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): JUNE 14, 2002
KENDLE INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
OHIO 000-23019 31-1274091
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(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) No.)
441 VINE STREET, SUITE 1200, CINCINNATI, OHIO 45202
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(Address of principal executive offices) (Zip Code)
(513) 381-5500
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(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS.
In January 1999, Kendle International Inc. (Kendle) acquired a minority interest
in Digineer, Inc. (Digineer, formerly known as Component Software International,
Inc.), a healthcare consulting and software development company, for
approximately $1.6 million in cash and 19,995 shares of Kendle's common stock.
This investment has been accounted for under the cost method. For the past
several years, Digineer has provided healthcare consulting and software
development services to a variety of customers, including Kendle, and has also
invested in the development of marketable products, either proprietary or
obtained through third parties.
In April 2000, Digineer raised $20 million in new capital to support its ongoing
operational needs and continue its strategic initiatives. A variety of factors
have negatively affected Digineer's recent performance, including an overall
softness in demand for consulting and software development services, the ongoing
capital needs of their marketable products development initiatives and losses
and negative cash flows from operations. Digineer's ability to provide ongoing
consulting and software development services and successfully establish
marketable products has been highly dependent on its ability to generate
sufficient revenues and operating cash flows to meet its obligations while also
raising additional capital to fund its operations.
During the first quarter 2002, Digineer implemented a significant cost reduction
program to improve cash flows and also pursued a variety of potentially viable
alternatives to raise new capital. Despite these efforts, Digineer was unable to
close on subsequent funding sufficient to meet its long-term operating needs. As
a result, the Board of Directors of Digineer, Inc., with the consent of the
majority of its shareholders, recently adopted a plan that will result in a
winding down of Digineer's operations and eventual cessation of operations.
Because of this action, Kendle has determined that its investment in Digineer
has been permanently impaired. Accordingly, Kendle will record a $1.9 million
non-cash charge in the 2nd quarter, 2002, to reflect the write-off of this
investment. The non-cash charge will be reflected in "Other Income/Expense"
below "Income from Operations", as the Digineer investment was not an integral
part of Kendle's day-to-day operations. Kendle has no current or future
obligations to Digineer and the cessation of Digineer's operations will have no
impact on Kendle's operations. The write-off is a capital loss for income tax
purposes and will be deductible only to the extent Kendle generates capital
gains in the future to offset this loss.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
None.
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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.
KENDLE INTERNATIONAL INC.
Date: June 14, 2002 By: /s/ Timothy M. Mooney
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Name: Timothy M. Mooney,
Title: Executive Vice President -
Chief Financial Officer
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