Dendrite Reports Continued Strong Growth.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)--July 22, 1999-- Second Quarter 1999 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. Up 58% To $0.19 Per 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. Share Excluding Acquisition Related Charges First Half EPS Grows 67% Over 1998 Dendrite dendrite: see nervous system; synapse. International, Inc. (NASDAQ/ NMS See NetWare Management System. :DRTE DRTE Defence Research Telecommunications Establishment ), the leading supplier of enterprise wide sales force effectiveness solutions with the pharmaceutical and Consumer Package Goods (CPG CPG central pattern generators. ) industries, today announced record results for both the second quarter and six months ended June June: see month. 30, 1999. The Company reported second quarter net income of $5.1 million or $0.19 per diluted share exclusive of charges of $3.5 million associated with the acquisition of CorNet International, which closed in May, 1999. This compares with net income of $3.2 million or $0.12 per diluted share for the second quarter 1998. Revenue increased 28% to $41.9 million. For the six months ending June 30, 1999, net income, excluding the one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges, was $9.3 million, or $0.35 per diluted share, a 67% increase over 1998's $0.21 per share, and first half revenue increased 34% to $79.5 million. "This has been a spectacular quarter in what is proving to be a rapidly growing year," said John E. Bailye, 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. of Dendrite. "Continued strength in our U.S. pharmaceutical business, strong momentum in our SalesPlus CorNet Americas A·mer·i·cas , the See America. Division, several successful wins by SalesPlus 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). and continuing, rapid growth in
Japan are all propelling pro·pel tr.v. pro·pelled, pro·pel·ling, pro·pels To cause to move forward or onward. See Synonyms at push. [Middle English propellen, from Latin the company at a rate which has exceeded our expectations." License fees of $6.7 million grew 42% over the second quarter of 1998 reaching the highest level for any quarter in the Company's history. Services revenue grew 26% to $35.1 million. "I am particularly pleased that our growth was broad based, led by the US and Japanese Japanese (jăp'ənēz`), language of uncertain origin that is spoken by more than 125 million people, most of whom live in Japan. There are also many speakers of Japanese in the Ryukyu Islands, Korea, Taiwan, parts of the United States, and pharmaceutical businesses. The growth of our business is especially impressive when you remember the second quarter of 1998 was 55% higher than second quarter 1997," Bailye added. On a geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. basis, continued strength in domestic demand led to 74% of revenue coming from the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , a similar level to last year. The pharmaceutical sector accounted for 95% of the quarter's revenue, while CPG was 5%. Gross margins in the quarter improved to 56.2%, up from 51.7% a year ago. License margin improved 12.8 points to 91.2%, while service margins, at 49.5%, were up 2.3 points. SG&A expense at 34.4% of revenue and R&D expense at 4.4% were both within Dendrite's targeted ranges, despite heavy investment in sales force growth and product development, as the Company continues to broaden its business beyond the traditional software model of 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. . In the quarter, the company recorded a charge for merger related expenses of $3.5 million, which represented the fees incurred by Dendrite to acquire CorNet International in May; fees associated with a terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: secondary offering once the CorNet acquisition was executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. ; and CorNet's expenses for the transaction, which were subtracted from the value paid to the CorNet shareholders. The Company also closed the acquisition of MMI (Man Machine Interface) See HMI. 1. MMI - Man-Machine Interface. 2. (company) MMI - The company which developed the first Programmable Array Logic devices. MMI was bought by AMD. on June 30th. This transaction was accounted for as a purchase. There was no in-process R&D write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. ; therefore, there was no effect on the second quarter's income statement, although MMI was incorporated into Dendrite's consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. . Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for the quarter was 9.2%; excluding the one-time charge for acquisitions, the margin was 17.5%, up from 15.2% from last year. Pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta income on the same basis, rose to $7.8 million due to interest income on the Company's substantial cash balance. The Company reduced its 1999 tax rate to 36% in the quarter, but since many of the CorNet transaction expenses were not tax deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). , the apparent rate was 53%. Earnings per diluted share, excluding the one-time items, were $0.19 per share, up from $0.12 in the year ago quarter. After the acquisition expenses, reported earnings per share were $0.08. For the first six months, reported earnings per share were $0.23, while earnings per share, excluding the one-time charge, were $0.35, up 67% from $0.21 a year ago. The Company maintained its excellent balance sheet, despite using $6.6 million of cash in the MMI acquisition and paying $2.7 million of the CorNet acquisition expenses. Cash and Investments declined $6.4 million from the first quarter as these expenditures were partially offset by net income. DSO See CSO. in the quarter was 63 days compared to 94 days in the year ago quarter. DSO actually rose from first quarter levels of 58 days with 4 days of this growth attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the inclusion of MMI's 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 at quarter end with no associated revenue. Chief Financial Officer and Executive Vice President George Robson George Robson (February 24, 1909 - September 2, 1946) was a Canadian racecar driver active in the 1940s. Born in Newcastle-upon-Tyne, England, Robson later moved to Ontario and finally to the U.S. in 1924. said, "This has truly been a great quarter. We've we've Contraction of we have. we've have exceeded our financial goals while completing two critical acquisitions. The accounting effects of those acquisitions make the financial results very complex, partially obscuring the company's underlying operating strength. To assist everyone in understanding the quarter, we've posted supplemental schedules on our website, in addition to the normal financial statements that are included with the press release." Bailye added, "We've consistently been conservative in our statements about the second half of 1999 because we were concerned about the uncertainty of any Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 impact. We now have sufficient visibility into the third quarter to suggest we will exceed current analyst estimates by $0.01 to $0.02 in the upcoming quarter. We expect to address fourth quarter at a later date when we have even more visibility." ABOUT DENDRITE With a strong focus on outcomes in the Pharmaceutical and Consumer Package Goods (CPG) industries, Dendrite is a leading global provider of highly-specialized, integrated product and service offerings to support strategies for a sustained competitive advantage. Thousands of sales representatives and their managers in over 150 companies in 57 countries rely on Dendrite for a uniquely tailored combination of tools, information and skills to help them prepare for tomorrow's challenges and improve their sales success. The Company uses its highly specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. industry knowledge to develop modular software See modular programming. products that enhance sales force effectiveness. The products, combined with specifically tailored coaching and support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services , focus sales representatives on improving their performance. With a global infrastructure as its foundation, Dendrite's commitment to unparalleled service has been the hallmark hallmark, mark impressed on silverwork or goldwork to signify official approval of the standard of purity of the metal, also called plate mark. The hallmark was introduced by statute in England in 1300 and enforced by the Goldsmiths' Hall, London. of the business and the basis of strong customer loyalty since the Company's inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. . Headquartered in Morristown, New Jersey Morristown is a town in Morris County, New Jersey, United States. As of the United States 2000 Census, the town population was 18,544. Its estimated population in 2004 was 18,842. It is the county seat of Morris CountyGR6. , Dendrite employs over 1100 people all around the world. For more information, visit the Company's Web site: http://www.drte.com. Note: Dendrite is a registered trademark of Dendrite International, Inc. This press release contains statements that are 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. and discuss expectations about future events or outcomes with respect to Dendrite and its business, including statements regarding expected results for future periods. The forward-looking statements are based on a number of assumptions and involve risks and uncertainties and, accordingly, Dendrite's actual results may differ materially from the results discussed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by in such forward-looking statements. Factors that could cause actual results to differ from the results expressed or implied by these forward-looking statements include: (i) our dependence on the pharmaceutical industry; (ii) our exposure to significant fluctuations in our quarterly results, as a result of which we may not meet market expectations; (iii) our dependence on our major customers; (iv) our inability to successfully introduce new products or respond to technological change; and (v) increased competition which may result in price reductions and reduced demand for our products and services. For further discussion of these and other factors that could adversely affect Dendrite's financial condition and results of operations consult Dendrite's annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the Securities and Exchange Commission. -0-
Dendrite International, Inc.
Consolidated Statements of Operations
(In Thousands Except Per Share Data)
(Unaudited)
Three Months Ended June 30
-------------------------------
1998 % 1999 %
---- - ---- -
Revenues:
License fees $ 4,735 14.5 $ 6,747 16.1
Services 27,930 85.5 35,104 83.9
------- -------
32,665 100.0 41,851 100.0
------- -------
Cost of revenues:
Cost of license fees 1,024 3.1 592 1.4
Cost of services 14,751 45.2 17,722 42.4
------- ------
15,775 48.3 18,314 43.8
------- ------
Gross margin 16,890 51.7 23,537 56.2
------- ------
Operating expenses:
Selling, general and administrative 10,826 33.1 14,397 34.4
Research and development 1,094 3.4 1,835 4.4
Mergers and acquisitions - 0.0 3,466 8.2
-- ------
11,920 36.5 19,698 47.0
Operating income 4,970 15.2 3,839 9.2
Interest income 215 0.7 440 1.0
Other income/(expense) (30) -0.1 43 0.1
---- ---
Income before income taxes 5,155 15.8 4,322 10.3
Income taxes 1,949 6.0 2,296 5.5
------ ------
Net income $ 3,206 9.8 $ 2,026 4.8
======== ========
Net income per share:
Basic $0.13 $0.08
====== ======
Diluted $0.12 $0.08
====== ======
Shares used in computing
net income per share:
Basic 23,890 25,030
====== ======
Diluted 25,962 26,736
====== ======
Net income per share excluding
one time charges:
Basic $0.13 $0.20
====== ======
Diluted $0.12 $0.19
====== ======
Six Months Ended June 30
---------------------------------
1998 % 1999 %
---- - ---- -
Revenues:
License fees $ 8,008 13.5 $ 10,801 13.6
Services 51,494 86.5 68,684 86.4
------ -------
59,502 100.0 79,485 100.0
------ -------
Cost of revenues:
Cost of license fees 1,385 2.3 990 1.2
Cost of services 27,021 45.4 34,225 43.1
------ -------
28,406 47.7 35,215 44.3
------ -------
Gross margin 31,096 52.3 44,270 55.7
------ -------
Operating expenses:
Selling, general and administrative 20,200 33.9 27,024 34.0
Research and development 2,205 3.7 3,473 4.4
Mergers and acquisitions - 0.0 3,466 4.3
------ ------
22,405 37.7 33,963 42.7
Operating income 8,691 14.6 10,307 13.0
Interest income 411 0.7 858 1.0
Other income/(expense) (374) -0.6 (82) -0.1
----- ----
Income before income taxes 8,728 14.7 11,083 13.9
Income taxes 3,357 5.7 4,858 6.1
------ ------
Net income $ 5,371 9.0 $ 6,225 7.8
======== ========
Net income per share:
Basic $0.23 $0.25
====== =====
Diluted $0.21 $0.23
====== =====
Shares used in computing
net income per share:
Basic 23,843 24,857
====== ======
Diluted 25,750 26,598
====== ======
Net income per share excluding
one time charges:
Basic $0.23 $0.37
====== =====
Diluted $0.21 $0.35
====== =====
Dendrite International, Inc.
Consolidated Balance Sheets
(In Thousands Except Share Data)
(Unaudited)
December 31, June 30,
1998 1999
------------ -------------
Assets
Current Assets:
Cash and cash equivalents $ 32,555 $ 33,307
Short-term investments 9,614 8,334
Accounts receivable, net 20,378 29,394
Prepaid expenses and other 3,391 3,995
Prepaid Taxes 921 2,137
Deferred tax asset 675 675
---- ---
Total current assets 67,534 77,842
------- ------
Property and equipment, net 7,221 8,693
Deferred taxes 1,077 1,077
Goodwill, net 2,496 10,303
Capitalized software
development cost, net 3,503 6,045
------ -----
$ 81,831 $ 103,960
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 2,249 $ 2,806
Income taxes payable 1,036 982
Accrued compensation and benefits 4,321 5,417
Other accrued expenses 7,493 8,953
Deferred revenue 1,827 2,495
------ -----
Total current liabilities 16,926 20,653
------- ------
Capital Lease Obligation 544 522
Deferred rent 392 264
Deferred taxes 2,920 3,737
------ -----
Stockholders' Equity
Preferred Stock, no par value,
10,000,000 shares - -
authorized, none issued
Common Stock, no par value,
100,000,000 shares
authorized 24,830,450 and
25,634,755 shares issued
and 24,429,450 and
25,233,755 outstanding 41,442 53,467
Retained earnings 23,998 30,223
Deferred Compensation (1,970) (1,537)
Cumulative translation adjustment (494) (1,442)
Less treasury stock, at cost (1,927) (1,927)
------- -------
Total stockholder's equity 61,049 78,784
------- ------
$ 81,831 $ 103,960
========= =========
Dendrite International, Inc.
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Six Months Ended June 30,
------------------------
1998 1999
---- ----
Operating activities:
Net income $ 5,370 $ 6,225
Adjustments to reconcile
net income to net cash
Provided by (used in) operating
activities:
Depreciation and amortization 1,763 2,354
Compensation Expense 55 407
Tax benefit from employee
stock plan -- 3,913
Changes in assets and liabilities:
(Increase)/decrease in accounts
receivable (7,417) (7,863)
(Increase)/decrease in prepaid
expenses and other (196) (520)
(Increase)/decrease in prepaid
income taxes -- (1,216)
Increase/(decrease) in accounts
payable and accrued expenses 697 2,337
Increase/(decrease) in deferred
rent (95) (128)
Increase/(decrease) in income
taxes payable 596 61
Increase/(decrease) in deferred
revenue 535 661
--- ---
Net cash provided by (used in)
operating activities 1,308 6,231
----- -----
Investing activities:
Purchases of short-term investments (2,558) (14,695)
Sales of short-term investments 1,790 15,975
Purchase of MMI, net of cash acquired -- (6,640)
Purchases of property and equipment (807) (2,855)
Additions to capitalized software
development costs (698) (1,270)
---- ------
Net cash provided by (used in)
investing activities (2,273) (9,485)
------ ------
Financing activities:
Payments on capital lease obligations (111) (288)
Issuance of Common Stock 959 4,703
--- -----
Net cash provided by (used in)
financing activities 848 4,415
--- -----
Effect of foreign exchange rate changes on
cash (132) (409)
Net increase (decrease) in cash and cash
equivalents (249) 752
Cash and cash equivalents, beginning of
period 15,937 32,555
------ ------
Cash and cash equivalents, end of period $ 15,688 $ 33,307
====== ======
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