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, 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 |
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, 22,958,776 shares outstanding as of May 9, 2003.
QUARTERLY REPORT ON
FORM 10-Q
| Page | ||
| PART I. FINANCIAL INFORMATION |
||
| ITEM 1. Financial Statements |
||
| Consolidated Balance Sheets as of March 31, 2003 (unaudited) and December 31, 2002 |
3 | |
| 4 | ||
| 5 | ||
| 6-13 | ||
| ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14-20 | |
| 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 6. Exhibits and Reports on Form 8-K |
22 | |
| 23 | ||
| 24-25 | ||
| EXHIBITS |
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
| March 31, 2003 |
December 31, 2002 |
|||||||
| (unaudited) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and equivalents |
$ |
58,238 |
|
$ |
46,059 |
| ||
| Restricted cash |
|
2,309 |
|
|
1,694 |
| ||
| Accounts receivable, net of allowances for doubtful accounts of $1,043 and $1,178 at March 31, 2003 and December 31, 2002, respectively |
|
25,955 |
|
|
28,696 |
| ||
| Unbilled services |
|
9,475 |
|
|
14,547 |
| ||
| Prepaid expenses and other current assets |
|
2,365 |
|
|
1,426 |
| ||
| Current deferred tax assets |
|
1,743 |
|
|
1,744 |
| ||
| Assets held for sale |
|
10,329 |
|
|
10,511 |
| ||
| Total current assets |
|
110,414 |
|
|
104,677 |
| ||
| Property and equipment, net |
|
17,496 |
|
|
19,675 |
| ||
| Goodwill |
|
20,638 |
|
|
20,638 |
| ||
| Deferred tax assets |
|
7,670 |
|
|
7,670 |
| ||
| Other assets |
|
390 |
|
|
758 |
| ||
| Total assets |
$ |
156,608 |
|
$ |
153,418 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Current portion of capital lease obligations |
$ |
3,922 |
|
$ |
4,148 |
| ||
| Accrued payroll, accounts payable and accrued expenses |
|
26,495 |
|
|
28,179 |
| ||
| Current tax liabilities |
|
3,632 |
|
|
3,279 |
| ||
| Client advances and unearned revenue |
|
10,247 |
|
|
3,725 |
| ||
| Liabilities held for sale |
|
9,219 |
|
|
8,537 |
| ||
| Total current liabilities |
|
53,515 |
|
|
47,868 |
| ||
| Capital lease obligations |
|
7,352 |
|
|
8,904 |
| ||
| Other non-current liabilities |
|
216 |
|
|
200 |
| ||
| Total liabilities |
|
61,083 |
|
|
56,972 |
| ||
| Commitments and contingencies |
||||||||
| Stockholders’ Equity: |
||||||||
| Preferred stock, $.001 par value, 10,000,000 shares authorized, none issued and outstanding at March 31, 2003 and December 31, 2002 |
|
— |
|
|
— |
| ||
| Common stock, $.001 par value, 50,000,000 shares authorized; 22,958,776 shares issued and outstanding at March 31, 2003 and December 31, 2002 |
|
23 |
|
|
23 |
| ||
| Additional paid-in-capital |
|
158,559 |
|
|
158,619 |
| ||
| Deferred compensation |
|
(265 |
) |
|
(457 |
) | ||
| Accumulated other comprehensive losses |
|
(4,169 |
) |
|
(4,288 |
) | ||
| Accumulated deficit |
|
(58,623 |
) |
|
(57,451 |
) | ||
| Total stockholders’ equity |
|
95,525 |
|
|
96,446 |
| ||
| Total liabilities and stockholders’ equity |
$ |
156,608 |
|
$ |
153,418 |
| ||
The accompanying notes are an integral part of these consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| For the Three Months |
||||||||
| 2003 |
2002 |
|||||||
| (unaudited) |
||||||||
| Revenues |
$ |
43,654 |
|
$ |
69,868 |
| ||
| Operating expenses: |
||||||||
| Cost of services |
|
37,856 |
|
|
61,016 |
| ||
| Selling, general and administrative expenses |
|
5,433 |
|
|
6,650 |
| ||
| Operating earnings |
|
365 |
|
|
2,202 |
| ||
| Interest expense |
|
(106 |
) |
|
(594 |
) | ||
| Investment income |
|
103 |
|
|
85 |
| ||
| Earnings from continuing operations before income taxes |
|
362 |
|
|
1,693 |
| ||
| Income tax provision |
|
138 |
|
|
643 |
| ||
| Earnings from continuing operations |
|
224 |
|
|
1,050 |
| ||
| Losses from discontinued operations: |
||||||||
| Losses from discontinued operations, net of taxes |
|
(843 |
) |
|
(644 |
) | ||
| Losses on disposals of discontinued operations, net of taxes |
|
(553 |
) |
|
— |
| ||
| Losses from discontinued operations |
|
(1,396 |
) |
|
(644 |
) | ||
| Net earnings (losses) |
$ |
(1,172 |
) |
$ |
406 |
| ||
| Earnings (losses) per share: |
||||||||
| Continuing operations: |
||||||||
| Basic |
$ |
0.01 |
|
$ |
0.05 |
| ||
| Diluted |
$ |
0.01 |
|
$ |
0.05 |
| ||
| Discontinued operations: |
||||||||
| Basic |
$ |
(0.06 |
) |
$ |
(0.03 |
) | ||
| Diluted |
$ |
(0.06 |
) |
$ |
(0.03 |
) | ||
| Net earnings (losses): |
||||||||
| Basic |
$ |
(0.05 |
) |
$ |
0.02 |
| ||
| Diluted |
$ |
(0.05 |
) |
$ |
0.02 |
| ||
| Weighted average common shares outstanding: |
||||||||
| Basic |
|
22,892 |
|
|
22,823 |
| ||
| Diluted |
|
23,104 |
|
|
22,823 |
| ||
The accompanying notes are an integral part of these consolidated financial statements
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| For the Three Months |
||||||||
| 2003 |
2002 |
|||||||
| (unaudited) |
||||||||
| Cash flows from operating activities: |
||||||||
| Net earnings (losses) |
$ |
(1,172 |
) |
$ |
406 |
| ||
| Adjustments to reconcile net earnings (losses) to net cash provided by operating activities: |
||||||||
| Losses from discontinued operations |
|
1,396 |
|
|
644 |
| ||
| Depreciation |
|
2,090 |
|
|
3,320 |
| ||
| Amortization |
|
4 |
|
|
10 |
| ||
| Deferred taxes |
|
— |
|
|
20 |
| ||
| Loss on disposal of capital assets |
|
— |
|
|
185 |
| ||
| Write off of deferred financing costs |
|
— |
|
|
314 |
| ||
| Stock compensation expense |
|
132 |
|
|
170 |
| ||
| Changes in assets and liabilities, net of effects from discontinued operations: |
||||||||
| Escrow cash |
|
173 |
|
|
— |
| ||
| Accounts receivable, net |
|
2,741 |
|
|
7,990 |
| ||
| Unbilled services |
|
5,072 |
|
|
15,163 |
| ||
| Prepaid expenses and other current assets |
|
(1,509 |
) |
|
(1,155 |
) | ||
| Accrued payroll, accounts payable and accrued expenses |
|
|||||||