||||
Depreciation
expense:
|
|||||||||||||
Sales
services
|
$
|
843
|
$
|
883
|
$
|
2,639
|
$
|
2,744
|
|||||
Marketing
services
|
243
|
176
|
635
|
495
|
|||||||||
PPG
|
-
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
1,086
|
$
|
1,059
|
$
|
3,274
|
$
|
3,239
|
¨
|
Sales
Services Segment, which is comprised of the following business
units:
|
·
|
Select
Access™’
|
¨
|
Marketing
Services Segment, which is comprised of the following business
units:
|
·
|
Pharmakon;
|
·
|
TVG
Marketing Research and Consulting;
and
|
·
|
Vital
Issues in Medicine®
|
¨
|
PDI
Products Group Segment
|
Three
Months Ended
|
Nine
Months Ended
|
||||||
September
30,
|
September
30,
|
||||||
Operating
data
|
2007
|
2006
|
2007
|
2006
|
|||
Revenue,
net
|
100.0%
|
100.0%
|
100.0%
|
100.0%
|
|||
Cost
of services
|
75.9%
|
75.8%
|
74.1%
|
76.5%
|
|||
Gross
profit
|
24.1%
|
24.2%
|
25.9%
|
23.5%
|
|||
Compensation
expense
|
24.5%
|
14.8%
|
21.6%
|
11.6%
|
|||
Other
selling, general and administrative expenses
|
21.5%
|
10.6%
|
17.7%
|
8.1%
|
|||
Total
operating expenses
|
46.0%
|
25.4%
|
39.3%
|
19.7%
|
|||
Operating
(loss) income
|
(21.9%)
|
(1.2%)
|
(13.4%)
|
3.8%
|
|||
Other
income, net
|
6.2%
|
2.6%
|
5.2%
|
1.9%
|
|||
(Loss)
income before income tax
|
(15.7%)
|
1.4%
|
(8.2%)
|
5.7%
|
|||
Provision
for income tax
|
1.2%
|
0.6%
|
1.8%
|
2.1%
|
|||
(Loss)
income from continuing operations
|
(16.9%)
|
0.8%
|
(10.0%)
|
3.6%
|
|||
Income
from discontinued operations, net of tax
|
-
|
0.1%
|
-
|
0.2%
|
|||
Net
(loss) income
|
(16.9%)
|
0.9%
|
(10.0%)
|
3.8%
|
·
|
the
net loss when adjusted for depreciation and other non-cash items
of $5.8
million, which includes depreciation expense of $3.3 million and
stock
compensation expense of $901,000, which resulted in a use of cash
of
approximately $2.6 million;
|
2008-
|
2010-
|
After
|
||||||||||||||
Total
|
2007
|
2009
|
2011
|
2011
|
||||||||||||
Contractual
obligations (1)
|
$
|
5,284
|
$
|
3,257
|
$
|
2,027
|
$
|
-
|
$
|
-
|
||||||
Operating
lease obligations:
|
||||||||||||||||
Minimum
lease payments
|
32,396
|
2,336
|
7,758
|
7,739
|
14,563
|
|||||||||||
Less
minimum sublease rentals
(2)
|
(6,118
|
)
|
(311
|
)
|
(2,043
|
)
|
(1,527
|
)
|
(2,237
|
)
|
||||||
Net
minimum lease payments
|
26,278
|
2,025
|
5,715
|
6,212
|
12,326
|
|||||||||||
Total
|
$
|
31,562
|
$
|
5,282
|
$
|
7,742
|
$
|
6,212
|
$
|
12,326
|
(1)
|
Amounts
represent contractual obligations related to software license contracts,
IT consulting contracts and outsourcing contracts for employee
benefits
administration and software system support.
|
(2)
|
Consists
of two subleases at our New Jersey location and two subleases at
our
Pennsylvania location.
|
·
|
volatility
in the trading markets generally;
|
·
|
significant
fluctuations in our quarterly operating
results;
|
·
|
significant
changes in our cash and cash equivalent
reserves;
|
·
|
announcements
regarding our business or the business of our
competitors;
|
·
|
strategic
actions by us or our competitors, such as acquisitions or
restructurings;
|
·
|
industry
and/or regulatory developments;
|
·
|
changes
in revenue mix;
|
·
|
changes
in revenue and revenue growth rates for us and for our industry
as a
whole;
|
·
|
changes
in accounting standards, policies, guidance, interpretations or
principles; and
|
·
|
statements
or changes in opinions, ratings or earnings estimates made by brokerage
firms or industry analysts relating to the markets in which we
operate or
expect to operate.
|
Exhibit
No.
|
Description
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002, filed herewith as Exhibit 31.1.
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002, filed herewith as Exhibit 31.2.
|
|
32.1
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
as adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith
as Exhibit 32.1.
|
|
32.2
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
as adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith
as Exhibit 32.2.
|
Date:
November 9, 2007
|
PDI,
Inc.
|
||
(Registrant)
|
|||
/s/
Michael J. Marquard
|
|||
Michael
J. Marquard
|
|||
Chief
Executive Officer
|
|||
/s/
Jeffrey E. Smith
|
|||
Jeffrey
E. Smith
|
|||
Chief
Financial Officer
|