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): February 19, 2002
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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 File (IRS Employer
incorporation) Number) Identification 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 February 19, 2002 the Registrant issued the following press release:
"PDI Announces 4th Quarter and Year-End Results
Comments on future strategy
Net revenue up 42% to $263.9 million; operating income up 14% to $19.1
million and EPS down 23% to $0.59, compared to fourth quarter 2000.
Upper Saddle River, New Jersey (Tuesday, February 19, 2002). PDI, Inc.
(Nasdaq: PDII) today announced net revenue, operating income, net income
and net income per share for the quarter and year ended December 31, 2001.
Quarterly Results
Net revenue for the quarter ended December 31, 2001 was $263.9 million, an
increase of 42.3% over net revenue of $185.4 million for the quarter ended
December 31, 2000. Operating income for the quarter ended December 31,
2001 was $19.1 million, compared to operating income of $16.8 million for
the quarter ended December 31, 2000. Net income for the quarter ended
December 31, 2001 was $8.3 million, compared to net income of $10.9
million for the quarter ended December 31, 2000. Diluted net income per
share for the quarter ended December 31, 2001 was $0.59, compared to
diluted net income per share of $0.77 for the quarter ended December 31,
2000. Stronger than expected Ceftin sales primarily drove these results,
offset in part by no Evista revenue contribution. The Ceftin Agreement is
scheduled to expire February 28, 2002.
Annual Results
Net revenue for the twelve months ended December 31, 2001 was $696.6
million, an increase of 67.1% over net revenue of $416.9 million for the
twelve months ended December 31, 2000. Operating income for the twelve
months ended December 31, 2001 was $12.7 million, compared to operating
income of $40.9 million for the twelve months ended December 31, 2000. Net
income for the twelve months ended December 31, 2001 was $6.4 million,
compared to net income of $27.0 million for the twelve months ended
December 31, 2000. Diluted net income per share for the twelve months
ended December 31, 2001 was $0.45, compared to diluted net income per
share of $1.96 for the twelve months ended December 31, 2000.
Charles T. Saldarini, Vice Chairman and Chief Executive Officer stated,
"The improved results for Ceftin in the 4th quarter reflects our success
in a difficult selling environment as well as the lack of a generic
entrant. We were successful in
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sustaining strong demand creation efforts and also in implementing
successful trade actions. We are quite pleased with Ceftin results for the
4th quarter."
Commenting further on the Company's experience with Ceftin, Saldarini
noted, "Over the abbreviated life of the deal, Ceftin produced a positive
financial outcome. It also permitted us to create strategic capabilities
in areas that are now critical to our transition from a service-dominated
to a product-driven company. The skills we have developed make us a more
attractive commercial partner and enhance our ability to license, acquire
and co-promote products. We must now concentrate on accelerating our
transition by leveraging the sales and marketing capabilities we currently
possess, utilizing our financial assets, including the strength of our
balance sheet, and by leveraging our reputation for high quality work. We
are currently engaged in discussions with prospective partners that
reflect this strategy."
PDI further announced that the loss from its Services segment for the
quarter ended December 31, 2001 exceeded the previously estimated loss of
approximately $0.23 per share, primarily attributable to Evista sales not
achieving PDI's contractual baselines for the period which resulted in no
Evista revenue contribution for the fourth quarter. The preliminary
guidance of a loss of $0.23 was based upon an expected operating loss of
approximately $6 million. The reported operating loss will be
approximately $11 million. The strong Ceftin program results more than
offset the Services segment shortfall.
Other factors which impacted the Company's fourth quarter results included
positive contributions from Lotensin, which exceeded previously revised
expectations. Further, Lotrel and Quixin produced results consistent with
expectations. Additionally, the Company noted that its newly created
Medical Device and Diagnostic business, which acquired In-Serve Support
Solutions, a privately held leading provider of after sales support,
clinical education and hospital-based sales efforts, in September 2001,
was on target. Results from contract sales, including the shared sales
group, as well as the research and communications units were all on
target. Also, during the quarter the Company wrote-off its $1.9 million
investment in In2Focus Contract Sales Limited, which will be reflected as
a charge to other income and will likely be treated as a capital loss for
tax purposes. Since the Company does not anticipate having offsetting
capital gains there will not be any immediate tax benefit and therefore
the effective tax rate for the period will be adversely impacted.
Regarding Evista performance, Saldarini stated, "The 4th quarter Evista
results were disappointing since we had hoped for a revenue contribution
in the period. We are working actively with our partner to monitor our
progress and we are working to leverage the sales asset we have fielded
with additional products."
Given the variables impacting the implementation of its business strategy,
PDI further announced that it will not provide quarterly guidance on its
projected 2002
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results and will comment on current consensus estimates only by
identifying those factors which could improve or detract from already
published estimates.
The Company cited several reasons for its decision regarding forward
statements about earnings, including uncertainties about the size, scope,
timing and investments related to new business development and a stagnant
contract sales market, partially related to slower FDA approval activity.
Saldarini stated, "The range of earnings outcomes is wide and complicated
by the changing nature of our business model. We are continuing to move
aggressively to brand PDI as a commercial partner and therefore as more
than simply a dominant contract sales organization. The result of those
efforts to date is active dialogs with prospective partners that include
co-promotion opportunities for our existing sales force capacity, product
licensing and product acquisition opportunities. We will provide updates
on these developments as appropriate."
Webcast and Conference Call
PDI will conduct a live webcast of its Earnings Release Briefing at 9:00
AM EDT on Wednesday, February 20, 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 1-800-233-2795 and asking for
conference ID - PDI.
Company Background & Strategy
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.
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
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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 reports and registration statements
filed with the Securities and Exchange Commission, including without limitation
PDI's Annual Report on Form 10-K filed for the year ended December 31, 2000 and
Quarterly Report on Form 10-Q for the quarter ended September 30, 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
December 31,
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2001 2000
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ASSETS (in thousands)
Current assets:
Cash and cash equivalents .................................................. $ 160,043 $ 109,000
Short-term investments ..................................................... 7,387 4,907
Inventory, net ............................................................. 442 36,385
Accounts receivable, net of allowance for doubtful accounts of
$3,692 and $250 as of December 31, 2001 and 2000, respectively ........... 52,640 84,529
Unbilled costs and accrued profits on contracts in progress ................ 6,898 2,953
Deferred training .......................................................... 5,569 4,930
Other current assets ....................................................... 8,101 4,541
Deferred tax asset ......................................................... 19,308 4,758
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Total current assets .......................................................... 260,388 252,003
Net property, plant & equipment ............................................... 21,044 9,965
Other long-term assets ........................................................ 25,295 8,257
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Total assets .................................................................. $ 306,727 $ 270,225
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................................... $ 9,493 $ 31,328
Accrued rebates and sales discounts ........................................ 68,403 24,368
Accrued contract losses .................................................... 12,256 --
Accrued incentives ......................................................... 23,023 19,824
Accrued salaries and wages ................................................. 7,167 6,568
Unearned contract revenue .................................................. 10,878 23,813
Other accrued expenses ..................................................... 22,045 25,382
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Total current liabilities ..................................................... 153,265 131,283
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Long-term liabilities:
Deferred compensation ...................................................... 65 169
Deferred tax liability ..................................................... 3,272 663
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Total long-term liabilities ................................................... 3,337 832
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Total liabilities ............................................................. $ 156,602 $ 132,115
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Stockholders' equity:
Common stock, $.01 par value; 100,000,000 shares authorized; shares
issued and outstanding, 2001 - 13,983,485; 2000 - 13,837,390;
restricted $.01 par value; shares issued and outstanding, 2001,- 7,972;
2000 - 7,972 ............................................................. $ 140 $ 138
Preferred stock, $.01 par value, 5,000,000 shares
authorized, no shares issued and outstanding ............................. -- --
Additional paid-in capital .................................................... 102,757 96,945
Additional paid-in capital, restricted ........................................ 217 217
Retained earnings ............................................................. 48,008 41,654
Accumulated other comprehensive (loss) ........................................ (79) (34)
Unamortized compensation costs ................................................ (808) (810)
Treasury stock, at cost: 2001 - 5,000 shares and 2000 - 0 shares .............. (110) --
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Total stockholders' equity .................................................... $ 150,125 $ 138,110
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Total liabilities & stockholders' equity ...................................... $ 306,727 $ 270,225
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PDI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Three Months Ended December 31, Twelve Months Ended December 31,
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2001 2000 2001 2000
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(unaudited)
Revenue
Service, net ............................................. $ 67,264 $ 84,422 $ 281,269 $ 315,867
Product, net ............................................. 196,638 101,008 415,314 101,008
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Total revenue, net ................................... 263,902 185,430 696,583 416,875
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Cost of goods and services
Program expenses (including related party amounts of
$73 and $322 for the quarters ended December 31, 2001
and 2000, and $758 and $2,117 for the twelve months
ended December 31, 2001 and 2000, respectively) ....... 63,926 63,894 232,171 235,355
Cost of goods sold ....................................... 161,069 68,997 328,629 68,997
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Total cost of goods and services ..................... 224,995 132,891 560,800 304,352
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Gross profit ................................................ 38,907 52,539 135,783 112,523
Compensation expense ........................................ 9,804 9,787 39,263 32,820
Other selling, general & administrative expenses ............ 9,981 25,985 83,815 38,827
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Total selling, general & administrative expenses ......... 19,785 35,772 123,078 71,647
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Operating income ............................................ 19,122 16,767 12,705 40,876
Other (expense) income, net ................................. (2,132) 1,941 2,275 4,864
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Income before provision for taxes ........................... 16,990 18,708 14,980 45,740
Provision for income taxes .................................. 8,711 7,840 8,626 18,712
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Net income .................................................. $ 8,279 $ 10,868 $ 6,354 $ 27,028
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Basic net income per share .................................. $ 0.59 $ 0.79 $ 0.46 $ 2.00
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Diluted net income per share ................................ $ 0.59 $ 0.77 $ 0.45 $ 1.96
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Basic weighted average number of shares outstanding ......... 13,968,097 13,768,203 13,885,773 13,503,061
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Diluted weighted average number of shares outstanding ....... 14,009,810 14,173,968 14,113,308 13,773,040
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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: February 19, 2002
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