<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
Commission File Number 0-22510
CLINTRIALS RESEARCH INC.
(Exact name of registrant as specified in its charter)
DELAWARE 62-1406017
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification number)
11000 WESTON PARKWAY
CARY, NORTH CAROLINA 27513
(Address of principal executive offices) (Zip Code)
(919) 460-9005
(Registrant's telephone number, including area code)
Indicate by check mark whether the 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 [ ]
As of July 21, 2000, there were 18,402,172 shares of ClinTrials Research Inc.
common stock outstanding.
<PAGE> 2
CLINTRIALS RESEARCH INC.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures about Market Risk 20
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 6. Exhibits and Reports on Form 8-K 22
SIGNATURES 23
</TABLE>
2
<PAGE> 3
CLINTRIALS RESEARCH INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,600 $ 7,889
Accounts receivable, net of allowance for doubtful
accounts of $1,493 in 2000 and $1,909 in 1999 33,967 31,084
Income taxes receivable 2,295 1,454
Other current assets 3,740 1,757
--------- ---------
Total current assets 42,602 42,184
Property, plant and equipment:
Land, buildings and leasehold improvements 22,918 22,995
Equipment 33,711 32,725
Furniture and fixtures 4,876 4,946
--------- ---------
61,505 60,666
Less accumulated depreciation 23,339 21,161
--------- ---------
38,166 39,505
Excess of purchase price over net assets acquired 32,965 34,304
Other assets 411 411
--------- ---------
$ 114,144 $ 116,404
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,579 $ 4,095
Advance billings/unearned revenue 11,375 8,338
Payables to investigators 3,465 4,683
Accrued expenses 5,349 7,469
Income taxes payable 1,648 1,174
Current maturities of long-term debt 114 114
--------- ---------
Total current liabilities 28,530 25,873
Deferred income taxes 5,667 4,982
Long-term debt 364 381
Commitments and contingencies -- --
Stockholders' equity:
Preferred Stock, $.01 par value - 1,000,000 shares
Authorized; no shares issued or outstanding -- --
Common Stock, $.01 par value - 50,000,000 shares
Authorized; issued and outstanding 18,402,172 shares 184 184
Additional paid-in capital 126,651 126,651
Accumulated deficit (42,118) (38,490)
Accumulated other comprehensive loss (5,134) (3,177)
--------- ---------
Total stockholders' equity 79,583 85,168
--------- ---------
$ 114,144 $ 116,404
========= =========
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE> 4
CLINTRIALS RESEARCH INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR INCOME (LOSS) PER SHARE)
<TABLE>
<CAPTION>
Three months ended
June 30,
----------------------
2000 1999
-------- --------
<S> <C> <C>
Revenue:
Service revenue $ 28,282 $ 30,224
Less: Subcontractor costs 2,737 5,010
-------- --------
Net service revenue 25,545 25,214
Costs and expenses:
Direct costs 16,124 14,811
Selling, general and administrative costs 8,756 8,610
Depreciation and amortization 1,490 1,635
Interest income, net of interest expense (89) (113)
-------- --------
Income (loss) before income taxes (736) 271
Provision for income taxes 451 118
-------- --------
Net income (loss) $ (1,187) $ 153
======== ========
Income (loss) per share:
Basic $ (0.06) $ 0.01
Diluted $ (0.06) $ 0.01
Number of shares and common stock equivalents
used in computing income (loss) per share:
Basic 18,402 18,017
Diluted 18,402 18,678
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE> 5
CLINTRIALS RESEARCH INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR LOSS PER SHARE)
<TABLE>
<CAPTION>
Six months ended
June 30
----------------------
2000 1999
-------- --------
<S> <C> <C>
Revenue:
Service revenue $ 56,394 $ 58,301
Less: Subcontractor costs 7,075 9,384
-------- --------
Net service revenue 49,319 48,917
Costs and expenses:
Direct costs 32,254 29,886
Selling, general and administrative costs 16,937 18,080
Depreciation and amortization 3,065 3,238
Interest income, net of interest expense (195) (217)
Gain on Sale of Ovation -- (484)
Nashville lease termination costs -- 845
-------- --------
Loss before income taxes (2,742) (2,431)
Provision for income taxes 886 357
-------- --------
Net loss $ (3,628) $ (2,788)
======== ========
Loss per share:
Basic $ (0.20) $ (0.15)
Diluted $ (0.20) $ (0.15)
Number of shares and common stock equivalents
used in computing loss per share:
Basic 18,402 18,021
Diluted 18,402 18,021
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE> 6
CLINTRIALS RESEARCH INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six months ended
June 30,
---------------------
2000 1999
------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(3,628) $ (2,788)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 3,608 3,886
Gain on sale of Ovation -- (484)
Changes in operating assets and liabilities (2,695) (2,181)
------- --------
Net cash used in operating activities (2,715) (1,567)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment, net (1,946) (2,870)
Costs associated with option to acquire MPI -- (198)
------- --------
Net cash used in investing activities (1,946) (3,068)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds received on long-term debt borrowings -- 84
------- --------
Net cash provided by financing activities -- 84
Effect of exchange rate changes on cash (628) (95)
------- --------
Net decrease in cash and cash equivalents (5,289) (4,646)
Cash and cash equivalents at beginning of period 7,889 10,867
------- --------
Cash and cash equivalents at end of period $ 2,600 $ 6,221
======= ========
</TABLE>
See notes to condensed consolidated financial statements
6
<PAGE> 7
CLINTRIALS RESEARCH INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
ClinTrials Research Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair presentation have been included. Certain
prior year amounts have been reclassified to conform to the current year
presentation. Operating results for the three and six months ended June 30, 2000
are not necessarily indicative of the results that may be expected for other
quarters or the entire year. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
report on Form 10-K for the year ended December 31, 1999.
2. EARNINGS (LOSS) PER SHARE
Earnings (loss) per share is computed in accordance with Financial Accounting
Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS")
No. 128, "Earnings per Share" ("SFAS No. 128"). SFAS No. 128 requires
presentation of both Basic Earnings per Share ("Basic EPS") and Diluted Earnings
per Share ("Diluted EPS"). Basic EPS is based on the weighted average number of
shares of common stock outstanding during the period while Diluted EPS also
includes the dilutive effect of common stock equivalents.
Diluted loss per share for the three months ended June 30, 2000 does not include
the dilutive effect of 2,000 common stock equivalents (stock options and
warrants) as their effect would be anti-dilutive. Diluted income per share for
the three months ended June 30, 1999 includes the dilutive effect of 661,000
common stock equivalents (stock options and warrants). Diluted loss per share
for the six months ended June 30, 2000 and 1999 does not include the dilutive
effect of 46,000 and 718,000 common stock equivalents (stock options and
warrants), respectively, as their effect would be anti-dilutive.
The Company's stock is currently traded in the NASDAQ Stock Market and sale
information is included on the NASDAQ National Market Issues System under the
symbol "CCRO".
3. COMPREHENSIVE INCOME (LOSS)
FASB SFAS No. 130, "Reporting Comprehensive Income" ("SFAS No. 130") establishes
rules for reporting and displaying comprehensive income and its components.
Accumulated other comprehensive loss for the Company consists entirely of
accumulated foreign currency translation adjustments and is a separate component
of stockholders' equity under SFAS No. 130.
7
<PAGE> 8
The components of comprehensive loss, net of related tax, are as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended
June 30,
--------------------
2000 1999
------- -------
<S> <C> <C>
Net income (loss) $(1,187) $ 153
Foreign currency translation adjustments (1,629) 1,451
------- -------
Comprehensive income (loss) $(2,816) $ 1,604
======= =======
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
2000 1999
------- -------
<S> <C> <C>
Net loss $(3,628) $(2,788)
Foreign currency translation adjustments (1,957) 1,917
------- -------
Comprehensive loss $(5,585) $ (871)
======= =======
</TABLE>
4. SEGMENT REPORTING
FASB SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131") establishes standards for reporting information
about operating segments in annual financial statements and interim financial
reports to stockholders as well as standards for disclosure concerning related
products and services, and geographic areas.
The Company is a full-service contract research organization ("CRO") serving the
pharmaceutical, biotechnology and medical device industries. These research
services comprise two reportable operating segments - Clinical and Preclinical.
Clinical services consist of designing, monitoring, and managing trials of new
pharmaceutical and biotechnology products on humans, and providing clinical data
management, biostatistical, product registration, and pharmacoeconomic services.
Clinical service activities and revenues are performed and earned primarily in
the United States and Europe. The Company's European operations are
headquartered in Maidenhead, U.K. with its primary satellite offices in
Brussels, Belgium and Glasgow, Scotland. The operating results of the Company in
the individual European countries are immaterial and therefore European
operations as a whole are disclosed below. Preclinical services are comprised of
designing and conducting trials of new pharmaceutical and biotechnology products
based primarily upon animal models to produce data required to assess and
evaluate efficacy in and potential risks to humans. Preclinical services are
performed in Montreal, Quebec, Canada. Activity which is not included in the
Clinical or Preclinical segments is shown as "Other" which includes operations
not directly related to the business segments and corporate expenses.
Financial data by segment is summarized below (in thousands). Segment assets
have not materially changed since December 31, 1999.
8
<PAGE> 9
<TABLE>
<CAPTION>
Three Months Ended June 30, 2000 and 1999
----------------------------------------------------------------
Americas Europe Total Canada
Clinical Clinical Clinical Preclinical Other Totals
-------- -------- -------- ----------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
June 30, 2000
-------------
Net revenues from external customers $ 6,877 $ 5,115 $ 11,992 $13,553 $-0- $ 25,545
Segment profit (loss) (1,578) (972) (2,550) 2,887 (1,162) (825)
June 30, 1999
-------------
Net revenues from external customers $ 7,558 $ 5,396 $ 12,954 $12,260 $-0- $ 25,214
Segment profit (loss) (2,380) 1,076 (1,304) 1,928 (466) 158
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 2000 and 1999
----------------------------------------------------------------
Americas Europe Total Canada
Clinical Clinical Clinical Preclinical Other Totals
-------- -------- -------- ----------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
June 30, 2000
-------------
Net revenues from external customers $ 12,741 $ 10,544 $ 23,285 $26,034 $-0- $ 49,319
Segment profit (loss) (4,166) (2,078) (6,244) 5,348 (2,041) (2,937)
June 30, 1999
-------------
Net revenues from external customers $ 16,217 $ 9,584 $ 25,801 $23,116 $-0- $ 48,917
Segment profit (loss) (4,650) 372 (4,278) 3,544 (1,553) (2,287)
</TABLE>
Segment profit (loss) excludes other income (expense) and income taxes and
reconciles to consolidated income (loss) before income taxes as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended
June 30,
--------------------
2000 1999
------- -------
<S> <C> <C>
Segment profit (loss) $ (825) $ 158
Interest income, net 89 113
------- -------
Income (loss) before income taxes $ (736) $ 271
======= =======
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
2000 1999
------- -------
<S> <C> <C>
Segment profit (loss) $(2,937) $(2,287)
Interest income, net 195 217
Gain on sale of Ovation -- 484
Nashville lease termination costs -- (845)
------- -------
Income (loss) before income taxes $(2,742) $(2,431)
======= =======
</TABLE>
5. PROVISION FOR INCOME TAXES
The Company's provision for income taxes was $451,000 and $118,000 for the three
months ended June 30, 2000 and 1999, respectively, primarily due to the
Company's Canadian operations. The Company's provision for income taxes was
$886,000 and $357,000 for the six months ended June 30, 2000 and 1999,
respectively, primarily due to the Company's Canadian operations. A valuation
allowance has been established for the amount of the United States deferred tax
assets primarily related to the Company's potential tax benefit associated with
loss carryforwards.
6. CREDIT FACILITIES AND DEBT
During the first quarter of 2000, the Company extended its $15.0 million
domestic credit facility through September 2001. The extension provides for
expansion capabilities to $25.0 million provided the Company meets certain
financial requirements. Credit availability under the Company's domestic line of
credit and foreign line of credit totals approximately $18.4 million. The lines
are collateralized by certain of the Company's assets and bear interest at a
fluctuating rate based either on the respective banks' prime interest rate or
the London Interbank Offered Rate (LIBOR), as elected by the Company. On June
30, 2000 and December 31, 1999, there were no borrowings outstanding under the
Company's lines of credit. In July 2000, the Company borrowed $2 million under
its $15 million domestic credit facility. Commitment availability at June 30,
2000 has been reduced by issued letters of credit of approximately $727,000.
Borrowings available under the lines of credit are subject to certain financial
and operating covenants.
The Company's Canadian subsidiary has outstanding borrowings of approximately
$458,000 from the Canadian government. This borrowing bears no interest and is
repayable in four equal annual installments beginning August 2000 and ending in
2003.
7. CONTINGENCIES
In 1991, a customer commenced legal action against the predecessor of the
Company's preclinical subsidiary claiming damages resulting from statistical
errors in carrying out two research studies. Judgment was rendered in February
1997 by the Superior Court of Montreal against the Company's preclinical
subsidiary in the amount of approximately $556,000 plus interest to accrue from
September 1991. The Company's preclinical subsidiary, now responsible for this
action, has reserves adequate to cover the current judgment amount. The
Company's preclinical subsidiary has appealed the amount of the judgment and the
subsidiary's insurance company has appealed the portion of the judgment which
obligates the insurance company to pay the insurance claim related to this
litigation. The Company believes it is entitled, subject to certain limitations,
to indemnification from a former
10
<PAGE> 11
owner of the predecessor for a portion of this claim. In the opinion of
management, the ultimate resolution of such pending legal proceedings will not
have a material effect on the Company's financial position or results of
operations.
8. SALE OF OVATION
On January 4, 1999, the Company sold its pharmacoeconomic subsidiary, Ovation,
back to the principals from whom the shares were originally purchased, as part
of the Company's ongoing consolidation of U.S. operations into its Research
Triangle Park, North Carolina ("RTP") facility. Pharmacoeconomic services are
now performed out of the Company's RTP facility as the Company retains the right
to use the ClinTrials Ovation name. The Company received 213,000 shares of the
Company's stock in the sales transaction and recorded a gain on the sale of
$484,000.
9. NASHVILLE LEASE TERMINATION COSTS
The Company entered into an agreement to terminate the lease of its Nashville
office and accrued $845,000 in the first quarter of 1999 for costs related to
the termination of this lease. The termination of this lease relieved the
Company of approximately $11.0 million of future minimum lease payments. The
Company relocated its Corporate office to Research Triangle Park, North Carolina
in the second quarter of 1999.
10. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities (SFAS No. 133) which was required to be
adopted in years beginning after June 15, 1999. In July 1999, SFAS No. 137 was
issued as Accounting for Derivative Investments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133 which defers for one
year the effective date of SFAS No. 133 to all fiscal quarters of all fiscal
years beginning after June 15, 2000. Accordingly, the Company plans to adopt
SFAS No. 133 effective January 1, 2001. From time to time, the Company uses
foreign exchange forward contracts to hedge the risk of changes in foreign
currency exchange rates associated with contracts in which the expenses for
providing services are incurred in the functional currency of the Company's
foreign subsidiary, but payments on contracts are made by the client in another
currency. The Company does not anticipate that the adoption of SFAS No. 133 will
have a significant effect on the financial position of the Company.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin 101, (SAB No. 101), "Revenue Recognition in Financial Statements." SAB
No.101 summarizes certain of the SEC staff's views on applying generally
accepted accounting principles to revenue recognition. The Company will adopt
SAB No. 101 in the quarter ending December 31, 2000 and does not expect SAB No.
101 to have a material effect on its financial position or results of
operations.
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in the Company's annual report on Form 10-K for the year ended December
31, 1999.
The information set forth and discussed below for the three and six month
periods ended June 30, 2000 and 1999 is derived from the Condensed Consolidated
Financial Statements included elsewhere herein. The financial information set
forth and discussed below is unaudited but, in the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. The Company's results of operations for a
particular quarter may not be indicative of the results that may be expected for
other quarters or the entire year.
The Company's Form 10-Q includes forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, including, without
limitation, statements containing the words "believes," "anticipates,"
"intends," "expects" and words of similar import. Such statements include
statements concerning the Company's ability to obtain new business and to
accurately estimate the timing of recognition of revenue from the backlog due to
variability in size, scope and duration of projects, regulatory delays, study
results which lead to reductions or cancellations of projects, other decisions
totally within the control of its clients and its ability to immediately affect
the level of operating expenses, as well as statements concerning the Company's
business strategy, acquisition strategy, operations, cost savings initiatives,
industry, economic performance, financial condition, liquidity and capital
resources, existing government regulations and changes in, or the failure to
comply with, governmental regulations. Such statements are subject to various
risks and uncertainties. The Company's actual results may differ materially from
the results discussed in such forward-looking statements because of a number of
factors, including those identified in this Management's Discussion and Analysis
of Financial Condition and Results of Operations. Although the Company believes
that the assumptions underlying the forward-looking statements contained herein
are reasonable, any of the assumptions could be inaccurate, and therefore, there
can be no assurance that such statements included in this document will prove to
be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved. The
forward-looking statements are made as of the date of this document and the
Company assumes no obligation to update such statements or to update the reasons
that actual results could differ from those projected in the forward-looking
statements.
OVERVIEW
The Company is a full-service contract research organization ("CRO") serving the
pharmaceutical, biotechnology and medical device industries. The Company
designs, monitors and manages preclinical and clinical trials, provides clinical
data management and biostatistical services and offers product registration and
pharmacoeconomic services throughout the United States, Canada and Europe. The
Company generates substantially all of its revenue from the preclinical and
clinical testing of new pharmaceutical and biotechnology products.
The Company's contracts are typically fixed-price contracts which range in
duration from a few months to a few years. The contracts usually require a
portion of the contract amount to be paid at or near the time the trial is
initiated with the remaining contract amount paid in intervals based upon the
completion of certain negotiated performance requirements or milestones and, to
a lesser extent, on a date certain basis. The Company's contracts generally may
be terminated with or without cause. In the event of termination, the Company is
typically entitled to all sums owed for work performed through the notice of
termination and all costs associated with termination
12
<PAGE> 13
of the study. In addition, at times some of the Company's contracts provide for
an early termination fee, the amount of which usually declines as the trial
progresses. Termination or delay in the performance of a contract may occur for
various reasons, including, but not limited to, unexpected or undesired results,
inadequate patient enrollment or investigator recruitment, production problems
resulting in shortages of the drug, adverse patient reactions to the drug, or
the client's decision to de-emphasize a particular trial.
Revenue for contracts is recorded in accordance with the American Institute of
Certified Public Accountants ("AICPA") Statement of Position ("SOP") 81-1
"Accounting for Performance of Construction-Type and Certain Product-Type
Contracts" as costs are incurred and includes estimated earned fees or profits
calculated on the basis of the relationship between costs incurred and total
estimated costs (cost-to-cost type of percentage-of-completion method of
accounting). Additionally, the Company may begin work on a project before a
contract is signed for customers with whom the Company has formed a strategic
alliance or has a long-term relationship. Revenue is recognized in the same
manner as signed contracts based upon terms orally agreed with the customer.
Revenue is affected by the mix of trials conducted and the degree to which labor
and facilities are utilized. The Company recognizes revenue related to contract
modifications when realization is assured and the amounts can be reasonably
determined. When estimated contract costs indicate that a loss will be incurred
on a contract, the entire loss is provided for in such period. The Company
routinely subcontracts with third party investigators in connection with
multi-site clinical trials and with other third party service providers for
laboratory analysis and other specialized services. Subcontractor costs are
passed through to clients and, in accordance with industry practice, are
included in gross service revenue. Subcontractor costs are accrued on a
straight-line basis over the investigator phase of the contract. Subcontractor
services may vary significantly from contract to contract; therefore, changes in
gross service revenue may not be indicative of trends in revenue growth.
Accordingly, the Company views net service revenue, which consists of gross
service revenue less subcontractor costs, as its primary measure of revenue
growth. The Company has had, and is expected to continue to have, certain
clients from which at least 10% of the Company's overall revenue is generated
over multiple contracts. Such concentrations of business are not uncommon within
the CRO industry.
The Company's core European operation consists of offices in Maidenhead, United
Kingdom and Brussels, Belgium. The Company expanded its ability to perform
global clinical trials by opening offices in Australia, Chile, France, and
Israel in 1996, Italy and Scotland in 1997, and Poland in 1999. In 2000, the
Company has opened an office in Spain and plans to open an office in Germany.
During the third quarter of 2000, the Company is planning to close its office in
Chile. The Company is focused on generating new business while controlling its
cost structure.
RESULTS OF OPERATIONS
The Company's operating segments consist of preclinical trials which are
performed by the Company's Canadian subsidiary and clinical trials which are
performed primarily in the United States and Europe. Summarized below (in
thousands) is the Company's net revenue and segment profit (loss) for the three
and six months ended June 30, 2000 and 1999 for each reportable segment as
defined by Financial Accounting Standards Board Statement of Financial
Accounting Standard No. 131, "Disclosures about Segments of an Enterprise and
Related Information". "Other" includes operations not directly related to the
segments and corporate expenses. See Segment Reporting note to condensed
consolidated financial statements of the Company.
13
<PAGE> 14
<TABLE>
<CAPTION>
Three Months Ended June 30,
--------------------------
2000 1999
-------- --------
<S> <C> <C>
Net Revenue:
Americas Clinical $ 6,877 $ 7,558
Europe Clinical 5,115 5,396
-------- --------
Total Clinical 11,992 12,954
Canada Preclinical 13,553 12,260
-------- --------
Total Company $ 25,545 $ 25,214
======== ========
Segment profit (loss):
Americas Clinical $ (1,578) $ (2,380)
Europe Clinical (972) 1,076
-------- --------
Total Clinical (2,550) (1,304)
Canada Preclinical 2,887 1,928
Other (1,162) (466)
-------- --------
Total Company $ (825) $ 158
======== ========
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
2000 1999
-------- --------
<S> <C> <C>
Net Revenue:
Americas Clinical $ 12,741 $ 16,217
Europe Clinical 10,544 9,584
-------- --------
Total Clinical 23,285 25,801
Canada Preclinical 26,034 23,116
-------- --------
Total Company $ 49,319 $ 48,917
======== ========
Segment profit (loss):
Americas Clinical $ (4,166) $ (4,650)
Europe Clinical (2,078) 372
-------- --------
Total Clinical (6,244) (4,278)
Canada Preclinical 5,348 3,544
Other (2,041) (1,553)
-------- --------
Total Company $ (2,937) $ (2,287)
======== ========
</TABLE>
The Americas Clinical segment reported lower net revenues for the three and six
month periods ended June 30, 2000 compared to the same periods in 1999. Lower
levels of work performed from backlog and new orders were experienced during
these periods in year 2000 compared to 1999. The segment loss for the three and
six month
14
<PAGE> 15
periods ended June 30, 2000 were lower than in the same periods in 1999 due to a
lower cost structure and more appropriate levels of staffing of the direct
workforce in year 2000 compared to 1999.
The Europe Clinical segment reported lower net revenues and a segment loss for
the three month period ended June 30, 2000 compared to higher levels of revenue
and segment income in the same period of 1999. During the three month period
ended June 30, 1999, several significant contracts were completed resulting in
higher revenues and income. Additionally, significant resources were deployed in
the three month period ended June 30, 2000 to work on a large contract which has
its only revenue milestone in December 2000. Accordingly, no revenue was
recorded from work performed on this contract during the three months ended June
30, 2000. For the six month period ended June 30, 2000, the Europe Clinical
segment reported higher net revenues and a segment loss compared lower net
revenues and a segment profit during the same period in 1999. The increase in
significant resources deployed on the large contract with the December 2000
revenue milestone mentioned above and office expansion efforts in Spain,
Scotland and Germany without corresponding increases in revenue recognition
resulted in the segment loss in the six month period ended June 30, 2000.
Canada Preclinical reported higher net revenues and segment profit for the three
and six month periods ended June 30, 2000 compared to the same periods in 1999.
These increases were primarily due to continuing high demand for specialty
studies in the reproduction/infusion areas. These are generally shorter-term
studies with shorter startup times, and thus yield higher margins because of the
higher level of special technology requirements.
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
Net loss for the three months ended June 30, 2000 was $1.2 million, or $0.06
basic and diluted loss per share, compared to a net income in the same period of
1999 of $153,000 or $0.01 diluted income per share. This net loss is primarily
attributable to a loss recognized during 2000 in the Europe clinical segment
compared to income generated in 1999 and higher corporate costs in 2000 compared
to 1999. This was partially offset by an increase in income in the Canada
preclinical segment and a decrease in the segment loss in the Americas clinical
segment during the three months ended June 30, 2000 compared to the same period
of 1999. Additionally, the income tax provision related to the Canada
preclinical segment increased due to a higher level of income.
Net service revenue for the three months ended June 30, 2000 of $25.5 million
approximated revenues reported in the same period in 1999 as increased revenues
in Canada preclinical were offset by a decrease in the Americas and Europe
clinical revenues.
Based on average exchange rates computed daily, the Canadian dollar and the
British pound were slightly weaker in relation to the U.S. dollar in the second
quarter of 2000 than in the same period in 1999. These changes in currency rates
did not significantly affect the Company's net revenues and net loss.
Direct costs increased 8.9% to $16.1 million in the three months ended June 30,
2000 from $14.8 million in the same period in 1999. Direct costs increased as a
percentage of net service revenue to 63.1% from 58.7%. Direct costs are based on
the mix of contracts in progress and as a percentage of net revenue may
fluctuate from period to period dependent upon the mix of contracts in the
backlog. In addition, direct costs will fluctuate due to changes in labor and
facility utilization. This increase in direct costs was primarily attributable
to the significant resources deployed on the large European contract with the
December 2000 revenue milestone mentioned above, office expansion efforts in
Spain, Scotland and Germany, and an increase in direct costs due to higher
revenue levels in Canada preclinical. In general, the Company's preclinical
direct costs in Canada tend to be lower than the Company's clinical direct costs
in the U. S. and Europe.
Selling, general and administrative costs increased 1.7% to $8.8 million in the
three months ended June 30, 2000 from $8.6 million in the same period in 1999.
Selling, general and administrative costs increased as a percentage
15
<PAGE> 16
of net service revenue to 34.3% from 34.1%. Selling, general and administrative
costs, which primarily includes compensation for administrative employees and
costs related to facilities, information technology and marketing, are
relatively fixed in the near term while revenue is subject to fluctuation,
therefore, variations in the timing of contracts or the progress of clinical
trials (both delays and accelerations) may cause significant variations in
quarterly operating results.
Depreciation and amortization expense for the three months ended June 30, 2000
at $1.5 million decreased 8.9% from $1.6 million during the same period in 1999.
The relocation of the Corporate office in Nashville to the existing facility in
Research Triangle Park was the primary reason for the decrease in depreciation
and amortization expense.
Interest income, net of interest expense, was $89,000 in the second quarter of
2000 compared to $113,000 in the same period of 1999.
The Company's provision for income taxes was $451,000 and $118,000 for the three
months ended June 30, 2000 and 1999, respectively, primarily due to the
Company's Canadian operations. A valuation allowance has been established for
the amount of the United States deferred tax assets primarily related to the
Company's potential tax benefit associated with loss carryforwards.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
Net loss for the six months ended June 30, 2000 was $3.6 million, or $0.20 basic
and diluted loss per share, compared to a net loss in the same period of 1999 of
$2.8 million or $0.15 basic and diluted loss per share. The increase in net loss
is primarily attributable to a loss recognized during 2000 in the Europe
clinical segment compared to income generated in 1999 and higher corporate costs
in 2000 compared to 1999. This was partially offset by an increase in income in
the Canada preclinical segment and a decrease in the segment loss in the
Americas clinical segment in the six months ended June 30, 2000 compared to the
same period of 1999. Additionally, the income tax provision related to the
Canada preclinical segment increased due to a higher level of income.
Net service revenue for the six months ended June 30, 2000 of $49.3 million
approximated revenues reported in the same period in 1999 as increased revenues
in Canada preclinical and Europe clinical were offset by a decrease in the
Americas clinical revenues.
Direct costs increased 7.9% to $32.3 million in the six months ended June 30,
2000 from $29.9 million in the same period in 1999. Direct costs increased as a
percentage of net service revenue to 65.4% from 61.1%. Direct costs are based on
the mix of contracts in progress and as a percentage of net revenue may
fluctuate from period to period dependent upon the mix of contracts in the
backlog. In addition, direct costs will fluctuate due to changes in labor and
facility utilization. This increase in direct costs was primarily attributable
to the significant resources deployed on the large European contract with the
December 2000 revenue milestone mentioned above, office expansion efforts in
Spain, Scotland and Germany, and an increase in direct costs due to higher
revenue levels in Canada preclinical. In general, the Company's preclinical
direct costs in Canada tend to be lower than the Company's clinical direct costs
in the U. S. and Europe.
Selling, general and administrative costs decreased 6.3% to $16.9 million in the
six months ended June 30, 2000 from $18.1 million in the same period in 1999.
Selling, general and administrative costs decreased as a percentage of net
service revenue to 34.3% from 37.0%. Selling, general and administrative costs,
which primarily includes compensation for administrative employees and costs
related to facilities, information technology and marketing, are relatively
fixed in the near term while revenue is subject to fluctuation, therefore,
variations in the timing of contracts or the progress of clinical trials (both
delays and accelerations) may cause significant variations in quarterly
operating results.
16
<PAGE> 17
Depreciation and amortization expense decreased 5.3% to $3.1 million in the six
months ended June 30, 2000 from $3.2 million in the same period in 1999. The
relocation of the Corporate office in Nashville to the existing facility in
Research Triangle Park was the primary reason for the decrease in depreciation
and amortization expense.
Interest income, net of interest expense, was $195,000 in the six months ended
June 30, 2000 compared to $217,000 in the same period of 1999.
On January 4, 1999, the Company sold its pharmacoeconomic subsidiary, Ovation,
back to the principals from whom the shares were originally purchased, as part
of the Company's ongoing consolidation of U.S. operations into its Research
Triangle Park, North Carolina ("RTP") facility. Pharmacoeconomic services are
now performed out of the Company's RTP facility as the Company retained the
right to use the ClinTrials Ovation name. The Company received 213,000 shares of
the Company's stock in the sales transaction and recorded a gain on the sale of
$484,000.
The Company also accrued $845,000 in the first quarter of 1999 for costs related
to the termination of its Nashville office lease. The Company relocated its
Corporate office to Research Triangle Park, North Carolina in the second quarter
of 1999.
The Company's provision for income taxes was $886,000 and $357,000 for the six
months ended June 30, 2000 and 1999, respectively, primarily due to the
Company's Canadian operations. A valuation allowance has been established for
the amount of the United States deferred tax assets primarily related to the
Company's potential tax benefit associated with loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary operating cash needs on both a short-term and long-term
basis include the payment of salaries, office rent and travel expenses, as well
as capital expenditures. The Company has historically financed these
expenditures, as well as acquisitions, with cash flow from operations, issuances
of equity securities and borrowings under its lines of credit. The Company
utilizes its working capital to finance these expenditures pending receipt of
its receivables. Contract receipts from the Company's clients vary according to
the terms of each contract.
Prerequisites for billings are generally established by contractual provisions
that include predetermined date certain payment schedules (which may include
payment at or near the time the trial is initiated), the achievement of
negotiated performance requirements or milestones, or the submission of required
billing detail. Unbilled receivables arise from those contracts under which
services performed exceed billings which are rendered upon the achievement of
certain negotiated performance requirements or on a date-certain basis. Advance
billings represent contractual billings for services not yet rendered. As of
June 30, 2000, the Company's advance billings and unearned revenue were $11.4
million and its accounts receivable of $34.0 million included $17.2 million of
unbilled receivables. The Company expects to bill and collect these unbilled
receivables within one year of revenue recognition. Cash receipts do not
correspond to costs incurred and revenue recognition (which is typically based
on cost-to-cost type of percentage of completion accounting) and therefore, the
Company's cash flow is influenced by the interaction of changes in receivables
and advance billings. The Company typically receives a low volume of
large-dollar cash receipts. The number of days sales outstanding in accounts
receivable (which includes unbilled receivables) was 112 days at June 30, 2000,
compared to 111 days at December 31, 1999. The number of days sales outstanding
in accounts receivable (which includes unbilled receivables) net of advance
billings was 76 days at June 30, 2000, compared to 82 days at December 31, 1999.
17
<PAGE> 18
The Company had cash and cash equivalents of $2.6 million at June 30, 2000 as
compared to $7.9 million at December 31, 1999.
During the six months ended June 30, 2000, net cash used in operating activities
totaled $2.7 million. The net loss of $3.6 million was offset by depreciation
and amortization of approximately the same amount. An increase in accounts
receivable of $2.9 million was the principal reason for this use of cash.
Cash used in investing activities of $2.0 million during the six months ended
June 30, 2000 related to capital expenditures primarily for expenditures on
facility expansion in Canada preclinical, computer system additions and
upgrades, and personal computer equipment. The Company expects to fund an
additional $7 million in capital expenditures expanding its preclinical facility
in Montreal during the second half of year 2000.
During the first quarter of 2000, the Company extended its $15.0 million
domestic credit facility through September 2001. The extension provides for
expansion capabilities to $25.0 million provided the Company meets certain
financial requirements. Credit availability under the Company's domestic line of
credit and foreign line of credit totals approximately $18.4 million. The lines
are collateralized by certain of the Company's assets and bear interest at a
fluctuating rate based either on the respective banks' prime interest rate or
the London Interbank Offered Rate (LIBOR), as elected by the Company. On June
30, 2000 and December 31, 1999, there were no borrowings outstanding under the
Company's lines of credit. In July 2000, the Company borrowed $2 million under
its $15 million domestic credit facility. Commitment availability at June 30,
2000 has been reduced by issued letters of credit of approximately $727,000.
Borrowings available under the lines of credit are subject to certain financial
and operating covenants.
The Company's Canadian subsidiary has outstanding borrowings of approximately
$458,000 from the Canadian government. This borrowing bears no interest and is
repayable in four equal annual installments beginning August 2000 and ending in
2003.
The Company expects to continue expanding its operations through internal growth
and strategic acquisitions. The Company expects such activities will be funded
from existing cash and cash equivalents, cash flow from operations, and
available borrowings under its Credit Facilities. Although pressure on cash
reserves is expected, the Company estimates that its sources of cash, including
its credit facilities, will be sufficient to fund the Company's current
operations, including planned capital expenditures, over the next year. There
may be acquisition or other growth opportunities which require additional
external financing, and the Company may from time to time seek to obtain
additional funds from public or private issuances of equity or debt securities.
There can be no assurances that such financings will be available on terms
acceptable to the Company.
QUARTERLY RESULTS
The Company's quarterly operating results may fluctuate as a result of factors
such as delays experienced in implementing or completing particular clinical
trials and termination of clinical trials, the costs associated with integrating
acquired operations, foreign currency exchange fluctuations, as well as the
costs associated with opening new offices. Since a high percentage of the
Company's operating costs are relatively fixed while revenue is subject to
fluctuation, minor variations in the timing of contracts or the progress of
clinical trials (both delays and accelerations) may cause significant variations
in quarterly operating results. Results of one quarter are not necessarily
indicative of results for the next quarter.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities (SFAS No. 133) which was required to be
adopted in years beginning after June 15, 1999. In July 1999, SFAS No. 137 was
issued as Accounting for Derivative Investments and Hedging Activities -
Deferral of the Effective
18
<PAGE> 19
Date of FASB Statement No. 133 which defers for one year the effective date of
SFAS No. 133 to all fiscal quarters of all fiscal years beginning after June 15,
2000. Accordingly, the Company plans to adopt SFAS No. 133 effective January 1,
2001. From time to time, the Company uses foreign exchange forward contracts to
hedge the risk of changes in foreign currency exchange rates associated with
contracts in which the expenses for providing services are incurred in the
functional currency of the Company's foreign subsidiary, but payments on
contracts are made by the client in another currency. The Company does not
anticipate that the adoption of SFAS No. 133 will have a significant effect on
the financial position of the Company.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin 101, (SAB No. 101), "Revenue Recognition in Financial Statements." SAB
No.101 summarizes certain of the SEC staff's views on applying generally
accepted accounting principles to revenue recognition. The Company will adopt
SAB No. 101 in the quarter ended December 31, 2000 and does not expect SAB No.
101 to have a material effect on its financial position or results of
operations.
YEAR 2000 ISSUE
The Company was engaged in a major effort to minimize the impact of the Year
2000 date change on its products, services, information systems, laboratories
and facilities. All systems were deemed Year 2000 compliant in September 1999.
The Company did not experience any Year 2000 problems subsequent to December 31,
1999.
FOREIGN CURRENCY
The Company is exposed to foreign currency risk by virtue of its international
operations. The Company conducts business in several foreign countries.
Approximately 73% and 70% of the Company's net revenue for the three months
ended June 30, 2000 and 1999, respectively, and 74% and 67% for the six months
ended June 30, 2000 and 1999 were derived from the Company's operations outside
the United States. During the quarter ended June 30, 2000, the Company's
preclinical operations in Canada generated 73% of the Company's non-U.S.
revenue. Accordingly, exposure exists to potentially adverse movement in foreign
currency rates, especially the Canadian dollar and British pound sterling.
Canada and the United Kingdom have traditionally had relatively stable
currencies in recent years and it is expected these conditions will persist over
the next twelve months. However, the Company continually monitors international
events which could affect currency values. Accordingly, from time to time, the
Company uses foreign exchange forward contracts to hedge the risk of changes in
foreign currency exchange rates associated with contracts in which the expenses
for providing services are incurred in the functional currency of the Company's
foreign subsidiary, but payments on contracts are made by the client in another
currency. The objective of these contracts is to reduce the effect of foreign
currency exchange rate fluctuations on the Company's foreign subsidiary's
operating results.
Additionally, the Company's consolidated financial statements are denominated in
U.S. dollars and, accordingly, changes in the exchange rates between the
Company's subsidiaries' local currency and the U.S. dollar will affect the
translation of such subsidiaries' financial results into U.S. dollars for
purposes of reporting the Company's consolidated financial results. Translation
adjustments are reported with accumulated other comprehensive income (loss) as a
separate component of stockholders' equity. Such adjustments may in the future
be material to the Company's financial statements.
INCOME TAXES
The Company's financial statements do not reflect U.S. or additional foreign
taxes on the possible distribution of undistributed earnings of foreign
subsidiaries as those earnings have been permanently reinvested. Should the
Company determine the need to distribute these undistributed earnings of foreign
subsidiaries, it would be subject
19
<PAGE> 20
to both U.S. income taxes (subject to an adjustment for foreign tax credits) and
withholding taxes payable to various countries.
The Company's provision for income taxes was $451,000 and $118,000 for the three
months ended June 30, 2000 and 1999, respectively, primarily due to the
Company's Canadian operations. The Company's provision for income taxes was
$886,000 and $357,000 for the six months ended June 30, 2000 and 1999,
respectively, primarily due to the Company's Canadian operations. A valuation
allowance has been established for the amount of the United States deferred tax
assets primarily related to the Company's potential tax benefit associated with
loss carryforwards.
EUROPEAN MONETARY UNION
Within Europe, the European Economic and Monetary Union (the "EMU") introduced a
new currency, the Euro, on January 1, 1999. The new currency is in response to
the EMU's policy of economic convergence to harmonize trade policy, eliminate
business costs associated with currency exchange and to promote the free flow of
capital, goods and services.
On January 1, 1999, the participating countries adopted the Euro as their local
currency, initially available for currency trading on currency exchanges and non
cash (banking) transactions. The existing local currencies, or legacy
currencies, are planned to remain legal tender through January 1, 2002.
Beginning on January 1, 2002, Euro-denominated bills and coins are planned to be
issued for cash transactions. For a period of nine months from this date, both
legacy currencies and the Euro are planned to be legal tender. On or before July
1, 2002, the participating countries are planning to withdraw all legacy
currency and use the Euro exclusively.
The introduction of the Euro may have potential implications for the Company's
existing operations. Currently, Spain, Belgium, France and Italy are the only
participating countries in the EMU in which the Company has operations. While
one cannot predict such events, many authorities expect non-participating
European Union countries, such as the United Kingdom, to eventually join the
EMU. The Company does not currently expect to experience any operational
disruptions or to incur any costs as a result of the introduction of the Euro
that would materially affect the Company's liquidity or capital resources. A
substantial portion of the Company's contracts with customers provide for
payment in U.S. dollars, Canadian dollars, and British pound sterling;
accordingly, the Euro has not been used except to a minor degree.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is a global provider of preclinical and clinical research services
to pharmaceutical, biotechnology and medical device clients. As such, the
Company's ability to win new outsourced contracts from the pharmaceutical
industry is dependent upon the rate of research and development expenditure by
that industry. This in turn can be influenced by a variety of factors, including
mergers within the pharmaceutical industry, the availability of capital to the
biotechnology industry, and by the impact of government reimbursement rates for
medicare and medicaid programs. Consequently, the success of the company to grow
and win new outsourced contracts is highly dependent upon the ability of the
pharmaceutical and biotechnology industries to continue to spend on R&D at rates
close to or at historical levels.
The Company is exposed to foreign currency risk by virtue of its international
operations. The Company conducts business in several foreign countries.
Approximately 73% and 70% of the Company's net revenue for the three months
ended June 30, 2000 and 1999, and 74% and 67% for the six months ended June 30,
2000 and 1999 were derived from the Company's operations outside the United
States. During the quarter ended June 30, 2000, the Company's preclinical
operations in Canada generated 73% of the Company's non-U.S. revenue.
Accordingly, exposure exists to potentially adverse movement in foreign currency
rates, especially the Canadian dollar and British pound sterling. Canada and the
United Kingdom have traditionally had relatively stable currencies in
20
<PAGE> 21
recent years and it is expected these conditions will persist over the next
twelve months. However, the Company continually monitors international events
which could affect currency values. Accordingly, from time to time, the Company
uses foreign exchange forward contracts to hedge the risk of changes in foreign
currency exchange rates associated with contracts in which the expenses for
providing services are incurred in the functional currency of the Company's
foreign subsidiary, but payments on contracts are made by the client in another
currency. The objective of these contracts is to reduce the effect of foreign
currency exchange rate fluctuations on the Company's foreign subsidiary's
operating results.
Additionally, the Company's consolidated financial statements are denominated in
U.S. dollars and, accordingly, changes in the exchange rates between the
Company's subsidiaries' local currency and the U.S. dollar will affect the
translation of such subsidiaries' financial results into U.S. dollars for
purposes of reporting the Company's consolidated financial results. Translation
adjustments are reported with accumulated other comprehensive income (loss) as a
separate component of stockholders' equity. Such adjustments may in the future
be material to the Company's financial statements.
21
<PAGE> 22
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The regular annual meeting of stockholders of the Company was
held on May 25, 2000.
(c) At the annual meeting, the stockholders:
(i) Voted to elect five directors of the Company. Each
nominee for director was elected by a vote of the
stockholders as follows:
<TABLE>
<CAPTION>
Affirmative Votes Term
Votes Withheld Expiration
----- -------- ----------
<S> <C> <C> <C>
Jerry R. Mitchell, M.D., Ph.D 13,855,760 1,314,629 2001
Irwin B. Eskind, M.D 14,945,090 225,299 2001
Richard J. Eskind 14,940,322 230,067 2001
Edward G. Nelson 14,971,390 198,999 2001
Roscoe R. Robinson, M.D 14,837,914 332,475 2001
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT INDEX
EXHIBIT NO.
-----------
10.18 Amended and Restated Loan and Security Agreement dated March 30, 2000
by and among Bank of America, N.A., a national banking association and
the successor to NationsBank of Tennessee, N.A., and the Registrant and
its U.S. subsidiaries
10.19 Form of Employment Agreement between the Company and its President of
the Americas, Graham S. May, M.D.
27 Financial Data Schedule (SEC use only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended June 30, 2000.
22
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLINTRIALS RESEARCH INC.
Date: July 31, 2000 By: /s/ S. COLIN NEILL
----------------------------------------
S. Colin Neill
Senior Vice President and Chief
Financial Officer (Principal Financial
and Accounting Officer)
23
