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
|
|
|
|||||||
|
Delaware
|
|
22-2919486
|
|||||
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S
Employer
Identification
No.)
|
|||||
|
SaddleRiver
Executive Centre
1
Route 17
South
Saddle
River, New Jersey07458
|
|||||||
|
(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
August
3, 2007
|
Common
stock, $0.01 par value
|
14,167,110
|
PDI,
Inc.
|
|||
Form
10-Q for Period Ended June 30, 2007
|
|||
TABLE
OF CONTENTS
|
|||
Page
No.
|
|||
PART
I - FINANCIAL INFORMATION
|
|||
Item
1.
|
Condensed
Consolidated Financial Statements
|
||
Condensed
Consolidated Balance Sheets
at
June 30, 2007 (unaudited) and December 31, 2006
|
3
|
||
Condensed
Consolidated Statements of Operations
for
the three and six month periods ended June 30, 2007 and 2006
(unaudited)
|
4
|
||
Condensed
Consolidated Statements of Cash Flows
for
the six month periods ended June 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
|
14
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
23
|
|
Item
4.
|
Controls
and Procedures
|
23
|
|
PART
II - OTHER INFORMATION
|
|||
Item
1.
|
Legal
Proceedings
|
24
|
|
Item
1A.
|
Risk
Factors
|
24
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
26
|
|
Item
6.
|
Exhibits
|
26
|
|
Signatures
|
26
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|||||||
(in
thousands, except share and per share data)
|
|||||||
June
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
(unaudited)
|
|||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
90,800
|
$
|
45,221
|
|||
Short-term
investments
|
20,477
|
69,463
|
|||||
Accounts
receivable, net of allowance for doubtful accounts of
|
|||||||
$24
and $36, respectively
|
19,164
|
25,416
|
|||||
Unbilled
costs and accrued profits on contracts in progress
|
2,483
|
4,224
|
|||||
Income
tax receivable
|
1,888
|
1,888
|
|||||
Other
current assets
|
8,507
|
10,528
|
|||||
Total
current assets
|
143,319
|
156,740
|
|||||
Property
and equipment, net
|
10,754
|
12,809
|
|||||
Goodwill
|
13,612
|
13,612
|
|||||
Other
intangible assets, net
|
15,310
|
15,950
|
|||||
Other
long-term assets
|
2,350
|
2,525
|
|||||
Total
assets
|
$
|
185,345
|
$
|
201,636
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
1,987
|
$
|
3,915
|
|||
Accrued
income taxes
|
2,138
|
1,761
|
|||||
Unearned
contract revenue
|
10,642
|
14,252
|
|||||
Accrued
incentives
|
5,960
|
9,009
|
|||||
Accrued
payroll and related benefits
|
873
|
1,475
|
|||||
Other
accrued expenses
|
10,879
|
14,142
|
|||||
Total
current liabilities
|
32,479
|
44,554
|
|||||
Long-term
liabilities
|
7,620
|
7,885
|
|||||
Total
liabilities
|
40,099
|
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;
|
|||||||
15,198,394
and 15,096,976 shares issued, respectively;
|
|||||||
14,167,110
and 14,078,970 shares outstanding, respectively
|
152
|
151
|
|||||
Additional
paid-in capital
|
119,764
|
119,189
|
|||||
Retained
earnings
|
38,594
|
42,992
|
|||||
Accumulated
other comprehensive income
|
88
|
79
|
|||||
Treasury
stock, at cost (1,031,284 and 1,018,006 shares, respectively)
|
(13,352
|
)
|
(13,214
|
)
|
|||
Total
stockholders' equity
|
145,246
|
149,197
|
|||||
Total
liabilities and stockholders' equity
|
$
|
185,345
|
$
|
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
|
Six
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Revenue,
net
|
$
|
27,784
|
$
|
54,951
|
$
|
60,586
|
$
|
132,095
|
|||||
Cost
of services
|
20,633
|
42,993
|
44,461
|
101,433
|
|||||||||
Gross
profit
|
7,151
|
11,958
|
16,125
|
30,662
|
|||||||||
Compensation
expense
|
6,327
|
7,158
|
12,425
|
13,627
|
|||||||||
Other
selling, general and administrative expenses
|
4,711
|
4,763
|
9,830
|
9,493
|
|||||||||
Total
operating expenses
|
11,038
|
11,921
|
22,255
|
23,120
|
|||||||||
Operating
(loss) income
|
(3,887
|
)
|
37
|
(6,130
|
)
|
7,542
|
|||||||
Other
income, net
|
1,577
|
1,216
|
2,937
|
2,191
|
|||||||||
(Loss)
income before income tax
|
(2,310
|
)
|
1,253
|
(3,193
|
)
|
9,733
|
|||||||
Provision
for income tax
|
187
|
546
|
1,205
|
3,604
|
|||||||||
(Loss)
income from continuing operations
|
(2,497
|
)
|
707
|
(4,398
|
)
|
6,129
|
|||||||
Income
from discontinued operations, net of tax
|
-
|
188
|
-
|
387
|
|||||||||
Net
(loss) income
|
$
|
(2,497
|
)
|
$
|
895
|
$
|
(4,398
|
)
|
$
|
6,516
|
|||
(Loss)
income per share of common stock:
|
|||||||||||||
Basic:
|
|||||||||||||
Continuing
operations
|
$
|
(0.18
|
)
|
$
|
0.05
|
$
|
(0.32
|
)
|
$
|
0.44
|
|||
Discontinued
operations
|
-
|
0.01
|
-
|
0.03
|
|||||||||
$
|
(0.18
|
)
|
$
|
0.06
|
$
|
(0.32
|
)
|
$
|
0.47
|
||||
Assuming
dilution:
|
|||||||||||||
Continuing
operations
|
$
|
(0.18
|
)
|
$
|
0.05
|
$
|
(0.32
|
)
|
$
|
0.44
|
|||
Discontinued
operations
|
-
|
0.01
|
-
|
0.03
|
|||||||||
$
|
(0.18
|
)
|
$
|
0.06
|
$
|
(0.32
|
)
|
$
|
0.47
|
||||
Weighted
average number of common shares and
|
|||||||||||||
common
share equivalents outstanding:
|
|||||||||||||
Basic
|
13,931
|
13,857
|
13,920
|
13,841
|
|||||||||
Assuming
dilution
|
13,931
|
13,953
|
13,920
|
13,941
|
|||||||||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
|
PDI,
INC.
|
|||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
(unaudited,
in thousands)
|
|||||||
Six
Months Ended
|
|||||||
June
30,
|
|||||||
2007
|
2006
|
||||||
Cash
Flows From Operating Activities
|
|||||||
Net
(loss) income from operations
|
$
|
(4,398
|
)
|
$
|
6,516
|
||
Adjustments
to reconcile net (loss) income to net cash
|
|||||||
provided
by operating activities:
|
|||||||
Depreciation,
amortization and accretion
|
2,844
|
2,902
|
|||||
Deferred
income taxes, net
|
750
|
3,168
|
|||||
Provision
for (recovery of) bad debt, net
|
9
|
(807
|
)
|
||||
Recovery
of doubtful notes, net
|
(150
|
)
|
-
|
||||
Stock-based
compensation
|
576
|
593
|
|||||
Non-cash
facilities realignment
|
(17
|
)
|
-
|
||||
Asset
impairment
|
42
|
-
|
|||||
Loss
on disposal of equipment
|
7
|
-
|
|||||
Other
|
-
|
9
|
|||||
Other
changes in assets and liabilities:
|
|||||||
Decrease
in accounts receivable
|
6,243
|
3,528
|
|||||
Decrease
in unbilled costs
|
1,741
|
1,714
|
|||||
Decrease
in income tax receivable
|
-
|
800
|
|||||
Decrease
(increase) in other current assets
|
2,021
|
(887
|
)
|
||||
Decrease
in other long-term assets
|
175
|
185
|
|||||
Decrease
in accounts payable
|
(1,928
|
)
|
(3,251
|
)
|
|||
Increase
in accrued income taxes
|
377
|
564
|
|||||
(Decrease)
increase in unearned contract revenue
|
(3,610
|
)
|
3,559
|
||||
(Decrease)
increase in accrued incentives
|
(3,049
|
)
|
208
|
||||
Decrease
in accrued payroll and related benefits
|
(602
|
)
|
(710
|
)
|
|||
Decrease
in accrued liabilities
|
(3,806
|
)
|
(6,778
|
)
|
|||
Net
cash (used in) provided by operating activities
|
(2,775
|
)
|
11,313
|
||||
Cash
Flows From Investing Activities
|
|||||||
Sales
(purchases) of short-term investments, net
|
48,909
|
(45,170
|
)
|
||||
Repayments
of note receivable
|
150
|
150
|
|||||
Purchase
of property and equipment
|
(567
|
)
|
(905
|
)
|
|||
Net
cash provided by (used in) investing activities
|
48,492
|
(45,925
|
)
|
||||
Cash
Flows From Financing Activities
|
|||||||
Net
proceeds from exercise of stock options
|
-
|
87
|
|||||
Cash
paid for repurchase of restricted shares
|
(138
|
)
|
-
|
||||
Net
cash (used in) provided by financing activities
|
(138
|
)
|
87
|
||||
Net
increase (decrease) in cash and cash equivalents
|
45,579
|
(34,525
|
)
|
||||
Cash
and cash equivalents - beginning
|
45,221
|
90,827
|
|||||
Cash
and cash equivalents - ending
|
$
|
90,800
|
$
|
56,302
|
|||
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
|
Six
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Basic
weighted average number of
|
13,931
|
13,857
|
13,920
|
13,841
|
|||||||||
of
common shares
|
|||||||||||||
Dilutive
effect of stock options, SARs,
|
|||||||||||||
and
restricted stock
|
-
|
96
|
-
|
100
|
|||||||||
Diluted
weighted average number
|
|||||||||||||
of
common shares
|
13,931
|
13,953
|
13,920
|
13,941
|
3.
|
INVESTMENTS
IN MARKETABLE SECURITIES:
|
June
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
Cash/money
accounts
|
$
|
-
|
$
|
332
|
|||
Municipal
securities
|
3,001
|
32,843
|
|||||
US
Treasury obligations
|
1,498
|
1,499
|
|||||
Government
agency obligations
|
7,799
|
8,394
|
|||||
Other
securities
|
3,550
|
2,879
|
|||||
Total
|
$
|
15,848
|
$
|
45,947
|
4.
|
GOODWILL
AND OTHER INTANGIBLE
ASSETS:
|
As
of June 30, 2007
|
As
of December 31, 2006
|
||||||||||||||||||
Carrying
|
Accumulated
|
Carrying
|
Accumulated
|
||||||||||||||||
Amount
|
Amortization
|
Net
|
Amount
|
Amortization
|
Net
|
||||||||||||||
Covenant
not to compete
|
$
|
140
|
$
|
79
|
$
|
61
|
$
|
140
|
$
|
65
|
$
|
75
|
|||||||
Customer
relationships
|
16,300
|
3,079
|
13,221
|
16,300
|
2,536
|
13,764
|
|||||||||||||
Corporate
tradename
|
2,500
|
472
|
2,028
|
2,500
|
389
|
2,111
|
|||||||||||||
Total
|
$
|
18,940
|
$
|
3,630
|
$
|
15,310
|
$
|
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
|
10
|
6
|
16
|
|||||||
Adjustments
|
(400
|
)
|
-
|
(400
|
)
|
|||||
Payments
|
(221
|
)
|
(125
|
)
|
(346
|
)
|
||||
Balance
as of June 30, 2007
|
$
|
938
|
$
|
644
|
$
|
1,582
|
7.
|
COMMITMENTS
AND CONTINGENCIES:
|
8.
|
OTHER
COMPREHENSIVE (LOSS)
INCOME:
|
Three
Months Ended
|
Six
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Net
(loss) income
|
$
|
(2,497
|
)
|
$
|
895
|
$
|
(4,398
|
)
|
$
|
6,516
|
|||
Other
comprehensive income
|
|||||||||||||
Unrealized
holding gain/(loss) on
|
|||||||||||||
available-for-sale
securities
|
15
|
(21
|
)
|
9
|
4
|
||||||||
Reclassification
adjustment for
|
|||||||||||||
realized
losses
|
-
|
-
|
-
|
(12
|
)
|
||||||||
Other
comprehensive (loss) income
|
$
|
(2,482
|
)
|
$
|
874
|
$
|
(4,389
|
)
|
$
|
6,508
|
9.
|
STOCK-BASED
COMPENSATION:
|
Three
Months Ended
|
Six
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Restricted
Stock
|
$
|
108
|
$
|
277
|
$
|
346
|
$
|
448
|
|||||
SARs
|
107
|
57
|
157
|
66
|
|||||||||
Stock
Options and Performance Based Shares
|
31
|
69
|
73
|
79
|
|||||||||
Total
Stock-Based Compensation
|
$
|
246
|
$
|
403
|
$
|
576
|
$
|
593
|
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
|
4.75
|
116
|
|||||||||
Exercised
|
-
|
-
|
|||||||||||
Forfeited
or expired
|
(346,431
|
)
|
25.49
|
||||||||||
Outstanding
at June 30, 2007
|
827,491
|
19.93
|
6.46
|
153
|
|||||||||
Exercisable
at June 30, 2007
|
599,815
|
$
|
23.51
|
5.08
|
$
|
37
|
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
|
130,103
|
9.68
|
2.79
|
1,335
|
|||||||||
Vested
|
(77,638
|
)
|
18.00
|
||||||||||
Forfeited
|
(29,349
|
)
|
11.89
|
||||||||||
Outstanding
at June 30, 2007
|
219,854
|
$
|
10.82
|
2.46
|
$
|
2,256
|
10.
|
INCOME
TAXES:
|
Three
Months Ended
|
Six
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Income
tax expense
|
$
|
187
|
$
|
546
|
$
|
1,205
|
$
|
3,604
|
|||||
Effective
income tax rate
|
8.1
|
%
|
43.6
|
%
|
37.7
|
%
|
37.0
|
%
|
Jurisdiction
|
Tax
Years
|
|
Federal
|
2003-2006
|
|
State
and Local
|
2002-2006
|
|
11.
|
DISCONTINUED
OPERATIONS:
|
Three
Months
|
Six
Months
|
||||||
Ended
|
Ended
|
||||||
June
30,
|
June
30,
|
||||||
2006
|
2006
|
||||||
Revenue,
net
|
$
|
208
|
$
|
1,876
|
|||
Income
from discontinued operations
|
|||||||
before
income tax
|
$
|
235
|
$
|
608
|
|||
Income
tax expense
|
47
|
221
|
|||||
Income
from discontinued
|
|||||||
operations
|
$
|
188
|
$
|
387
|
12.
|
SEGMENT
INFORMATION:
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Revenue:
|
|||||||||||||
Sales
services
|
$
|
19,538
|
$
|
47,828
|
$
|
45,705
|
$
|
114,112
|
|||||
Marketing
services
|
8,246
|
7,123
|
14,932
|
17,983
|
|||||||||
PPG
|
-
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
27,784
|
$
|
54,951
|
$
|
60,637
|
$
|
132,095
|
|||||
Revenue,
intersegment:
|
|||||||||||||
Sales
services
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||
Marketing
services
|
-
|
-
|
51
|
-
|
|||||||||
PPG
|
-
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
-
|
$
|
-
|
$
|
51
|
$
|
-
|
|||||
Revenue,
less intersegment:
|
|||||||||||||
Sales
services
|
$
|
19,538
|
$
|
47,828
|
$
|
45,705
|
$
|
114,112
|
|||||
Marketing
services
|
8,246
|
7,123
|
14,881
|
17,983
|
|||||||||
PPG
|
-
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
27,784
|
$
|
54,951
|
$
|
60,586
|
$
|
132,095
|
|||||
Operating
(loss) income:
|
|||||||||||||
Sales
services
|
$
|
(4,449
|
)
|
$
|
(593
|
)
|
$
|
(6,430
|
)
|
$
|
5,289
|
||
Marketing
services
|
562
|
414
|
300
|
1,954
|
|||||||||
PPG
|
-
|
216
|
-
|
299
|
|||||||||
Total
|
$
|
(3,887
|
)
|
$
|
37
|
$
|
(6,130
|
)
|
$
|
7,542
|
|||
Reconciliation
of operating (loss)
|
|||||||||||||
income
to (loss) income from
|
|||||||||||||
continuing
operations before
|
|||||||||||||
income
taxes
|
|||||||||||||
Total
operating (loss) income from
|
|||||||||||||
operating
groups
|
$
|
(3,887
|
)
|
$
|
37
|
$
|
(6,130
|
)
|
$
|
7,542
|
|||
Other
income, net
|
1,577
|
1,216
|
2,937
|
2,191
|
|||||||||
(Loss)
income from continuing operations
|
|||||||||||||
before
income taxes
|
$
|
(2,310
|
)
|
$
|
1,253
|
$
|
(3,193
|
)
|
$
|
9,733
|
|||
Capital
expenditures:
|
|||||||||||||
Sales
services
|
$
|
265
|
$
|
327
|
$
|
472
|
$
|
680
|
|||||
Marketing
services
|
49
|
150
|
95
|
225
|
|||||||||
PPG
|
-
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
314
|
$
|
477
|
$
|
567
|
$
|
905
|
|||||
Depreciation
expense:
|
|||||||||||||
Sales
services
|
$
|
858
|
$
|
937
|
$
|
1,796
|
$
|
1,861
|
|||||
Marketing
services
|
206
|
160
|
392
|
319
|
|||||||||
PPG
|
-
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
1,064
|
$
|
1,097
|
$
|
2,188
|
$
|
2,180
|
¨
|
Sales
Services:
|
·
|
Performance
Sales Teams; and
|
·
|
Select
Access.
|
¨
|
Marketing
Services:
|
·
|
Vital
Issues in Medicine (VIM)®;
|
·
|
Pharmakon;
and
|
·
|
TVG
Marketing Research and Consulting
(TVG).
|
¨
|
PDI
Products Group (PPG)
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
Operating
data
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Revenue,
net
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||||
Cost
of services
|
74.3
|
%
|
78.2
|
%
|
73.4
|
%
|
76.8
|
%
|
|||||
Gross
profit
|
25.7
|
%
|
21.8
|
%
|
26.6
|
%
|
23.2
|
%
|
|||||
Compensation
expense
|
22.8
|
%
|
13.0
|
%
|
20.5
|
%
|
10.3
|
%
|
|||||
Other
selling, general and administrative expenses
|
17.0
|
%
|
8.7
|
%
|
16.2
|
%
|
7.2
|
%
|
|||||
Total
operating expenses
|
39.7
|
%
|
21.7
|
%
|
36.7
|
%
|
17.5
|
%
|
|||||
Operating
(loss) income
|
(14.0
|
%)
|
0.1
|
%
|
(10.1
|
%)
|
5.7
|
%
|
|||||
Other
income, net
|
5.7
|
%
|
2.2
|
%
|
4.8
|
%
|
1.7
|
%
|
|||||
(Loss)
income before income tax
|
(8.3
|
%)
|
2.3
|
%
|
(5.3
|
%)
|
7.4
|
%
|
|||||
Provision
for income tax
|
0.7
|
%
|
1.0
|
%
|
2.0
|
%
|
2.7
|
%
|
|||||
(Loss)
income from continuing operations
|
(9.0
|
%)
|
1.3
|
%
|
(7.3
|
%)
|
4.6
|
%
|
|||||
Income
from discontinued operations, net of tax
|
-
|
0.3
|
%
|
-
|
0.3
|
%
|
|||||||
Net
(loss) income
|
(9.0
|
%)
|
1.6
|
%
|
(7.3
|
%)
|
4.9
|
%
|
·
|
the
net loss when adjusted for depreciation and other non-cash items
of $4.1
million, which includes depreciation expense of $2.2 million and
stock
compensation expense of $576,000, which resulted in a use of cash
of
approximately $337,000;
|
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
(3)
|
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.
|
(3)
|
As
a result of the net operating loss carryback claims which have
been filed
or are expected to be filed by us, and the impact of those claims
on the
relevant statue of limitations, it is not practicable to predict
the
amount or timing of the impact on FASB Interpretation No. 48, “Accounting
for Uncertainty in Income Taxes - an Interpretation of FASB Statement
109”
(FIN 48) liabilities in the table above and therefore have been
excluded.
|
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:
August 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
|