Exhibit 99.1
NEWS RELEASE FOR RELEASE JULY 29, 2004
6 a.m. Eastern Time
CONTACTS:
Keith A. Cheesman, Investors, (513) 763-1936
Lori Dorer, Media, (513) 345-1685
KENDLE INTERNATIONAL INC. REPORTS SECOND QUARTER 2004 RESULTS
Results Reflect Third Consecutive Quarter of
Strong Sales Performance Above $50 Million
CINCINNATI, July 29, 2004 -- Kendle International Inc. (Nasdaq: KNDL), a leading
global full-service clinical research organization, today reported second
quarter 2004 financial results.
New business awards were $58 million for second quarter 2004. Contract
cancellations for the quarter were $5 million, the third consecutive quarter
with a cancellation rate at or below 10 percent. Total business authorizations,
which consist of signed backlog and verbally awarded business, totaled an
all-time company high of $206 million at June 30, 2004, compared to $186 million
at December 31, 2003. "We are pleased with our continued strong sales growth for
the quarter, which marks our third consecutive quarter of delivering net new
business awards over the $50 million mark," said Candace Kendle, PharmD,
Chairman and CEO. "We believe this is the result of the Kendle 2004
restructuring and significant additions to leadership within our operating
units. Our strong sales performance in the quarter and pipeline of sales
opportunities position us well in this highly competitive marketplace."
Net service revenues for second quarter 2004 were $41.2 million compared to net
service revenues of $38.5 million for second quarter 2003. Net service revenues
by geographic region were 59 percent in North America, 37 percent in Europe and
4 percent in the Asia-Pacific region. The top five customers based on net
service revenues accounted for 39 percent of net service revenues for second
quarter 2004.
Reimbursable out-of-pocket revenues and expenses were $12.0 million for second
quarter 2004 compared to $14.4 million in the same quarter a year ago.
Income from operations for second quarter 2004 was approximately $287,000, or 1
percent of net service revenues, compared to income from operations of
approximately $549,000 in second quarter 2003. Net income for the quarter was
approximately $211,000, or $0.02 per diluted share, compared to a loss of
$423,000, or $0.03 per share, in second quarter 2003.
"While we have made strides in growing net service revenues and improving net
income over 2003, our earnings for the second quarter were impacted by a
slow-down in activity on a large contract and the slower-than-expected start-up
of newer contracts recently awarded," said Dr. Kendle.
Included in income from operations for the second quarter is a charge of
approximately $48,000 for additional severance costs related to the March 2004
workforce realignment plan. Included in income from operations for the second
quarter of 2003 is a $106,000 credit to reduce the severance costs related to a
workforce realignment charge recorded by the Company in first quarter 2003.
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Also during the second quarter of 2004, Kendle made a $1.2 million partial early
repayment on the remaining $3 million of its convertible note. Accordingly, as a
result of this partial early debt extinguishment, Kendle recognized a gain of
approximately $343,000 compared to a similar gain of $558,000 in the second
quarter of 2003. As of June 30, 2004, there remains $1.5 million outstanding
under this convertible note. Kendle intends to continue to repay this
convertible note ahead of its originally scheduled maturity.
Cash flow from operations for the quarter was a positive $89,000. Cash and
marketable securities totaled $18.9 million, including $637,000 of restricted
cash, and bank borrowings totaled $8.3 million at June 30, 2004. Days sales
outstanding in accounts receivable were 57 and capital expenditures for second
quarter 2004 totaled $1.3 million.
Net service revenues for the six months ended June 30, 2004 were $82.0 million
compared to net service revenues of $75.7 million for the six months ended June
30, 2003. Net service revenues by geographic region were 60 percent in North
America, 36 percent in Europe and 4 percent in the Asia-Pacific region. The top
five customers based on net service revenues accounted for 42 percent of net
service revenues for the six months ended June 30, 2004.
Reimbursable out-of-pocket revenues and expenses were $23.0 million for the six
months ended June 30, 2004 compared to $25.9 million in the same period a year
ago.
Income from operations for the six months ended June 30, 2004 was approximately
$983,000, or 1 percent of net service revenues, compared to a loss from
operations of approximately $969,000 in the first six months of 2003. The
operating results include a charge of approximately $302,000 in the first six
months of 2004 for severance costs related to a workforce realignment and a
similar charge of approximately $576,000 in the first six months of 2003. Net
income for the first six months of 2004 was approximately $884,000, or $0.07 per
diluted share, compared to a loss of $2.5 million, or $0.20 per share in the
first six months of 2003. Net income for the six months ended June 30, 2004
includes gains of approximately $597,000 due to the partial early extinguishment
of debt. The net loss for the six month period ended June 30, 2003 includes
gains on debt extinguishment of approximately $558,000 and a $405,000 impairment
charge to reduce to zero the value of the Company's investment in KendleWits.
Cash flow from operations for the six months ended June 30, 2004 was a negative
$6.5 million. Capital expenditures for this six month period totaled $2.3
million.
Kendle International will host its second quarter 2004 conference call July 29,
2004, at 8:30 a.m. Eastern Time. The call will be broadcast live over the
Internet and can be accessed at www.kendle.com. A replay of the Webcast will be
available at www.kendle.com shortly after the call for on-demand replay through
5 p.m. Eastern Time on Aug. 29, 2004.
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ABOUT KENDLE INTERNATIONAL INC.
Kendle International Inc. (Nasdaq: KNDL) is among the world's leading global
clinical research organizations. We deliver innovative and robust clinical
development solutions -- from first-in-man studies through market launch and
surveillance -- to help the world's biopharmaceutical companies maximize product
life cycles and grow market share. With headquarters in Cincinnati, Ohio, and
nearly 1,700 associates worldwide, Kendle has conducted clinical trials or
provided regulatory and validation services in more than 60 countries.
Additional information and investor kits are available upon request from Kendle
International Inc., 1200 Carew Tower, 441 Vine Street, Cincinnati, OH 45202 or
from the Company's Web site at www.kendle.com.
Information provided herein, which is not historical information, such as
statements about prospective earnings, revenue and earnings growth, are
forward-looking statements pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. All such forward-looking statements,
including the statements contained herein regarding anticipated trends in the
Company's business, are based largely on management's expectations and are
subject to and qualified by risks and uncertainties that could cause actual
results to differ materially from those expressed or implied by such statements.
These risks and uncertainties include, without limitation, competitive factors
and industry consolidation, outsourcing trends in the pharmaceutical and
biotechnology industries, the Company's ability to manage growth and to continue
to attract and retain qualified personnel, the Company's ability to complete
additional acquisitions and to integrate newly acquired businesses, the
Company's ability to penetrate new markets, the fixed price nature of contracts
or the loss of large contracts, cancellation or delay of contracts, the progress
of ongoing contracts, the ability to maintain existing customer relationships or
enter into new ones, cost overruns, the Company's sales cycle, the effects of
exchange rate fluctuations, and other factors described in the Company's filings
with the Securities and Exchange Commission including Quarterly Reports on Form
10-Q and the Annual Report on Form 10-K. No assurance can be given that the
Company will be able to realize the net service revenues included in backlog and
verbal awards. Kendle believes that its aggregate backlog and verbal awards are
not necessarily a meaningful indicator of future results. All information in
this release is current as of July 29, 2004. The Company
undertakes no duty to update any forward-looking statement to conform the
statement to actual results or changes in the Company's expectations.
###
Kendle International Inc.
Condensed Consolidated Statement of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Net service revenues $ 41,217 $ 38,497 $ 82,003 $ 75,677
Reimbursable out-of-pocket revenues 11,998 14,381 22,998 25,926
--------- --------- --------- ---------
Total revenues 53,215 52,878 105,001 101,603
--------- --------- --------- ---------
Costs and expenses:
Direct costs 24,221 23,480 47,482 46,169
Reimbursable out-of-pocket costs 11,998 14,381 22,998 25,926
Selling, general and administrative expenses 14,391 12,347 28,667 25,489
Depreciation and amortization 2,270 2,227 4,569 4,412
Severance and office consolidation costs 48 (106) 302 576
--------- --------- --------- ---------
Total costs and expenses 52,928 52,329 104,018 102,572
--------- --------- --------- ---------
Income (loss) from operations 287 549 983 (969)
Other income (expense):
Interest expense (201) (276) (415) (548)
Interest income 84 96 164 199
Other (178) 14 285 (424)
Investment impairment - (405) - (405)
Gain on debt extinguishment 343 558 597 558
--------- --------- --------- ---------
Income (loss) before income taxes 335 536 1,614 (1,589)
Income taxes 124 959 730 958
--------- --------- --------- ---------
Net income (loss) $ 211 ($ 423) $ 884 ($ 2,547)
========= ========= ========= =========
Income (loss) per share data:
Basic:
Net income (loss) per share $ 0.02 ($ 0.03) $ 0.07 ($ 0.20)
========= ========= ========= =========
Weighted average shares outstanding 13,120 12,938 13,096 12,908
Diluted:
Net income (loss) per share $ 0.02 ($ 0.03) $ 0.07 ($ 0.20)
========= ========= ========= =========
Weighted average shares outstanding 13,349 12,938 13,351 12,908
PRO FORMA:
Pro forma net income (loss) per diluted share: $ 0.00 ($ 0.04) $ 0.05 ($ 0.16)
========= ========= ========= =========
Kendle International Inc.
Reconciliation of GAAP EPS to Pro forma EPS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ------------------------
2004 2003 2004 2003
-------- --------- -------- ---------
GAAP net income (loss) per share $ 0.02 ($ 0.03) $ 0.07 ($ 0.20)
Severance and office consolidation costs - $ (0.01) 0.01 $ 0.04
Investment impairment - $ 0.03 - $ 0.03
Gain on debt extinguishment (0.02) $ (0.03) (0.03) $ (0.03)
-------- --------- -------- ---------
Pro forma net income (loss) per diluted share $ 0.00 ($ 0.04) $ 0.05 ($ 0.16)
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Kendle International Inc.
Selected Balance Sheet Information
(In thousands)
(Unaudited)
June 30, 2004 December 31, 2003
------------- -----------------
Cash, cash equivalents and
marketable securities (including
restricted cash) $ 18,873 $ 32,408
Net Receivables 33,842 20,330
Total assets 147,076 154,415
Bank borrowings 8,346 9,750
Shareholders' equity 96,679 96,369