EX-99.1 2 a04-8888_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

 

 

 

FOR IMMEDIATE RELEASE

 

 

Dendrite Delivers Another Quarter of Strong Results

      Revenues approach $100 million, up 44% from prior year

      GAAP EPS of $0.17 up 17% from prior year

      Adjusted EPS of $0.19 tops First Call Consensus Estimate of $0.18 Adjusted EPS

      Adjusted Operating Margin % climbs almost 2 points from prior quarter to 12.8%; GAAP Operating Margins at 11.6%

Morristown, N.J., August 5, 2004  - Dendrite International, Inc. (NASDAQ: DRTE) today announced another strong quarter, reporting second quarter 2004 GAAP diluted earnings of $0.17 per share, up 17% compared to GAAP diluted earnings of $0.14 per share for the second quarter of 2003.

Excluding approximately $1.2 million of non-cash amortization pertaining to acquisition-related intangibles, second quarter 2004 adjusted earnings were $0.19 per diluted share, an improvement of 11% from an adjusted $0.17 per diluted share reported in the same period of the prior year.  A reconciliation of GAAP to adjusted results can be found on table 3 of the accompanying financial tables.

SECOND QUARTER RESULTS

Revenues for the quarter increased to $99.9 million, up 44% from the same period of the prior year.  Revenue growth was driven by the inclusion of a full quarter of Synavant operating revenue and strong overall performance by the Company across many of its product lines and geographies.

As a percentage of revenues, both GAAP and adjusted operating margins improved approximately 2 percentage points sequentially.  GAAP operating margins grew from 9.9% in the first quarter to 11.6% in the second quarter.  Adjusted operating margins climbed to 12.8% in the second quarter versus 11.0% in the first

 

 

 

 



 

 

quarter.  Adjusted operating margins exclude approximately $1.2 million of acquisition-related intangible expense.  Additional detail on acquisition-related intangible amortization expense can be found on table 7 of the accompanying financial tables.

 

 

 

“We are pleased to report that our investments in promoting fully integrated, data-driven sales and marketing solutions continued to show progress this quarter.  We are working diligently to continue building this momentum for sustainable growth in the future,” stated John Bailye, Chairman and Chief Executive Officer. “Even as we invest and work to build our integrated capabilities across the globe, we continue to report strong financial results.  The growth in operating income percent that we delivered this quarter shows that we are executing against our plans and steadily progressing towards reaching our longer-term financial goals.”

 

 

 

The Company also noted that its 2004 estimated tax rate was reduced from 40% to 38.5% and is expected to be maintained for the foreseeable future.  The key driver of the reduction was the profitability improvement of its European operations where historically some countries were operating at losses on which the Company was unable to recognize tax benefits.  The Company updated the 2004 tax estimate on the full year provision in the second quarter, resulting in a second quarter effective tax rate of 37.3%.

 

 

 

KEY OPERATING STATISTICS

 

 

 

Dendrite ended the second quarter of 2004 with $40.7 million in cash and cash equivalents.   Cash from operations continued to be strong, with the Company reporting $9.4 million of cash from operations in the second quarter, including approximately $1.7 million of payments related to acquisition liabilities.

 

 

 

Accounts receivable days sales outstanding (DSO) remained strong at 60 days, an increase of one day from the first quarter.  “We have maintained our focus on receivables management even as our revenue grows and we bring on new acquisitions,” said Kathy Donovan, Senior Vice President and Chief Financial Officer. “We credit this receivables management success to

 

2



 

 

our strong customer relationships and the Company’s focus on bringing cash in the door.”

 

 

 

RECENT HIGHLIGHTS

 

Dendrite reported success in many aspects of its business. Highlights included:

 

      Signing more than 20 new agreements with customers in North America, Europe, Latin America and Asia/Pacific Rim.  Additionally, the Company continued to see improvement in the adoption of Data & Analytics with agreements for more than 25 new studies/projects across 10 customers

 

      Adding approximately 1600 additional sales force automation user licenses through new and expanded business

 

      Signing a global clinical trials support agreement with one of the world’s leading pharmaceutical companies

 

      Signing a comprehensive three-year software and services contract with Sankyo Pharma, whose 550 member U.S. sales force will upgrade to Dendrite’s latest WebForce™ sales effectiveness solution

 

      Winning new business with the Canadian subsidiary of a leading pharmaceutical company’s consumer healthcare division, which will deploy Dendrite’s sales effectiveness and trade promotions management solutions to promote its over-the-counter products

 

      Completing its strategic acquisition of Schwarzeck-Verlag GmbH in July 2004 to accelerate its penetration in Europe and further expand its interactive marketing solutions within the German pharmaceutical industry

 

      Launching an innovative .NET-based framework that will serve as the core architecture for a new generation of Customer Relationship Management solutions for the pharmaceutical industry

 

 

OUTLOOK

 

 

 

The Company provided its customary six-month rolling outlook. “We currently believe that the combined revenue for the third and fourth quarters of 2004 will be in the range of approximately $217 to $222 million, representing mid-teen growth over the same periods in the prior year,” said Ms. Donovan.  Based on achieving this targeted revenue, we would anticipate delivering GAAP earnings in the range of $0.39 to $0.42 per diluted share over the next six months.  Excluding approximately $0.04 of projected acquisition-related

 

3



 

 

intangible expense, we would expect adjusted earnings to be in the range of $0.43 to $0.46 per diluted share for that same period, representing growth of 23% -31% versus the prior year.”

 

 

 

This outlook is based on our current expectations and assumptions and constitutes “forward-looking information.”  The Company can give no assurance that such expectations and assumptions will prove to be correct.  The Company does not intend to update such outlook other than in connection with regularly scheduled earnings releases.

 

 

 

Please visit our website at www.dendrite.com to participate in our earnings call web cast on August 5, 2004 at 5 p.m. EDT.

 

 

 

ABOUT DENDRITE

 

 

 

Dendrite develops and delivers solutions that increase the productivity of sales, marketing, and clinical processes for pharmaceutical and other life science clients. For more information, visit www.dendrite.com.

 

 

 

Investor Relations

 

Christine Croft
908-541-5865
christine.croft@dendrite.com

 

 

 

Note: Dendrite is a registered trademark of Dendrite International, Inc.

 

 

 

This document contains forward-looking statements that may be identified by such forward-looking terminology as “expect,” “believe,” “anticipate,” “will,” “intend,” “plan,” “target,” “outlook,” “guidance,” and similar statements or variations. Such forward-looking statements are based on our current expectations, estimates, assumptions and projections and involve significant risks and uncertainties, including risks which may result from our dependence on the pharmaceutical industry; fluctuations in quarterly revenues due to lengthy sales and implementation cycles for our products; our fixed expenses in relation to fluctuating revenues and variations in customers’ budget cycles; dependence on certain major customers; changes in demand for our products and services attributable to any weakness experienced in the  economy or mergers, acquisitions and consolidations in the pharmaceutical industry; successful and timely development and introduction of new products and versions; rapid technological changes; risks associated with foreign currency fluctuations as they affect our non-U.S. operations;  increased competition; risks associated with our expanded international operations and our ability to adopt and respond successfully to the unique risks involved in our non-U.S. operations; acquisitions, including the success of the acquisition of Synavant and other acquisitions and the risks associated with the integration of acquisitions; our ability to effectively manage our growth; the

 

4



 

 

protection of our proprietary technology; our ability to compete in the Internet-related products and services market; the continued demand for Internet-related products and services; the ability of our third party vendors to respond to technological change; our ability to maintain our relationships with third-party vendors;  less favorable than anticipated results from strategic relationships; dependence of data solutions on strategic relationships; events which may affect the U.S. and world economies; and catastrophic events which could negatively affect our information technology infrastructure. Other important factors that should be reviewed and carefully considered are included in the Company’s 10-K, 10-Qs, and other reports filed with the SEC. Actual results may differ materially. The Company assumes no obligation for updating any such forward-looking statements to reflect actual results, changes in assumptions or other changes affecting such forward-looking statements.

 

5



 

TABLE 1

DENDRITE INTERNATIONAL, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP

 

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2004

 

%

 

2003

 

%

 

Change

 

2004

 

%

 

2003

 

%

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License fees

 

$

2,431

 

2.4

%

$

2,752

 

4.0

%

-12

%

$

5,777

 

3.0

%

$

5,315

 

4.1

%

9

%

Services

 

97,476

 

97.6

%

66,776

 

96.0

%

46

%

189,194

 

97.0

%

123,923

 

95.9

%

53

%

Total revenues

 

99,907

 

100

%

69,528

 

100

%

44

%

194,971

 

100

%

129,238

 

100

%

51

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of license fees

 

923

 

0.9

%

1,204

 

1.7

%

-23

%

1,912

 

1.0

%

2,283

 

1.8

%

-16

%

Cost of services

 

50,007

 

50.1

%

33,578

 

48.3

%

49

%

99,043

 

50.8

%

62,318

 

48.2

%

59

%

Total cost of sales

 

50,930

 

51.0

%

34,782

 

50.0

%

46

%

100,955

 

51.8

%

64,601

 

50.0

%

56

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License gross margin

 

1,508

 

62.0

%

1,548

 

56.3

%

5.7

Pt 

3,865

 

66.9

%

3,032

 

57.0

%

(9.9

)Pt

Services gross margin

 

47,469

 

48.7

%

33,198

 

49.7

%

(1.0

)Pt

90,151

 

47.7

%

61,605

 

49.7

%

(2.0

)Pt

Total gross margin

 

48,977

 

49.0

%

34,746

 

50.0

%

(1.0

)Pt

94,016

 

48.2

%

64,637

 

50.0

%

(1.8

)Pt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

34,652

 

34.7

%

20,983

 

30.2

%

65

%

67,618

 

34.7

%

41,222

 

31.9

%

64

%

Research and development

 

2,722

 

2.7

%

3,215

 

4.6

%

-15

%

5,744

 

2.9

%

5,912

 

4.6

%

-3

%

Other operating (income)

 

 

0.0

%

 

0.0

%

0

%

(339

)

-0.2

%

 

0.0

%

0

%

 

 

37,374

 

37.4

%

24,198

 

34.8

%

54

%

73,023

 

37.5

%

47,134

 

36.5

%

55

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

11,603

 

11.6

%

10,548

 

15.2

%

10

%

20,993

 

10.8

%

17,503

 

13.5

%

20

%

Interest income

 

(4

)

0.0

%

312

 

0.4

%

-101

%

3

 

0.0

%

554

 

0.4

%

-99

%

Other income

 

18

 

0.0

%

25

 

0.0

%

-28

%

61

 

0.0

%

34

 

0.0

%

79

%

Income before income taxes

 

11,617

 

11.6

%

10,885

 

15.7

%

7

%

21,057

 

10.8

%

18,091

 

14.0

%

16

%

Income taxes

 

4,331

 

4.3

%

4,962

 

7.1

%

-13

%

8,107

 

4.2

%

7,844

 

6.1

%

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

7,286

 

7.3

%

$

5,923

 

8.5

%

23

%

$

12,950

 

6.6

%

$

10,247

 

7.9

%

26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.18

 

 

 

$

0.15

 

 

 

19

%

$

0.31

 

 

 

$

0.26

 

 

 

23

%

Diluted

 

$

0.17

 

 

 

$

0.14

 

 

 

17

%

$

0.30

 

 

 

$

0.25

 

 

 

20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

41,464

 

 

 

40,220

 

 

 

 

 

41,192

 

 

 

40,115

 

 

 

 

 

Diluted

 

43,342

 

 

 

41,101

 

 

 

 

 

42,941

 

 

 

40,704

 

 

 

 

 

 



 

TABLE 2

DENDRITE INTERNATIONAL, INC.

 

ADJUSTED CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)

 

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2004 (1)

 

%

 

2003 (1)

 

%

 

Change

 

2004 (2)

 

%

 

2003 (2)

 

%

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License fees

 

$

2,431

 

2.4

%

$

2,752

 

4.0

%

-12

%

$

5,777

 

3.0

%

$

5,315

 

4.1

%

9

%

Services

 

97,476

 

97.6

%

66,776

 

96.0

%

46

%

189,194

 

97.0

%

123,923

 

95.9

%

53

%

Total revenues

 

99,907

 

100.0

%

69,528

 

100.0

%

44

%

194,971

 

100.0

%

129,238

 

100.0

%

51

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of license fees

 

770

 

0.8

%

1,041

 

1.5

%

-26

%

1,607

 

0.8

%

1,968

 

1.5

%

-18

%

Cost of services

 

49,652

 

49.7

%

33,509

 

48.2

%

48

%

98,623

 

50.6

%

62,184

 

48.1

%

59

%

Total cost of sales

 

50,422

 

50.5

%

34,550

 

49.7

%

46

%

100,230

 

51.4

%

64,152

 

49.6

%

56

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License gross margin

 

1,661

 

68.3

%

1,711

 

62.2

%

6.1

Pt

4,170

 

72.2

%

3,347

 

63.0

%

9.2

Pt

Services gross margin

 

47,824

 

49.1

%

33,267

 

49.8

%

(0.7

)Pt

90,571

 

47.9

%

61,739

 

49.8

%

(1.9

)Pt

Total gross margin

 

49,485

 

49.5

%

34,978

 

50.3

%

(0.8

)Pt

94,741

 

48.6

%

65,086

 

50.4

%

(1.8

)Pt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

33,934

 

34.0

%

20,590

 

29.6

%

65

%

66,090

 

33.9

%

40,590

 

31.4

%

63

%

Research and development

 

2,722

 

2.7

%

3,215

 

4.6

%

-15

%

5,744

 

2.9

%

5,912

 

4.6

%

-3

%

Other operating (income)

 

 

0.0

%

 

0.0

%

0

%

(339

)

-0.2

%

 

0.0

%

0

%

 

 

36,656

 

36.7

%

23,805

 

34.2

%

54

%

71,495

 

36.7

%

46,502

 

36.0

%

54

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

12,829

 

12.8

%

11,173

 

16.1

%

15

%

23,246

 

11.9

%

18,584

 

14.4

%

25

%

Interest income

 

(4

)

0.0

%

312

 

0.4

%

-101

%

3

 

0.0

%

554

 

0.4

%

-99

%

Other income

 

18

 

0.0

%

25

 

0.0

%

-28

%

61

 

0.0

%

34

 

0.0

%

79

%

Income before income taxes

 

12,843

 

12.9

%

11,510

 

16.6

%

12

%

23,310

 

12.0

%

19,172

 

14.8

%

22

%

Income taxes

 

4,788

 

4.8

%

4,604

 

6.6

%

4

%

8,974

 

4.6

%

7,668

 

5.9

%

17

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

8,055

 

8.1

%

$

6,906

 

9.9

%

17

%

$

14,336

 

7.4

%

$

11,504

 

8.9

%

25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.19

 

 

 

$

0.17

 

 

 

13

%

$

0.35

 

 

 

$

0.29

 

 

 

21

%

Diluted

 

$

0.19

 

 

 

$

0.17

 

 

 

11

%

$

0.33

 

 

 

$

0.28

 

 

 

18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

41,464

 

 

 

40,220

 

 

 

 

 

41,192

 

 

 

40,115

 

 

 

 

 

Diluted

 

43,342

 

 

 

41,101

 

 

 

 

 

42,941

 

 

 

40,704

 

 

 

 

 

 

Note:  The non-GAAP financial information set forth above is not prepared in accordance with U.S. generally accepted accounting principles (GAAP).  These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.  Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.  The Company believes that disclosing non-GAAP statements of operations provide further insight into the operating performance of the Company and are useful to investors to help them analyze operating trends and perform comparisons across periods. Management uses the adjusted numbers to manage the business and evaluate operating performance on a period-to-period comparative basis.

 


(1) See Table 3 for the Statement of Operations reconciliation from GAAP to non-GAAP for the three months ended June 30, 2004 and 2003.

(2) See Table 4 for the Statement of Operations reconciliation from GAAP to non-GAAP for the six months ended June 30, 2004 and 2003.

 



 

TABLE 3

DENDRITE INTERNATIONAL, INC.

 

RECONCILIATION OF GAAP TO ADJUSTED (NON-GAAP) STATEMENT OF OPERATIONS

 

THREE MONTHS ENDED JUNE 30, 2004 AND 2003

 

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(Unaudited)

 

 

 

Three Months Ended June 30, 2004

 

Three Months Ended June 30, 2003

 

 

 

Total Adjusted

 

Adjustments (1)

 

GAAP

 

Total Adjusted

 

Adjustments (2)

 

GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

License fees

 

$

2,431

 

$

 

$

2,431

 

$

2,752

 

$

 

$

2,752

 

Services

 

97,476

 

 

97,476

 

66,776

 

 

66,776

 

Total revenues

 

99,907

 

 

99,907

 

69,528

 

 

69,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of license fees

 

770

 

153

 

923

 

1,041

 

163

 

1,204

 

Cost of services

 

49,652

 

355

 

50,007

 

33,509

 

69

 

33,578

 

Total cost of sales

 

50,422

 

508

 

50,930

 

34,550

 

232

 

34,782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

License gross margin

 

1,661

 

(153

)

1,508

 

1,711

 

(163

)

1,548

 

Services gross margin

 

47,824

 

(355

)

47,469

 

33,267

 

(69

)

33,198

 

Total gross margin

 

49,485

 

(508

)

48,977

 

34,978

 

(232

)

34,746

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

33,934

 

718

 

34,652

 

20,590

 

393

 

20,983

 

Research and development

 

2,722

 

 

2,722

 

3,215

 

 

3,215

 

Other operating income

 

 

 

 

 

 

 

 

 

36,656

 

718

 

37,374

 

23,805

 

393

 

24,198

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

12,829

 

(1,226

)

11,603

 

11,173

 

(625

)

10,548

 

Interest income

 

(4

)

 

(4

)

312

 

 

312

 

Other income

 

18

 

 

18

 

25

 

 

25

 

Income before income taxes

 

12,843

 

(1,226

)

11,617

 

11,510

 

(625

)

10,885

 

Income taxes

 

4,788

 

457

 

4,331

 

4,604

 

(358

)

4,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

8,055

 

$

(769

)

$

7,286

 

$

6,906

 

$

(983

)

$

5,923

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (3)

 

$

0.19

 

$

(0.02

)

$

0.18

 

$

0.17

 

$

(0.02

)

$

0.15

 

Diluted (3)

 

$

0.19

 

$

(0.02

)

$

0.17

 

$

0.17

 

$

(0.02

)

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

41,464

 

41,464

 

41,464

 

40,220

 

40,220

 

40,220

 

Diluted

 

43,342

 

43,342

 

43,342

 

41,101

 

41,101

 

41,101

 

 


(1) Adjustments represent exclusion of acquisition related amortization expense of definite lived intangible assets.

(2) All costs of sales and operating expense adjustments represent the exclusion of acquisition related amortization expense of definite lived intangible assets. Income taxes were adjusted $608 due to a foreign tax valuation adjustment in connection with the integration of Synavant.

(3) EPS does not appear to foot across due to the mathematical rounding of the individual calculations.

 



 

TABLE 4

DENDRITE INTERNATIONAL, INC.

 

RECONCILIATION OF GAAP TO ADJUSTED (NON-GAAP) STATEMENT OF OPERATIONS

 

SIX MONTHS ENDED JUNE 30, 2004 AND 2003

 

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(Unaudited)

 

 

 

Six Months Ended June 30, 2004

 

Six Months Ended June 30, 2003

 

 

 

Total Adjusted

 

Adjustments (1)

 

GAAP

 

Total Adjusted

 

Adjustments (2)

 

GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

License fees

 

$

5,777

 

$

 

$

5,777

 

$

5,315

 

$

 

$

5,315

 

Services

 

189,194

 

 

189,194

 

123,923

 

 

123,923

 

Total revenues

 

194,971

 

 

194,971

 

129,238

 

 

129,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of license fees

 

1,607

 

305

 

1,912

 

1,968

 

315

 

2,283

 

Cost of services

 

98,623

 

420

 

99,043

 

62,184

 

134

 

62,318

 

Total cost of services

 

100,230

 

725

 

100,955

 

64,152

 

449

 

64,601

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

License gross margin

 

4,170

 

(305

)

3,865

 

3,347

 

(315

)

3,032

 

Services gross margin

 

90,571

 

(420

)

90,151

 

61,739

 

(134

)

61,605

 

Total gross margin

 

94,741

 

(725

)

94,016

 

65,086

 

(449

)

64,637

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

66,090

 

1,528

 

67,618

 

40,590

 

632

 

41,222

 

Research and development

 

5,744

 

 

5,744

 

5,912

 

 

5,912

 

Other operating income

 

(339

)

 

(339

)

 

 

 

 

 

71,495

 

1,528

 

73,023

 

46,502

 

632

 

47,134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

23,246

 

(2,253

)

20,993

 

18,584

 

(1,081

)

17,503

 

Interest income

 

3

 

 

3

 

554

 

 

554

 

Other income

 

61

 

 

61

 

34

 

 

34

 

Income before income taxes

 

23,310

 

(2,253

)

21,057

 

19,172

 

(1,081

)

18,091

 

Income taxes

 

8,974

 

867

 

8,107

 

7,668

 

(176

)

7,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

14,336

 

$

(1,386

)

$

12,950

 

$

11,504

 

$

(1,257

)

$

10,247

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (3)

 

$

0.35

 

$

(0.03

)

$

0.31

 

$

0.29

 

$

(0.03

)

$

0.26

 

Diluted

 

$

0.33

 

$

(0.03

)

$

0.30

 

$

0.28

 

$

(0.03

)

$

0.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

41,192

 

41,192

 

41,192

 

40,115

 

40,115

 

40,115

 

Diluted

 

42,941

 

42,941

 

42,941

 

40,704

 

40,704

 

40,704

 

 


(1)  Adjustments represent exclusion of acquisition related amortization expense of definite lived intangible assets.

(2)  All costs of sales and operating expense adjustments represent the exclusion of acquisition related amortization expense of definite lived intangible assets. Income taxes were adjusted $608 due to a foreign tax valuation adjustment in connection with the integration of Synavant.

(3) EPS does not appear to foot across due to the mathematical rounding of the individual calculations.

 



 

TABLE 5

DENDRITE INTERNATIONAL, INC.

 

CONSOLIDATED BALANCE SHEETS

 

(IN THOUSANDS, EXCEPT SHARE DATA)

(Unaudited)

 

 

 

June 30, 2004

 

December 31, 2003(1)

 

Assets

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

40,650

 

$

30,405

 

Accounts receivable, net

 

66,567

 

71,383

 

Prepaid expenses and other current assets

 

8,430

 

8,483

 

Deferred taxes

 

13,078

 

8,844

 

Facility held for sale

 

6,900

 

6,900

 

Total current assets

 

135,625

 

126,015

 

 

 

 

 

 

 

Property and equipment, net of accumulated amortization of $49,820 and $43,946

 

31,184

 

28,140

 

Other assets

 

4,900

 

2,004

 

Long-term receivable

 

 

3,157

 

Goodwill

 

84,792

 

70,403

 

Intangible assets, net

 

21,176

 

18,574

 

Purchased capitalized software, net

 

1,361

 

1,666

 

Capitalized software development costs, net

 

6,691

 

6,126

 

Deferred taxes

 

6,272

 

6,372

 

 

 

$

292,001

 

$

262,457

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

Current Liabilities:

 

 

 

 

 

Current installments of long-term debt

 

$

386

 

$

 

Accounts payable

 

10,446

 

4,990

 

Income taxes payable

 

10,918

 

6,194

 

Capital lease obligations

 

601

 

1,033

 

Accrued compensation and benefits

 

15,843

 

16,104

 

Accrued professional and consulting fees

 

6,341

 

7,842

 

Other accrued expenses

 

20,040

 

21,038

 

Purchase accounting restructuring accrual

 

3,754

 

3,203

 

Deferred revenues

 

13,235

 

16,379

 

Total current liabilities

 

81,564

 

76,783

 

 

 

 

 

 

 

Capital lease obligations

 

35

 

187

 

Purchase accounting restructuring accrual

 

5,589

 

8,627

 

Deferred rent

 

468

 

369

 

Long-term debt, excluding current installments

 

1,257

 

 

Other non-current liabilities

 

3,572

 

356

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Preferred stock, no par value, 15,000,000 shares authorized, none issued

 

 

 

Common stock, no par value, 150,000,000 shares authorized, 43,803,530 and 43,013,428 shares issued; 41,580,830 and 40,790,728 shares outstanding at June 30, 2004 and December 31, 2003, respectively

 

110,689

 

100,448

 

Retained earnings

 

110,886

 

97,936

 

Deferred compensation

 

(64

)

(56

)

Accumulated other comprehensive loss

 

(1,119

)

(1,317

)

Less treasury stock, at cost

 

(20,876

)

(20,876

)

 

 

 

 

 

 

Total stockholders’ equity

 

199,516

 

176,135

 

 

 

 

 

 

 

 

 

$

292,001

 

$

262,457

 

 


(1) Amounts reflect reclassifications to conform to current year presentation.

 



 

TABLE 6

DENDRITE INTERNATIONAL, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(IN THOUSANDS)

(Unaudited)

 

 

 

For the Six Months Ended June 30,

 

 

 

2004

 

2003

 

Operating activities:

 

 

 

 

 

Net income

 

$

12,950

 

$

10,247

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

10,446

 

8,564

 

Amortization of deferred compensation, net of forfeitures

 

115

 

(54

)

Other adjustments for non-cash items

 

901

 

608

 

Changes in assets and liabilities, net of effects from acquisitions:

 

 

 

 

 

Decrease in accounts receivable

 

9,780

 

6,858

 

Decrease (increase) in prepaid expenses and other current assets

 

870

 

(933

)

Increase in other assets

 

693

 

 

Decrease in accounts payable and accrued expenses

 

(3,576

)

(16,100

)

Decrease in purchase accounting restructuring accrual

 

(4,278

)

 

Increase in income taxes payable

 

675

 

58

 

Decrease in accrued restructuring charge

 

 

(260

)

Decrease in deferred revenue

 

(3,787

)

(1,130

)

Increase in other non-current liabilities

 

114

 

68

 

Net cash provided by operating activities

 

24,903

 

7,926

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

Sales of short-term investments

 

 

1,294

 

Acquisitions, net of cash acquired

 

(6,812

)

(51,682

)

Purchases of property and equipment

 

(8,615

)

(3,905

)

Additions to capitalized software development costs

 

(2,074

)

(1,382

)

Other, net

 

 

(50

)

Net cash used in investing activities

 

(17,501

)

(55,725

)

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

Borrowings from line of credit

 

 

5,000

 

Repayments of line of credit

 

 

(5,000

)

Repayments of long-term debt

 

(1,689

)

 

Repayments of acquired loan

 

(624

)

 

Payments on capital lease obligations

 

(592

)

(251

)

Issuance of common stock

 

5,580

 

2,530

 

Net cash provided by financing activities

 

2,675

 

2,279

 

 

 

 

 

 

 

Effect of foreign exchange rate changes on cash

 

168

 

401

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

10,245

 

(45,119

)

Cash and cash equivalents, beginning of year

 

30,405

 

68,308

 

Cash and cash equivalents, end of period

 

$

40,650

 

$

23,189

 

 



 

TABLE 7

DENDRITE INTERNATIONAL, INC.

 

PURCHASED INTANGIBLE ASSET AMORTIZATION

 

(DOLLARS IN THOUSANDS)

(Unaudited)

 

 

 

2004

 

 

 

 

 

Actuals

 

Projections

 

Full Year Projections

 

 

 

1st Qtr

 

2nd Qtr

 

3rd Qtr

 

4th Qtr

 

2004

 

2005 (b)

 

2006 (b)

 

2007 (b)

 

2008 (b)

 

Thereafter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Synavant Intangible Detail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Covenants not to compete

 

$

263

 

$

263

 

$

263

 

$

263

 

$

1,052

 

$

481

 

$

 

$

 

$

 

$

 

Backlog (a)

 

129

 

129

 

129

 

129

 

516

 

87

 

 

 

 

 

Pharbase Database

 

65

 

65

 

65

 

65

 

260

 

260

 

260

 

260

 

260

 

1,159

 

Customer relationships

 

112

 

112

 

112

 

112

 

448

 

446

 

446

 

446

 

446

 

3,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Synavant Amortization Total

 

569

 

569

 

569

 

569

 

2,276

 

1,274

 

706

 

706

 

706

 

4,487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PharmaVision Amortization (c)

 

76

 

86

 

76

 

76

 

304

 

344

 

201

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SAI Amortization

 

322

 

322

 

322

 

322

 

1,288

 

610

 

445

 

 

 

 

UTO Brain Amortization (c)

 

60

 

58

 

60

 

60

 

240

 

176

 

176

 

176

 

175

 

927

 

MDM Amortization

 

 

191

 

191

 

213

 

595

 

818

 

747

 

277

 

90

 

103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Amortization Expense

 

$

1,027

 

$

1,226

 

$

1,218

 

$

1,240

 

$

4,703

 

$

3,222

 

$

2,275

 

$

1,159

 

$

971

 

$

5,517

 

 


(a) Backlog is amortized as the backlog revenue is recognized.

(b) Amortization is evenly spread throughout the year.

(c) Amortization expense will fluctuate based upon movements in foreign currency.