DELAWARE
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0-24249
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22-2919486
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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99.1
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Press Release dated March 21, 2011.
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* * * * * * * | |||
SIGNATURE |
PDI, INC. | |
By: /s/ Jeffrey Smith | |
Jeffrey Smith | |
Chief Financial Officer |
PDI CONTACT: | INVESTOR CONTACT: |
Amy Lombardi | Melody Carey |
PDI, Inc. | Rx Communications Group, LLC |
(862) 207-7866 | (917) 322-2571 |
Alombardi@pdi-inc.com, www.pdi-inc.com | Mcarey@RxIR.com |
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Fourth quarter 2010 revenue of $44.7 million rose 94% vs. fourth quarter of 2009
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·
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Full year 2010 revenue of $144.7 million, up 80% compared to 2009
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·
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Reported operating loss from continuing operations for 2010 fourth quarter of $2.6 million; $0.5 million operating profit from continuing operations without impact of Group DCA acquisition
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Reported operating loss from continuing operations for full year 2010 of $4.3 million; $0.5 million operating loss from continuing operations without impact of Group DCA acquisition
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Cash flow from operations was positive for each quarter in 2010 and $16.4 million for the full year of 2010
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Signed a total of over $120 million in new contracts and renewals in 2010
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Strengthened competitive position with acquisition of Group DCA, a leading provider of interactive digital communications which positions PDI as a leader in delivering superior physician engagement through multi-channel, integrated communications to health care providers
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Launched new clinical educator division, EngageCE
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·
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Signed an exclusive partnership with QForma, a leading provider of advanced analytics and predictive modeling technologies for the health sciences industry
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Condensed Summary Statement of Operations - Continuing Operations
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4th Quarter Ended
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Year Ended
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December 31,*
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December 31, *
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$'s in millions except EPS
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2010
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2009
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2010
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2009
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||||||||||||
Revenue, net
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$ | 44.7 | $ | 23.1 | $ | 144.7 | $ | 80.4 | ||||||||
Gross Profit
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$ | 9.5 | $ | 7.1 | $ | 32.2 | $ | 24.5 | ||||||||
Operating Expenses
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$ | 12.0 | $ | 32.4 | $ | 36.5 | $ | 59.7 | ||||||||
Operating Loss
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$ | (2.6 | ) | $ | (25.2 | ) | $ | (4.3 | ) | $ | (35.1 | ) | ||||
Other Income, net
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- | - | 0.1 | 0.2 | ||||||||||||
Provision (benefit) for Income Taxes
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0.2 | (7.3 | ) | 0.4 | (6.8 | ) | ||||||||||
Loss from Continuing Operations
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$ | (2.8 | ) | $ | (17.9 | ) | $ | (4.6 | ) | $ | (28.1 | ) | ||||
Diluted Loss From Continuing
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||||||||||||||||
Operations Per Share
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$ | (0.19 | ) | $ | (1.26 | ) | $ | (0.32 | ) | $ | (1.97 | ) | ||||
*Unaudited
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||||||||||||||||
Reconciliation of Condensed Consolidating Summary of Continuing Operations**
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For the Quarter Ended & Year Ended - December 31, 2010
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Fourth Quarter Ended December 31, 2010
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Group DCA Related
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$'s in millions
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Legacy
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Acquisition
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Intangible
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Operating
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Total
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Cons.
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|||||||
PDI*
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Costs
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Amortization
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Results
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Group DCA
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PDI***
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||||||||
Revenue, net
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$44.0
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$0.7
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$0.7
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$44.7
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|||||||||
Gross Profit
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$10.1
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$(0.6)
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$(0.6)
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$9.5
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|||||||||
Total Operating Expenses
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9.5
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1.0
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0.1
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1.3
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2.5
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12.0
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|||||||
Operating Income (Loss)
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$0.5
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$(1.0)
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$(0.1)
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$(1.9)
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$(3.1)
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$(2.6)
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Year Ended December 31, 2010
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Group DCA Related
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$'s in millions
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Legacy
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Acquisition
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Intangible
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Operating
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Total
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Cons.
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PDI*
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Costs
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Amortization
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Results
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Group DCA
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PDI***
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Revenue, net
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$143.9
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$0.7
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$0.7
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$144.7
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Gross Profit
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$32.8
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$(0.6)
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$(0.6)
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$32.2
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Total Operating Expenses
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33.4
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1.7
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0.1
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1.3
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3.2
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36.5
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Operating Income (Loss)
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$(0.5)
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$(1.7)
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$(0.1)
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$(1.9)
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$(3.8)
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$(4.3)
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* Legacy PDI excluding all impacts of Group DCA acquisition
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**Summary reconciles Legacy PDI & Group DCA to GAAP (Unaudited)
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*** Consolidated PDI on a GAAP basis
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Ø
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Sales Services segment revenue for the fourth quarter of 2010 of $41.4 million was 97% higher than the fourth quarter of 2009, and 2010 full year revenue of $133.3 million was 82% higher than last year. In 2010, revenue from new contracts and renewals and expansions of existing contracts were significantly higher than the expiration or termination of 2009 contracts.
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Ø
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Marketing Services segment revenue for the fourth quarter of 2010 of $3.3 million and 2010 full year revenue of $11.3 million were down slightly compared to 2009 even with the inclusion of $0.7 million of Group DCA revenue for two months, as a result of fewer projects being won and executed by Pharmakon.
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Ø
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Sales Services segment gross profit for the fourth quarter of 2010 of $8.6 million was 61% higher than the fourth quarter of 2009, and 2010 full year gross profit of
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Ø
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$28.1 million was 79% higher than last year. These increases were primarily the result of higher revenue.
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Ø
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Marketing Services segment gross profit for the fourth quarter of 2010 of $0.8 million and 2010 full year gross profit of $4.1 million were down compared to the 2009 periods as a result of lower Pharmakon revenue and the inclusion of Group DCA, which had negative gross margin of $0.6 million for the two months it was included in PDI’s results. Group DCA’s negative gross profit is primarily the result of lower revenues as a result of recording the deferred revenue to its fair value in accordance with acquisition accounting rules.
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Ø
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The company had positive net cash provided by operations of $16.4 million for 2010, which was aided by enhanced accounts receivable collections and the receipt of $3.3 million of income tax refunds. The company was also cash flow positive for each quarter in 2010.
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Ø
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On the purchase date, Group DCA had $13 million of deferred revenue on its historical closing balance sheet. Had Group DCA not been purchased, that amount would be recorded as revenue by Group DCA as projects were completed over the remainder of 2010 and 2011. However, as required by the rules of acquisition accounting, a large part of the approximately $13 million of deferred revenue at the date of the acquisition will not carry over to PDI after the acquisition. In fact, approximately $10 million of the deferred revenue is eliminated by acquisition accounting, leaving only approximately $3 million to carry over as revenue to PDI. A portion of this impacts the two months PDI owned Group DCA in 2010, but the majority affects 2011.
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Ø
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Revenue recognition rules, as modified by new rules that became effective as of January 1, 2011 and applied to Group DCA, have the impact of delaying the start of recording revenue from the date a project is initiated and stretching out the total revenue recognition process. The near-term impact on reported revenue from contracts signed and initiated in 2011 will be that almost no revenue will be recorded in the first quarter of 2011 and very little in the second quarter of 2011, as the flow of revenue recognition builds by quarter. This accounting, in and of itself, would not be an issue if deferred revenue from 2010 carried over in full; however, because it does not, first and second quarter 2011 revenue will not reflect the amount of business being signed or the normal carryover of deferred revenue at the time of acquisition, making reported revenue much lower than it would be on a normal going-forward basis. While the combination of the impact of acquisition accounting and revenue recognition rules will result in lower reported revenue, particularly in the first and second quarters of 2011, neither of these rules will significantly reduce on-going operating expenses associated with delivering such revenue.
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Ø
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Acquisition accounting requires ongoing amortization of finite lived intangibles acquired and valued for accounting purposes as of the date of the acquisition. These include the acquired proprietary technology and the extensive health care provider database. These intangibles will be amortized, resulting in an annual charge of approximately $0.9 million.
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Ø
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The accounting for potential earn out payments, while not impacting 2010 results, are influenced by acquisition accounting. Up to $5.0 million of the potential $30.0 million of earn out payments must be charged against earnings as they are earned over 2011 and 2012. However, in determining the amount that is recorded as the initial purchase price, acquisition accounting requires the company to estimate the fair value for the remainder of the $25.0 million of potential earn out payments
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Ø
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which we determined by estimating the present value of earn out payments we think are probable on a weighted–risk adjusted basis. The amount we recorded for the fair value of these estimated earn out payments was $1.6 million which is considered part of the initial purchase price for accounting purposes. Going forward, the difference between what we estimated and our updated estimates to what we actually expect to pay in 2012 and 2013 will be adjusted through the income statement in the future. This will result in a charge if the amount we expect to pay is higher than our original estimates or a gain if the amounts we expect to pay are lower than our original estimates.
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PDI, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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(in thousands, except per share data)
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Three Months Ended
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Years Ended
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December 31,
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December 31,
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2010
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2009
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2010
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2009
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Revenue, net
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$ | 44,700 | $ | 23,072 | $ | 144,652 | $ | 80,384 | ||||||||
Cost of services
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35,239 | 15,925 | 112,448 | 55,844 | ||||||||||||
Gross profit
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9,461 | 7,147 | 32,204 | 24,540 | ||||||||||||
Compensation expense
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5,088 | 4,149 | 18,569 | 17,989 | ||||||||||||
Other selling, general and administrative expenses
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5,531 | 4,723 | 15,941 | 16,944 | ||||||||||||
Asset impairment
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- | 18,118 | - | 18,118 | ||||||||||||
Facilities realignment
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1,416 | 5,389 | 1,999 | 6,609 | ||||||||||||
Total operating expenses
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12,035 | 32,379 | 36,509 | 59,660 | ||||||||||||
Operating loss
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(2,574 | ) | (25,232 | ) | (4,305 | ) | (35,120 | ) | ||||||||
Other income, net
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6 | - | 138 | 208 | ||||||||||||
Loss from continuing operations before
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income tax
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(2,568 | ) | (25,232 | ) | (4,167 | ) | (34,912 | ) | ||||||||
Provision (benefit) for income tax
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206 | (7,312 | ) | 414 | (6,838 | ) | ||||||||||
Loss from continuing operations
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(2,774 | ) | (17,920 | ) | (4,581 | ) | (28,074 | ) | ||||||||
Income (loss) from discontinued operations, net of tax
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223 | (527 | ) | (2,233 | ) | (5,486 | ) | |||||||||
Net loss
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$ | (2,551 | ) | $ | (18,447 | ) | $ | (6,814 | ) | $ | (33,560 | ) | ||||
Basic income (loss) per share of common stock:
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Loss from continuing operations
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$ | (0.19 | ) | $ | (1.26 | ) | $ | (0.32 | ) | $ | (1.97 | ) | ||||
Income (loss) from discontinued operations
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0.01 | (0.04 | ) | (0.16 | ) | (0.39 | ) | |||||||||
Net loss per basic share of common stock
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$ | (0.18 | ) | $ | (1.30 | ) | $ | (0.48 | ) | $ | (2.36 | ) | ||||
Diluted income (loss) per share of common stock:
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Loss from continuing operations
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$ | (0.19 | ) | $ | (1.26 | ) | $ | (0.32 | ) | $ | (1.97 | ) | ||||
Income (loss) from discontinued operations
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0.01 | (0.04 | ) | (0.16 | ) | (0.39 | ) | |||||||||
Net loss per diluted share of common stock
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$ | (0.18 | ) | $ | (1.30 | ) | $ | (0.48 | ) | $ | (2.36 | ) | ||||
Weighted average number of common shares and
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common share equivalents outstanding:
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Basic
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14,349 | 14,227 | 14,306 | 14,219 | ||||||||||||
Diluted
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14,349 | 14,227 | 14,306 | 14,219 |
Segment Data (Unaudited)
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($ in thousands)
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Sales
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Marketing
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PC
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Services
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Services
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Services
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Eliminations
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Consolidated
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Three months ended December 31, 2010:
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Revenue, net
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$ | 41,370 | $ | 3,330 | $ | - | $ | - | $ | 44,700 | |||||||||
Gross profit
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$ | 8,640 | $ | 821 | $ | - | $ | - | $ | 9,461 | |||||||||
Gross profit %
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20.9 | % | 24.7 | % | - |
NA
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21.2 | % | |||||||||||
Three months ended December 31, 2009:
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Revenue, net
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$ | 21,002 | $ | 3,776 | $ | - | $ | (1,706 | ) | $ | 23,072 | ||||||||
Gross profit
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$ | 5,382 | $ | 2,006 | $ | 11 | $ | (252 | ) | $ | 7,147 | ||||||||
Gross profit %
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25.6 | % | 53.1 | % |
NA
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NM
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31.0 | % | |||||||||||
Year ended December 31, 2010:
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Revenue
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$ | 133,307 | $ | 11,345 | $ | - | $ | - | $ | 144,652 | |||||||||
Gross profit
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$ | 28,123 | $ | 4,081 | $ | - | $ | - | $ | 32,204 | |||||||||
Gross profit %
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21.1 | % | 36.0 | % | - |
NA
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22.3 | % | |||||||||||
Year ended December 31, 2009:
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Revenue
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$ | 73,233 | $ | 12,260 | $ | - | $ | (5,109 | ) | $ | 80,384 | ||||||||
Gross profit
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$ | 15,692 | $ | 6,303 | $ | 2,497 | $ | 48 | $ | 24,540 | |||||||||
Gross profit %
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21.4 | % | 51.4 | % |
NA
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NM
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30.5 | % | |||||||||||
NA - Not Applicable
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NM - Not Meaningful
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Selected Balance Sheet Data (Unaudited)
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(in thousands)
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December 31,
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December 31,
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||||||
2010
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2009
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Cash and cash equivalents
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$ | 62,711 | $ | 72,463 | |||
Total current assets
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$ | 80,652 | $ | 96,511 | |||
Total current liabilities
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43,328 | 24,880 | |||||
Working capital
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$ | 37,324 | $ | 71,631 | |||
Total assets
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$ | 124,389 | $ | 109,776 | |||
Total liabilities
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$ | 54,876 | $ | 34,886 | |||
Total stockholders' equity
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$ | 69,513 | $ | 74,890 |
Selected Cash Flow Data (Unaudited)
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(in thousands)
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December 31,
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||||||||
2010
|
2009
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Net loss
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$ | (6,814 | ) | $ | (33,560 | ) | ||
Non-cash items
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4,096 | 23,552 | ||||||
Net change in assets and liabilities
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19,070 | (5,964 | ) | |||||
Net cash provided by (used in) operations
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$ | 16,352 | $ | (15,972 | ) | |||
Change in cash and cash equivalents
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$ | (9,752 | ) | $ | (17,611 | ) |