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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the quarterly period ended September 30, 2003

or

[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the Transition Period From ___________ to ___________

Commission file number 0-30318

VENTIV HEALTH, INC.
(Exact name of registrant as specified in its charter)

Delaware 52-2181734
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)

200 Cottontail Lane
Vantage Court North
Somerset, New Jersey 08873
(Address of principal executive office and zip code)

(800) 416-0555
(Registrant's telephone number, including area code)

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  Yes  [_] No [X]


Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common Stock, par value $0.001, 22,994,720 shares outstanding as of November 7, 2003.
 
     
 
VENTIV HEALTH, INC.
QUARTERLY REPORT ON
FORM 10-Q

 
Page
PART I. FINANCIAL INFORMATION
 
 
 
ITEM 1. Financial Statements (unaudited)
 
Consolidated Balance Sheets as of September 30, 2003
 
       and December 31, 2002
1
 
 
Consolidated Statements of Operations for the three-and nine-month
 
periods ended September 30, 2003 and 2002
2
 
 
Consolidated Statements of Cash Flows for the nine-month
 
periods ended September 30, 2003 and 2002
3
 
 
Notes to Consolidated Financial Statements
4 –11
 
 
ITEM 2. Management's Discussion and Analysis of Financial Condition and
 
Results of Operations
12-20
 
 
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
21
 
 
ITEM 4. Controls and Procedures
21
 
 
PART II. OTHER INFORMATION
 
 
 
ITEM 1. Legal Proceedings
22
 
 
ITEM 5. Other Information
22
 
 
ITEM 6. Exhibits and Reports on Form 8-K
22
 
 
SIGNATURES
23
 
 
EXHIBITS
24-29

 
     
 
PART I. FINANCIAL INFORMATION

ITEM 1.  Financial Statements

VENTIV HEALTH, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
 
September 30,
December 31,
 
2003
2002
 
 
 
ASSETS
 
 
Current assets:
 
 
Cash and equivalents
$52,545
$46,059
Restricted cash
2,535
1,694
Accounts receivable, net of allowances for doubtful accounts of $1,607
 
 
and $1,178 at September 30, 2003 and December 31, 2002, respectively
33,391
28,696
Unbilled services
14,958
14,547
Prepaid expenses and other current assets
1,620
1,426
Current deferred tax assets
1,744
1,744
Assets held for sale
--
10,511
Total current assets
106,793
104,677
Property and equipment, net
20,921
19,675
Goodwill
20,638
20,638
Deferred tax assets
5,122
7,670
Other assets
280
758
 
$153,754
$153,418
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
Current liabilities:
 
 
Current portion of capital lease obligations
$5,913
$4,148
Accrued payroll, accounts payable and accrued expenses
31,841
28,179
Current income tax liabilities
6,486
3,279
Client advances and unearned revenue
4,944
3,725
Liabilities held for sale
--
8,537
Total current liabilities
49,184
47,868
Capital lease obligations
9,260
8,904
Other non-current liabilities
249
200
Total liabilities
58,693
56,972
 
 
 
Commitments and contingencies
 
 
 
 
 
Stockholders' Equity:
 
 
Preferred stock, $.001 par value, 10,000,000 shares authorized, none issued
 
 
and outstanding at September 30, 2003 and December 31, 2002
—
—
Common stock, $.001 par value, 50,000,000 shares authorized; 22,975,344 and
 
 
22,958,776 shares issued and outstanding at September 30, 2003 and
 
 
December 31, 2002, respectively
23
23
Additional paid-in-capital
158,576
158,619
Deferred compensation
--
(457)
Accumulated other comprehensive gains (losses)
36
(4,288)
Accumulated deficit
(63,574)
(57,451)
Total stockholders' equity
95,061
96,446
Total liabilities and stockholders' equity
$153,754
$153,418

The accompanying notes are an integral part of these consolidated financial statements.

 
  1  
 
VENTIV HEALTH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

 
For the Three Months
For the Nine Months
 
Ended September 30,
Ended September 30,
 
2003
2002
2003
2002
 
(unaudited)
Revenues
$59,291
$46,888
$149,183
$165,525
Operating expenses:
 
 
 
 
Cost of services
47,968
38,642
123,808
139,483
Selling, general and administrative expenses
6,516
6,137
17,750
19,449
Gain on sale of real estate
--
--
(392)
--
Total operating expenses
54,484
44,779
141,166
158,932
 
 
 
 
 
Operating earnings
4,807
2,109
8,017
6,593
Interest expense
(127)
(614)
(373)
(1,425)
Interest income
94
144
319
325
Earnings from continuing operations before income taxes
4,774
1,639
7,963
5,493
Income tax provision
1,814
623
3,026
2,087
Earnings from continuing operations
2,960
1,016
4,937
3,406
 
 
 
 
 
Earnings (losses) from discontinued and held for sale operations:
 
 
 
 
Losses from discontinued operations, net of taxes
(525)
(117)
(4,154)
(2,797)
Gains (losses) on disposals of discontinued operations, net of taxes
(5,553)
3,400
(6,906)
(1,412)
Tax benefit related to the disposal of a discontinued operation
--
--
--
5,400
Net earnings (losses) from discontinued operations
(6,078)
3,283
(11,060)
1,191
 
 
 
 
 
Net earnings (losses):
$(3,118)
$4,299
$(6,123)
$4,597
 
 
 
 
 
Earnings (losses) per share (see Note 3):
 
 
 
 
Continuing operations:
 
 
 
 
Basic
$0.13
$0.04
$0.22
$0.15
Diluted
$0.12
$0.04
$0.21
$0.15
Discontinued operations:
 
 
 
 
Basic
$(0.27)
$0.15
$(0.49)
$0.05
Diluted
$(0.26)
$0.15
$(0.48)
$0.05
Net earnings (losses):
 
 
 
 
Basic
$(0.14)
$0.19
$(0.27)
$0.20
Diluted
$(0.14)
$0.19
$(0.27)
$0.20
Weighted average common shares outstanding:
 
 
 
 
Basic
22,880
22,828
22,886
22,826
Diluted
23,910
22,830
23,634
22,830

The accompanying notes are an integral part of these consolidated financial statements

 
  2  
 
VENTIV HEALTH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
For the Nine Months Ended September 30,
 
2003
2002
 
(unaudited)
Cash flows from operating activities:
 
Net earnings (losses)