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PDI Reports 2009 Fourth Quarter And Full Year Financial Results

Financial Overview Fourth Quarter 2009

Revenue, net - For the fourth quarter ended December 31, 2009, adjusted basis revenue, net totaled $25.7 million compared to $25.4 million for the same period in 2008.  On a GAAP basis revenue, net was $24.0 million for the fourth quarter of 2009 compared to $25.4 million for the same period in 2008.  Revenue, net for the fourth quarter of 2009 on a GAAP basis was $1.7 million lower than on an adjusted basis as a result of credits issued in connection with the mutual termination of the product commercialization contract.
  • GAAP and adjusted basis revenue, net in the Sales Services segment for both the fourth quarter of 2009 and 2008 was $21.0 million. Revenue lost from the internalization of an outsourced sales force by a long-term client and the expiration or termination of other sales force arrangements in effect in 2008 were offset by new contracts and expansion of existing contracts.
  • GAAP and adjusted basis revenue, net in the Marketing Services segment for the fourth quarter of 2009 was $4.7 million compared to $4.4 million for the same period in 2008. Higher revenue in our Pharmakon business unit due to an increase in the number of projects was partially offset by lower revenue in our TVG business unit and a decrease in revenue from the closing of the Vital Issues in Medicine (VIM) business unit in 2009.  

Gross Profit – Adjusted basis gross profit for the fourth quarter of 2009 was $7.8 million compared to $2.1 million for the same period in 2008. On an adjusted basis, the Company's fourth quarter 2008 gross profit was negatively impacted by $3.7 million from the execution of the product commercialization contract that was mutually terminated in the second quarter of 2009.  On a GAAP basis, gross profit was $7.6 million for the 2009 period compared to a loss of $(8.2) million for the 2008 period. On a GAAP basis, the Company's fourth quarter 2008 gross profit was negatively impacted by $14.0 million from the execution of the product commercialization contract and $10.3 million of that related to the loss contract accrual.
  • GAAP and adjusted basis gross profit for the Sales Services segment increased to $5.4 million for the fourth quarter of 2009 from $4.5 million for the same period in 2008. GAAP and adjusted basis gross profit percentage also increased in 2009 in large part due to lower costs and the recognition of higher performance related fees in 2009.  
  • GAAP and adjusted basis gross profit in the Marketing Services segment increased to $2.4 million for the fourth quarter of 2009 from $1.3 million for the same period in 2008.  This increase was primarily attributable to higher revenue from our Pharmakon business unit. GAAP and adjusted basis gross profit percentage also increased in Marketing Services due primarily to lower costs and favorable business and services mix.

Total Operating Expenses – Adjusted basis total operating expenses for the fourth quarter of 2009 were $9.5 million compared to $8.9 million for the same period of 2008. On a GAAP basis total operating expenses were $33.3 million for the 2009 period compared to $9.0 million for the 2008 period. Total operating expenses for the fourth quarter are higher on a GAAP basis by $24.3 million due to the inclusion of an asset impairment charge of $18.1 million related to Pharmakon business unit goodwill and intangibles and $5.7 million of facilities realignment charges primarily related to the relocation of the Company's corporate headquarters.  
  • GAAP and adjusted basis operating expenses for the fourth quarter of 2008 benefited by approximately $0.8 million from the reversal of certain franchise tax reserves for which issues were cleared in the quarter and the reduction of certain insurance related accruals due to favorable experience.
  • GAAP and adjusted basis operating expenses for the fourth quarter of 2009 increased in large part due to higher professional fees of approximately $0.7 million incurred in connection with the development of new service offerings and the continued strengthening of existing offerings.

Operating Loss – The adjusted basis operating loss for the fourth quarter of 2009 was $(1.7) million compared to $(6.8) million for the same period in 2008.  On a GAAP basis the operating loss for the fourth quarter of 2009 was $(25.7) million compared to a $(17.2) million loss for the same period. The operating losses on both a GAAP and adjusted basis result from the net effect of the revenue, gross profit and operating expense items discussed above.

Net Loss and Net Loss Per Share - The adjusted basis net loss for the quarter in 2009 was $(1.4) million, or $(0.10) per share, compared to a net loss of $(6.5) million, or $(0.46) per share, for the same period of 2008. On a GAAP basis the net loss was $(18.4) million, or $(1.30) per share in 2009, compared to a net loss of $(16.9) million, or $(1.19) per share in 2008. The net loss in 2009 on a GAAP basis was reduced by $7.0 from tax benefits realized as a result of the Worker, Homeownership, and Business Assistance Act passed in November 2009.

Financial Overview Full Year 2009

Revenue, net - For the year ended December 31, 2009, adjusted basis revenue, net totaled $90.0 million compared to $112.5 million for the same period in 2008.  On a GAAP basis revenue, net was $84.9 million in 2009 compared to $112.5 million in 2008.  Revenue, net for 2009 on a GAAP basis was $5.1 million lower than on an adjusted basis as a result of credits issued in connection with the mutual termination of the product commercialization arrangement.
  • GAAP and adjusted basis revenue, net in the Sales Services segment for 2009 was $73.2 million, compared to $89.7 million for the full year in 2008. While Sales Services has gained revenue as a result of new contracts and the expansion of existing contracts, these gains were more than offset by lost revenue from the internalization of an outsourced sales force by a long-term client and the expiration or termination of other sales force arrangements in effect in 2008.
  • GAAP and adjusted basis revenue, net in the Marketing Services segment for 2009 was $16.8 million, compared to $23.9 million for 2008. While our Pharmakon business unit had revenue growth in the second half of 2009, it was not enough to offset the softness in the market for these services in the first six months of 2009 and the overall softness in the demand for market research services provided by our TVG business unit. In addition, GAAP and adjusted basis revenue, net in Marketing Services decreased by $2.3 million in 2009, compared to 2008 from the closing of our VIM business unit in 2009.

Gross Profit – Adjusted basis gross profit for 2009 was $24.1 million compared to $14.8 million for 2008. On an adjusted basis, the Company's 2008 gross profit was negatively impacted by $13.3 million from the execution of the product commercialization contract that was mutually terminated in the second quarter of 2009. On a GAAP basis gross profit was $26.3 million for 2009 compared to $4.5 million for 2008. On a GAAP basis, the Company's 2008 gross profit was negatively impacted by $23.6 million from the execution of the product commercialization contract and the loss contract accrual. In addition, on a GAAP basis, 2009 gross profit benefited from the net gain of $2.5 million realized in connection with the mutual termination of the product commercialization contract.
  • GAAP and adjusted basis gross profit for the Sales Services segment decreased to $15.7 million for 2009 from $18.4 million for 2008. This decline is primarily the result of lower revenue for the 2009 compared to 2008.  
  • GAAP and adjusted basis gross profit in the Marketing Services segment decreased to $8.0 million for 2009 from $9.8 million for 2008. The decrease was primarily attributable to lower overall revenue. The gross profit percentage increased in Marketing Services due primarily to lower costs and favorable business and services mix.

Total Operating Expenses – Adjusted basis total operating expenses for 2009 were $40.0 million compared to $40.8 million for 2008.  On a GAAP basis total operating expenses were $66.9 million in 2009 compared to $40.9 in 2008.  Total operating expenses for 2009 are higher on a GAAP basis by $26.0 million due to the inclusion of an asset impairment charge of $18.1 million related to the carrying value of our Pharmakon business unit goodwill and intangibles and $8.7 million of facilities realignment charges related to the downsizing of space at our former Company headquarters and TVG business unit and the relocation of the Company's corporate headquarters.    
  • GAAP and adjusted basis 2009 operating expenses were lower in part due to the Company's ongoing cost reduction initiatives, net lower compensation related expenses and lower executive severance compared to 2008.  Somewhat offsetting these amounts were professional fees incurred throughout the year in connection with the development of new service offerings, continued strengthening of existing offerings and upgrading of internal systems, process and procedures.

Operating Loss - The adjusted basis operating loss for 2009 was $(15.9) million compared to $(26.0) million for the same period in 2008.  On a GAAP basis the operating loss for 2009 was $(40.6) million compared to a $(36.4) million loss for 2008. The operating losses on both a GAAP and adjusted basis results from the net effect of the revenue, gross profit and operating expense items discussed above.

Net Loss and Net Loss Per Share - The adjusted basis net loss for 2009 was $(15.9) million, or $(1.12) per share, compared to a net loss of $(24.0) million, or $(1.69) per share, for 2008. On a GAAP basis the net loss was $(33.6) million, or $(2.36) per share in 2009, compared to a net loss of $(34.5) million, or $(2.42) per share in 2008. The net loss in 2009 on a GAAP basis was reduced by $7.0 million from tax benefits realized as a result of the Worker, Homeownership, and Business Assistance Act passed in November 2009.

Liquidity and Cash Flow – On a GAAP and adjusted basis, cash and cash equivalents as of December 31, 2009 were $72.5 million, which is $1.9 million higher than September 30, 2009 and $17.6 million lower than December 31, 2008.  
  • The decline in cash for the full year is primarily the result of the net loss incurred in 2009 and the cash obligations of the product commercialization contract that was mutually terminated in April 2009.  At December 31, 2009, the Company had no further obligations under this mutually terminated arrangement.
  • As of December 31, 2009, the Company's cash equivalents were predominantly invested in Treasury money market funds and the Company had no commercial debt.

Conference Call

As previously announced, PDI will hold a conference call today, to discuss financial and operational results of the fourth quarter and year ended December 31, 2009 as follows:

Time: 4:30 (ET)

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