Dendrite reports 1996 results and announces share repurchase plan.
The Company also announced that its Board of Directors has approved a share purchase program which may include open market purchases of up to $10 million based on market conditions. An initial $3 million in share purchases will commence after February 10, 1997.
As previously disclosed, the fourth quarter was impacted by several unanticipated events including the delay of certain new license purchases by an existing customer, the delay of an existing client's upgrade decision, and the postponement of certain post-production implementations for an existing client in seven country sites.
The impact of this revenue shortfall and associated project expenses in the fourth quarter was $5.1 million pretax tax, or $0.28 per share after tax. Of this amount, $4.4 million pretax, or $0.24 per share after tax, represents the direct impact of the revenue shortfall. The balance is attributable to expenses incurred for staffing additions in anticipation of the business that was delayed through the quarter.
The Company announced that amongst the seven delayed country implementations for the fourth quarter, five have now been contracted and rescheduled to commence in the first and second quarters of 1997, with three of them already underway. The remainder are expected to be finalized in the near future. The upgrade decision and the sales force expansion issues affecting Quarter 4 are still pending.
Virtually all of the Company's R&D incurred in the fourth quarter was expensed in the quarter. Of the $3.6 million total R&D, approximately $1.4 million was attributable to the completion of certain new products by year end, including adapting certain new software for the German market, as well as integrating the Company's product and service support with the products of its newest strategic partners such as PenVision, ProScape and Presidio.
In addition, during the fourth quarter the Company incurred higher than expected Cost of Service Revenue of approximately $2 million, primarily due to costs associated with using external contractors to complete time-sensitive project implementations for some customers in the United States and Europe, and additonal tasks for SRCI customers on Version 1 of the Company's ForceOnce product. Selling, general and administrative expenses in the fourth quarter included additional expense related to the expansion of the sales personnel in the Consumer Business Division. During the fourth quarter, the Company also incurred a restructuring charge related to the reorganization of the European sales, marketing and service delivery organization.
Separately, Dendrite announced the following:
-- 14 new contracts or letters of intent in both the Health Care and Consumer Business Divisions, totaling more than $20 million over three years.
-- Teaming agreements with Presidio Systems, Inc. and Epsilon to broaden product service and offerings to the Health Care Industry.
Dendrite International provides comprehensive Electronic Territory Management solutions used to manage, coordinate and control the activities of large sales organizations in complex selling environments. Dendrite has two major divisions: the Healthcare Division which is the largest supplier of customer management systems to the global pharmaceutical industry and the Consumer Business Division which serves the Over-the-Counter Drug, Cosmetics and Consumer Packaged Goods industries worldwide. In the healthcare are field, Dendrite has developed the popular Series 6 pharmaceutical sales automation software. The Company's modular software products are designed to facilitate enterprise-wide communications between all levels of the sales and marketing organization, as well as other functional areas. Dendrite's products convert massive amounts of data into actionable rather than passive information. Headquartered in Morristown, New Jersey, Dendrite employs over 600 people in 11 offices around the world. -0-
Consolidated Statements of Operations (in thousands, except per share data) (audited) Three Months Ended Year Ended December 31, December 31, 1996 1995 1996 1995 REVENUES: % % % % License Fees $ 1,035 $ 6.4 $2,425 15.2 $8,681 13.1 $ 6,042 11.2 Services 15,037 93.6 13,540 84.8 57,472 86.9 48,080 88.8 16,072 100 15,965 100 66,153 100 54,122 100 COST OF REVENUES: Cost of License Fees 185 17.9 391 16.1 739 8.5 712 11.8 Cost of Services 9,727 64.7 5,808 42.9 29,631 51.6 21,144 44.0 9,912 61.7 6,199 38.8 30,370 45.9 21,856 40.4 Gross Margin 6,160 38.3 9,766 61.2 35,783 54.1 32,266 59.6 OPERATING EXPENSES: Selling, general and administrative 7,624 47.4 6,139 38.5 26,440 40.0 21,252 39.2 Research and development 3,632 22.6 467 2.9 8,747 13.2 3,844 7.1 Write-off of in-process R & D Costs -- -- 2,640 4.0 -- 11,256 70.0 6,606 41.4 37,827 57.2 25,096 46.4 Operating income (loss) (5,096)(31.7) 3,160 19.8 (2,044)(3.1) 7,170 13.2 INTEREST EXPENSE 3 0.0 5 0.0 12 0.0 15 0.0 OTHER EXPENSE (INCOME) 11 0.0 (175) (1.1) (788)(1.2) (526)(0.9) Income (loss) before income taxes (5,110)(31.8)3,330 20.9 (1,268)(1.9 ) 7,681 14.2 INCOME TAXES (1,847)(11.5)1,262 7.9 644 1.0 2,987 5.4 NET INCOME (LOSS) (3,263)(20.3)$2,068 13.0 $(1,912) 2.9 $4,694 8.7 NET INCOME (LOSS) PER SHARE $(0.29) $ 0.19 $ (0.17) $0.45 SHARES USED IN COMPUTING NET INCOME (LOSS) PER SHARE 11,159 11,134 11,056 10,381
John Bailye, President and CEO
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|Date:||Feb 10, 1997|
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