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 August 8, 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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Second quarter 2011 revenue of $40.6 million rose 24% vs. second quarter of 2010
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·
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Consolidated second quarter 2011 operating loss from continuing operations of $0.7 million; excluding Group DCA operations, earned $0.5 million in operating income
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Cash and equivalents at June 30, 2011 totaled $64.1 million, $1.3 million higher than year end 2010; no commercial debt
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Announced a $55 million fee-for-service agreement to provide full commercialization services for a pain product for osteoarthritis through 2013; PDI forms new division, Interpace BioPharma, LLC (Interpace) for product commercialization business
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Announced four new CSO business wins, expected to generate total combined revenues of approximately $10 million, with a projected $4 million to be recorded in 2011. A total of approximately $20 million in new CSO business wins have been announced, to date, in 2011
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2nd Quarter Ended
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Six Months Ended
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June 30,*
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June 30,*
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$'s in millions except EPS
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2011
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2010
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2011
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2010
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Revenue, net
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$ | 40.6 | $ | 32.8 | $ | 86.7 | $ | 64.0 | ||||||||
Gross profit
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9.0 | 7.8 | 18.0 | 14.3 | ||||||||||||
Operating expenses:
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Compensation expense
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6.2 | 4.5 | 12.2 | 9.0 | ||||||||||||
Other SG&A
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3.5 | 3.3 | 8.0 | 6.9 | ||||||||||||
Facilities realignment
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- | 0.6 | - | 0.6 | ||||||||||||
Total operating expenses
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9.7 | 8.4 | 20.2 | 16.5 | ||||||||||||
Operating loss
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$ | (0.7 | ) | $ | (0.6 | ) | $ | (2.2 | ) | $ | (2.2 | ) | ||||
Other (expense) income, net
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- | - | (0.1 | ) | 0.1 | |||||||||||
Provision (benefit) for income tax
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0.2 | 0.1 | (0.9 | ) | 0.1 | |||||||||||
Loss from continuing operations
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$ | (0.9 | ) | $ | (0.7 | ) | $ | (1.4 | ) | $ | (2.2 | ) | ||||
Diluted loss from continuing
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operations per share
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$ | (0.06 | ) | $ | (0.05 | ) | $ | (0.10 | ) | $ | (0.16 | ) | ||||
*Unaudited
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Reconciliation of Condensed Consolidating Summary of Continuing Operations*
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For the Quarter Ended June 30, 2011
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$'s in millions
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Legacy
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Total
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Cons.
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PDI**
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Group DCA
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PDI***
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Revenue, net
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$ | 37.4 | $ | 3.2 | $ | 40.6 | ||||||
Gross Profit
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7.8 | 1.2 | 9.0 | |||||||||
Total Operating Expenses
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7.3 | 2.4 | 9.7 | |||||||||
Operating Income (Loss)
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$ | 0.5 | $ | (1.2 | ) | $ | (0.7 | ) | ||||
For the Six Months Ended June 30, 2011
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Revenue, net
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$ | 81.7 | $ | 5.0 | $ | 86.7 | ||||||
Gross Profit
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17.4 | 0.6 | 18.0 | |||||||||
Total Operating Expenses
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15.9 | 4.3 | 20.2 | |||||||||
Operating Income (Loss)
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$ | 1.5 | $ | (3.7 | ) | $ | (2.2 | ) |
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Sales Services segment revenue for the second quarter of 2011 of $34.6 million was 14% higher than the second quarter of 2010. This increase in revenue was primarily due to the carryover of 2010 new business wins.
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Marketing Services segment revenue for the second quarter of 2011 of $5.4 million was 112% higher than the second quarter of 2010 due to $3.2 million of Group DCA revenue recorded, partially offset by a small decrease in Pharmakon revenue, as a result of fewer projects being won and executed.
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Product Commercialization Services segment revenue for the second quarter of 2011 of $0.7 million is related to operational support services under a new fee-for-service arrangement within the company’s new Interpace BioPharma division. There was no revenue in the second quarter of 2010, as there were no ongoing product commercialization activities during that period.
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Sales Services segment gross profit for the second quarter of 2011 of $6.4 million was 5% lower than the second quarter of 2010. This decrease was primarily the result of lower revenue and gross margin percentage within the Shared Sales unit.
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Marketing Services segment gross profit for the second quarter of 2011 of $2.3 million was 112% higher due to the inclusion of Group DCA and its gross profit of $1.2 million.
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Product Commercialization Services segment had gross profit for the second quarter of 2011 of $0.3 million.
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The company had positive net cash provided by operations of $1.6 million for the first six months of 2011.
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As of June 30, 2011, the company's cash equivalents were predominantly invested in U.S. Treasury money market funds, and the company had no commercial debt.
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On the purchase date, Group DCA had approximately $13 million of deferred revenue on its historical GAAP basis closing balance sheet. Had Group DCA not been purchased, that amount would be recorded as revenue by Group DCA as projects were completed through the remainder of 2010 and 2011. However, as required by the rules of acquisition accounting, approximately $10 million of deferred revenue was eliminated, leaving only $3 million carrying over as revenue to PDI. The majority of the impact will be reflected over the full year of 2011.
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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. Amortization of these intangibles will result in annual charges of approximately $0.9 million.
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The accounting for potential earn-out payments is influenced by acquisition accounting. Up to $5 million of the potential $30 million of earn-out payments must be charged against earnings as they are earned over 2011 and 2012. However, in determining the amount that was recorded in the initial purchase price, acquisition accounting required the company to estimate the fair value for the remainder of the $25 million of potential earn-out payments 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 as 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. During the quarter ended June 30, 2011 we recognized a benefit of $0.2 million in our Marketing Services segment, as the amount we expect to pay as of
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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(in thousands, except per share data)
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Three Months Ended
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Six Months Ended
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June 30,
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June 30,
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2011
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2010
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2011
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2010
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Revenue, net
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$ | 40,626 | $ | 32,849 | $ | 86,728 | $ | 63,981 | ||||||||
Cost of services
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31,640 | 25,074 | 68,755 | 49,721 | ||||||||||||
Gross profit
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8,986 | 7,775 | 17,973 | 14,260 | ||||||||||||
Compensation expense
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6,174 | 4,528 | 12,172 | 8,963 | ||||||||||||
Other selling, general and administrative expenses
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3,484 | 3,300 | 7,993 | 6,866 | ||||||||||||
Facilities realignment
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- | 583 | - | 583 | ||||||||||||
Total operating expenses
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9,658 | 8,411 | 20,165 | 16,412 | ||||||||||||
Operating loss
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(672 | ) | (636 | ) | (2,192 | ) | (2,152 | ) | ||||||||
Other (expense) income, net
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(23 | ) | 10 | (82 | ) | 75 | ||||||||||
Loss from continuing operations before
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income tax
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(695 | ) | (626 | ) | (2,274 | ) | (2,077 | ) | ||||||||
Provision (benefit) for income tax
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188 | 70 | (855 | ) | 137 | |||||||||||
Loss from continuing operations
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(883 | ) | (696 | ) | (1,419 | ) | (2,214 | ) | ||||||||
Loss from discontinued operations, net of tax
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(12 | ) | (194 | ) | (26 | ) | (375 | ) | ||||||||
Net loss
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$ | (895 | ) | $ | (890 | ) | $ | (1,445 | ) | $ | (2,589 | ) | ||||
Basic loss per share of common stock:
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From continuing operations
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$ | (0.06 | ) | $ | (0.05 | ) | $ | (0.10 | ) | $ | (0.16 | ) | ||||
From discontinued operations
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- | (0.01 | ) | - | (0.02 | ) | ||||||||||
Net loss per basic share of common stock
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$ | (0.06 | ) | $ | (0.06 | ) | $ | (0.10 | ) | $ | (0.18 | ) | ||||
Diluted loss per share of common stock:
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From continuing operations
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$ | (0.06 | ) | $ | (0.05 | ) | $ | (0.10 | ) | $ | (0.16 | ) | ||||
From discontinued operations
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- | (0.01 | ) | - | (0.02 | ) | ||||||||||
Net loss per diluted share of common stock
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$ | (0.06 | ) | $ | (0.06 | ) | $ | (0.10 | ) | $ | (0.18 | ) | ||||
Weighted average number of common shares and
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common share equivalents outstanding:
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Basic
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14,413 | 14,289 | 14,386 | 14,274 | ||||||||||||
Diluted
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14,413 | 14,289 | 14,386 | 14,274 |
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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Consolidated
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Three months ended June 30, 2011:
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Revenue, net
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$ | 34,585 | $ | 5,357 | $ | 684 | $ | 40,626 | ||||||||
Gross profit
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$ | 6,362 | $ | 2,340 | $ | 284 | $ | 8,986 | ||||||||
Gross profit %
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18.4 | % | 43.7 | % | 41.5 | % | 22.1 | % | ||||||||
Three months ended June 30, 2010:
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Revenue, net
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$ | 30,327 | $ | 2,522 | $ | - | $ | 32,849 | ||||||||
Gross profit
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$ | 6,669 | $ | 1,106 | $ | - | $ | 7,775 | ||||||||
Gross profit %
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22.0 | % | 43.9 | % | - | 23.7 | % | |||||||||
Six months ended June 30, 2011:
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Revenue, net
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$ | 76,940 | $ | 9,104 | $ | 684 | $ | 86,728 | ||||||||
Gross profit
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$ | 15,139 | $ | 2,550 | $ | 284 | $ | 17,973 | ||||||||
Gross profit %
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19.7 | % | 28.0 | % | 41.5 | % | 20.7 | % | ||||||||
Six months ended June 30, 2010:
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Revenue, net
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$ | 58,645 | $ | 5,336 | $ | - | $ | 63,981 | ||||||||
Gross profit
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$ | 12,145 | $ | 2,115 | $ | - | $ | 14,260 | ||||||||
Gross profit %
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20.7 | % | 39.6 | % | - | 22.3 | % | |||||||||
* Product Commercialization (PC) Services
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Selected Balance Sheet Data (Unaudited)
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(in thousands)
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June 30,
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December 31,
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2011
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2010
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Cash and cash equivalents
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$ | 64,020 | $ | 62,711 | ||||
Total current assets
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$ | 75,113 | $ | 80,652 | ||||
Total current liabilities
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38,283 | 43,328 | ||||||
Working capital
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$ | 36,830 | $ | 37,324 | ||||
Total assets
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$ | 116,951 | $ | 124,389 | ||||
Total liabilities
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$ | 47,631 | $ | 54,876 | ||||
Total stockholders' equity
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$ | 69,320 | $ | 69,513 | ||||
Selected Cash Flow Data (Unaudited)
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(in thousands)
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June 30,
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2011 | 2010 | |||||||
Net loss
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$ | (1,445 | ) | $ | (2,589 | ) | ||
Non-cash items:
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Depreciation and amortization
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1,564 | 763 | ||||||
Stock-based compensation
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1,259 | 788 | ||||||
Other
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(9 | ) | 82 | |||||
Net change in assets and liabilities
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198 | 10,432 | ||||||
Net cash provided by operations
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$ | 1,567 | $ | 9,476 | ||||
Change in cash and cash equivalents
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$ | 1,309 | $ | 8,428 |