CINCINNATI, Aug. 5 /PRNewswire-FirstCall/ -- Kendle , a leading, global full-service clinical research organization, today reported net income of $3.2 million or $0.21 per diluted share for the second quarter of 2009 compared with net income of $6.3 million or $0.42 per diluted share for the second quarter of 2008. On a pro forma basis, net income per diluted share for the second quarter of 2009 was $0.43 compared with $0.52 per diluted share for the second quarter of 2008.
Second Quarter 2009 Results
Operating income for the quarter was $7.0 million or 6.5 percent of net revenues. On a constant currency basis and excluding the impact of a one-time restructuring charge, this is $15.8 million or 13.2 percent of constant currency revenues compared with $16.1 million or 12.7 percent of net revenues for the second quarter of 2008.
Cash flow from operations for second quarter of 2009 was $31.1 million. Cash, cash equivalents and marketable securities at June 30, 2009, totaled $65.0 million. Days sales outstanding in accounts receivables were 29 days compared with 47 days in the second quarter 2008. Capital expenditures for the quarter totaled $5.7 million, composed primarily of investments in IT infrastructure related to the Company's implementation of an ERP system. During the quarter, the Company paid $18.2 million in the open market to repurchase $25 million at par value of its convertible debt. As a result, the Company generated a pretax gain on the extinguishment of the debt of $3.1 million. In addition, by reducing the principal balance outstanding, the Company expects to reduce cash and noncash interest expense over the remaining term of the convertible notes by approximately $6.2 million.
Kendle took a series of actions in the second quarter 2009 to reduce its variable costs and right size its business. These actions include a workforce and capacity optimization initiative to better balance its staffing levels with customer demand and certain facilities-related actions, among other things. As a result, the Company took a one-time, pretax charge of $6 million in the second quarter for severance-related and other restructuring expenses. The Company anticipates these initiatives will generate a total pretax savings of $19 million to $22 million in 2009.
Net revenues for the six months ended June 30, 2009 were $215.5 million. This is $242.9 million on a constant currency basis and compares with $241.1 million reported for the same period of the prior year.
Net income was $4.1 million for the first six months of 2009 compared with net income of $10.4 million for the same period last year. Net income per share on a diluted basis for the six months ended June 30, 2009 was $0.27 per share compared with $0.69 per diluted share for the first six months of 2008. On a pro forma basis, net income per diluted share for the six month period in 2009 was $0.90 compared with $0.90 for 2008.
Update on Full-Year 2009 Guidance
Second Quarter 2009 Conference Call and Webcast Details
About Kendle
Additional information and investor kits are available upon request from Kendle, 441 Vine Street, Suite 500, Cincinnati, OH 45202 or from the Company's Web site at www.kendle.com.
The press release contains adjustments to net service revenues, income from operations, net income and earnings 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.
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 the Company'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) competitive factors in the industry, (b) drug-development activity and outsourcing trends in the biopharmaceutical industry, (c) the Company's ability to manage growth, including integration of acquired businesses and implementation of information technology solutions, (d) the Company's dependence on the skills, experience and efforts of its employees and management team in the geographic regions and therapeutic areas in which the Company operates and the risks associated with hiring, managing and retaining members of this team (e) the fixed price nature of contracts and cost overruns, (f) the loss, cancellation or delay of contracts or amendments thereto, (g) the mix of contracts in the Company's backlog and the sales cycle for these contracts, (h) the Company's ability to service its indebtedness and maintain adequate credit facilities and credit lines, (i) the effects of exchange rate fluctuations, (j) the risks related to the Company's international operations, (k) the amount of goodwill and other intangible assets on the Company's balance sheet and the potential for write-downs of these assets if they become impaired under accounting rules; (l) changes in regulation of the drug-development process, (m) litigation that might arise from patient volunteers in the drug development process, (n) natural disasters, acts of war or other similar events that could have an adverse effect on the Company's operations, and (o) 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 the Company will be able to realize the net service revenues included in backlog and verbal awards. The Company believes that its aggregate backlog and verbal awards are not necessarily a meaningful indicator of future results. All information in this press release is current as of Aug. 5, 2009. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
SOURCE Kendle International Inc.
CONTACT: Investors: Michael Lawson, +1-513-763-1992, Media: Lori Dorer,
+1-513-345-1685, both of Kendle International Inc.
Web site: http://www.kendle.com/
