EX-99.1 2 a04-11780_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

 

 

 

 

 

Dendrite Reports Solid Third Quarter Revenue and Earnings Growth

 

 

      GAAP EPS of $0.18 grows 53% from prior year

 

      Adjusted EPS of $0.20 up 29% from prior year

 

      Adjusted Operating Margin climbs to 13.8% of sales; GAAP Operating Margin at 12.6%

 

Bedminster, N.J., October 21, 2004  - Dendrite International, Inc. (NASDAQ: DRTE) today announced solid earnings growth, reporting third quarter 2004 GAAP diluted earnings of $0.18 per share, up 53% compared to GAAP diluted earnings of $0.12 per share for the third quarter of 2003.

 

Excluding approximately $1.2 million this quarter of non-cash amortization expense pertaining to acquisition-related intangible assets, third quarter 2004 adjusted earnings were $0.20 per diluted share, an improvement of 29% from an adjusted $0.15 per diluted share reported in the same period of the prior year.

 

THIRD QUARTER RESULTS

 

Revenues for the quarter were $99.4 million, an increase of 7% from the same period of the prior year.

 

International operations reported 44% growth.  This growth included revenues from a global software and services agreement with one of the world’s leading pharmaceutical companies that was signed in September.  “We are very pleased that, even with the exclusion of approximately $5-6 million of acquisition revenue and approximately $2 million of foreign currency favorability, our foreign operations still exhibited mid-teen revenue growth when compared to the third quarter of 2003,” stated Senior VP and CFO Kathy Donovan.

 

Strong performance in the Company’s foreign operations was offset by a decline in domestic revenues.  Year over year comparisons were challenging in the US due to one-time roll-outs in the third quarter of 2003 that the Company has previously discussed. This effect was compounded by delays in two large projects and a general slowness in decision-making among some larger US 

 

 

1405/1425 ROUTE 206 SOUTH BEDMINSTER, NJ 07921
P: 908.443.2000
F: 908.443.2100

 



 

 

customers.  US emerging market customers, however, continued to show strength, delivering approximately 20% growth year-to-date.

 

“We are very pleased with the significant events that took place in the quarter,” stated Chairman and CEO John Bailye.  “We had one of our strongest license fee revenue quarters in nearly two years, even as we witnessed a move in Europe towards our software rental model. The multi-country global agreement is a very significant new business acquisition for us.”

 

As a percentage of revenues, both GAAP and adjusted operating margins improved approximately one percentage point sequentially.  GAAP operating margins grew from 11.6% in the second quarter to 12.6% in the third quarter.  Adjusted operating margins climbed to 13.8% in the third quarter versus 12.8% in the second quarter.  Adjusted operating margins for the quarter exclude approximately $1.2 million of non-cash amortization expense pertaining to acquisition-related intangible assets.  Additional detail on acquisition-related intangible asset amortization expense can be found on table 7 of the accompanying financial tables.

 

“Operating margin expansion has been one of our key financial goals for 2004.  We are very pleased that in each quarter of this year, we have been able to execute and deliver sequential operating margin growth, driving adjusted operating margins up from 11.0% in the first quarter to 13.8% this quarter,” stated Senior VP and CFO Kathy Donovan.

 

A reconciliation of adjusted actual results to GAAP amounts can be found on the financial tables attached to this press release.  In addition, the Company noted that quarterly 2003-2004 GAAP and adjusted income statements in its new format can be found on its website at www.dendrite.com in the Investors’ Highlights Section. A description of some of the format changes will also be discussed during the Company's earnings call.

 

KEY OPERATING STATISTICS

 

Dendrite added approximately $5 million to its cash balance, ending the third quarter of 2004 with $46.1 million in cash and cash equivalents.  Cash from operations continued to be strong, with the Company reporting $12.0 million of cash from operations in the third quarter, including approximately $1.1 million

 

2



 

 

of payments related to acquisition liabilities.  Accounts receivable days sales outstanding (DSO) was 63 days, in line with the Company’s current target range of 60-63 days.

 

 

 

RECENT HIGHLIGHTS

 

 

 

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

 

 

 

      Adding or upgrading almost 5,000 users on Dendrite’s software systems including its flagship sales force automation application, WebForce™.

 

      Signing more than 45 new agreements, not only in its sales automation offerings, but across the Dendrite suite of solutions, with customers in North America, Europe, Latin America and Asia/Pacific, including continued adoption of Dendrite’s analytics solutions driven by longitudinal prescription data.

 

      Launching the pharmaceutical industry’s first dedicated sales force automation solution designed to take advantage of Microsoft’s Tablet operating system.

 

      Launching Dendrite's First Source Integrated MarketingSM solution designed for coordinated, targeted marketing campaign planning, execution and measurement.

 

OUTLOOK

 

The Company provided its customary six-month rolling outlook. “We currently believe that the combined revenue for the fourth quarter of 2004 and first quarter of 2005 will be in the range of approximately $210-$220 million,” said Ms. Donovan.  Based on achieving this targeted revenue, we would anticipate delivering GAAP earnings in the range of $0.36 to $0.40 per diluted share over the next six months.  Excluding approximately $0.04 of projected non-cash amortization expense pertaining to acquisition-related intangible assets, we would expect adjusted earnings to be in the range of $0.40 to $0.44 per diluted share for that same period.”

 

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 to reflect actual results or changes in expectations or assumptions during the period other than in connection with regularly scheduled earnings releases.

 

To participate in our earnings call webcast on October 21, 2004 at 5 p.m. EDT, or to obtain replay information, please visit the Investors' Highlights Section of our website at www.dendrite.com.

 

3



 

 

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 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 expectations or assumptions or other changes affecting such forward-looking statements.

 

4



 

TABLE 1

DENDRITE INTERNATIONAL, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP

 

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2004

 

%

 

2003

 

%

 

Change

 

2004

 

%

 

2003 (1)

 

%

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services & Technology:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales support

 

$

71,629

 

72.0

%

$

71,593

 

77.1

%

0

%

$

214,673

 

72.9

%

$

187,723

 

84.5

%

14

%

Marketing support

 

23,834

 

24.0

%

18,122

 

19.5

%

32

%

67,847

 

23.0

%

30,280

 

13.6

%

124

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shipping

 

3,965

 

4.0

%

3,147

 

3.4

%

26

%

11,879

 

4.0

%

4,097

 

1.8

%

190

%

Total revenues

 

99,428

 

100.0

%

92,862

 

100.0

%

7

%

294,399

 

100.0

%

222,100

 

100.0

%

33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Costs & Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs (including shipping)

 

51,578

 

51.9

%

46,688

 

50.3

%

10

%

151,807

 

51.6

%

110,839

 

49.9

%

37

%

Selling, general and administrative

 

32,832

 

33.0

%

33,780

 

36.4

%

-3

%

98,923

 

33.6

%

74,535

 

33.6

%

33

%

Research and development

 

1,673

 

1.7

%

2,863

 

3.1

%

-42

%

7,417

 

2.5

%

8,775

 

4.0

%

-15

%

Amortization of acquired intangible assets

 

1,214

 

1.2

%

1,251

 

1.3

%

-3

%

3,467

 

1.2

%

2,168

 

1.0

%

60

%

Other operating (income)

 

(368

)

-0.4

%

 

0.0

%

NM

 

(707

)

-0.2

%

 

0.0

%

NM

 

Total costs & operating expenses

 

86,929

 

87.4

%

84,582

 

91.1

%

3

%

260,907

 

88.6

%

196,317

 

88.4

%

33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

12,499

 

12.6

%

8,280

 

8.9

%

51

%

33,492

 

11.4

%

25,783

 

11.6

%

30

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense (income), net

 

14

 

0.0

%

(58

)

-0.1

%

-124

%

11

 

0.0

%

(612

)

-0.3

%

-102

%

Other (income) expense, net

 

(190

)

-0.2

%

55

 

0.1

%

445

%

(251

)

-0.1

%

21

 

0.0

%

1295

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

12,675

 

12.7

%

8,283

 

8.9

%

53

%

33,732

 

11.5

%

26,374

 

11.9

%

28

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

4,880

 

4.9

%

3,314

 

3.6

%

47

%

12,987

 

4.4

%

11,158

 

5.0

%

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

7,795

 

7.8

%

$

4,969

 

5.4

%

57

%

$

20,745

 

7.0

%

$

15,216

 

6.9

%

36

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.19

 

 

 

$

0.12

 

 

 

52

%

$

0.50

 

 

 

$

0.38

 

 

 

33

%

Diluted

 

$

0.18

 

 

 

$

0.12

 

 

 

53

%

$

0.48

 

 

 

$

0.37

 

 

 

30

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

41,620

 

 

 

40,442

 

 

 

 

 

41,335

 

 

 

40,225

 

 

 

 

 

Diluted

 

42,939

 

 

 

41,859

 

 

 

 

 

42,942

 

 

 

41,090

 

 

 

 

 

 


(1) Includes Synavant’s operating results for the period June 16, 2003 to September 30, 2003.

NM - Not meaningful

 



 

TABLE 2

DENDRITE INTERNATIONAL, INC.

 

ADJUSTED CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)

 

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

 

 

Three Months Ended September 30, (1)

 

Nine Months Ended September 30, (2)

 

 

 

2004

 

%

 

2003

 

%

 

Change

 

2004

 

%

 

2003

 

%

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services & Technology:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales support

 

$

71,629

 

72.0

%

$

71,593

 

77.1

%

0

%

$

214,673

 

72.9

%

$

187,723

 

84.5

%

14

%

Marketing support

 

23,834

 

24.0

%

18,122

 

19.5

%

32

%

67,847

 

23.0

%

30,280

 

13.6

%

124

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shipping

 

3,965

 

4.0

%

3,147

 

3.4

%

26

%

11,879

 

4.0

%

4,097

 

1.8

%

190

%

Total revenues

 

99,428

 

100.0

%

92,862

 

100.0

%

7

%

294,399

 

100.0

%

222,100

 

100.0

%

33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Costs & Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs (including shipping)

 

51,578

 

51.9

%

46,688

 

50.3

%

10

%

151,807

 

51.6

%

110,839

 

49.9

%

37

%

Selling, general and administrative

 

32,832

 

33.0

%

32,560

 

35.1

%

1

%

98,923

 

33.6

%

73,221

 

33.0

%

35

%

Research and development

 

1,673

 

1.7

%

2,863

 

3.1

%

-42

%

7,417

 

2.5

%

8,775

 

4.0

%

-15

%

Other operating (income)

 

(368

)

-0.4

%

 

0.0

%

NM

 

(707

)

-0.2

%

 

0.0

%

NM

 

Total costs & operating expenses

 

85,715

 

86.2

%

82,111

 

88.4

%

4

%

257,440

 

87.4

%

192,835

 

86.8

%

34

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

13,713

 

13.8

%

10,751

 

11.6

%

28

%

36,959

 

12.6

%

29,265

 

13.2

%

26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense (income), net

 

14

 

0.0

%

(58

)

-0.1

%

-124

%

11

 

0.0

%

(612

)

-0.3

%

-102

%

Other (income) expense, net

 

(190

)

-0.2

%

55

 

0.1

%

445

%

(251

)

-0.1

%

21

 

0.0

%

1295

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

13,889

 

14.0

%

10,754

 

11.6

%

29

%

37,199

 

12.6

%

29,856

 

13.4

%

25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

5,347

 

5.4

%

4,302

 

4.6

%

24

%

14,322

 

4.9

%

11,943

 

5.4

%

20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

8,542

 

8.6

%

$

6,452

 

6.9

%

32

%

$

22,877

 

7.8

%

$

17,913

 

8.1

%

28

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.21

 

 

 

$

0.16

 

 

 

29

%

$

0.55

 

 

 

$

0.45

 

 

 

24

%

Diluted

 

$

0.20

 

 

 

$

0.15

 

 

 

29

%

$

0.53

 

 

 

$

0.44

 

 

 

22

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

41,620

 

 

 

40,442

 

 

 

 

 

41,335

 

 

 

40,225

 

 

 

 

 

Diluted

 

42,939

 

 

 

41,859

 

 

 

 

 

42942

 

 

 

41,090

 

 

 

 

 

 


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 September 30, 2004 and 2003.

(2)

See Table 4 for the Statement of Operations reconciliation from GAAP to non-GAAP for the nine months ended September 30, 2004 and 2003.

NM - Not meaningful

 



 

TABLE 3

DENDRITE INTERNATIONAL, INC.

 

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

 

THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

 

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

 

 

Three Months Ended September 30, 2004

 

Three Months Ended September 30, 2003

 

 

 

Total Adjusted

 

Amortization (1)

 

GAAP

 

Total Adjusted

 

Amortization (1)

 

Other Charges (2)

 

GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services & Technology:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales support

 

$

71,629

 

 

$

71,629

 

$

71,593

 

 

 

$

71,593

 

Marketing support

 

23,834

 

 

23,834

 

18,122

 

 

 

18,122

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shipping

 

3,965

 

 

3,965

 

3,147

 

 

 

3,147

 

Total revenues

 

99,428

 

 

99,428

 

92,862

 

 

 

92,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Costs & Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs (including shipping)

 

51,578

 

 

51,578

 

46,688

 

 

 

46,688

 

Selling, general and administrative

 

32,832

 

 

 

32,832

 

32,560

 

 

1,220

 

33,780

 

Research and development

 

1,673

 

 

1,673

 

2,863

 

 

 

2,863

 

Amortization of acquired intangible assets

 

 

1,214

 

1,214

 

 

1,251

 

 

1,251

 

Other operating (income)

 

(368

)

 

(368

)

 

 

 

 

Total costs & operating expenses

 

85,715

 

1,214

 

86,929

 

82,111

 

1,251

 

1,220

 

84,582

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

13,713

 

(1,214

)

12,499

 

10,751

 

(1,251

)

(1,220

)

8,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense (income), net

 

14

 

 

14

 

(58

)

 

 

(58

)

Other (income) expense, net

 

(190

)

 

(190

)

55

 

 

 

55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

13,889

 

(1,214

)

12,675

 

10,754

 

(1,251

)

(1,220

)

8,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

5,347

 

467

 

4,880

 

4,302

 

500

 

488

 

3,314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

8,542

 

$

(747

)

$

7,795

 

$

6,452

 

$

(751

)

$

(732

)

$

4,969

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share: (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.21

 

$

(0.02

)

$

0.19

 

$

0.16

 

$

(0.02

)

$

(0.02

)

$

0.12

 

Diluted

 

$

0.20

 

$

(0.02

)

$

0.18

 

$

0.15

 

$

(0.02

)

$

(0.02

)

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

41,620

 

41,620

 

41,620

 

40,442

 

40,442

 

40,442

 

40,442

 

Diluted

 

42,939

 

42,939

 

42,939

 

41,859

 

41,859

 

41,859

 

41,859

 

 


(1)   Represents exclusion of acquisition related amortization expense of definite lived intangible assets.  This amortization was previously included within Total Costs of Sales and Selling, General & Administrative costs in our prior presentations.

(2)   Includes Dendrite severance and facility closure costs incurred as a result of the acquisition of Synavant along with other integration costs.

(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

 

NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

 

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

 

 

Nine Months Ended September 30, 2004

 

Nine Months Ended September 30, 2003

 

 

 

Total Adjusted

 

Amortization (1)

 

GAAP

 

Total Adjusted

 

Amortization (1)

 

Other Charges (2)

 

GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services & Technology:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales support

 

$

214,673

 

 

$

214,673

 

$

187,723

 

 

 

$

187,723

 

Marketing support

 

67,847

 

 

67,847

 

30,280

 

 

 

30,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shipping

 

11,879

 

 

11,879

 

4,097

 

 

 

4,097

 

Total revenues

 

294,399

 

 

294,399

 

222,100

 

 

 

222,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Costs & Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs (including shipping)

 

151,807

 

 

151,807

 

110,839

 

 

 

110,839

 

Selling, general and administrative

 

98,923

 

 

98,923

 

73,221

 

 

1,314

 

74,535

 

Research and development

 

7,417

 

 

7,417

 

8,775

 

 

 

8,775

 

Amortization of acquired intangible assets

 

 

3,467

 

3,467

 

 

2,168

 

 

2,168

 

Other operating (income)

 

(707

)

 

(707

)

 

 

 

 

Total costs & operating expenses

 

257,440

 

3,467

 

260,907

 

192,835

 

2,168

 

1,314

 

196,317

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

36,959

 

(3,467

)

33,492

 

29,265

 

(2,168

)

(1,314

)

25,783

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense (income), net

 

11

 

 

11

 

(612

)

 

 

(612

)

Other (income) expense, net

 

(251

)

 

(251

)

21

 

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

37,199

 

(3,467

)

33,732

 

29,856

 

(2,168

)

(1,314

)

26,374

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

14,322

 

1,335

 

12,987

 

11,943

 

867

 

(82

)

11,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

22,877

 

$

(2,132

)

$

20,745

 

$

17,913

 

$

(1,301

)

$

(1,396

)

$

15,216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share: (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.55

 

$

(0.05

)

$

0.50

 

$

0.45

 

$

(0.03

)

$

(0.03

)

$

0.38

 

Diluted

 

$

0.53

 

$

(0.05

)

$

0.48

 

$

0.44

 

$

(0.03

)

$

(0.03

)

$

0.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

41,335

 

41,335

 

41,335

 

40,225

 

40,225

 

40,225

 

40,225

 

Diluted

 

42,942

 

42,942

 

42,942

 

41,090

 

41,090

 

41,090

 

41,090

 

 


(1)   Represents exclusion of acquisition related amortization expense of definite lived intangible assets.  This amortization was previously included within Total Costs of Sales and Selling, General & Administrative costs in our prior presentations.

(2)   Includes Dendrite severance and facility closure costs incurred as a result of the acquisition of Synavant along with other integration costs. 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)

 

 

 

September 30,
2004

 

December 31,
2003 (1)

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

46,134

 

$

30,405

 

Accounts receivable, net

 

69,589

 

71,383

 

Prepaid expenses and other current assets

 

7,843

 

7,949

 

Deferred taxes

 

4,976

 

8,844

 

Income tax receivable

 

3,045

 

 

Facility held for sale

 

 

6,900

 

Total current assets

 

131,587

 

125,481

 

 

 

 

 

 

 

Property and equipment, net of accumulated amortization of $53,096 and $43,946

 

42,613

 

28,140

 

Other assets

 

5,851

 

2,538

 

Long-term receivable

 

 

3,157

 

Goodwill

 

85,952

 

70,403

 

Intangible assets, net

 

20,067

 

18,574

 

Purchased capitalized software, net

 

1,208

 

1,666

 

Capitalized software development costs, net

 

8,015

 

6,126

 

Deferred taxes

 

6,462

 

6,372

 

 

 

$

301,755

 

$

262,457

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Current installments of long-term debt

 

$

422

 

$

 

Accounts payable

 

9,666

 

4,990

 

Income taxes payable

 

9,502

 

6,194

 

Capital lease obligations

 

1,345

 

1,033

 

Accrued compensation and benefits

 

15,198

 

16,104

 

Accrued professional and consulting fees

 

6,330

 

7,842

 

Other accrued expenses

 

22,808

 

21,038

 

Purchase accounting restructuring accrual

 

3,600

 

3,203

 

Deferred revenues

 

11,512

 

16,379

 

Total current liabilities

 

80,383

 

76,783

 

 

 

 

 

 

 

Capital lease obligations

 

2,651

 

187

 

Purchase accounting restructuring accrual

 

4,452

 

8,627

 

Deferred rent

 

1,295

 

369

 

Long-term debt, excluding current installments

 

1,041

 

 

Other non-current liabilities

 

3,546

 

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, 43,881,862 and 43,013,428 shares issued: 41,659,162 and 40,790,728 shares outstanding at September 30, 2004 and December 31, 2003, respectively

 

111,556

 

100,448

 

Retained earnings

 

118,681

 

97,936

 

Deferred compensation

 

(91

)

(56

)

Accumulated other comprehensive loss

 

(883

)

(1,317

)

Less treasury stock, at cost

 

(20,876

)

(20,876

)

 

 

 

 

 

 

Total stockholders’ equity

 

208,387

 

176,135

 

 

 

 

 

 

 

 

 

$

301,755

 

$

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 Nine Months Ended September 30,

 

 

 

2004

 

2003

 

Operating activities:

 

 

 

 

 

Net income

 

$

20,745

 

$

15,216

 

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

 

 

 

 

 

Depreciation and amortization

 

15,958

 

14,924

 

Restructuring adjustment

 

(407

)

 

Amortization of deferred compensation, net of forfeitures

 

149

 

(40

)

Other adjustments for non-cash items

 

901

 

608

 

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

 

 

 

 

 

Decrease in accounts receivable

 

7,424

 

15,443

 

Decrease in prepaid expenses and other current assets

 

926

 

1,399

 

Decrease in other assets

 

786

 

136

 

Decrease in accounts payable and accrued expenses

 

(3,464

)

(21,034

)

Decrease in purchase accounting restructuring accrual

 

(5,406

)

(6,969

)

Increase in income taxes payable

 

3,907

 

2,163

 

Decrease in accrued restructuring charge

 

 

(260

)

Decrease in deferred revenue

 

(5,505

)

(8,968

)

Increase in other non-current liabilities

 

860

 

288

 

 

 

 

 

 

 

Net cash provided by operating activities

 

36,874

 

12,906

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

Sales of short-term investments

 

 

1,294

 

Proceeds from sale leaseback transaction

 

2,162

 

 

Acquisitions, net of cash acquired

 

(7,312

)

(53,161

)

Purchases of property and equipment

 

(15,083

)

(5,038

)

Additions to capitalized software development costs

 

(4,087

)

(2,362

)

Other, net

 

 

(50

)

 

 

 

 

 

 

Net cash used in investing activities

 

(24,320

)

(59,317

)

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

Borrowings from line of credit

 

 

8,000

 

Repayments of line of credit

 

 

(8,000

)

Repayments of long-term debt

 

(1,773

)

 

Repayments of acquired loan

 

(624

)

 

Payments on capital lease obligations

 

(829

)

(469

)

Issuance of common stock

 

6,249

 

4,458

 

 

 

 

 

 

 

Net cash provided by financing activities

 

3,023

 

3,989

 

 

 

 

 

 

 

Effect of foreign exchange rate changes on cash

 

152

 

287

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

15,729

 

(42,135

)

Cash and cash equivalents, beginning of period

 

30,405

 

68,308

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

46,134

 

$

26,173

 

 



 

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 (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

72

 

76

 

310

 

344

 

201

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SAI Amortization

 

322

 

322

 

322

 

322

 

1,288

 

610

 

445

 

 

 

 

UTO Brain Amortization (c)

 

60

 

58

 

60

 

60

 

238

 

176

 

176

 

176

 

175

 

927

 

MDM Amortization

 

 

191

 

191

 

191

 

573

 

749

 

704

 

279

 

93

 

232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Amortization Expense

 

$

1,027

 

$

1,226

 

$

1,214

 

$

1,218

 

$

4,685

 

$

3,153

 

$

2,232

 

$

1,161

 

$

974

 

$

5,646

 

 


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

(b) Amortization is calculated on a straight-line basis.

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

  * See “Forward-looking” statement included as part of this release.  It does not reflect or assume any additional acquisitions.