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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 March 31, 2004

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 [X] No [_]


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, 23,462,264 shares outstanding as of April 26, 2004.
 
 
     

 
VENTIV HEALTH, INC.
QUARTERLY REPORT ON
FORM 10-Q

 
Page
PART I. FINANCIAL INFORMATION
 
 
 
ITEM 1. Financial Statements
 
Consolidated Balance Sheets as of March 31, 2004 and December 31, 2003 (unaudited)
          1
 
 
Consolidated Statements of Operations for the three-months ended March 31, 2004 and 2003 (unaudited)
2
 
Consolidated Statements of Cash Flows for the three-months ended March 31, 2004 and 2003 (unaudited)
3
Notes to Consolidated Financial Statements
4
 
 
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
9
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
16
 
 
ITEM 4. Controls and Procedures
16
 
 
PART II. OTHER INFORMATION
 
 
 
ITEM 1. Legal Proceedings
17
 
 
ITEM 6. Exhibits and Reports on Form 8-K
17
 
 
SIGNATURES
18
 
 
EXHIBITS
19



     


PART I. FINANCIAL INFORMATION

ITEM 1.   Financial Statements

VENTIV HEALTH, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
   
March 31, 

 

 

December 31,

 

 
   
2004

 

 

2003
 
   
 
 
ASSETS
   
 
   
 
 
Current assets:
   
 
   
 
 
Cash and equivalents
 
$
61,622
 
$
54,970
 
Restricted cash
   
2,879
   
1,672
 
Accounts receivable, net of allowances for doubtful accounts of $1,770
   
 
   
 
 
and $2,019 at March 31, 2004 and December 31, 2003, respectively
   
38,928
   
41,836
 
Unbilled services
   
22,435
   
21,347
 
Prepaid expenses and other current assets
   
2,437
   
1,146
 
Current deferred tax assets
   
1,660
   
1,660
 
   
 
 
Total current assets
   
129,961
   
122,631
 
Property and equipment, net
   
30,902
   
31,457
 
Goodwill
   
20,638
   
20,638
 
Deferred tax assets
   
5,438
   
5,438
 
Deposits and other assets
   
925
   
544
 
   
 
 
Total assets
 
$
187,864
 
$
180,708
 
   
 
 
 
   
 
   
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
   
 
   
 
 
Current liabilities:
   
 
   
 
 
Current portion of capital lease obligations
 
$
8,747
 
$
8,100
 
Accrued payroll, accounts payable and accrued expenses
   
30,767
   
32,105
 
Current income tax liabilities
   
12,170
   
9,165
 
Client advances and unearned revenue
   
4,469
   
4,859
 
   
 
 
Total current liabilities
   
56,153
   
54,229
 
Capital lease obligations, net of current portion
   
17,808
   
18,488
 
Other non-current liabilities
   
257
   
266
 
   
 
 
Total liabilities
   
74,218
   
72,983
 
   
 
 
 
   
 
   
 
 
Commitments and contingencies
   
 
   
 
 
 
   
 
   
 
 
Stockholders' Equity:
   
 
   
 
 
Preferred stock, $.001 par value, 10,000,000 shares authorized, none issued
   
 
   
 
 
and outstanding at March 31, 2004 and December 31, 2003, respectively
   
   
 
Common stock, $.001 par value, 50,000,000 shares authorized; 23,369,209 and
   
 
   
 
 
23,094,503 shares issued and outstanding at March 31, 2004 and
   
 
   
 
 
December 31, 2003, respectively
   
23
   
23
 
Additional paid-in-capital
   
160,136
   
159,359
 
Deferred compensation
   
(72
)
 
(85
)
Accumulated other comprehensive earnings
   
131
   
103
 
Accumulated deficit
   
(46,572
)
 
(51,675
)
   
 
 
Total stockholders' equity
   
113,646
   
107,725
 
   
 
 
Total liabilities and stockholders' equity
 
$
187,864
 
$
180,708
 
   
 
 

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

 
     

 
VENTIV HEALTH, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

 
For the Three Months 
 
Ended March 31, 
   
 
   
2004

 

 

2003
 
   
 
 
Revenues
 
$
70,661
 
$
43,654
 
Operating expenses:
   
 
   
 
 
Cost of services
   
56,311
   
37,856
 
Selling, general and administrative expenses
   
6,271
   
5,433
 
   
 
 
Total operating expenses
   
62,582
   
43,289
 
   
 
 
 
   
 
   
 
 
Operating earnings
   
8,079
   
365
 
Interest expense
   
(181
)
 
(106
)
Interest income
   
83
   
103
 
   
 
 
Earnings from continuing operations before income taxes
   
7,981
   
362
 
Income tax provision
   
3,033
   
138
 
   
 
 
Earnings from continuing operations
   
4,948
   
224
 
   
 
 
 
   
 
   
 
 
Earnings (losses) from discontinued operations:
   
 
   
 
 
Losses from discontinued operations, net of taxes
   
--
   
(843
)
Gains (losses) on disposals of discontinued operations, net of taxes
   
155
   
(553
)
   
 
 
Net earnings (losses) from discontinued operations
   
155
   
(1,396
)
   
 
 
 
   
 
   
 
 
Net earnings (losses)
 
$
5,103
 
$
(1,172
)
   
 
 
 
   
 
   
 
 
Earnings (losses) per share (see Note 3):
   
 
   
 
 
Continuing operations:
   
 
   
 
 
Basic
 
$
0.22
 
$
0.01
 
Diluted
 
$
0.20
 
$
0.01
 
Discontinued operations:
   
 
   
 
 
Basic
 
$
--
 
$
(0.06
)
Diluted
 
$
0.01
 
$
(0.06
)
Net earnings (losses):
   
 
   
 
 
Basic
 
$
0.22
 
$
(0.05
)
Diluted
 
$
0.21
 
$
(0.05
)
Weighted average common shares outstanding:
   
 
   
 
 
Basic
   
22,906
   
22,892
 
Diluted
   
24,405
   
23,104
 

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

 
     

 
VENTIV HEALTH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 
For the Three Months
Ended March 31, 
   
 
   
2004

 

 

2003
 
   
 
 
Cash flows from operating activities:
 
 
Net earnings (losses)
 
$
5,103
 
$
(1,172
)
Adjustments to reconcile net earnings (losses) to net cash provided by operating activities:
   
 
   
 
 
(Earnings) losses from discontinued operations
   
(155
)
 
1,396
 
Depreciation
   
3,593
   
2,090
 
Amortization
   
5
   
4
 
Stock compensation expense
   
13
   
132
 
Changes in assets and liabilities, net of effects from discontinued operations:
   
 
   
 
 
Restricted cash
   
(7
)
 
173
 
Accounts receivable, net
   
2,908
   
2,741
 
Unbilled services
   
(1,088
)
 
5,072
 
Prepaid expenses and other current assets
   
(1,291
)
 
(1,509
)
Accrued payroll, accounts payable and accrued expenses
   
(1,338
)
 
(1,684
)
Current income tax liabilities
   
3,005
   
353
 
Client advances and unearned revenue
   
(390
)
 
6,522
 
Other
   
(395
)
 
381
 
   
 
 
Net cash provided by operating activities
   
9,963
   
14,499
 
   
 
 
 
   
 
   
 
 
Cash flows from investing activities:
   
 
   
 
 
Proceeds from disposals of discontinued operations
   
41
   
867
 
Purchases of property and equipment
   
(1,537
)
 
(573
)
   
 
 
Net cash (used in) provided by investing activities
   
(1,496
)
 
294
 
   
 
 
 
   
 
   
 
 
Cash flows from financing activities:
   
 
   
 
 
Collateralization of obligations under standby letter of credit
   
(1,200
)
 
(788
)
Repayments of capital lease obligations
   
(1,534
)