Kendle Announces Third Quarter 2009 Results

Improves Sequential Quarter Earnings

CINCINNATI, Nov. 4 /PRNewswire-FirstCall/ -- Kendle (Nasdaq: KNDL), a leading,
global full-service clinical research organization, today reported solid net
income of $8.8 million or $0.59 per diluted share for the third quarter of
2009, primarily the result of strong execution of its cost control
initiatives, compared with net income of $9.4 million or $0.62 per diluted
share for the third quarter of 2008. On a pro forma basis, excluding the
additional non-cash interest and restructuring charge, net income per diluted
share for the third quarter of 2009 was $0.71 compared with $0.73 per diluted
share for the third quarter of 2008.

Third Quarter 2009 Results

Net revenues for the third quarter ended Sept. 30, 2009, were $104.6 million,
down slightly from the second quarter. On a constant currency basis this is
$111.9 million compared with $124.8 million for the same period of the prior
year.

Operating income for the quarter increased from the second quarter of 2009 to
$15.5 million or 14.9 percent of net revenues, primarily related to the
Company's cost control initiatives coupled with the resolution of an insurance
claim, previously discussed in connection with its Year End 2008 press
release. The insurance recovery resulted in a $5.0 million reduction of direct
costs for the third quarter of 2009. This reduction was partially offset by
$1.6 million of additional expense to adjust a related liability. The net
effect of these two items was to increase operating income by $3.4 million or
3.3 percent of net revenue. On a constant currency basis operating income was
$17.8 million or 15.9 percent of net revenues compared with $15.9 million or
12.7 percent of net revenues for the third quarter of 2008.

New business awards for the third quarter of 2009 totaled $137.2 million, up
from $132 million in the second quarter of 2009. Gross book to bill for the
third quarter was a solid 1.3 to 1.0. Contract cancellations for the quarter
were $53.8 million or 6.1 percent of the Company's backlog at June 30, 2009
and representing a net book-to-bill of 0.8 to 1.0. Total business
authorizations amounted to $846.0 million at Sept. 30, 2009.

Cash flow from operations for the third quarter of 2009 was $10.6 million.
Cash, cash equivalents and marketable securities at Sept. 30, 2009 totaled
$57.7 million. Days sales outstanding in accounts receivables continue to be
strong at 33 days compared with 46 days in the third quarter of 2008. Capital
expenditures for the quarter totaled $2.9 million, composed primarily of
investments in IT infrastructure related to the Company's implementation of an
ERP system.

Open Market Repurchase

During the quarter, the Company paid $13.3 million in the open market to
repurchase par value of $15.0 million of its convertible debt. Year-to-date,
the Company has repurchased par value $40.0 million of its convertible debt
for a total cost of $31.6 million. As a result of this program, the Company
expects to reduce interest expense by approximately $9.8 million over the
remaining term of the convertible notes, which includes approximately $750,000
in the fourth quarter of 2009.

Nine-Month Results

Net revenues for the nine-month period ended Sept. 30, 2009 were $320.0
million. This is $355.4 million on a constant currency basis and compares with
$365.9 million reported for the same period in 2008.

Operating income for the first nine months of 2009 was $30.6 million or 9.6
percent of net service revenues. On a constant currency basis and excluding
the restructuring charge taken in the second quarter of 2009, operating income
is strong at $46.1 million or 13.0 percent of net revenues compared with $45.9
million or 12.5 percent of net revenues for same period of the prior year. The
previously discussed insurance recovery and related item had a net positive
impact on the year-to-date operating margin of 1.0 percent of net revenues.

Net income was $12.9 million for the first nine months of 2009 compared with
net income of $19.8 million for the same period last year. Net income per
share on a diluted basis for the nine months ended Sept. 30, 2009 was $0.86
per share compared with $1.32 per diluted share for the first nine months of
2008. On a pro forma basis, net income per diluted share for the first nine
months of 2009 was $1.61 compared with $1.63 for 2008.

Cash flow from operations for the first nine months of 2009 was strong at
$50.0 million compared with $3.5 million for the same period of the prior
year. Capital expenditures for the nine month period totaled $14.1 million
versus $18.1 million for the same period last year.

Third Quarter 2009 Conference Call and Webcast Details

Kendle will host its Third Quarter 2009 conference call on Nov. 5, 2009, at
8:30 a.m. Eastern Time. The call will be broadcast live over the Internet and
can be accessed at www.kendle.com. A replay of the Webcast will be available
at www.kendle.com shortly after the call for on-demand replay through 5 p.m.
Eastern Time on Dec. 4, 2009.

About Kendle

Kendle International Inc. (Nasdaq: KNDL) is a leading global clinical research
organization providing the full range of early- to late-stage clinical
development services for the world's biopharmaceutical industry. Our focus is
on innovative solutions that reduce cycle times for our customers and
accelerate the delivery of life-enhancing drugs to market for the benefit of
patients worldwide. As one of the world's largest global providers of Phase
I-IV services, we offer experience spanning more than 100 countries, along
with industry-leading patient access and retention capabilities and broad
therapeutic expertise, to meet our customers' clinical development challenges.

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.

Use of Non-GAAP Financial Measures

This 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.

Forward-Looking Statements

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.
The Company believes that its aggregate backlog is not necessarily a
meaningful indicator of future results. All information in this press release
is current as of Nov. 4, 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.

Kendle International Inc.
Condensed Consolidated Statement of Income
(In thousands, except per share data)
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2009 2008(1) 2009 2008(1)
-------- -------- -------- --------
Net service revenues $104,588 $124,828 $320,042 $365,941
Reimbursable out-of-pocket
revenues 29,172 56,254 100,934 151,346
-------- -------- -------- --------
Total revenues 133,760 181,082 420,976 517,287
-------- -------- -------- --------

Costs and expenses:
Direct costs 48,914 64,070 162,096 186,763
Reimbursable
out-of-pocket costs 29,172 56,254 100,934 151,346
Selling, general and
administrative expenses 35,854 40,649 109,110 122,009
Restructuring expense 380 - 6,386 -
Depreciation and
amortization 3,907 4,240 11,802 11,245
-------- -------- -------- --------
Total costs and
expenses 118,227 165,213 390,328 471,363
-------- -------- -------- --------

Income from operations 15,533 15,869 30,648 45,924

Other expense:
Interest expense (3,462) (3,832) (11,066) (12,079)
Interest income 72 94 435 483
Gain (loss) on
extinguishment of debt (182) - 2,951 -
Other (213) 3,364 3,981 (815)
-------- -------- -------- --------
Total other expense (3,785) (374) (3,699) (12,411)
-------- -------- -------- --------

Income before income taxes 11,748 15,495 26,949 33,513

Income taxes 2,922 6,114 14,043 13,725
-------- -------- -------- --------

Net income $8,826 $9,381 $12,906 $19,788
======== ======== ======== ========

Income per share data:
Basic:

Net income per share $0.59 $0.64 $0.87 $1.34
======== ======== ======== ========

Weighted average
shares outstanding 14,868 14,769 14,853 14,721

Diluted:

Net income per share $0.59 $0.62 $0.86 $1.32
======== ======== ======== ========

Weighted average
shares outstanding 14,979 15,018 14,981 14,982

(1) As adjusted resulting from the adoption of new accounting guidance for
convertible debt, as of January 1, 2009.

Kendle International Inc.
Reconciliation of Non-GAAP Measures
(In thousands, except per share data)
(Unaudited)

September 30, 2009
---------------------------
Three Months Nine Months
------------- -------------
Reconciliation of pro
forma net service
revenues:
Net service revenues, as
reported $104,588 $320,042
Constant currency
adjustment 7,277 35,310
------------- -------------
Net service revenues, as
adjusted for constant
currency $111,865 $355,352
------------- -------------

Reconciliation of pro forma
income from operations:
Income from operations, as
reported $15,533 $30,648
Constant currency
adjustment 2,308 8,507
Restructuring charge, as
adjusted for constant
currency - 6,901
------------- -------------
Income from operations, as
adjusted for constant
currency and restructuring
charge $17,841 $46,056
============= =============

Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2009 2008(1) 2009 2008(1)
-------- -------- -------- --------
Reconciliation of pro
forma net income:

Net income, as reported $8,826 $9,381 $12,906 $19,788
Additional interest
expense related to
convertible debt 1,541 1,595 4,969 4,647
Restructuring expense,
net of tax 234 - 3,927 -
Gain (loss) on
extinguishment of debt,
net of tax - - (2,114) -
Discrete tax item
related to foreign
currency hedge - - 4,441 -
-------- -------- -------- --------
Pro forma net income $10,601 $10,976 $24,129 $24,435
======== ======== ======== ========

Pro forma net income per
share:
Basic $0.71 $0.74 $1.62 $1.66
Diluted $0.71 $0.73 $1.61 $1.63

(1) As adjusted resulting from the adoption of new accounting guidance for
convertible debt, as of January 1, 2009.

See Use of Non-GAAP Measures section in the body of the press release.

Kendle International Inc.
Selected Balance Sheet and Other Information
(In thousands)
(Unaudited)

Selected Balance Sheet
Information: September 30, 2009 December 31, 2008 (1)
------------------ ---------------------

Cash, cash equivalents
and marketable securities
(including restricted
cash) $57,703 $36,053

Receivables, net of
advance billings 49,204 63,410

Convertible notes, Net
of discount 141,726 171,848

Net Service Revenues by
Geographic Region:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
North America 45% 50% 49% 47%
Europe 42% 37% 37% 41%
Latin America 9% 9% 10% 8%
Asia-Pacific 4% 4% 4% 4%

Segment Information:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
Early Stage:
Net Service Revenues $10,764 $11,225 $27,227 $25,500
Operating Income 1,784 1,208 2,699 3,745

Late Stage:
Net Service Revenues $91,496 $110,879 $284,691 $331,793
Operating Income 23,002 26,674 63,134 79,963

Support and Other:
Net Service Revenues $2,328 $2,724 $8,124 $8,648
Operating Loss (9,253) (12,013) (35,185) (37,784)

(1) As adjusted resulting from the adoption of new accounting guidance for
convertible debt, as of January 1, 2009.

SOURCE Kendle International Inc.

Michael Lawson, Investors, +1-513-763-1992, or Lori Dorer, Media,
+1-513-345-1685, both for Kendle International Inc.