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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): January 25, 2000
DENDRITE INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 0-26138 22-2786386
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(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
1200 Mount Kemble Avenue
Morristown, New Jersey 07960-6767
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(Address of principal executive offices) (Zip Code)
(973) 425-1200
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On January 25, 2000, the Company issued a press release announcing
its 1999 fourth quarter and full year earnings, a copy of which press
release is attached as Exhibit 99.1.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 99.1 - Press Release of Dendrite International,
Inc., dated January 25, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
Dendrite International, Inc.
By: /s/ Christopher J. French
-------------------------------
Vice President, General Counsel
and Secretary
Dated:
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For Immediate Release
( BW) (NJ-DENDRITE) (DRTE) Dendrite Reports Record Revenue & Earnings; 4th
Quarter EPS $0.17 Per Diluted Share, Full Year EPS $0.55 per Diluted Share
MORRISTOWN, NJ (January 25, 2000) -- Dendrite International, Inc.
(NASDAQ/NMS:DRTE) today announced another record quarter and full year. Revenue,
operating profit, operating margin and earnings per share all are company highs.
Revenue in the quarter was $47.5 million up 31% over last year's fourth
quarter. Net income was up 53% to $6.9 million, or $0.17 per share on a diluted
basis.
For the twelve months ended December 31, 1999, revenue increased 32% to
$172.7 million. Net income for the year, excluding the effects of a one-time
merger related charge in the second quarter, rose 56% to $22.4 million or $0.55
per share on a diluted basis. Reported net income was $19.3 million or $0.48 per
diluted share.
Commenting on the results, Chairman and CEO John Bailye said,
"Dendrite's performance was outstanding, surpassing the higher expectations that
the company set in September."
"The market remains highly competitive, but despite this, our new
business remains very robust as seen when we were selected by Aventis France to
be the provider of their next generation SFE solution for Europe's largest sales
force. We also had a large number of successes in the mid and emerging market in
the quarter, had several important wins in Japan, and we announced our second
global contract. We could not be more pleased with our success."
Despite each region's strength, very strong performance in the US
market continued to drive revenue during the quarter, with domestic revenue
reaching 78% of the total, Europe was 14%, Asia, was 6% and Latin America was
1%.
License fees, grew to $6.6 million in the quarter, up 23% over the 4th
quarter of 1998 and accounted for nearly 14% of revenue. The license fee growth
was broadly based with all business units contributing new sales.
Service revenue at $40.9 million was up 32% over the year-ago period
and accounted for 86% of total revenue.
In the quarter, total gross margin declined slightly to 57.6% from
58.1% last year. This decline was driven by license fees, which fell from 89.7%
to 87.3% while service margin improved from 52.6% to 52.8%. The license margin
decline was primarily attributable to the inclusion of 3rd party costs
associated with the new Web Session products. Dendrite sometimes builds new
products on the backbone of code they acquire from outside the pharmaceutical
industry as evident here.
For the year license gross margin improved to 90.3% from 84.5% while
service gross margin rose to 51.2% from 50.0% in 1998.
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Operating profit rose to $10.3 million or 21.8% in the quarter, up from
$7.1 million or 19.7% in the year ago quarter as expense controls continued to
reduce administrative costs as a % of revenue.
For the year, operating profit, excluding a merger related one-time
charge in the 2nd quarter was $33.4 million or 19.3% of revenue. This compares
to $21.8 million last year, which excludes a one-time charge associated with the
write-off of in-process R&D.
Pre-tax profit was $10.8 million in the 4th quarter and $35.0 million
for the year, again excluding the 2nd quarter charge. These were increases of
48% and 56% respectively.
Cash flow from operating activities was $14.4 million for the quarter
and $31.8 million for the year. The company left the year with $65.2 million of
cash and short-term investments, despite having used $6.6 million in the
acquisition of MMI.
Bailye added, "In 1999, we gave substance to the Global Reach Strategy.
We grew our mid market presence to over $30 million from a simple start. We grew
emerging markets to become globally dominant in that area. We sold and commenced
installing global ForcePharma applications and we moved assertively into the
field of Marketing Automation with the Analytika acquisition. This has been a
great year to lay the foundation for continued strong growth."
ABOUT DENDRITE
As a leading global provider of highly-specialized, integrated product
and service offerings for the Pharmaceutical and Consumer Package Goods (CPG)
industries, Dendrite supports corporate strategies for a sustained competitive
advantage. Thousands of sales representatives and their managers from over 150
companies and 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. Focusing strongly on outcomes, Dendrite
combines its modular software products with specifically tailored coaching and
support services. With a global infrastructure as its foundation, Dendrite's
commitment to unparalleled service has been the hallmark of the business and the
basis of strong customer loyalty since the Company's inception in 1986.
Headquartered in Morristown, New Jersey, Dendrite employs over 1200
people around the world.
Note: Dendrite is a registered trademark of Dendrite International,
Inc.
This press release contains statements that are forward-looking
statements and discuss expectations about future events or outcomes with respect
to Dendrite and its business, including statements regarding expected results
for future periods. We believe these statements are within the scope of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, and we intend that these statements be covered by the safe harbors
created by such acts. The forward-looking statements are based on our current
expectations, assumptions, estimates and projections about our company and the
pharmaceutical and consumer packaged goods industries and involve risks and
uncertainties. Accordingly, Dendrite's actual results may differ materially from
the results discussed in or implied by such forward-looking statements. The risk
factors that could cause actual results to differ from the results expressed or
implied by these forward-looking statements include the following: (i) our
business is heavily dependent on the pharmaceutical industry; (ii) our
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quarterly results of operations may fluctuate significantly and may not meet
market expectations; (iii) our lengthy sales and implementation cycles make it
difficult to predict our quarterly revenues; (iv) our fixed costs may lead to
fluctuations in our quarterly operating results if revenues fall below
expectations; (v) our business is affected by variations in our customers'
budget cycles; (vi) our revenues would decline and our business would be
adversely affected by the loss of one of our major customers; (vii) we may be
unable to successfully introduce new products or respond to technological
change; (viii) we are exposed to risks associated with the Year 2000 (for
example, (a) demand for our software products and services may decline before
and after the Year 2000, (b) our Year 2000 remediation efforts may be
unsuccessful and (c) we may incur material expenses in connection with any claim
relating to Year 2000 compliance of our own products or the products of third
parties); (ix) increased competition may result in price reductions and
decreased demand for our products and services; (x) some of our customers rely
on our competitors for market data; (xi) our international operations have risks
that our domestic operations do not; (xii) our success depends on retaining our
key senior management team and on attracting and retaining qualified personnel;
(xiii) our inability to manage our growth could adversely affect our business;
(xiv) our business depends on proprietary technology that we may not be to
protect completely; and (xv) the consumer packaged goods industry may have
different characteristics from those we are used to in the pharmaceutical
industry. In light of the significant uncertainties inherent in these
forward-looking statements, you should not consider their inclusion as a
representation by us or anyone else that we will achieve our objectives and
plans. Moreover, we assume no obligation to update these forward-looking
statements to reflect actual results, changes in assumptions or changes in other
factors affecting such forward-looking statements. 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 and quarterly reports on Form 10-Q filed with the Securities and Exchange
Commission.
DENDRITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Dec 31,
--------------------------
1998 % 1999 %
<S> <C> <C> <C> <C>
Revenues:
License fees $5,326 14.7% $ 6,552 13.8%
Services 30,870 85.3% $40,902 86.2%
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36,196 100.0% $47,454 100.0%
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Cost of revenues:
Cost of license fees 550 1.5% 835 1.8%
Cost of services 14,618 40.4% 19,307 40.7%
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15,167 41.9% 20,142 42.4%
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Gross margin 21,029 58.1% 27,312 57.6%
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Operating expenses:
Selling, general and
administrative 12,591 34.8% 15,186 32.0%
Research and development 1,320 3.6% 1,803 3.8%
write-off of in-process
research and development -- 0.0% -- 0.0%
Mergers and acquisitions -- 0.0% -- 0.0%
------- -------
13,911 38.4% 16,989 35.8%
Operating income 7,117 19.7% 10,323 21.8%
Interest income 405 1.1% 613 1.3%
Other expense/(income) 211 0.6% 97 0.2%
Income before income taxes 7,310 20.2% 10,839 22.8%
Income taxes 2,769 7.7% 3,901 8.2%
------- -------
Net income $ 4,541 12.5% $ 6,938 14.6%
======= =======
Net income per share
Basic $ 0.12 $ 0.18
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Diluted $ 0.11 $ 0.17
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Net income per share
excluding one time charges
Basic $ 0.12 $ 0.18
======= =======
Diluted $ 0.11 $ 0.17
======= =======
Shares used in computing
net income per share
Basic 36,534 38,305
======= =======
Diluted 40,118 41,527
======= =======
</TABLE>
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DENDRITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Twelve Months Ended Dec 31
--------------------------
1998 % 1999 %
<S> <C> <C> <C> <C>
Revenues:
License fees $14,955 11.4 $ 24,244 14.0%
Services 115,677 88.6% 148,441 86.0%
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130,633 100.0% 172,685 100.0%
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Cost of revenues:
Cost of license fees 2,314 1.8% 2,360 1.4%
Cost of services 57,887 44.3% 72,380 41.9%
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60,201 46.1% 74,740 43.3%
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Gross margin 70,431 53.9% 97,945 56.7%
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Operating expenses:
Selling,general and
administrative 44,046 33.7% 56,927 33.0%
Research and development 4,583 3.5% 7,669 4.4%
Write-off of in-process
research and Development 1,230 0.9% - 0.0%
Mergers and acquisitions - 0.0% 3,466 2.0%
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49,859 38.2% 68,061 39.4%
Operating income 20,572 15.7% 29,884 17.3%
Interest income 1,099 0.8% 1,880 1.1%
Other expense/(income) 465 0.4 189 0.1%
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Income before income taxes 21,206 16.2% 31,574 18.3%
Income taxes 8,446 6.5% 12,234 7.1%
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Net income $12,759 9.8% $19,340 11.2%
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Net income per share
Basic $0.35 $ 0.51
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Diluted $0.32 $ 0.48
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Net income per share
excluding one time charges
Basic $0.39 $ 0.60
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Diluted $0.36 $ 0.55
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Shares used in computing
net income per share
Basic 36,080 37,725
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Diluted 39,392 40,599
====== ======
</TABLE>
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DENDRITE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
December 31, December 31
1998 1999
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents $ 32,555 $ 50,024
Short-term investments 9,614 15,151
Accounts receivable, net 20,378 29,374
Prepaid expenses and other 3,391 3,659
Prepaid taxes 921 114
Deferred tax asset 675 1,368
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Total current assets 67,534 99,689
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Property and equipment, net 7,221 10,249
Deferred taxes 1,077 -
Goodwill, net 2,496 8,716
Purchased capitalized software, net 1,099 2,483
Capitalized software development
cost, net 2,404 3,582
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$ 81,831 $124,720
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 2,249 $ 3,735
Income taxes payable 1,036 -
Accrued compensation and benefits 4,321 6,000
Other accrued expenses 7,493 8,001
Deferred revenue 1,827 3,822
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Total current liabilities 16,926 21,558
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Capital Lease Obligation 544 285
Deferred rent 392 -
Deferred taxes 2,920 1,761
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Stockholders' Equity
Preferred Stock, no par value,
10,000,000 shares
authorized, none issued - -
Common Stock, no par value,
150,000,000 shares authorized
38,999,555 and 37,245,675
shares issued as of December 31,
1999 and December 31, 1998,
respectively and 38,398,055
and 36,644,175 outstanding as of
December 31, 1999 and December
31, 1888, respectively 41,442 61,550
Retained earnings 23,998 43,338
Deferred Compensation (1,970) (777)
Accumulated other
comprehensive income (494) (1,068)
Less treasury stock, at cost (1,927) (1,927)
-------- --------
Total stockholders' equity 61,049 101,116
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$ 81,831 $124,720
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</TABLE>
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DENDRITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Year Ended December 31,
-----------------------
1998 1999
---- ----
Operating activities:
Net income $ 12,759 $ 19,340
Adjustments to reconcile net income
to net cash
Provided by (used in) operating
activities:
Depreciation and amortization 4,197 6,118
Compensation Expense - 686
Deferred income taxes (benefit) 25 -
Tax benefit from employee stock plan - 8,487
Write-off in-process research and
development 1,230 -
Changes in assets and liabilities:
(Increase)/decrease in accounts
receivable 6,099 (6,047)
(Increase)/decrease in prepaid
expenses and other (870) (371)
(Increase)/decrease in prepaid
income taxes - 1,052
Increase/(decrease) in accounts
payable and accrued expenses 3,335 3,132
Increase/(decrease) in
deferred rent (206) (392)
Increase/(decrease) in income
taxes payable 461 (2,195)
Increase/(decrease) in deferred
revenue 357 1,995
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Net cash provided by (used in)
operating activities 27,387 31,805
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Investing activities:
Purchases of short-term investments (13,552) (39,335)
Sales of short-term investments 6,893 33,804
Purchase of MMI, net of cash acquired - (6,640)
Purchase of ABC and ADEM, net of
cash acquired (2,295) -
Purchases of property and equipment (2,779) (7,512)
Additions to capitalized software
development costs (1,637) (2,227)
-------- --------
Net cash provided by (used in)
investing activities (13,370) (21,910)
Financing activities:
Net proceeds from borrowings (930) -
Payments on capital lease obligations (302) (788)
Issuance of Common Stock 3,703 8,691
-------- --------
Net cash provided by (used in)
financing activities 2,471 7,903
-------- --------
Effect of foreign echange rate
changes on cash 130 (329)
Net increase (decrease) in cash and
cash equivalents 16,618 17,469
Cash and cash equivalents, beginning
of period 15,937 32,555
-------- --------
Cash and cash equivalents, end of period $ 32,555 $ 50,024
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CONTACT: Dendrite International, Inc., Morristown
John Bailye, CEO
George Robson, CFO
Erik Hawkinson,
Investor Relations
973-425-1200
