Dendrite Reports Another Strong Quarter of Revenue and Earnings Growth; GAAP EPS Improves 17% to $0.14; Adjusted EPS of $0.20 at 3 Year High - Up 60% from Prior Year -.Business Editors/Health/Medical Writers MORRISTOWN Morristown. 1 Town (1990 pop. 16,189), seat of Morris co., N N.J., on the Whippany River; settled c.1710, inc. 1865. Although chiefly residential, it has diverse manufactures, including electronic products, health and beauty aids, auto parts, and , N.J.--(BUSINESS WIRE)--Jan. 29, 2004 Dendrite dendrite: see nervous system; synapse. International, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : DRTE DRTE Defence Research Telecommunications Establishment ) today announced another strong quarter, reporting fourth quarter GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings of $0.14 per share, up 17% compared to GAAP earnings of $0.12 per share for the fourth quarter of 2002. GAAP diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the fourth quarter 2003 included approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.06 of acquisition related non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. and other acquisition-related costs. Excluding these items, fourth quarter 2003 adjusted earnings were $0.20 per diluted share, an improvement of 60% from an adjusted $0.12 per diluted share reported in the same period of the prior year. GAAP earnings per share for the full year 2003 were $0.51, up 33% versus prior year GAAP EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $0.38 per share. Excluding the above acquisition-related items, adjusted EPS of $0.63 grew 50% versus prior year adjusted EPS of $0.42. A reconciliation of GAAP to adjusted results can be found on Table 7 of the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. financial tables. "The fourth quarter marked the culmination of what was an exceptional year for Dendrite," noted Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. John Bailye. "Our adjusted fourth quarter EPS was at a three year high, and we also recorded significant growth to both GAAP and adjusted EPS every quarter this year. In addition to generating considerable value for our shareowners, we achieved many significant milestones in our business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . Concurrent At the same time. It implies that multiple processes are taking place simultaneously. See concurrent operation. with the rapid and effective integration of the former Synavant business, we completed a very large sales force integration for a major U.S. customer and successfully supported a large Siebel For the tech company, see . Siebel, originally Flugzeugbau Halle, was a German aircraft manufacturer in Halle an der Saale. Siebel aircraft included:
SFA - Sales Force Automation deals in Japan. We are quite proud of all of our accomplishments and feel we are well positioned to continue the momentum in 2004." FOURTH QUARTER RESULTS Revenues for the quarter increased to $99.0 million, up 74% from prior year and 7% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen . While a key contributor of the year-over-year increase was the revenue contribution from the Synavant acquisition, the company also indicated that revenue from its core businesses showed strong growth versus the prior year as well. Dendrite delivered GAAP operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $9.0 million in the fourth quarter, an 18% improvement over the prior year's fourth quarter GAAP operating income of $7.7 million. The company indicated that there were several items impacting its fourth quarter GAAP operating income. The company finalized See finalization. its valuation of the Synavant acquisition and recorded an additional $0.9 million of expense relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the amortization of definite lived intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. , bringing total intangible amortization expense in the fourth quarter to $2.1 million, versus $0.3 million in 2002. The company also recorded approximately $2.0 million of charges relating to Dendrite severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when , facility closure costs, and other integration costs incurred as a result of the Synavant acquisition. Excluding these items, operating income was $13.1 million, up 63% from the $8.0 million adjusted operating income generated in the prior year. Chief Financial Officer, Kathy Kathy is a feminine first name. It may refer to: In sports:
American army officer and public official who founded and directed (1942-1945) the Office of Strategic Services, an intelligence-gathering agency that was a forerunner of the CIA. , attributed the profit growth to increased revenue, in combination with "the successful results of previous cost-saving initiatives and international cost synergies Cost Synergy In the context of mergers, cost synergy is the savings in operating costs expected after two companies, who compliment each other's strengths, join. Notes: The savings in operating costs usually come in the form of laying off employees. realized from the Synavant integration." A reconciliation of GAAP operating income to adjusted operating income can be found on Tables 2 and 10 of the accompanying financial tables. KEY OPERATING STATISTICS Dendrite ended the fourth quarter with $30.4 million in cash and cash equivalents. The company noted that the $4.9 million of cash from operations reported for the fourth quarter also included $3.9 million of payments related to acquisition and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities. Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). (DSO See CSO. ) was reported at 68 days. The company stated that the DSO figure included approximately 4 days of invoices related to advance billings Billings, city (1990 pop. 81,151), seat of Yellowstone co., S Mont., on the Yellowstone River, in a valley surrounded by seven mountain ranges; inc. as a city 1885. and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed . FOURTH QUARTER HIGHLIGHTS Dendrite reported success in many aspects of its business. Highlights included: -- Signing more than 15 new agreements with customers in North America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. , Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and Asia/Pacific Rim (Research In Motion Limited, Waterloo, Ontario, www.rim.com) The company that makes the popular BlackBerry device. It was established in 1984. See BlackBerry. See also RDRAM. .
Additionally, the company achieved a record level of activity in its Data and Analytics business by entering into agreements for more than 20 studies using its Longitudinal lon·gi·tu·di·nal adj. Running in the direction of the long axis of the body or any of its parts. Prescription prescription In property law, the effect of the lapse of time in creating and destroying rights. Acquisitive prescription allows an individual, after unequivocal possession for a specific period, to acquire an interest in real property, such as an easement, but not the Data -- Adding almost 3,000 additional sales force automation Automating the sales activities within an organization. A comprehensive SFA package provides such functions as contact management, note and information sharing, quick proposal and presentation generation, product configurators, calendars and to-do lists. user licenses through business with new customers and expanded business with existing customers - an increase in line with historical Dendrite new user growth -- Securing a major U.S. services contract extension with Novartis Novartis International AG (NYSE: NVS) is a multinational pharmaceutical company based in Basel, Switzerland that manufactures drugs such as diclofenac (Voltaren), carbamazepine (Tegretol), valsartan (Diovan), imatinib mesylate (Gleevec / Glivec), cyclosporin A (Neoral / , under which Dendrite's CRM (Customer Relationship Management) An integrated information system that is used to plan, schedule and control the presales and postsales activities in an organization. Center of Excellence will deliver a broad range of hardware and software support during one of the largest implementations of Siebel software A family of Web-based customer relationship management (CRM) applications from Siebel Systems, Inc., San Mateo, CA (www.siebel.com). A complete range of products for sales, marketing and customer service are provided. ever conducted in the pharmaceutical industry -- Launching its analytically an·a·lyt·ic or an·a·lyt·i·cal adj. 1. Of or relating to analysis or analytics. 2. Dividing into elemental parts or basic principles. 3. driven interactive marketing business to enhance pharmaceutical promotional effectiveness -- Bringing together more than 100 industry executives from leading drug manufacturers during the company's Pharmaceutical Sales and Marketing Leadership Summit, which reviewed critical issues shaping the industry today OUTLOOK The company provided its customary six-month rolling outlook. "We currently believe that the combined revenue for the first and second quarters of 2004 will be in the range of approximately $190 to $194 million," said Dendrite Chief Financial Officer, Ms. Donovan. "This outlook includes the recently announced acquisition of Uto Brain in Japan, which is expected to add approximately $8 million to 2004 revenue. We expect the second quarter to be seasonally stronger than the first as we anticipate an increase in international revenues. Based on achieving this targeted revenue, we anticipate delivering GAAP earnings in the range of $0.27 to $0.29 per diluted share and adjusted earnings of $0.29 to $0.31 per diluted share over the next six months." Please refer to table 8 of this press release for a reconciliation of GAAP and adjusted EPS. This current outlook is based on current expectations and assumptions and constitutes "forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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 January January: see month. 29, 2004 at 5 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. . 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. Note: Dendrite is a registered trademark of Dendrite International, Inc. This document contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. may be identified by such forward-looking terminology The terminology used in the computer and telecommunications field adds tremendous confusion not only for the lay person, but for the technicians themselves. What many do not realize is that terms are made up by anybody and everybody in a nonchalant, casual manner without any regard or as "expect," "believe," "anticipate," "will," "intend," "plan," "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 fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. revenues and variations in customers' budget cycles; dependence on major customers; changes in demand for our products and services attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the extended 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; increased competition; international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. ; acquisitions, including the success of the June June: see month. 2003 acquisition of Synavant 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 fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. 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.
TABLE 1
DENDRITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP
(IN THOUSANDS EXCEPT PER SHARE DATA)
Unaudited
Three Months Ended December 31,
---------------------------------------
2003 % 2002 % Change
------- ------ ------- ------ ---------
Revenues:
License fees $2,849 2.9% $5,745 10.1% -50%
Services 96,158 97.1% 51,295 89.9% 87%
------- -------
99,007 100.0% 57,040 100.0% 74%
------- -------
Cost of sales:
Cost of license fees 1,510 1.5% 1,954 3.4% -23%
Cost of services 50,428 50.9% 25,333 44.4% 99%
------- -------
51,938 52.5% 27,287 47.8% 90%
------- -------
Gross margin
License fees gross margin 1,339 47.0% 3,791 66.0% (19.0) Pt
Services gross margin 45,730 47.6% 25,962 50.6% (3.0) Pt
------- -------
47,069 47.5% 29,753 52.2% (4.7) Pt
------- -------
Operating expense:
Selling, general and
administrative 35,171 35.5% 19,161 33.6% 84%
Research and development 2,858 2.9% 2,950 5.2% -3%
Restructuring benefit - 0.0% (47) -0.1% -100%
Asset impairment - 0.0% - 0.0% 0%
------- -------
38,029 38.4% 22,064 38.7% 72%
Operating income 9,040 9.1% 7,689 13.5% 18%
Interest income 119 0.1% 229 0.4% -48%
Other income/(expense) 581 0.6% (43) -0.1% 1451%
------- -------
Income before income taxes 9,740 9.8% 7,875 13.8% 24%
Income taxes 3,896 3.9% 3,150 5.5% 24%
------- -------
Net income $5,844 5.9% $4,725 8.3% 24%
======= =======
Net income per share:
Basic $0.14 $0.12 21%
======= =======
Diluted $0.14 $0.12 17%
======= =======
Shares used in computing net
income per share:
Basic 40,680 39,910
======= =======
Diluted 42,385 39,966
======= =======
Year Ended December 31,
-----------------------------------------
2003 (1) % 2002 % Change
-------- ------ -------- ------ ---------
Revenues:
License fees $10,860 3.4% $13,507 6.0% -20%
Services 310,247 96.6% 212,249 94.0% 46%
-------- --------
321,107 100.0% 225,756 100.0% 42%
-------- --------
Cost of sales:
Cost of license fees 4,915 1.5% 4,730 2.1% 4%
Cost of services 158,597 49.4% 106,817 47.3% 48%
-------- --------
163,512 50.9% 111,547 49.4% 47%
-------- --------
Gross margin
License fees gross margin 5,945 54.7% 8,777 65.0% (10.3) Pt
Services gross margin 151,650 48.9% 105,432 49.7% (0.8) Pt
-------- --------
157,595 49.1% 114,209 50.6% (1.5) Pt
-------- --------
Operating expense:
Selling, general and
administrative 111,139 34.6% 77,301 34.2% 44%
Research and development 11,633 3.6% 10,396 4.6% 12%
Restructuring benefit - 0.0% (47) 0.0% -100%
Asset impairment - 0.0% 1,832 0.8% -100%
-------- --------
122,772 38.2% 89,482 39.6% 37%
Operating income 34,823 10.8% 24,727 11.0% 41%
Interest income 731 0.2% 1,085 0.5% -33%
Other income/(expense) 560 0.2% (149) -0.1% 476%
-------- --------
Income before income taxes 36,114 11.2% 25,663 11.4% 41%
Income taxes 15,054 4.7% 10,265 4.5% 47%
-------- --------
Net income $21,060 6.6% $15,398 6.8% 37%
======== ========
Net income per share:
Basic $0.52 $0.39 35%
======== ========
Diluted $0.51 $0.38 33%
======== ========
Shares used in computing
net income per share:
Basic 40,340 39,872
======== ========
Diluted 41,415 40,127
======== ========
(1) Includes Synavant's operating results for the period June 16,
2003 to December 31, 2003.
TABLE 2
DENDRITE INTERNATIONAL, INC.
ADJUSTED CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended December 31,
----------------------------------------
2003 (1) % 2002 (2) % Change
-------- ----- -------- ----- ----------
Revenues:
License fees $2,849 2.9% $5,745 10.1% -50%
Services 96,158 97.1% 51,295 89.9% 87%
-------- --------
99,007 100.0% 57,040 100.0% 74%
-------- --------
Cost of license fees 1,357 1.4% 1,789 3.1% -24%
Cost of services 50,363 50.9% 25,333 44.4% 99%
-------- --------
51,720 52.2% 27,122 47.5% 91%
-------- --------
License Gross Margin 1,492 52.4% 3,956 68.9% (16.5) Pt
Services Gross Margin 45,795 47.6% 25,962 50.6% (3.0) Pt
-------- --------
Gross margin 47,287 47.8% 29,918 52.5% (4.7) Pt
-------- --------
Operating expense:
Selling, general and
administrative 31,338 31.7% 18,933 33.2% 66%
Research and development 2,858 2.9% 2,950 5.2% -3%
-------- --------
34,196 34.5% 21,883 38.4% 56%
Operating income 13,091 13.2% 8,035 14.1% 63%
Interest income 119 0.1% 229 0.4% -48%
Other income/(expense) 581 0.6% (43) -0.1% 1451%
-------- --------
Income before income taxes 13,791 13.9% 8,221 14.4% 68%
Income taxes 5,516 5.6% 3,289 5.8% 68%
-------- --------
Net income $8,275 8.4% $4,932 8.6% 68%
======== ========
Net income per share:
Basic $0.20 $0.12 65%
======== ========
Diluted $0.20 $0.12 60%
======== ========
Shares used in computing net
income per share:
Basic 40,680 39,910
======== ========
Diluted 42,385 39,966
Year Ended December 31,
---------------------------------------
2003 (3) % 2002 (4) % Change
-------- ----- -------- ----- ---------
Revenues:
License fees $10,860 3.4% $13,507 6.0% -20%
Services 310,247 96.6% 212,249 94.0% 46%
-------- --------
321,107 100.0% 225,756 100.0% 42%
-------- --------
Cost of license fees 4,305 1.3% 4,565 2.0% -6%
Cost of services 158,456 49.3% 107,756 47.7% 47%
-------- --------
162,761 50.7% 112,321 49.8% 45%
-------- --------
License Gross Margin 6,555 60.4% 8,942 66.2% (5.8) Pt
Services Gross Margin 151,791 48.9% 104,493 49.2% (0.3) Pt
-------- --------
Gross margin 158,346 49.3% 113,435 50.2% (0.9) Pt
-------- --------
Operating expense:
Selling, general and
administrative 104,667 32.6% 75,836 33.6% 38%
Research and development 11,633 3.6% 10,396 4.6% 12%
-------- --------
116,300 36.2% 86,232 38.2% 35%
Operating income 42,046 13.1% 27,203 12.0% 55%
Interest income 731 0.2% 1,085 0.5% -33%
Other income/(expense) 560 0.2% (149) -0.1% 476%
-------- --------
Income before income taxes 43,337 13.5% 28,139 12.5% 54%
Income taxes 17,336 5.4% 11,256 5.0% 54%
-------- --------
Net income $26,001 8.1% $16,883 7.5% 54%
======== ========
Net income per share:
Basic $0.64 $0.42 52%
======== ========
Diluted $0.63 $0.42 50%
======== ========
Shares used in computing net
income per share:
Basic 40,340 39,872
======== ========
Diluted 41,415 40,127
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 December 31,
2003.
(2) See Table 10 for the Statement of Operations reconciliation from
GAAP to non-GAAP for the three months ended December 31, 2002.
(3) See Table 4 for the Statement of Operations reconciliation from
GAAP to non-GAAP for the year ended December 31, 2003.
(4) See Table 11 for the Statement of Operations reconciliation from
GAAP to non-GAAP for the year ended December 31, 2002.
TABLE 3
DENDRITE INTERNATIONAL, INC.
RECONCILIATION OF GAAP TO ADJUSTED (NON-GAAP) STATEMENT OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2003
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
% of
Total Adjusted Q4 Rev. Amortization (2)
------------------ ------- ------------------
Revenues:
License fees $ 2,849 2.9% $ -
Services 96,158 97.1% -
------------------ ------------------
99,007 100.0% -
------------------ ------------------
Cost of license fees 1,357 1.4% 153
Cost of services 50,363 50.9% 65
------------------ ------------------
51,720 52.2% 218
------------------ ------------------
License Gross Margin 1,492 52.4% (153)
Services Gross Margin 45,795 47.6% (65)
------------------ ------------------
Gross margin 47,287 47.8% (218)
------------------ ------------------
Selling, general and
administrative 31,338 31.7% 1,850
Research and
development 2,858 2.9% -
------------------ ------------------
34,196 34.5% 1,850
Operating income 13,091 13.2% (2,068)
Interest income 119 0.1% -
Other income 581 0.6% -
------------------ ------------------
Income before income
taxes 13,791 13.9% (2,068)
Income taxes 5,516 5.6% 827
------------------ ------------------
Net income $ 8,275 8.4% $ (1,241)
================== ==================
Net income per share
Basic $ 0.20 $ (0.03)
================== ==================
Diluted $ 0.20 (1) $ (0.03)
================== ==================
Shares used in
computing net
income (loss)
per share:
Basic 40,680 40,680
================== ===================
Diluted 42,385 42,385
================== ===================
% of
Other Charges (3) GAAP Rev.
----------------- ------------ --------
Revenues:
License fees $ - $ 2,849 2.9%
Services - 96,158 97.1%
---------------- ------------
- 99,007 100.0%
---------------- ------------
Cost of license fees - 1,510 1.5%
Cost of services - 50,428 50.9%
---------------- ------------
- 51,938 52.5%
---------------- ------------
License Gross Margin - 1,339 47.0%
Services Gross Margin - 45,730 47.6%
---------------- ------------
Gross margin - 47,069 47.5%
---------------- ------------
Selling, general and
administrative 1,983 35,171 35.5%
Research and development - 2,858 2.9%
---------------- ------------
1,983 38,029 38.4%
Operating income (1,983) 9,040 9.1%
Interest income - 119 0.1%
Other income - 581 0.6%
---------------- ------------
Income before income taxes (1,983) 9,740 9.8%
Income taxes 793 3,896 3.9%
---------------- ------------
Net income $ (1,190) $ 5,844 5.9%
================ ============
Net income per share
Basic $ (0.03) $ 0.14
================ ============
Diluted $ (0.03) $ 0.14
================ ============
Shares used in computing net
income (loss) per share:
Basic 40,680 40,680
================ =============
Diluted 42,385 42,385
================ =============
(1) See Table 7 for a more detailed reconciliation of net income for
the three months ended December 31, 2003.
(2) Represents amortization expense of definite lived intangible
assets resulting from the acquisitions of Synavant and SAI.
(3) Includes Dendrite severance and facility closure costs incurred as
a result of the acquisition of Synavant along with other
integration costs.
TABLE 4
DENDRITE INTERNATIONAL, INC.
RECONCILIATION OF GAAP TO ADJUSTED (NON-GAAP) STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2003
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Total
Adjusted % of Amortization Other % of
YTD Rev. (2) Charges(3) GAAP Rev.
-------- ----- ------------- ---------- ------- ------
Revenues:
License fees $10,860 3.4% $- $- $10,860 3.4%
Services 310,247 96.6% - - 310,247 96.6%
-------- ----------- -------- -------
321,107 100.0% - - 321,107 100.0%
-------- ----------- -------- -------
Cost of license
fees 4,305 1.3% 610 - 4,915 1.5%
Cost of
services 158,456 49.3% 141 - 158,597 49.4%
-------- ----------- -------- -------
162,761 50.7% 751 - 163,512 50.9%
-------- ----------- -------- -------
License Gross
Margin 6,555 60.4% (610) - 5,945 54.7%
Services Gross
Margin 151,791 48.9% (141) - 151,650 48.9%
-------- ----------- -------- -------
Gross margin 158,346 49.3% (751) - 157,595 49.1%
-------- ----------- -------- -------
Selling, general
and
administrative 104,667 32.6% 3,283 3,189 111,139 34.6%
Research and
development 11,633 3.6% - - 11,633 3.6%
-------- ----------- -------- -------
116,300 36.2% 3,283 3,189 122,772 38.2%
Operating income 42,046 13.1% (4,034) (3,189) 34,823 10.8%
Interest income 731 0.2% - - 731 0.2%
Other income 560 0.2% - - 560 0.2%
-------- ----------- -------- -------
Income before
income taxes 43,337 13.5% (4,034) (3,189) 36,114 11.2%
Income taxes 17,336 5.4% 1,614 668 15,054 4.7%
-------- ----------- -------- -------
Net income $26,001 8.1% $(2,420) $(2,521) $21,060 6.6%
======== =========== ======== =======
Net income per share
Basic $0.64 $(0.06) $(0.06) $0.52
======== =========== ======== =======
Diluted $0.63 (1) $(0.06) $(0.06) $0.51
======== =========== ======== =======
Shares used in
computing net
income (loss) per
share:
Basic 40,340 40,340 40,340 40,340
======== ======= ====== ======
Diluted 41,415 41,415 41,415 41,415
======== ======= ====== ======
Note: Includes Synavant's operating results for the period June 16,
2003 to December 31, 2003.
(1) See Table 7 for a more detailed reconciliation of net income for
the year ended December 31, 2003.
(2) Represents amortization expense of definite lived intangible
assets resulting from the acquisitions of SAI and Synavant.
(3) Includes Dendrite severance and facility closure costs as a
result of the acquisition of Synavant and other integration costs as
well as a foreign tax valuation adjustment made in connection with the
integration of Synavant.
TABLE 5
DENDRITE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
December 31,
-------------------
2003 2002 (1)
--------- ---------
Assets
Current Assets:
Cash and cash equivalents $30,405 $68,308
Short-term investments - 1,295
Accounts receivable, net 71,383 39,853
Prepaid expenses and other current assets 8,483 4,962
Deferred taxes 8,844 3,380
Facility held for sale 6,900 6,900
--------- ---------
Total current assets 126,015 124,698
--------- ---------
Property and equipment, net 27,858 26,377
Other assets 2,004 1,713
Long-term receivable 3,157 6,314
Goodwill 70,685 12,353
Intangible assets, net 18,574 2,973
Purchased capitalized software, net 1,666 2,275
Capitalized software development costs, net 6,126 5,605
Deferred taxes 6,372 6,168
--------- ---------
$262,457 $188,476
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $4,990 $1,274
Income taxes payable 6,194 5,659
Capital lease obligations 1,033 615
Accrued compensation and benefits 16,104 5,055
Other accrued expenses 29,203 16,749
Purchase accounting restructuring accrual 3,203 1,188
Accrued restructuring charge - 260
Deferred revenues 16,379 7,861
--------- ---------
Total current liabilities 77,106 38,661
--------- ---------
Capital lease obligations 187 275
Purchase accounting restructuring accrual 8,627 2,064
Other non-current liabilities 402 717
Stockholders' Equity:
Preferred stock, no par value, 15,000,000
shares authorized, none issued - -
Common Stock, no par value, 150,000,000 shares
authorized, 43,013,428 and 42,156,344 shares
issued; 40,790,728 and 39,933,644 shares
outstanding 100,448 93,037
Retained earnings 97,936 76,876
Deferred compensation (56) (76)
Accumulated other comprehensive loss (1,317) (2,202)
Less treasury stock, at cost (20,876) (20,876)
--------- ---------
Total stockholders' equity 176,135 146,759
--------- ---------
$262,457 $188,476
========= =========
(1) Amounts reflect reclassifications to conform to current year
presentation.
TABLE 6
DENDRITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Year Ended
December 31,
-----------------
2003 2002
-----------------
Operating activities:
Net income $21,060 $15,398
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 21,717 14,096
Asset impairment - 1,832
Restructuring benefit - (47)
Amortization of deferred compensation, net
of forfeitures (30) 68
Deferred taxes 608 (469)
Changes in assets and liabilities, net of
effects from acquisitions:
Decrease/(increase) in accounts
receivable 6,105 (4,889)
Increase in prepaid expenses and other (1,090) -
Decrease/(increase) in other non-
current assets 482 (22)
Decrease in prepaid income taxes - 4,744
Decrease in accounts payable and
accrued expenses (20,775) (5,076)
Decrease in purchase accounting
restructuring accrual (10,883) -
Increase in income taxes payable 3,320 4,257
Decrease in accrued restructuring
charge (260) (2,643)
Decrease in deferred revenue (2,161) (3,260)
Decrease/(increase) in other non-
current liabilities (279) 200
-----------------
Net cash provided by operating
activities 17,814 24,189
-----------------
Investing activities:
Purchases of short-term investments - (14,710)
Sales of short-term investments 1,294 19,798
Acquisitions, net of cash acquired (53,458)(13,117)
Increase in other non-current assets (50) (700)
Purchases of property and equipment (6,350)(11,113)
Additions to capitalized software development
costs (3,182) (2,678)
-----------------
Net cash used in investing activities (61,746)(22,520)
-----------------
Financing activities:
Borrowings from line of credit 8,000 -
Repayments of line of credit (8,000) -
Purchases of treasury stock - (1,469)
Payments on capital lease obligations (999) (330)
Issuance of common stock 6,235 2,807
-----------------
Net cash provided by financing
activities 5,236 1,008
-----------------
Effect of foreign exchange rate changes on cash 793 137
Net (decrease)/increase in cash and cash equivalents (37,903) 2,814
Cash and cash equivalents, beginning of year 68,308 65,494
-----------------
Cash and cash equivalents, end of year $30,405 $68,308
=================
TABLE 7
DENDRITE INTERNATIONAL, INC.
RECONCILIATION OF GAAP TO ADJUSTED (NON-GAAP) RESULTS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
--------------- -----------------
Three Months Year Ended
Ended December December 31,
31,
---------------------------------
2003 2002 2003 2002
------- ------- -------- --------
Net income (See Table 1) $5,844 $4,725 $21,060 $15,398
Non-GAAP Adjustments:
Purchased capitalized software
amortization, net of tax (1)
SAI 92 99 366 99
Intangible assets amortization, net
of tax (1)
Synavant 1,048 - 1,649 -
SAI 101 101 406 101
Integration costs, net of tax (2) 140 - 427 -
Dendrite related acquisition costs,
net of tax (3) 1,050 - 1,485 -
Reduction in workforce, net of
tax (4) - 7 - 749
Asset impairment, net of tax (5) - - - 1,099
Reversal of loss contracts, net of
tax (6) - - - (563)
Income taxes (7) - - 608 -
------- ------- -------- --------
Adjusted Net income $8,275 $4,932 $26,001 $16,883
------- ------- -------- --------
Adjusted Net income per share:
Basic $0.20 $0.12 $0.64 $0.42
======= ======= ======== ========
Diluted $0.20 $0.12 $0.63 $0.42
======= ======= ======== ========
Shares used in computing net income per
share :
Basic 40,680 39,910 40,340 39,872
======= ======= ======== ========
Diluted 42,385 39,966 41,415 40,127
======= ======= ======== ========
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 adjusted results 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) Represents amortization expense, net of tax, for definite lived
assets resulting from the acquisitions of SAI and Synavant.
(2) Represents costs associated with the integration of the Synavant
business into the Dendrite business. These costs include but are
not limited to, legal, consulting and moving charges as well as
reconstruction of temporary facilities.
(3) Represents costs related to workforce and facility redundancies
identified in connection with the integration of the Synavant
business into the Dendrite business. If the redundancies involved
the Dendrite workforce or facilities they were charged to
operations and have been identified above. If the redundancies
involved the Synavant workforce or facilities they were recorded
to goodwill.
(4) Represents costs of severance related to a reduction in workforce
during the third quarter 2002 due to a slower than expected growth
in revenue.
(5) Represents an adjustment to the fair value of a building held for
sale during the third quarter 2002.
(6) Represents the reversal, during the third quarter 2002, of costs
previously recorded in 2001, which related to the recognition of
anticipated future losses on selected contracts for which the
Company's obligations were favorably resolved.
(7) Represents a foreign tax valuation adjustment in connection with
the integration of Synavant.
TABLE 8
DENDRITE INTERNATIONAL, INC.
RECONCILIATION OF PROJECTED GAAP RESULTS TO PROJECTED ADJUSTED
RESULTS (a)
(IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
----------------------
Rolling 6 month
outlook
January 1, 2004 - June
30, 2004
Projected Revenue Range $ 190 to $ 194
Projected GAAP EPS Range $0.27 to $0.29
Projected Per Share Impact of:
Intangible Asset Amortization (1) $0.02 to $0.02
Projected Adjusted EPS Range $0.29 to $0.31
-------- ------ ------
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 adjusted results provide further 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) Includes amortization of both purchased capitalized software and
intangible assets from the Synavant and SAI acquisitions. The UTO
Brain intangible valuation is in the process of being determined.
However, the Company currently estimates that the amortization
impact of the UTO Brain acquisition should not materially affect
the projected EPS range.
(2) Includes charges from Dendrite severance and facility closure
costs as a result of the acquisition of Synavant as well as costs
incurred as part of the integration of Synavant.
(a) - See "forward looking statement" disclaimer included as part of
this press release.
TABLE 9
DENDRITE INTERNATIONAL, INC.
PURCHASED INTANGIBLE ASSET AMORTIZATION
(DOLLARS IN THOUSANDS)
(UNAUDITED)
-----------------------------------
Purchased Intangible Amortization
Expense
-----------------------------------
2003 Actual
-----------------------------------
Intangible Life 1st 2nd 3rd 4th
Value (Years) Qtr Qtr Qtr Qtr(b) 2003
---------- ------- ----- ----- ------- ------- -------
Synavant
Intangible Detail
------------------
Covenants not to
compete $2,100 2 $- $27 $175 $365 $567
Backlog 2,400 (a) - 62 376 1,360 1,798
Pharbase Database 2,600 10 - 10 65 65 140
Customer
relationships 5,800 13 - 40 245 (44) 241
----- ----- ------- -------- ------
Synavant Amortization
Total - 139 861 1,746 2,746
SAI Amortization 322 322 322 322 1,288
UTOBrain Amortization (d) - - - - -
----- ----- ------- ------- -------
Total Amortization Expense(d) $322 $461 $1,183 $2,068 $4,034
-----------------------------------
Full Year Projections
----------------------------------------------
2004 (c) 2005 (c) 2006 (c) 2007 (c) Thereafter
-------- -------- -------- -------- ----------
Synavant Intangible
Detail
--------------------
Covenants not to
compete $1,050 $481 $- $- $-
Backlog 516 87 - - -
Pharbase Database 260 260 260 260 1,419
Customer relationships 446 446 446 446 3,774
-------- -------- -------- -------- ----------
Synavant Amortization
Total 2,272 1,274 706 706 5,193
SAI Amortization 1,286 610 445 - -
UTOBrain Amortization (d) TBD TBD TBD TBD TBD
-------- -------- -------- -------- ----------
Total Amortization
Expense(d) $3,558 $1,884 $1,151 $706 $5,193
----------------------------------------------
(a) Backlog is amortized as the backlog revenue is recognized.
(b) Includes a onetime adjustment for final Synavant valuation
adjustments.
(c) Amortization is evenly spread throughout the year.
(d) Since the Uto Brain acquisition closed on January 5, 2004, the
purchase price allocation is currently in progress.
TABLE 10
DENDRITE INTERNATIONAL, INC.
RECONCILIATION OF GAAP TO ADJUSTED (NON-GAAP) STATEMENT OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2002
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Total
Adjusted % of Amortization Other % of
Q4 Rev. (2) Charges(3) GAAP Rev.
---------- ----- ---------- ----------- ----- -----
Revenues:
License fees $5,745 10.1% $- $- $5,745 10.1%
Services 51,295 89.9% - - 51,295 89.9%
------- ---------- ------- -------
57,040 100.0% - - 57,040 100.0%
------- ---------- ------- -------
Cost of license
fees 1,789 3.1% 165 - 1,954 3.4%
Cost of
services 25,333 44.4% - - 25,333 44.4%
------- ---------- ------- -------
27,122 47.5% 165 - 27,287 47.8%
------- ---------- ------- -------
License Gross
Margin 3,956 68.9% (165) - 3,791 66.0%
Services Gross
Margin 25,962 50.6% - - 25,962 50.6%
------- ---------- ------- -------
Gross margin 29,918 52.5% (165) - 29,753 52.2%
------- ---------- ------- -------
Selling, general
and
administrative 18,933 33.2% 169 59 19,161 33.6%
Research and
development 2,950 5.2% - - 2,950 5.2%
Restructuring
benefit - - (47) (47)
------- ---------- ------- -------
21,883 38.4% 169 12 22,064 38.7%
Operating income 8,035 14.1% (334) (12) 7,689 13.5%
Interest income 229 0.4% - - 229 0.4%
Other expense (43) -0.1% - - (43) -0.1%
-------- ---------- ------- -------
Income before
income taxes 8,221 14.4% (334) (12) 7,875 13.8%
Income taxes 3,289 5.8% 134 5 3,150 5.5%
------- ---------- ------- -------
Net income $4,932 8.6% $(200) $(7) $4,725 8.3%
======= =========== ======== =======
Net income per share
Basic $0.12 $(0.01) $(0.00) $0.12(4)
======= =========== ======== =======
Diluted $0.12(1) $(0.01) $(0.00) $0.12(4)
======= =========== ======== =======
Shares used in
computing net income
(loss) per share:
Basic 39,910 39,910 39,910 39,910
====== =========== ======== ======
Diluted 39,966 39,966 39,966 39,966
====== =========== ======== ======
(1) See Table 7 for a more detailed reconciliation of net income for
the three months ended December 31, 2002.
(2) Represents amortization expense of definite lived intangible
assets resulting from the acquisition of SAI.
(3) Includes Dendrite severance and a revised estimate of the 2001
restructuring accrual.
(4) Diluted EPS does not appear to foot across due to the
mathematical rounding of the individual calculations.
TABLE 11
DENDRITE INTERNATIONAL, INC.
RECONCILIATION OF GAAP TO ADJUSTED (NON-GAAP) STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2002
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Total
Adjusted % of Amortization Other % of
YTD Rev. (2) Charges(3) GAAP Rev.
---------- ----- ------------ ----------- ----- -----
Revenues:
License fees $13,507 6.0% $- $- $13,507 6.0%
Services 212,249 94.0% - - 212,249 94.0%
------- ---------- -------- --------
225,756 100.0% - - 225,756 100.0%
------- ---------- -------- --------
Cost of license
fees 4,565 2.0% 165 - 4,730 2.1%
Cost of
services 107,756 47.7% - (939) 106,817 47.3%
------- ---------- -------- --------
112,321 49.8% 165 (939) 111,547 49.4%
------- ---------- -------- --------
License Gross
Margin 8,942 66.2% (165) - 8,777 65.0%
Services Gross
Margin 104,493 49.2% - 939 105,432 49.7%
------- ---------- -------- --------
Gross margin 113,435 50.2% (165) 939 114,209 50.6%
------- ---------- -------- --------
Selling, general
and
administrative 75,836 33.6% 169 1,296 77,301 34.2%
Research and
development 10,396 4.6% - - 10,396 4.6%
Restructuring
benefit - - (47) (47) 0.0%
Asset impairment - - 1,832 1,832 0.8%
------- ---------- -------- --------
86,232 38.2% 169 3,081 89,482 39.6%
Operating income 27,203 12.0% (334) (2,142) 24,727 11.0%
Interest income 1,085 0.5% - - 1,085 0.5%
Other expense (149) -0.1% - - (149) -0.1%
------- ---------- -------- --------
Income before
income taxes 28,139 12.5% (334) (2,142) 25,663 11.4%
Income taxes 11,256 5.0% 134 857 10,265 4.5%
------- ---------- -------- --------
Net income $16,883 7.5% $(200) $(1,285) $15,398 6.8%
======== =========== ========= =======
Net income per
share
Basic $0.42 $(0.01) $(0.03) $0.39(4)
======= =========== ======== =======
Diluted $0.42(1) $(0.01) $(0.03) $0.38
======= =========== ======== =======
Shares used in
computing net income
(loss) per share:
Basic 39,872 39,872 39,872 39,872
======= ========== ======= ========
Diluted 40,127 40,127 40,127 40,127
======= ========== ======= ========
Note: Includes SAI's operating results for the period September 19,
2002 to December 31, 2002.
(1) See Table 7 for a more detailed reconciliation of net income for
the twelve months ended December 31, 2002.
(2) Represents amortization expense of definite lived intangible
assets resulting from the acquisition of SAI.
(3) Includes Dendrite severance; a reversal of costs previously
recorded in 2001, in connection with certain customer contracts, which
related to the recognition of anticipated future losses that were
ultimately favorably resolved; a revised estimate of the 2001
restructuring accrual; and an asset impairment charge related to the
facility held for sale.
(4) Diluted EPS does not appear to foot across due to the
mathematical rounding of the individual calculations.
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