-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BjEa839JpFPq28Oz2tj5qPHdCKC3jRyr0CiP9zDGlHWezqcqe2MfrIHzkfHj86YJ noNwfHtCU57fvTtzPRhiCA== 0000950109-96-005318.txt : 19960816 0000950109-96-005318.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950109-96-005318 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DENDRITE INTERNATIONAL INC CENTRAL INDEX KEY: 0000880321 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 222786386 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-92434 FILM NUMBER: 96613144 BUSINESS ADDRESS: STREET 1: 1200 MOUNT KEMBLE AVE CITY: MORRISTOWN STATE: NJ ZIP: 07960 BUSINESS PHONE: 2014251200 MAIL ADDRESS: STREET 1: 1200 MOUNT KEMBLE AVE CITY: MORRISTOWN STATE: NJ ZIP: 07960-6797 10-Q 1 FORM 10-Q - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-Q [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended June 30, 1996 ------------------ [_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____________________ Commission File Number 0-26138 -------------- Dendrite International, Inc. ---------------------------- (Exact name of registrant as specified in its charter) New Jersey 22-2786386 ------------------------ -------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ---------------------------------------- 1200 Mt. Kemble Avenue Morristown, NJ 07960 201-425-1200 ---------------------------------------- (Address, including zip code, and telephone number (including area code) of registrant's principal executive office) 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 last 90 days YES X NO ____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date. Class Shares Outstanding at August 12, 1996 ------------ -------------------------------------- Common Stock 11,131,006 ---------- - -------------------------------------------------------------------------------- 1 DENDRITE INTERNATIONAL, INC. INDEX
PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements Page No. -------- Consolidated Statements of Operations (unaudited) Three months and Six months ended June 30, 1996 and 1995............................... 3 Consolidated Balance Sheets June 30, 1996 (unaudited) and December 31, 1995........................................ 4 Consolidated Statements of Cash Flows (unaudited) Six months ended June 30, 1996 and 1995................................................ 5 Notes to Unaudited Consolidated Financial Statements..................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................................................ 7 PART II - OTHER INFORMATION - --------------------------- Item 4. Submission of Matters to a Vote of Security Holders...................................... 12 Item 6. Exhibits and Reports on Form 8-K......................................................... 12 Signatures............................................................................... 13
2 PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements Dendrite International, Inc. Consolidated Statements of Operations (In thousands, except per share data)
Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 1996 1995 1996 1995 ---- ---- ---- ---- (unaudited) (unaudited) REVENUES: License fees $ 2,241 $ 1,312 $ 4,114 $ 2,342 Services 15,019 11,290 27,370 21,433 ------------ ------------ ------------ ------------ 17,260 12,602 31,484 23,775 ------------ ------------ ------------ ------------ COST OF REVENUES: Cost of license fees 184 88 369 214 Cost of services 7,011 4,991 12,793 9,658 ------------ ------------ ------------ ------------ 7,195 5,079 13,162 9,872 ------------ ------------ ------------ ------------ Gross margin 10,065 7,523 18,322 13,903 ------------ ------------ ------------ ------------ OPERATING EXPENSES: Selling, general and administrative 6,764 5,000 11,999 10,112 Research and development 1,480 1,131 3,000 1,964 Write off in-process research and development costs 2,640 - 2,640 - ------------ ------------ ------------ ------------ 10,884 6,131 17,639 12,076 ------------ ------------ ------------ ------------ Operating income (loss) (819) 1,392 683 1,827 INTEREST (INCOME) EXPENSE (279) 5 (516) 5 OTHER EXPENSE (INCOME) 106 (147) 109 (175) ------------ ------------ ------------ ------------ Income (loss) before income taxes (646) 1,534 1,090 1,997 INCOME TAXES 765 615 1,426 800 ------------ ------------ ------------ ------------ NET INCOME (LOSS) $ (1,411) $ 919 $ (336) $ 1,197 ============ ============ ============ ============ NET INCOME (LOSS) PER SHARE $ (0.13) $ 0.10 $ (0.03) $ 0.12 ============ ============ ============ ============ SHARES USED IN COMPUTING NET INCOME (LOSS) PER SHARE 11,121 9,610 10,962 9,615 ============ ============ ============ ============
The accompanying notes are an integral part of these statements. 3 Dendrite International, Inc. Consolidated Balance Sheets (In thousands, except per share data)
June 30, December 31, 1996 1995 ---- ---- (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 11,657 $ 11,530 Short-term investments 11,985 10,955 Accounts receivable 18,588 14,699 Prepaid expenses and other 1,357 1,292 Deferred tax assets 1,155 1,157 ---------- ---------- Total current assets 44,742 39,633 PROPERTY AND EQUIPMENT, net 3,401 3,602 CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net 2,271 2,032 GOODWILL, net 831 - ---------- ---------- $ 51,245 $ 45,267 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 1,530 $ 1,002 Income taxes payable 81 2,528 Accrued compensation and benefits 2,718 2,174 Other accrued expenses 4,624 2,102 Deferred revenues 3,877 3,172 ---------- ---------- Total current liabilities 12,830 10,978 ---------- ---------- CAPITAL LEASE OBLIGATIONS - - DEFERRED RENT 643 464 DEFERRED TAXES 1,465 1,515 STOCKHOLDERS' EQUITY: Preferred stock, no par value, 10,000,000 shares authorized, none issued - - Common stock, no par value, 50,000,000 shares authorized: 11,124,706 and 10,675,581 shares issued and outstanding 31,520 26,809 Retained earnings 6,234 6,570 Deferred compensation (816) (502) Unrealized holding gain on short-term investments (2) 14 Cumulative translation adjustments (629) (581) ---------- ---------- Total stockholders' equity 36,307 32,310 ---------- ---------- $ 51,245 $ 45,267 ========== ==========
The accompanying notes are an integral part of these statements. 4 Dendrite International, Inc. Consolidated Statements of Cash Flows (in thousands)
Six Months Ended June 30, ---------------- 1996 1995 ---- ---- (unaudited) OPERATING ACTIVITIES Net Income (loss) $ (336) $ 1,197 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 1,007 1,090 Deferred income taxes (benefit) (48) - Write off of in-process research and development costs 2,640 - Changes in assets and liabilities: Increase in accounts receivable (3,889) (1,077) (Increase) decrease in prepaid expenses and other (65) 734 Increase (decrease) in accounts payable and accrued expenses 3,594 (760) Increase in deferred rent 179 226 Increase (decrease) in income taxes payable (2,447) 584 Increase in deferred revenues 705 1,530 ---------- ---------- Net cash provided by operating activities 1,340 3,524 INVESTING ACTIVITIES: Purchases of short-term investments (3,651) - Sales of short-term investments 2,621 - Payment for purchase of SRCI (3,500) - Purchases of property and equipment (407) (819) Additions to capitalized software development costs (609) (511) ---------- ---------- Net cash used in investing activities (5,546) (1,330) ---------- ---------- FINANCING ACTIVITIES: Payments on capital lease obligations $ - (6) Issurance of Common Stock from secondary offering net of offering costs 4,282 - Purchase of common stock - (132) Issuance of Common Stock 162 68 ---------- ---------- Net cash provided by (used in) financing activities 4,444 (70) ---------- ---------- EFFECT OF FORIEGN EXCHANGE RATE CHANGES ON CASH (111) (551) ---------- ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS 127 1,573 ---------- ---------- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 11,530 3,910 ---------- ---------- CASH AND CASH EQUIVALLENTS, END OF PERIOD 11,657 5,483 ========== ==========
The accompanying notes are an integral part of these statements. Dendrite International, Inc. Notes To Unaudited Consolidated Financial Statements 1. BASIS OF PRESENTATION The consolidated financial statements as of June 30, 1996 and for the three and six month periods ended June 30, 1996 and 1995 are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management's discussion and analysis of financial condition and results of operations, contained in this report on form 10-Q. 2. SALE OF COMMON STOCK The Company has consummated two Public Offerings of Common Stock which closed on July 6, 1995 and March 13, 1996 respectively. The Company offered and sold 1,500,000 and 300,000 shares of Common Stock at a public offering price of $14.50 and $18.25 per share, respectively. The net proceeds to the Company from the public offerings, after payment of offering expenses, were approximately $18,770,000 and $4,282,000, respectively. An additional 1,490,000 and 2,805,000 shares, respectively, of Common Stock (including 390,000 and 405,000 shares, respectively, purchased by the underwriters upon the exercise in full of over-allotment options) were offered and sold by certain stockholders of the Company. The Company did not receive any proceeds from the sale of shares by selling stockholders. 3. NET INCOME (LOSS) PER SHARE COMPUTATION Net income (loss) per share was calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common share equivalents (computed using the treasury stock method) outstanding during the period except where anti-dilutive. The calculation of shares used in computing net income (loss) per share also includes 5,607,000 shares of Series A Convertible Preferred Stock which converted into 5,607,000 shares of Common Stock upon the consummation of the Initial Public Offering, as if they were converted to Common Stock on their original date of issuance. 4. ACQUISITION OF SRCI On May 1, 1996, the Company acquired 100% of the capital stock of SRCI, a French company for $16,350,000 French Francs, equivalent to approximately U.S. $3,198,000. The acquisition has been accounted for using the purchase method of accounting, whereby the purchase price is allocated to the assets and liabilities of SRCI based on their fair market values at the acquisition date. Such allocation has been based on estimates that may be revised at a later date. The purchase price, including transaction costs, exceeded the fair market value of the net assets acquired by $3,500,000 of which $2,640,000 was recorded as a write-off of in-process research and development costs, with the balance of $860,000 recorded as goodwill which will be amortized on a straight-line basis over five years. SRCI's results of operations have been included in the Company's consolidated financial statements from the date of acquisition. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview - -------- The Company succeeded in 1991 to a business co-founded in 1986 by the Company's President and Chief Executive Officer and others to provide comprehensive Electronic Territory Management ("ETM") solutions used to manage, coordinate and control the activities of large sales forces in complex selling environments, primarily in the pharmaceutical industry. The Company's solutions combine advanced software products with a wide range of specialized support services including implementation services, technical and hardware support services and sales force support services. The Company develops, implements and services advanced ETM systems in the United States, Canada, Western Europe, Japan, Australia, New Zealand, Hong Kong and Brazil through its own sales, support and technical personnel located in eleven offices worldwide. The Company generates revenues from two sources; license fees and fees from support services. License fees are charged by the Company for use of its proprietary computer software. Customers generally pay one-time perpetual license fees for a particular version of the Company's software based upon the number of users, territory covered and the number of modules in the particular system licensed by the customer. Certain license contracts contain customer acceptance provisions which require the Company to customize the system in accordance with agreed upon specifications before the system is accepted by the customer. License fee revenue is deferred on contracts with customer acceptance provisions until such time as the acceptance provisions are satisfied. To date there have been no instances in which customer acceptance provisions have led to nonpayment of license fees. Additional license fees are payable when customers agree to license additional modules, acquire an upgraded version of the Company's software and/or when the maximum number of users or initial geographic coverage is exceeded. Beginning in 1995, the Company made available an alternative license fee arrangement known as a "capitation" agreement which is a long term agreement (currently up to 10 years) under which the customer licenses Dendrite software and upgrades for an increasing preset annual charge. Under the capitation agreements there is an annual fee payable each year during the term of the agreement, and the fee increases each year. The fee encompasses all users in all geographic regions, and covers all maintenance fees and upgrades. This differs from the Company's other license agreements, where there is generally a one-time license fee, and customers pay additional fees for additional users and modules and future upgrades. If a customer anticipates expanding the number of users and its geographic reach, can take advantage of more sophisticated modules and is also confident of the Company's ability to satisfy its needs, the capitation arrangement is more cost effective than the traditional license fee arrangement. One customer has executed a capitation agreement to date. The Company actively markets the concept to existing and potential customers. The second and more significant component of the Company's revenues consist of fees from a wide variety of contracted services which the Company makes available to its customers, generally under multi-year contracts. Implementation fees are generated from services provided to design and implement the ETM solution. Technical and hardware support services are derived from services related to the operation of the file server and from the provision of ongoing technical and customer service support including customization of the software following implementation. Sales force support fees are derived from organizing and managing support for the customer's sales force. Currently, the Company's products are marketed in over 13 countries. The United States, the United Kingdom and France are the Company's main markets. The Company expects its foreign operations to grow and to continue to account for a material part of its revenues. Operating results 7 generated in local currencies are translated into United States dollars at the average exchange rate in effect for the reporting period. Results of Operations - --------------------- Three Months Ended June 30, 1995 and 1996 Revenues. Total revenues increased $4,658,000 or 37% from $12,602,000 in the three months ended June 30, 1995 to $17,260,000 in the three months ended June 30, 1996 as a result of an increase in the installed base of Dendrite systems, both from new and existing customers. Fluctuations in the Company's revenues depend on a number of factors, some of which are beyond the Company's control. These factors include, among others, the timing of contracts, delays in customer acceptance of the Company's software, the length of the sales cycle, customer budget changes and changes in pricing policy by the Company or its competitors. License fee revenues increased to $2,241,000 in the three months ended June 30, 1996 from $1,312,000 in the three months ended June 30, 1995. This increase was primarily attributable to the effect on licenses fee revenues of the factors discussed in the previous paragraph. The Company typically expects to realize a greater percentage of its license fee revenues for the year in the last two quarters of the year with a lower percentage in the first two quarters of the year. Service revenues increased 33% from $11,290,000 in the three months ended June 30, 1995 to $15,019,000 in the three months ended June 30, 1996. This quarterly increase in service revenues is primarily the result of an increase in the Company's installed base of Dendrite systems both from new and existing customers. Cost of Revenues. Cost of revenues increased 42% from $5,079,000 in the three months ended June 30, 1995 to $7,195,000 in the three months ended June 30, 1996 primarily due to an increase in the number of service representatives and technical staff and, to a lesser extent, an increase in associated support costs. This increase was directly related to the increase in service revenues. Cost of license fees represent the amortization of capitalized software costs. Cost of license fees increased from $88,000 in the three months ended June 30, 1995 to $184,000 in the three months ended June 30, 1996. This increase was due to the increase in software development and enhancement costs capitalized in 1995 and amortized beginning in 1996. Cost of service revenues increased from $4,991,000 in the three months ended June 30, 1995 to $7,011,000 in the three months ended June 30, 1996. As a percentage of service revenues, cost of service revenues increased from 44% of service revenues for the three months ended June 30, 1995 to 47% of service revenues for the three months ended June 30, 1996. Selling, General and Administrative (SG&A). SG&A expenses increased 35% from $5,000,000 in the three months ended June 30, 1995 to $6,764,000 in the three months ended June 30, 1996. The increase in 1996 was primarily attributable to increased staff and, to a lesser extent, an increase in facilities growth to support operations and sales. As a percentage of revenues, SG&A expenses decreased from 40% for the three months ended June 30, 1995 to 39% for the three months ended June 30, 1996. Research and Development. Research and development expenses increased 31% from $1,131,000 in the three months ended June 30, 1995 to $1,480,000 in the three months ended June 30, 1996, while it remained constant at 9% as a percentage of revenues. The increase in research 8 and development expenses in 1996 is attributable to increased staff and resources required to continue development of updates and upgrades for the Company's Series 6 software product and for the development of prototypes for the next series of products. Write-off of in-process Research and Development Costs. The Company incurred a one-time charge of $2,640,000 to record the write-off of in-process research and development costs resulting from the acquisition of SRCI. The amount represents the estimated fair values related to incomplete research and development projects that were acquired as determined by independent appraisals. The technology acquired will require substantial additional development by the Company. Provision for Income Taxes. Excluding the non-deductible write-off of in-process research and development costs, the effective tax rate was 38% for the three months ended June 30, 1996 as compared to 40% for the three months ended June 30, 1995. Six Months Ended June 30, 1995 and 1996 Revenues. Total revenues increased $7,709,000 or 32% from $23,775,000 in the six months ended June 30, 1995 to $31,484,000 in the six months ended June 30, 1996 as a result of an increase in the installed base of Dendrite systems, both from new and existing customers. License fee revenues increased from $2,342,000 in the six months ended June 30, 1995 to $4,114,000 in the six months ended June 30, 1996 due to a number of factors, some of which are beyond the Company's control. The Company typically expects to realize a greater percentage of its license fee revenues for the year in the last two quarters of the year with a lower percentage in the first two quarters of the year. Service revenues increased 28% from $21,433,000 in the six months ended June 30, 1995 to $27,370,000 in the six months ended June 30, 1996 as a result of an increase in the Company's installed base of Dendrite systems. Service revenues increased 3% from $26,647,000 for the six months ended December 31, 1995 to $27,370,000 for the six months ended June 30, 1996 which is consistent with an increase in the installed base of Dendrite systems from both new and existing customers. Revenues from Pfizer Inc., Eli Lilly and Company and Rhone-Poulenc Rorer Inc. in the aggregate accounted for approximately 54% and 62% of the Company's revenues for the six months ended June 30, 1995 and 1996, respectively. Cost of Revenues. Cost of revenues increased 33% from $9,872,000 in the months ended June 30, 1995 to $13,162,000 in the six months ended June 30, 1996 primarily due to an increase in the number of service representatives and technical staff and, to a lesser extent, an increase in associated support costs. This increase was directly related to the increase in service revenues. Cost of license fees include the amortization of capitalized software costs. Cost of license fees increased from $214,000 in the six months ended June 30, 1995 to $369,000 in the six months ended June 30, 1996. This increase is due to increased software development and enhancement costs incurred and capitalized in 1995 and amortized beginning in 1996. Cost of service revenues increased from $9,658,000 in the six months ended June 30, 1995 to $12,793,000 in the six months ended June 30, 1996. As a percentage of service revenues, cost of service revenues increased from 45% of service revenues for the six months ended June 30, 1995 to 47% of service revenues for the six months ended June 30, 1996. Selling, General and Administrative (SG&A). SG&A expenses increased 19% from $10,112,000 in the six months ended June 30, 1995 to $11,999,000 in the six months ended June 30, 1996. The increase in 1996 was primarily attributable to increased staff and, to a lesser extent, an increase in facilities growth to support operations and sales. As a percentage of revenues, SG&A expenses decreased from 43% for the six months ended June 30, 1995 to 38% for the six months ended June 30, 1996. This decrease was primarily due to service revenues increasing faster than the growth in SG&A expense. 9 Research and Development. Research and development expense increased 53% from $1,964,000 in the six months ended June 30, 1995 to $3,000,000 in the six months ended June 30, 1996. As a percentage of revenues, research and development expenses increased from 8% for the six months ended June 30, 1995 to 10% for the six months ended June 30, 1996. The increase in research and development expenses in 1996 is attributable to increased staff and resources required to continue development of updates and upgrades for the Company's Series 6 software product and for the development of prototypes for the next series of products. Write-off of in-process Research and Development Costs. The Company incurred a one-time charge of $2,640,000 to record the write-off of in-process research and development costs resulting from the acquisition of SRCI. The amount represents the estimated fair values related to incomplete research and development projects that were acquired as determined by independent appraisals. The technology acquired will require substantial additional development by the Company. Provision for Income Taxes. Excluding the non-deductible write-off of in-process research and development costs, the effective tax rate was 38% for the six months ended June 30, 1996 as compared to 40% for the six months ended June 30, 1995. Variability of Quarterly Results Fluctuations in the Company's quarterly revenues depend on a number of factors, some of which are beyond the Company's control. These factors include, among others, the timing of contracts, delays in customer acceptance of the Company's software, the length of the sales cycle, customer budget changes and changes in the pricing policy by the Company or its competitors. The Company establishes its expenditure levels for product development and other operating expenses based in large part on its expected future revenues. As a result, should revenues fall below expectations, operating results are likely to be adversely and disproportionately affected because only a small portion of the Company's expenses vary with its revenues. In addition, the Company's quarterly revenues from software license fees and related income may vary due to seasonal and cyclical factors. The Company typically expects to realize a greater percentage of its license fees and service revenues for the year in the third and fourth quarters with a lower percentage in the first and second quarters. In the future, to the extent the percentage of revenue from service revenues from existing customers of the Company continues to increase, and to the extent more customers choose to enter into long-term agreements to license software and upgrades for an increasing preset annual charge, seasonal and cyclical trends in the Company's revenues may be reduced. Liquidity and Capital Resources The Company has historically financed its operations primarily through cash generated by operations. Net cash provided by operating activities was $1,340,000 during the six months ended June 30, 1996 compared to $3,524,000 during the six months ended June 30, 1995. Cash provided by operating activities for the six months ended June 30, 1995 decreased compared to the six months ended June 30, 1996 primarily due to the increase in accounts receivable, the decrease in income taxes payable, partially offset by the increase in accounts payable. The Company utilized $ 5,546,000 of cash in investing activities in the first six months of 1996 compared to $1,330,000 in the first six months of 1995. The increase is primarily attributable to the purchases of short-term investments from the net proceeds the Company received upon the closing of the Initial Public Offering and the purchase of SRCI. The Company's net cash provided by financing activities has been primarily limited to the issuance of common stock from the Initial Public Offering. The Company maintains a $5,000,000 revolving line of credit agreement with Chase Manhattan Bank N.A. The agreement provides for borrowings up to $1,000,000 in local currencies directly by the Company or certain of its overseas subsidiaries and is available to finance working capital needs and possible future acquisitions. The $5,000,000 line of credit is secured by substantially all of the Company's assets. The $5,000,000 line of credit agreement requires the Company to maintain a minimum consolidated net worth, among other covenants, measured quarterly which is equal to the Company's net worth as of December 31, 1994 plus 50% of net income earned after December 31, 1994. This covenant has the effect of limiting the amount of cash dividends the Company may pay. At June 30, 1996 there was no borrowings outstanding under the agreement. 10 At June 30, 1996, the Company's working capital was approximately $31,912,000. The Company has no significant capital spending or purchasing commitments other than normal purchase commitments and commitments under facility and capital leases. The Company believes that the proceeds from the offering, available funds, anticipated cash flows from operations and its line of credit will satisfy the Company's projected working capital and capital expenditure requirements through at least the next two years. 11 Item 4. Submission of Matters to a Vote of Security Holders On May 21, 1996, the Company held its 1996 Annual Meeting of Shareholders (the "Annual Meeting"). At the Annual Meeting, the following five individuals were elected to the Company's Board of Directors: John E. Bailye, Bernard M. Goldsmith, John H. Martinson, G. Robert Marcus and Paul A. Margolis. In addition, at the Annual Meeting the Shareholders of the Company approved the following two proposals: (1) A proposal to ratify the appointment of Arthur Andersen LLP as the Company's independent public accountants for the fiscal year ending December 31, 1996; and (2) A proposal to amend the Company's Restated Certificate of Incorporation to remove the provision requiring the approval of the holders of the Company's common stock in order to increase the maximum number of directors on the Company's Board of Directors above five members. The results of the voting in the Company's election of directors and on the foregoing two proposals are set forth below. Rider A ----- - Election of Directors: Nominee For Withheld - ------- --- -------- John E. Bailye 8,721,302 700 8,721,302 700 8,721,302 700 8,721,302 700 8,721,302 700 Ratification of Appointment of Arthur Anderson LLP For Against Abstentions --- ------- ----------- 8,719,902 1,700 400 Amendment to Company's Restated Certificate of Incorporation For Against Abstentions Broken Non-Votes --- ------- ----------- ---------------- 7,532,243 1,092,509 2,000 95,250 Item 6. Exhibits and Reports on Form 8-K (a) The Company is furnishing the following exhibits in connection with this report: 3.1 Restated Certificate of Incorporation. (b) The Company did not file any Reports on Form 8-K during the quarter for which this report is filed. 12 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. Date: August ___, 1996 DENDRITE INTERNATIONAL, INC. (Registrant) By: /s/ John E. Bailye --------------------------------------- John E. Bailye, President and Chief Executive Officer By: /s/ Charles Warczakowski --------------------------------------- Charles Warczakowski, V. P. Finance and Treasurer (Principal Financial Officer) 13 EX-3.1 2 RESTATED CERTIFICATE OF INCORPORATION EXHIBIT 3.1 RESTATED CERTIFICATE OF INCORPORATION OF DENDRITE INTERNATIONAL, INC. FIRST: The name of the corporation is Dendrite International, Inc. (the ------ "Corporation"). SECOND: The purpose for which the corporation is organized is to engage ------- in any activity within the purposes for which corporations may be organized under Title 14A, Corporations, General, of the New Jersey Statutes. THIRD: The address of the Corporation's registered office is 1200 Mount ------ Kemble Avenue, Morristown, New Jersey 07960, and the name of the Corporation's registered agent at such address is John Edward Bailye. FOURTH: The Corporation shall indemnify every corporate agent as defined ------- in, and to the full extent permitted by, Section 14A:3-5 of the New Jersey Business Corporation Act, and to the full extent otherwise permitted by law. FIFTH: The number of directors constituting the present Board of ------ Directors is five, and the names and addresses of the current directors are as follows: John Edward Bailye Ofer Nemirovsky 1200 Mount Kemble Avenue c/o Hancock Venture Partners Morristown, NJ 07960 One Financial Center Boston, MA 02111 G. Robert Marcus John Martinson 721 Route 202-206 997 Lennox Drive P.O. Box 1018 Unit # 3 Somerville, NJ 08876 Lawrenceville, NJ 08648 Paul A. Margolis 95 Wells Avenue Newton, MA 02159 SIXTH: The following is a statement of the designations and powers, ------ preferences and rights, and the relative participating, optional or other special rights, and the qualifications, limitations and restrictions granted to or imposed upon the respective classes of shares of capital stock of the Corporation or the holders thereof: This Corporation is authorized to issue an aggregate of 60,000,000 shares, which shall have no par value per share. Of these shares, 50,000,000 shall be Common Stock, and 10,000,000 shares shall be preferred stock without designation until further action by the Board of Directors as provided below. The division of authorized shares of preferred stock into series, the determination of the designation and the number of shares of any series, the determination of the relative rights, preferences and limitations of the shares of any series, and any or all of such divisions and determinations, may be accomplished by an amendment to this Restated Certificate of Incorporation authorized and approved by the Board of Directors of the Corporation. The Board of Directors is authorized to change the designation or number of shares, or the relative rights, preferences and limitations of shares of any theretofore established series no shares of which have been issued. Notwithstanding the foregoing, the Board of Directors of the Company shall retain no authority hereafter, absent an affirmative vote of the requisite majority of holders of Common Stock and of holders of the requisite majority of other classes of stock of the Company entitled to vote thereon, if any, to redesignate the 10,000,000 shares of preferred stock as stock of an undesignated class of stock or of Common Stock. SEVENTH: To the extent permitted by New Jersey law, no director or -------- officer of the Corporation shall be personally liable to the Corporation or its shareholders for damages for breach of any duty owed to the Corporation or its shareholders except that this Article shall not relieve a director or officer from liability for any breach of duty based on an act or omission (a) in breach of such person's duty of loyalty to the Corporation or its shareholders, (b) not in good faith or involving a knowing violation of law or (c) resulting in receipt of such person of an improper personal benefit. EIGHTH: Pursuant to Subsection 14A:9-5(6) of the New Jersey Business ------- Corporation Act, this Restated Certificate of Incorporation shall become effective on the date of filing of this Restated Certificate of Incorporation in the office of the Secretary of State. EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS 6-MOS DEC-31-1996 DEC-31-1995 JAN-01-1996 JAN-01-1995 JUN-30-1996 JUN-30-1995 11,657 11,530 11,985 10,955 18,588 14,699 0 0 0 0 44,742 39,633 3,401 3,602 609 1,769 51,245 45,267 12,830 10,978 0 0 0 0 0 0 31,520 26,809 4,787 5,501 51,245 45,267 0 0 31,484 23,775 0 0 13,162 9,872 17,639 12,076 0 0 0 5 1,090 1,997 1,426 800 (336) 1,197 0 0 0 0 0 0 (336) 1,197 (.03) .12 (.03) .12
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