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): November 12, 2001
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PDI, INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE 0-24249 22-2919486
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(State or other jurisdiction of (Commission (IRS Employer Identification
incorporation) File Number) No.)
10 Mountainview Road,
Upper Saddle River, NJ 07458
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(Address of principal executive office) (Zip Code)
(201) 258-8450
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Registrant's telephone number, including area code:
Professional Detailing, Inc.
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(Former name or former address, if changed since last report)
Item 5. Other Events
On November 12, 2001 the Registrant issued the following press release:
"PDI REPORTS THIRD QUARTER 2001 FINANCIAL RESULTS In Discussions with GSK
Regarding Termination of Ceftin Agreement
Net revenue up 37% to $115.7 million; operating loss of $29.5 million
(including a $24.0 million reserve for losses related to the Ceftin
contract) compared to operating income of $7.4 million in prior year
period; loss per share of $1.24 compared to diluted EPS of $0.41 in prior
year period.
Upper Saddle River, New Jersey (Monday, November 12, 2001). PDI, Inc. (Nasdaq:
PDII) today announced financial results for the quarters and nine months ended
September 30, 2001 and 2000.
PDI also announced it is engaged in negotiations with GlaxoSmithKline to effect
a mutual termination of the Ceftin Distribution Agreement dated October 1, 2000;
the proposed termination to be effective February 28, 2002. PDI has taken a
$24.0 million charge in the quarter as a reserve for losses related to the
Ceftin contract.
Quarterly Results
Net revenue for the quarter ended September 30, 2001 was $115.7 million, an
increase of 37.1% over net revenue of $84.4 million for the quarter ended
September 30, 2000. The operating loss for the quarter ended September 30, 2001
was $29.5 million which includes a $24.0 million reserve for contract losses,
compared to operating income of $7.4 million for the quarter ended September 30,
2000. The net loss for the quarter ended September 30, 2001 was $17.3 million,
compared to net income of $5.7 million for the quarter ended September 30, 2000.
The net loss per share for the quarter ended September 30, 2001 was $1.24,
compared to diluted net income per share $0.41 for the quarter ended September
30, 2000.
Year-to-Date Results
Net revenue for the nine months ended September 30, 2001 was $432.7 million, an
increase of 86.9% over net revenue of $231.4 million for the nine months ended
September 30, 2000. The operating loss for the nine months ended September 30,
2001 was $6.4 million, which includes a $24.0 million reserve for contract
losses, compared to operating income of $24.1 million for the nine months ended
September 30, 2000. The net loss for the nine months ended September 30, 2001
was $1.9 million, compared to net income of $16.2 million for the nine months
ended September 30, 2000. The net loss per share for the nine months ended
September 30, 2001 was $0.14, compared to diluted net income per share of $1.18
for nine months ended September 30, 2000.
Charles T. Saldarini, Chief Executive Officer of PDI, Inc. commented, "PDI's
third quarter results were adversely impacted by both a general softening in the
CSO market and developments surrounding the patent protection for Ceftin
tablets. Based upon these developments, GSK and PDI believe that it is in our
respective best interests to mutually wind-down and terminate our agreement.
While the Ceftin deal will be terminated early, we have developed, in a very
short time, a sales and marketing platform
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which has enabled PDI to enter into other relationships this year with both
Novartis and Eli Lilly and to broaden the types of discussions PDI is having
with other potential partners". Saldarini added, "We are currently working to
complete our detailed 2002 estimates and are encouraged by the visibility on all
our service offerings, notably Lifecycle Extension and Copromotion."
Outlook for the Fourth Quarter
The Company anticipates that it will incur a loss of $0.23 in the fourth
quarter. The loss is primarily related to revenue shortfalls from the Company's
LifeCycle Extension program for Lotensin. Mr. Saldarini stated, "We continue to
feel confident about Lotensin's ability to contribute positively to 2002
financial results, however, in the fourth quarter we will not realize the full
amount we had planned to achieve. We fully expect that our investment in this
brand will be rewarded in 2002."
Outlook for 2002
PDI expects 2002 service revenue to be $375 - $400 million and earnings per
share to be $1.25 - $1.35. Upon completion of the Ceftin contract discussions,
PDI will provide more detailed estimates for all of its service offerings,
including both dedicated and shared contract sales solutions, the Lotensin
LifeCycle Extension solution as well as the Lotrel and Evista Copromotion
solutions.
Webcast
PDI will conduct a live webcast of its Earnings Release Briefing at 9:00 AM EDT
on Tuesday, November 13, 2001. 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.
Company Background & Services
PDI is an innovative sales and marketing company serving the pharmaceutical,
biotech, and medical devices and diagnostics industries. Partnering with
clients, PDI provides product-specific programs designed to maximize
profitability throughout a product's lifecycle, from pre-launch through
maturity. With proven industry experience, PDI has the demonstrated ability to
deliver results.
PDI is recognized as an industry-leader based on its track record of innovation
and its ability to keep pace in a rapidly changing industry. PDI leverages its
expertise in sales, brand management and product marketing, marketing research,
medical education, medical affairs, and managed markets and trade relations to
create solutions that meet strategic objectives and provide incremental value
for product sales. For more information, visit PDI's website at www.pdi-inc.com.
In accordance with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the Company notes that statements in this release
which look forward in time involve risks and uncertainties that may cause actual
results or achievements to materially differ from those indicated by the
forward-looking statements. These forward-looking statements include any
statements relating to increased demand for the Company's services, expansion of
the Company's business as well as any other statements which are not solely
historical. The Company's plans and objectives 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 the control of the
Company. Therefore, there can be no assurance that the forward-looking
statements will prove to be accurate. The Company's documents filed with the SEC
identify important factors that may cause the actual results to differ
materially from those indicated by the forward-looking statements.
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PDI, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30, December 31,
2001 2000
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(unaudited)
ASSETS
Current assets:
Cash and cash equivalents ................................. $ 59,939 $ 109,000
Short-term investments .................................... 18,114 4,907
Inventory, net ............................................ 91,023 36,385
Accounts receivable, net of allowance for doubtful
accounts of $2,666 and $250 as of September 30, 2001
and December 31, 2000,respectively ...................... 69,374 84,529
Unbilled costs and accrued profits on
contracts in progress ................................... 5,804 2,953
Deferred training ......................................... 4,934 4,930
Other current assets ...................................... 9,514 4,541
Deferred tax asset ........................................ 4,758 4,758
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Total current assets ......................................... 263,460 252,003
Net property, plant & equipment .............................. 18,013 9,965
Other investments ............................................ 1,862 760
Other long-term assets ....................................... 15,116 7,497
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Total assets ................................................. $ 298,451 $ 270,225
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .......................................... $ 38,404 $ 31,328
Accrued rebates and sales discounts ....................... 52,639 24,368
Accrued contract losses ................................... 24,000 --
Accrued incentives ........................................ 23,292 19,824
Accrued salaries and wages ................................ 7,152 6,568
Unearned contract revenue ................................. 11,491 23,813
Other accrued expenses .................................... 3,585 25,382
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Total current liabilities .................................... 160,563 131,283
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Long-term liabilities:
Deferred compensation ................................... 169 169
Deferred tax liability .................................... 663 663
Other long-term liabilities ............................... -- --
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Total long-term liabilities .................................. 832 832
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Total liabilities ............................................ $ 161,395 $ 132,115
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Stockholders' equity:
Common stock, $.01 par value; 30,000,000 shares authorized;
shares issued and outstanding September 30, 2001 -
13,877,492; December 31, 2000 - 13,837,390; restricted
$.01 par value; shares issued and outstanding,
September 30, 2001 - 7,972;December 31, 2000 - 7,972 ......... 139 138
Preferred stock, $.01 par value, 5,000,000 shares
authorized, no shares issued and outstanding ................. -- --
Additional paid-in capital ................................... 97,643 96,945
Additional paid-in capital, restricted ....................... 217 217
Retained earnings ............................................ 39,729 41,654
Accumulated other comprehensive loss ......................... (119) (34)
Unamortized compensation costs ............................... (553) (810)
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Total stockholders' equity ................................... 137,056 138,110
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Total liabilities & stockholders' equity ..................... $ 298,451 $ 270,225
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PDI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Three Months Ended Nine Months Ended
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September 30, September 30,
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2001 2000 2001 2000
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(unaudited)
Revenue
Service, net ............................................ $ 71,129 $ 84,367 $ 214,005 $ 231,445
Product, net ............................................ 44,544 -- 218,676 --
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Total revenue, net ................................... 115,673 84,367 432,681 231,445
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Cost of goods and services
Program expenses (including related party amounts of
$100 and $731 for the quarters ended September 30, 2001
and 2000, and $685 and $1,795 for the nine months
ended September 30, 2001 and 2000, respectively) ...... 59,529 63,232 168,245 171,461
Cost of goods sold ...................................... 51,823 -- 167,561 --
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Total cost of goods and services ..................... 111,352 63,232 335,806 171,461
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Gross profit ............................................... 4,321 21,135 96,875 59,984
Compensation expense ....................................... 9,282 7,847 29,459 23,034
Other selling, general & administrative expenses ........... 24,560 5,863 73,833 12,841
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Total selling, general & administrative expenses ........ 33,842 13,710 103,292 35,875
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Operating (loss) income .................................... (29,521) 7,425 (6,417) 24,109
Other income, net .......................................... 999 1,984 4,407 2,923
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(Loss) income before provision for taxes ................... (28,522) 9,409 (2,010) 27,032
(Benefit) provision for income taxes ....................... (11,266) 3,701 (85) 10,872
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Net (loss) income .......................................... $ (17,256) $ 5,708 $ (1,925) $ 16,160
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Basic net (loss) income per share .......................... $ (1.24) $ 0.42 $ (0.14) $ 1.20
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Diluted net (loss) income per share ........................ $ (1.24) $ 0.41 $ (0.14) $ 1.18
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Basic weighted average number of shares outstanding ........ 13,876,341 13,646,817 13,858,331 13,414,680
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Diluted weighted average number of shares outstanding ...... 13,876,341 13,960,762 13,858,331 13,639,397
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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
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Charles T. Saldarini, Vice Chairman
and Chief Executive Officer
Date: November 13, 2001
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