KENDLE INTERNATIONAL LLC 
By CINCINNATI, March 2, 2011 /PRNewswire/ -- Kendle (Nasdaq: KNDL), a leading, global full-service clinical research organization, today reported new business awards of $152.1 million for the fourth quarter of 2010 versus $134.7 million for the fourth quarter of 2009. Gross book-to-bill improved 25 percent sequentially from the third quarter of 2010 to 2.0 in the fourth quarter. Net book-to-bill for the quarter was 1.3 as contract cancellations and adjustments totaled $51.2 million. New business authorizations (backlog) at Dec. 31, 2010 totaled $828.2 million, a 2.6 percent sequential improvement from Sept. 30, 2010.
"During 2010, we made significant strides toward positioning Kendle for long-term growth, including reinvigorating our sales efforts, bringing in new leadership, improving our processes, realigning our cost structure and implementing new technology," said Chairman and CEO Candace Kendle, PharmD, "I'm pleased with the progress we are making as a result of these initiatives, which will continue to enhance our ability to better serve our customers and lay the foundation for a return to top line growth going forward.''
Fourth Quarter 2010 Results
Net service revenues for the quarter ended Dec. 31, 2010, totaled $77.9 million compared with $96.6 million for the same period a year ago. The top five customers based on net service revenues accounted for 32.4 percent of total revenues versus 26.3 percent in the fourth quarter of 2009.
On a GAAP basis, loss from operations for the quarter was $11.7 million, which included $3.2 million in restructuring charges related to the previously announced closing of one of the Early Stage locations and $7.3 million in goodwill impairment charges related to the Early Stage segment. Income from operations for the fourth quarter of 2009 was $4.9 million, which included a restructuring charge of $3.8 million related to a workforce reduction initiative. On a non-GAAP basis, excluding the above restructuring and goodwill impairment charges, loss from operations for the fourth quarter was $1.3 million compared with income from operations of $8.7 million for the fourth quarter of 2009.
On a GAAP basis, net loss for the fourth quarter of 2010 was $9.2 million or $0.62 per diluted share, which included $0.16 per share related to the restructuring charge and $0.48 per share related to the goodwill impairment charge. Net income for the fourth quarter of 2009 was $2.3 million or $0.16 per diluted share, which included $0.18 per share related to a restructuring charge. On a non-GAAP basis, excluding the restructuring and goodwill impairment charges, net income for the fourth quarter was $391,000 or $0.03 per diluted share compared with net income of $5.0 million or $0.34 per diluted share for the same period last year.
Balance Sheet and Cash Flow Information
Cash and cash equivalents at Dec. 31, 2010, totaled $21.2 million compared with $52.1 million at Dec. 31, 2009. Days sales outstanding in accounts receivables, net of advances were 41 days compared with 34 days at Dec. 31, 2009. Capital expenditures for the quarter totaled $3.0 million and were largely related to IT hardware and software. As of Dec. 31, 2010, no amounts were outstanding under the Company's revolving credit facility.
Full-Year Results
For full-year 2010, net service revenues were $333.8 million compared with $416.7 million for full-year 2009. The top five customers based on net service revenues accounted for 26.2 percent of total revenues versus 27.2 percent for the same period last year.
On a GAAP basis, loss from operations for full-year 2010 was $1.2 million, which included $4.5 million in restructuring and $7.3 million in goodwill impairment charges. Income from operations for full-year 2009 was $35.6 million, which included $10.2 million in restructuring expenses. On a non-GAAP basis, excluding goodwill impairment and restructuring charges, income from operations for full-year 2010 was $10.6 million compared with $45.7 million for full-year 2009.
On a GAAP basis, net loss for full-year 2010 was $4.6 million or $0.31 per share, which included $0.22 per share related to the restructuring charge and $0.48 per share related to the goodwill impairment charge. Net income for the full-year 2009 was $15.2 million or $1.02 per diluted share, which included $0.45 per share of restructuring charges. On a non-GAAP basis, net income, as adjusted, was $6.0 million or $0.40 per diluted share compared with net income of $22.0 million or $1.47 per diluted share for full-year 2009.
Fourth Quarter and Full-Year 2010 Conference Call and Webcast Details
Kendle will host its Fourth Quarter and Full-Year 2010 conference call and Webcast on March 3, 2011 at 1:00 p.m. Eastern Time. The call will be broadcast live over the Internet and can be accessed at www.kendle.com. A replay of the Webcast will be available at www.kendle.com shortly after the call for on-demand replay through 5 p.m. Eastern Time on April 4, 2011.
Use of Non-GAAP Financial Measures
This press release contains adjustments to income (loss) from operations, net income (loss) and net income (loss) per share, calculated in accordance with generally accepted accounting principles ("GAAP") in the United States. These adjusted or "pro forma" results are and should be read in connection with the reconciliation provided in this press release. We believe that investors' understanding of performance is enhanced by disclosing these non-GAAP financial measures as a reasonable basis for comparison of our ongoing results of operations. Non-GAAP measures should not be considered a substitute for GAAP-based measures and results. Our non-GAAP measures may not be comparable to non-GAAP measures of other companies.
About Kendle
Kendle International Inc. (Nasdaq: KNDL) is a leading global clinical research organization providing the full range of early-to late-stage clinical development services for the world's biopharmaceutical industry. Our focus is on innovative solutions that reduce cycle times for our customers and accelerate the delivery of life-enhancing products to market for the benefit of patients worldwide. As one of the world's largest global providers of clinical development services, we offer experience spanning more than 100 countries, along with industry-leading patient access and retention capabilities and broad therapeutic expertise, to meet our customers' clinical development challenges.
Additional information and investor kits are available upon request from Kendle, 441 Vine Street, Suite 500, Cincinnati, OH 45202 or from the Company's website at www.kendle.com
Forward-Looking Statements
Certain statements and information contained in this press release may be deemed to be forward-looking statements under federal securities laws and the provisions of the Private Securities Litigation Reform Act of 1995 and Kendle intends that such forward-looking statements be subject to the safe-harbor created thereby. All such forward-looking statements, including the statements contained herein regarding anticipated trends in Kendle's business, are based largely on management's expectations and are subject to and qualified by risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These risks and uncertainties include, but are not limited to, (a) dependence on the biopharmaceutical industry, including drug-development activity and outsourcing trends, (b) competitive factors in the industry, (c) effects of economic and industry conditions on revenue and earnings growth rates and on Kendle's ability to preserve profitability while managing global operations, (d) changes in regulation of the drug-development process, (e) changes in tax legislation, including proposed changes related to non-U.S. earnings, (f) the potential for contracts to be reduced in scope, terminated, or delayed with little or no notice, (g) the fixed-price nature of contracts and cost overruns, (h) the ability to continue to attract physician investigators to supervise administration of study drugs and patient volunteers to participate in clinical trials, (i) the amount of goodwill and other intangible assets on Kendle's balance sheet and the potential for write-downs of these assets if they become impaired under accounting rules, (j) Kendle's ability to service its indebtedness and maintain adequate credit facilities and credit lines, (k) risks from Kendle's various counterparties, (l) risks related to Kendle's international operations, (m) exposure to foreign currency exchange rate fluctuations, (n) dependence on the continued effectiveness and availability of information technology infrastructure, (o) implementation and deployment of Kendle's enterprise-wide reporting solution, (p) litigation and regulatory risk incident to Kendle's business, (q) dependence on the skills, experience and ongoing efforts of employees and management team in the geographic regions and therapeutic areas in which Kendle operates, (r) effects of new or revised accounting standards on Kendle's consolidated financial statements, and (s) other risks as detailed from time to time in Kendle's Annual Report on Form 10-K as well as periodic reports filed with the SEC. In addition, no assurance can be given that Kendle will be able to realize the net service revenues from the contracts and awards included in backlog. Kendle believes that its aggregate backlog is not necessarily a meaningful indicator of future results. All information in this press release is current as of March 2, 2011. Kendle undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in Kendle's expectations.
Kendle International Inc.
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended
December 31
-----------
2010 2009
---- ----
Net service revenues $77,924 $96,646
Reimbursable out-of-pocket
revenues 29,960 34,290
------ ------
Total revenues 107,884 130,936
------- -------
Costs and expenses:
Direct costs 41,329 48,490
Reimbursable out-of-pocket
costs 29,960 34,290
Selling, general and
administrative expenses 33,426 35,549
Restructuring expense 3,221 3,771
Depreciation and amortization 4,425 3,910
Goodwill impairment 7,263 -
Total costs and expenses 119,624 126,010
------- -------
Income (loss) from operations (11,740) 4,926
Other income (expense):
Interest expense (2,921) (3,337)
Interest income 44 144
Gain (loss) on extinguishment of
debt - (64)
Other 1,561 53
----- ---
Total other income (expense) (1,316) (3,204)
------ ------
Income (loss) before income taxes (13,056) 1,722
Income taxes (3,874) (609)
------ ----
Net income (loss) $(9,182) $2,331
======= ======
Income (loss) per share data:
Basic:
Net income (loss) per share $(0.62) $0.16
====== =====
Weighted average shares
outstanding 14,925 14,887
Diluted:
Net income (loss) per share $(0.62) $0.16
====== =====
Weighted average shares
outstanding 14,925 15,008
Twelve Months Ended
December 31
-----------
2010 2009
---- ----
Net service revenues $333,766 $416,688
Reimbursable out-of-pocket
revenues 114,493 135,224
------- -------
Total revenues 448,259 551,912
------- -------
Costs and expenses:
Direct costs 171,600 210,586
Reimbursable out-of-pocket
costs 114,493 135,224
Selling, general and
administrative expenses 135,239 144,659
Restructuring expense 4,522 10,157
Depreciation and amortization 16,340 15,712
Goodwill impairment 7,263 -
Total costs and expenses 449,457 516,338
------- -------
Income (loss) from operations (1,198) 35,574
Other income (expense):
Interest expense (11,949) (14,403)
Interest income 144 579
Gain (loss) on extinguishment of
debt - 2,887
Other 7,770 4,034
----- -----
Total other income (expense) (4,035) (6,903)
------ ------
Income (loss) before income taxes (5,233) 28,671
Income taxes (674) 13,434
---- ------
Net income (loss) $(4,559) $15,237
======= =======
Income (loss) per share data:
Basic:
Net income (loss) per share $(0.31) $1.03
====== =====
Weighted average shares
outstanding 14,907 14,862
Diluted:
Net income (loss) per share $(0.31) $1.02
====== =====
Weighted average shares
outstanding 14,907 14,992
Kendle International Inc.
Selected Balance Sheet and Other Information
(In thousands)
(Unaudited)
Selected Balance Sheet Information:
December 31,
December 31, 2010 2009
----------------- -------------
Cash and cash equivalents $21,217 $52,103
Receivables, net of
advance billings 48,061 49,085
Convertible notes, net of
discount 133,082 138,308
Net Service
Revenues
by
Geographic
Region:
Three Months Ended Twelve Months Ended
December 31 December 31
----------- -----------
2010 2009 2010 2009
---- ---- ---- ----
North
America 44% 47% 46% 48%
Europe 41% 39% 39% 38%
Latin
America 12% 9% 11% 10%
Asia-
Pacific 3% 5% 4% 4%
Segment
Information:
Three Months Ended Twelve Months Ended
December 31 December 31
----------- -----------
2010 2009 2010 2009
---- ---- ---- ----
Early
Stage:
Net Service
Revenues $6,328 $10,246 $25,888 $37,473
Operating
Income
(Loss) (10,722) 1,488 (11,455) 4,187
Late Stage:
Net Service
Revenues $71,641 $85,487 $305,872 $370,178
Operating
Income 13,251 17,975 63,575 81,109
Support and
Other:
Net Service
Revenues $(45) $913 $2,006 $9,037
Operating
Loss (14,269) (14,537) (53,318) (49,722)
Kendle International Inc.
Reconciliation of Non-GAAP Measures
(In thousands)
(Unaudited)
Three Months Ended
December 31,
------------
2010 2009
---- ----
Reconciliation of pro forma income (loss) from
operations:
Income (loss) from operations, as reported $(11,740) $4,926
Restructuring expense 3,221 3,771
Goodwill impairment 7,263 -
Pro forma income (loss) from operations $(1,256) $8,697
======= ======
Reconciliation of pro forma net income (loss):
Net income (loss), as reported $(9,182) $2,331
Restructuring expense, net of tax 2,400 2,712
Goodwill impairment, net of tax 7,173 -
Pro forma net income $391 $5,043
==== ======
Reconciliation of pro forma diluted net income
(loss) per share:
Net income (loss), as reported $(0.62) $0.16
Restructuring expense, net of tax 0.16 0.18
Goodwill impairment, net of tax 0.48 -
Rounding 0.01 -
Pro forma net income $0.03 $0.34
===== =====
See Use of Non-GAAP Measures section in the body
of the press release.
Twelve Months Ended
December 31,
------------
2010 2009
---- ----
Reconciliation of pro forma income (loss) from
operations:
Income (loss) from operations, as reported $(1,198) $35,574
Restructuring expense 4,522 10,157
Goodwill impairment 7,263 -
Pro forma income (loss) from operations $10,587 $45,731
======= =======
Reconciliation of pro forma net income (loss):
Net income (loss), as reported $(4,558) $15,237
Restructuring expense, net of tax 3,349 6,799
Goodwill impairment, net of tax 7,173 -
Pro forma net income $5,964 $22,036
====== =======
Reconciliation of pro forma diluted net income
(loss) per share:
Net income (loss), as reported $(0.31) $1.02
Restructuring expense, net of tax 0.22 0.45
Goodwill impairment, net of tax 0.48 -
Rounding 0.01 -
Pro forma net income $0.40 $1.47
===== =====
See Use of Non-GAAP Measures section in the body
of the press release.
SOURCE Kendle International Inc.
