Dendrite Reports Solid Second Quarter Results With Adjusted EPS of $0.17 per Diluted Share; GAAP EPS Was up 26% to $0.14 per Diluted Share; Dendrite Revenue, Excluding Synavant, Was up 8%.Business Editors MORRISTOWN, N.J.--(BUSINESS WIRE)--Aug. 12, 2003 Dendrite International, Inc. (NASDAQ: DRTE) today announced solid second quarter GAAP diluted earnings of $0.14 per share, up 26%, as compared to earnings of $0.11 per share for the second quarter of 2002. GAAP diluted earnings per share includes approximately $0.02 in other charges, including amortization of definite lived intangibles arising from acquisitions and foreign tax valuation adjustments. On an adjusted basis, diluted earnings per share for the quarter were $0.17, excluding other charges. This represents approximately $0.15 in earnings per diluted share from the former Dendrite businesses and approximately $0.02 in per share earnings from Synavant, which was acquired by the Company on June 16, 2003. "We are pleased with Dendrite's second quarter accomplishments," said Dendrite Chairman and Chief Executive Officer John Bailye. "The Company reported solid revenue and earnings in what is still an economically fragile pharmaceutical services market." "During the second quarter, we also announced the completion of our acquisition of Synavant," added Bailye. "This acquisition is a critical step toward Dendrite becoming the leading global provider of information, software, and services to the sales and marketing divisions of life science companies. The Synavant acquisition enhances Dendrite's global market share, expands our customer base, and broadens our offering of customer solutions." "As a result of this acquisition, we have embarked upon a 100-day integration plan," said Paul Zaffaroni, Dendrite's Chief Operating Officer. "We are in the process of closing 10 facilities around the world, eliminating approximately 300 redundant positions, and have identified approximately $30 million in annual savings above the reductions already implemented by Synavant. At this point we have already completed approximately 75% of the cost-savings actions and expect to have them fully implemented by year-end." Second Quarter Results Revenue for the quarter was $69.5 million, including $7.4 million of Synavant revenue and $62.1 million of revenue from the former Dendrite businesses, versus last year's second quarter revenue of $57.6 million. This reflects a 21% increase in total Company revenue, including 8% growth from the former Dendrite businesses. Year-to-date revenue for the Company was $129.2 million, up 12% from the $115.1 million reported for the same period last year. Dendrite's 2003 year-to-date revenue contribution, excluding Synavant, was $121.8 million, up 6% from the prior year. License revenue for the second quarter of 2003 increased substantially to $2.8 million, up 19% over the prior year. The former Dendrite businesses contributed $2.7 million of total license revenue. On a year-to-date basis, license revenue, including Synavant's $0.1 million contribution, was $5.3 million, down 3% from the prior year period. Service revenue for the second quarter of 2003 was $66.8 million, a 21% increase over the $55.3 million in service revenue generated for the second quarter of 2002. Service revenue contributions for the second quarter of 2003 include $59.4 million from the Dendrite operations and $7.3 million from Synavant. This represents a 7% year-over-year second quarter increase for the former Dendrite businesses, excluding Synavant. Year-to-date, service revenue was up 13% over the prior year. Excluding Synavant, Dendrite's year-to-date service revenue was up 6% over the prior year. Gross margin Gross Margin 1) A company's total sales revenue minus its cost of goods sold.2) A company's total sales revenue minus cost of goods sold, divided by the total sales revenue, expressed as a percentage. 3) In the case of an adjustable-rate mortgage, the interest rate (expressed as a percentage) that is added on to the base index rate in order to establish the actual interest rate the borrower will pay on the loan. for the second quarter was $34.7 million, or 50.0% of revenue, versus $28.9 million, or 50.1%, in the prior year. In the second quarter of 2003, Synavant contributed $2.6 million in gross margin. Dendrite's second quarter 2003 gross margin for the former Dendrite businesses was $32.3 million, or a very strong 52.1% of revenue. Year-to-date gross margin for 2003, including Synavant and other charges, was $64.6 million, or 50.0% of revenue, versus the prior year-to-date gross margin of $56.1 million, or 48.8% of revenue. The Company generated strong second quarter operating income of $10.5 million, or a robust 15.2% of revenue, versus $6.9 million, or 12.0% of revenue for the same period last year. Operating income as a percent of revenue was 16.1% for the former Dendrite businesses. Synavant contributed approximately $1.1 million in operating income in the second quarter of 2003. On a year-to-date GAAP basis, operating income of $17.5 million was recorded for the first half of 2003 versus $12.1 million for the first half of 2002. Income tax rates for the three months ended June 30, 2003 and June 30, 2002 were 46% and 36%, respectively. The tax rate for 2003 was impacted by two events. First, the Dendrite effective tax rate had increased from 36% to 40% during the third quarter of 2002 as a result of a change in New Jersey tax laws. Second, in the second quarter of 2003, in connection with the integration of Synavant, the Company recognized foreign tax valuation adjustments, which effectively increased the Company's tax rate from 40% to 46% for the period. Going forward, the Company expects the normalized effective income tax rate to approximate 40%. Key Operating Statistics The Company ended the second quarter with $23.2 million in cash and cash equivalents. This reduction from the December 31, 2002 balance of $68.3 million primarily reflects a $51.7 reduction for costs associated with the acquisition of Synavant. The Company reported net cash from operations of $7.9 million for the six months ended June 30, 2003. However, this included approximately $16 million for the payment of Synavant liabilities. Excluding this working capital outlay for Synavant, the Company's net cash from operations for the six months ended June 30, 2003 would have approximated $24 million. This compares with net cash from operations of $3.8 million for the six months ended June 30, 2002. Accounts receivable days sales outstanding (DSO) for the former Dendrite businesses, excluding the impact of Synavant, improved to 61 days from 62 days last quarter. Including Synavant, DSO was 94 days on an as-reported basis. However, this calculation includes the total Synavant accounts receivable balance, but only 11 business days of Synavant revenue. Recent Highlights Dendrite's new business growth was derived from sales successes in many aspects of its business. Highlights included: -- Signing 31 customer contracts across North America, Europe, and Asia/Pacific Rim, including Australia and Japan -- Securing business with 9 new customers in the United States, United Kingdom, Italy, Poland, China, and Japan -- Adding nearly 2,350 additional SFA user licenses through business with new customers and expanded business with existing customers -- Completing our strategic acquisition of Synavant, a critical step toward becoming one of the most comprehensive information, software, and services company for the global pharmaceutical industry -- Signing a comprehensive, multi-year services contract with one of our largest clients, one of the world's leading pharmaceutical companies -- Continuing strong growth in the Japanese market through the launch of our new j-centre(TM) solution suite of applications for home office (headquarters-based) personnel, and adoption of its new j-centreSYNERGY(TM) communication solution by a leading Japanese drug manufacturer (Daiichi Pharmaceutical Co., Ltd.) and a top wholesaler (Astem K.K) Outlook "As we enter the third quarter, we are optimistic about the opportunities that exist for our Dendrite stand-alone businesses, which will be enhanced by our recent acquisition of Synavant," said Chief Financial Officer Kathleen Donovan. "We believe that combined revenue for the second half of the year will be in the range of $190 to $195 million, including Synavant, with a slightly stronger fourth quarter as our combined sales force gains momentum and as Synavant completes a major rollout for a large customer." "Based upon achieving this targeted revenue, we anticipate this to yield adjusted earnings per share in the range of $0.32 to $0.34 for the second half of 2003," added Donovan. Adjusted earnings per share exclude approximately $0.03 per share for the amortization of acquisition intangibles and approximately $0.03 to $0.04 per share for integration costs. GAAP earnings per share for the same period are expected to be in the range of $0.26 to $0.27. Regarding the Company's cash balances, Donovan commented, "We expect our cash balance to decline by $5 to $10 million in the third quarter as we continue to pay severance and facility wind-down costs. However, we are targeting to build our cash balances back to approximately $50 million within 20 months of the Synavant acquisition." While not giving guidance for 2004, the Company did indicate that Synavant should contribute approximately $110 million to 2004 revenue and be approximately $0.12 to $0.14 accretive to earnings per share on an adjusted basis excluding the impact of amortization of acquisition intangibles. The amortization of acquisition intangibles would reduce this number by approximately $0.05 per share, to approximately $0.07 to $0.09 per diluted share on a GAAP basis. This current outlook is based on current expectations and assumptions and constitutes "forward-looking information." The Company can give no assurance that such expectations and assumptions will prove to be correct. The Company does not intend to update such outlook other than in connection with regularly scheduled earnings releases. Please visit our website at www.dendrite.com to participate in our earnings call web cast, which will be held on August 12, 2003 at 5 p.m. EST. 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. The foregoing contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. The statements may be identified by such forward-looking terminology as "expect," "believe," "may," "will," "intend," "plan," and similar statements or variations. All of our "outlook" information, including future revenues, margins, earnings and earnings per share, cash flows and cash balances, cost savings and synergies, and other future financial and operating measures, constitute forward-looking information. Such forward-looking statements involve significant risks and uncertainties, including those which may result from our dependence on the pharmaceutical industry; dependence on major customers; economic pressures and legislative and regulatory impact on our customers; fluctuations in quarterly revenues due to lengthy sales and implementation cycles for our products; our fixed expenses in relation to fluctuating revenues; interest rates and foreign currency exchange rate fluctuations; successful and timely development and introduction of new products and versions; rapid technological changes; increased competition; timing of the execution and implementation of customer contracts, including potentially longer decision-making cycles by customers; international operations; our ability to attract and retain key personnel; 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; results from strategic relationships; increasing geopolitical concerns around the world and their impact on the world economies in which we operate; catastrophic events which could negatively affect our information technology infrastructure; difficulties disposing of certain of our facilities; unexpected changes in accounting regulations, standards or interpretations; and our ability to timely and successfully integrate our acquisitions, including Synavant, and our ability to successfully achieve and realize the planned cost savings and synergies from such acquisitions. Other important factors that should be considered are included in the "Factors That May Affect Future Operating Results" section of 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 or revising any such forward-looking statements to reflect actual results, new information, changes in assumptions or other changes or circumstances affecting such forward-looking statements. Our financial and performance outlook concerning future revenues, margins, earnings and earnings per share, cash flows and cash balances, and other operating or performance results do not include the impact of any future acquisitions or future acquisition-related expenses or any future restructuring or other charges that may occur from time to time due to management decisions or changing business circumstances or conditions.
TABLE 1
DENDRITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
------------------------------------
Three Months Ended June 30,
------------------------------------
2003 (1) % 2002 % Change
------ ---- --- -------- --- ------
Revenues:
License fees $ 2,752 4.0% $ 2,306 4.0% 19%
Services 66,776 96.0% 55,306 96.0% 21%
------- -------
69,528 100.0% 57,612 100.0% 21%
------- -------
Cost of license fees 1,204 1.7% 1,007 1.7% 20%
Cost of services 33,578 48.3% 27,748 48.2% 21%
------- -------
34,782 50.0% 28,755 49.9% 21%
------- -------
License Gross Margin 1,548 56.3% 1,299 56.3% -
Services Gross Margin 33,198 49.7% 27,558 49.8% (0.1)Pt
------- -------
Gross margin 34,746 50.0% 28,857 50.1% (0.1)Pt
------- -------
Operating expense:
Selling, general and
administrative 20,983 30.2% 19,488 33.8% 8%
Research and development 3,215 4.6% 2,455 4.3% 31%
------- -------
24,198 34.8% 21,943 38.1% 10%
Operating income 10,548 15.2% 6,914 12.0% 53%
Interest income 312 0.4% 288 0.5% 8%
Other income/(expense) 25 0.0% (21) 0.0% -219%
------- -------
Income before income taxes 10,885 15.7% 7,181 12.5% 52%
Income taxes 4,962 7.1% 2,585 4.5% 92%
------- -------
Net income $ 5,923 8.5% $ 4,596 8.0% 29%
======= =======
Net income per share:
Basic $ 0.15 $ 0.12
======= =======
Diluted $ 0.14 $ 0.11 26%
======= =======
Shares used in computing net
income per share:
Basic 40,220 39,921
======= =======
Diluted 41,101 40,321
======= =======
--------------- ----------------------
Six Months Ended June 30,
--------------- ----------------------
2003 (1) % 2002 % Change
--------- --- ----- --- ------
Revenues:
License fees $ 5,315 4.1% $ 5,485 4.8% -3%
Services 123,923 95.9% 109,570 95.2% 13%
-------- --------
129,238 100.0% 115,055 100.0% 12%
-------- --------
Cost of license fees 2,283 1.8% 2,251 2.0% 1%
Cost of services 62,318 48.2% 56,656 49.2% 10%
-------- --------
64,601 50.0% 58,907 51.2% 10%
-------- --------
License Gross Margin 3,032 57.0% 3,234 59.0% (2.0)Pt
Services Gross Margin 61,605 49.7% 52,914 48.3% 1.4 Pt
-------- --------
Gross margin 64,637 50.0% 56,148 48.8% 1.2 Pt
-------- --------
Operating expense:
Selling, general and
administrative 41,222 31.9% 38,987 33.9% 6%
Research and development 5,912 4.6% 5,083 4.4% 16%
-------- --------
47,134 36.5% 44,070 38.3% 7%
Operating income 17,503 13.5% 12,078 10.5% 45%
Interest income 554 0.4% 592 0.5% -6%
Other income/(expense) 34 0.0% 38 0.0% -11%
-------- --------
Income before income taxes 18,091 14.0% 12,708 11.0% 42%
Income taxes 7,844 6.1% 4,575 4.0% 71%
-------- --------
Net income $ 10,247 7.9% $ 8,133 7.1% 26%
======== ========
Net income per share:
Basic $ 0.26 $ 0.20
======== ========
Diluted $ 0.25 $ 0.20 25%
======== ========
Shares used in computing
net income per share:
Basic 40,115 39,818
======== ========
Diluted 40,704 40,269
======== ========
(1) Includes the operating results for Synavant during the period June
16, 2003 to June 30, 2003
TABLE 2
DENDRITE INTERNATIONAL, INC.
2ND QUARTER RECONCILIATION OF GAAP TO NON-GAAP
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Former Dendrite (1) Synavant % of Total
Rev. Adjusted
Q2
------------------- --------- ---- ---------
Revenues:
License fees $ 2,666 $ 86 1.2% $ 2,752
Services 59,436 7,340 98.8% 66,776
-------- -------- -------
62,102 7,426 100.0% 69,528
-------- -------- -------
Cost of license fees $ 1,051 - 0.0% 1,051
Cost of services 28,709 4,858 65.4% 33,567
-------- -------- -------
29,760 4,858 65.4% 34,618
-------- -------- -------
License Gross Margin 1,615 86 100.0% 1,701
Services Gross Margin 30,727 2,482 33.8% 33,209
-------- -------- -------
Gross margin 32,342 2,568 34.6% 34,910
-------- -------- -------
Selling, general and
administrative 19,351 1,246 16.8% 20,597
Research and development 3,017 198 2.7% 3,215
-------- -------- -------
22,368 1,444 19.4% 23,812
Operating income 9,974 1,124 15.1% 11,098
Interest income 296 16 0.2% 312
Other income 25 - 0.0% 25
-------- -------- -------
Income before income taxes 10,295 1,140 15.4% 11,435
Income taxes 4,118 456 6.1% 4,574
-------- -------- -------
Net income $ 6,177 $ 684 9.2% $ 6,861
======== ======== =======
Net income per share
Basic $ 0.15 $ 0.02 $ 0.17
======== ======== =======
Diluted $ 0.15 $ 0.02 $ 0.17(2)
======== ======== =======
Shares used in computing net
income (loss) per share
Basic 40,220 40,220 40,220
======== ======== =======
Diluted 41,101 41,101 41,101
======== ======== =======
% of Rev. Other GAAP
Charges(3)
--------- ------------ --------
Revenues:
License fees 4.0% $ - $ 2,752
Services 96.0% - 66,776
------- -------
100.0% - 69,528
------- -------
Cost of license fees 1.5% 153 1,204
Cost of services 48.3% 11 33,578
------- -------
49.8% 164 34,782
------- -------
License Gross Margin 61.8% (153) 1,548
Services Gross Margin 49.7% (11) 33,198
------- -------
Gross margin 50.2% (164) 34,746
------- -------
Selling, general and
administrative 29.6% 386 20,983
Research and development 4.6% - 3,215
------- -------
34.2% 386 24,198
Operating income 16.0% (550) 10,548
Interest income 0.4% - 312
Other income 0.0% - 25
------- -------
Income before income taxes 16.4% (550) 10,885
Income taxes 6.6% (388) 4,962
------- -------
Net income 9.9% $ (938) $ 5,923
======= =======
Net income per share
Basic $ (0.02) $ 0.15
======= =======
Diluted $ (0.02) $ 0.14 (4)
======= =======
Shares used in computing net
income (loss) per share
Basic 40,220 40,220
======= =======
Diluted 40,220 41,101
======= =======
(1) See Table 4 for additional information
(2) See Table 7 for additional information
(3) Includes costs associated with integration of Synavant, Dendrite
severance and facility closures and amortization of definite lived
intangible assets resulting from the acquisition of Synavant and
SAI as well as a foreign tax valuation adjustment in connection
with the integration of Synavant.
(4) Diluted EPS does not appear to foot across due to mathematical
rounding of the individual calculations
TABLE 3
DENDRITE INTERNATIONAL, INC.
YTD RECONCILIATION OF GAAP TO NON-GAAP
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Former Dendrite (1) Synavant % of Total
Rev. Adjusted
YTD
----------------- --------- ---- ---------
Revenues:
License fees $ 5,229 $ 86 1.2% $ 5,315
Services 116,583 7,340 98.8% 123,923
-------- ------- --------
121,812 7,426 100.0% 129,238
-------- ------- --------
Cost of license fees $ 1,978 - 0.0% 1,978
Cost of services 57,449 4,858 65.4% 62,307
-------- ------- --------
59,427 4,858 65.4% 64,285
-------- ------- --------
License Gross Margin 3,251 86 100.0% 3,337
Services Gross Margin 59,134 2,482 33.8% 61,616
-------- ------- --------
Gross margin 62,385 2,568 34.6% 64,953
-------- ------- --------
Selling, general and
administrative 39,421 1,246 16.8% 40,667
Research and development 5,714 198 2.7% 5,912
-------- ------- --------
45,135 1,444 19.4% 46,579
Operating income 17,250 1,124 15.1% 18,374
Interest income 538 16 0.2% 554
Other income 34 - 0.0% 34
-------- ------- --------
Income before income taxes 17,822 1,140 15.4% 18,962
Income taxes 7,129 456 6.1% 7,585
-------- ------- --------
Net income $ 10,693 $ 684 9.2% $ 11,377
======== ======= ========
Net income per share
Basic $ 0.27 $ 0.02 $ 0.28
======== ======= ========
Diluted $ 0.26 $ 0.02 $ 0.28 (2)
======== ======= ========
Shares used in computing net
income (loss) per share
Basic 40,115 40,115 40,115
======== ======= ========
Diluted 40,704 40,704 40,704
======== ======= ========
% of Rev. Other GAAP
Charges(3)
--------- ----------- ---------
Revenues:
License fees 4.1% $ - $ 5,315
Services 95.9% - 123,923
------- --------
100.0% - 129,238
------- --------
Cost of license fees 1.5% 305 2,283
Cost of services 48.2% 11 62,318
------- --------
49.7% 316 64,601
------- --------
License Gross Margin 62.8% (305) 3,032
Services Gross Margin 49.7% (11) 61,605
------- --------
Gross margin 50.3% (316) 64,637
------- --------
Selling, general and
administrative 31.5% 555 41,222
Research and development 4.6% - 5,912
------- --------
36.0% 555 47,134
Operating income 14.2% (871) 17,503
Interest income 0.4% - 554
Other income 0.0% - 34
------- --------
Income before income taxes 14.7% (871) 18,091
Income taxes 5.9% (260) 7,844
------- --------
Net income 8.8% $(1,131) $ 10,247
======= ========
Net income per share
Basic $ (0.03) $ 0.26
======= ========
Diluted $ (0.03) $ 0.25
======= ========
Shares used in computing net
income (loss) per share
Basic 40,115 40,115
======= ========
Diluted 40,115 40,704
======= ========
(1) See Table 4 for additional information
(2) See Table 7 for additionalinformation
(3) Includes costs associated with integration of Synavant, Dendrite
severance and facility closures and amortization of definite lived
intangible assets resulting from the acquisition of Synavant and
SAI as well as a foreign tax valuation adjustment in connection
with the integration of Synavant.
TABLE 4
DENDRITE INTERNATIONAL, INC.
FORMER DENDRITE STATEMENT OF OPERATIONS - NON-GAAP
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
-------------------------------------
Three Months Ended June 30,
-------------------------------------
2003 % 2002 % Change
-------- ----- ------- --- ---------
Revenues:
License fees $ 2,666 4.3% $ 2,306 4.0% 16%
Services 59,436 95.7% 55,306 96.0% 7%
------- -------
62,102 100.0% 57,612 100.0% 8%
------- -------
Cost of license fees 1,051 1.7% 1,007 1.7% 4%
Cost of services 28,709 46.2% 27,748 48.2% 3%
------- -------
29,760 47.9% 28,755 49.9% 3%
------- -------
License Gross Margin 1,615 60.6% 1,299 56.3% 4.3Pt
Services Gross Margin 30,727 51.7% 27,558 49.8% 1.9Pt
------- -------
Gross margin 32,342 52.1% 28,857 50.1% 2.0Pt
------- -------
Operating expense:
Selling, general and
administrative 19,351 31.2% 19,488 33.8% -1%
Research and development 3,017 4.9% 2,455 4.3% 23%
------- -------
22,368 36.0% 21,943 38.1% 2%
Operating income 9,974 16.1% 6,914 12.0% 44%
Interest income 296 0.5% 288 0.5% 3%
Other income / (expense) 25 0.0% (21) 0.0% -219%
------- -------
Income before income taxes 10,295 16.6% 7,181 12.5% 43%
Income taxes 4,118 6.6% 2,585 4.5% 59%
------- -------
Net income $ 6,177 9.9% $ 4,596 8.0% 34%
======= =======
Net income per share:
Basic $ 0.15 $ 0.12
======= =======
Diluted $ 0.15 $ 0.11 32%
======= =======
Shares used in computing net
income per share:
Basic 40,220 39,921
======= =======
Diluted 41,101 40,321
======= =======
-----------------------------------------
Six Months Ended June 30,
-----------------------------------------
2003 % 2002 % Change
--------- ----- -------- ---- --------
Revenues:
License fees $ 5,229 4.3% $ 5,485 4.8% -5%
Services 116,583 95.7% 109,570 95.2% 6%
-------- --------
121,812 100.0% 115,055 100.0% 6%
-------- --------
Cost of license fees 1,978 1.6% 2,251 2.0% -12%
Cost of services 57,449 47.2% 56,656 49.2% 1%
-------- --------
59,427 48.8% 58,907 51.2% 1%
-------- --------
License Gross Margin 3,251 62.2% 3,234 59.0% 3.2Pt
Services Gross Margin 59,134 50.7% 52,914 48.3% 2.4Pt
-------- --------
Gross margin 62,385 51.2% 56,148 48.8% 2.4Pt
-------- --------
Operating expense:
Selling, general and
administrative 39,421 32.4% 38,987 33.9% 1%
Research and development 5,714 4.7% 5,083 4.4% 12%
-------- --------
45,135 37.1% 44,070 38.3% 2%
Operating income 17,250 14.2% 12,078 10.5% 43%
Interest income 538 0.4% 592 0.5% -9%
Other income / (expense) 34 0.0% 38 0.0% -11%
-------- --------
Income before income taxes 17,822 14.6% 12,708 11.0% 40%
Income taxes 7,129 5.9% 4,575 4.0% 56%
-------- --------
Net income $ 10,693 8.8% $ 8,133 7.1% 31%
======== ========
Net income per share:
Basic $ 0.27 $ 0.20
======== ========
Diluted $ 0.26 $ 0.20 30%
======== ========
Shares used in computing net
income per share:
Basic 40,115 39,818
======== ========
Diluted 40,704 40,269
======== ========
Note: Because the Synavant acquisition closed so late in th e quarter,
this Statement of Operations was provided to enable analysis of
the Former Dendrite business. The Former Dendrite Statement of
Operations will not be provided in future press releases.
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
TABLE 5
DENDRITE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
June 30, December 31,
2003 2002 (1)
-------- --------
Assets
Current Assets:
Cash and cash equivalents $ 23,189 $ 68,308
Short-term investments - 1,295
Accounts receivable, net 69,740 39,853
Prepaid expenses and other 7,628 4,962
Deferred taxes 12,808 3,380
Facility held for sale 6,900 6,900
-------- --------
Total current assets 120,265 124,698
-------- --------
Property and equipment, net 33,136 26,377
Other assets 2,914 1,713
Long term receivable 3,157 6,314
Goodwill 68,504 12,353
Intangible Assets, net 29,825 2,973
Purchased capitalized software, net 4,560 2,275
Capitalized software development cost, net 5,608 5,605
Deferred taxes 1,584 6,168
-------- --------
$269,553 $188,476
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 14,116 $ 1,274
Income Taxes Payable 7,628 5,659
Capital Lease Obligations, current
portion 1,166 615
Accrued compensation and benefits 15,039 5,055
Other accrued expenses 28,345 16,749
Purchase accounting restructuring
accrual, current portion 15,107 1,188
Accrued restructuring charge - 260
Deferred revenues 17,277 7,861
-------- --------
Total current liabilities 98,678 38,661
-------- --------
Capital Lease Obligation 789 275
Purchase accounting restructuring accrual 9,482 2,064
Other non-current liabilities 692 717
-------- --------
Stockholders' Equity
Preferred Stock, no par value,
15,000,000 shares authorized,
none issued or outstanding
Common Stock, no par value, 150,000,000
shares authorized; 42,559,074 and
42,156,344 shares issued;
40,336,374 and 39,933,644 shares
outstanding 95,819 93,037
Retained earnings 87,123 76,876
Deferred compensation (39) (76)
Accumulated other comprehensive loss (2,115) (2,202)
Less treasury stock, at cost (20,876) (20,876)
-------- --------
Total stockholder's equity 159,912 146,759
-------- --------
$269,553 $188,476
======== ========
(1) Amounts reflect reclassifications to conform to current year
presentation
TABLE 6
DENDRITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Six Months Ended
June 30,
2003 2002
--------- --------
Operating activities:
Net income $ 10,247 $ 8,133
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization 8,564 6,632
Amortization of Deferred Compensation (54) 17
Deferred Taxes 608
Changes in assets and liabilities, net
of effect from acquisition:
Decrease/(increase) in accounts
receivable 6,858 (2,929)
(Increase) in prepaid expenses and other (671) (290)
(Increase) in other assets (262) -
Decrease in prepaid income taxes - 736
Decrease in accounts payable and
accrued expenses (16,100) (4,923)
Increase in income taxes payable 58 -
Decrease in accrued restructuring
charge (260) (1,504)
Decrease in deferred revenue (1,130) (2,158)
Increase in other non-current
liabilities 68 95
-------- --------
Net cash provided by operating
activities 7,926 3,809
-------- --------
Investing activities:
Purchases of short-term investments - (13,389)
Sales of short-term investments 1,294 6,383
Acquisition, net of cash acquired (51,682) -
Increase in other non-current assets (50) (600)
Purchases of property and equipment (3,905) (7,224)
Additions to capitalized software development
costs (1,382) (1,161)
-------- --------
Net cash used in investing
activities (55,725) (15,991)
-------- --------
Financing activities:
Borrowings from line of credit 5,000 -
Repayments of line of credit (5,000) -
Payments on capital lease obligations (251) -
Issuance of common stock 2,530 2,010
-------- --------
Net cash provided by financing
activities 2,279 2,010
-------- --------
Effect of foreign exchange rate changes on cash 401 199
Net decrease in cash and cash equivalents (45,119) (9,973)
Cash and cash equivalents, beginning of period 68,308 65,494
-------- --------
Cash and cash equivalents, end of period $ 23,189 $ 55,521
======== ========
TABLE 7
DENDRITE INTERNATIONAL, INC.
RECONCILIATION OF GAAP TO ADJUSTED RESULTS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
--------------- ----------------
Three Months Six Months Ended
Ended June 30, June 30,
----------------- -----------------
2003 2002 2003 2002
------- ------- ------- -------
Net income (See Table 1) $ 5,923 $ 4,596 $10,247 $ 8,133
Non-GAAP Adjustments:
Purchased capitalized software
amortization, net of tax
Synavant 7 - 7 -
SAI 91 - 182
Intangible assets amortization, net
of tax
Synavant 78 - 78 -
SAI 102 - 203 -
Integration costs, net of tax 52 - 52 -
Income taxes (1) 608 - 608 -
------- ------- ------- -------
Adjusted Net income $ 6,861 $ 4,596 $11,377 $ 8,133
------- ------- ------- -------
Adjusted Net income per share:
Basic $ 0.17 $ 0.12 $ 0.28 $ 0.20
======= ======= ======= =======
Diluted $ 0.17 $ 0.11 $ 0.28 $ 0.20
======= ======= ======= =======
Shares used in computing net income
per share:
Basic 40,220 39,921 40,115 39,818
======= ======= ======= =======
Diluted 41,101 40,321 40,704 40,269
======= ======= ======= =======
(1) Represents a foreign tax valuation adjustment in connection with
the integration of Synavant
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
TABLE 8
DENDRITE INTERNATIONAL, INC.
RECONCILIATION OF PROJECTED GAAP RESULTS TO ADJUSTED RESULTS
(IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
Rolling 6 month outlook
July 1, 2003 - December
31, 2003
Projected Revenue Range $ 190 to $ 195
Projected GAAP EPS Range $ 0.26 to $ 0.27
Projected Per Share Impact of:
Acquisition Intangible Amortization (1) $ 0.03 to $ 0.03
Integration Costs (2) $ 0.03 to $ 0.04
Projected Adjusted EPS Range $ 0.32 to $ 0.34
(1) Includes amortization of both purchased capitalized software and
intangible assets from the Synavant and SAI acquisitions
(2) Includes charges for the integration of Synavant such as
consulting, travel and entertainment, Dendrite severance and
facility closures
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
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