The following description of the Dendrite 401(k) Plan provides only general information. Participants should refer to the plan document as amended and restated, together with the amendments to the plan document and to the summary plan description for more complete information. In 1999, the plan changed its name from Dendrite 401(k) Retirement Savings Plan to Dendrite 401(k) Plan (the Plan).
The Plan is a defined contribution plan subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended. Those eligible to participate in the Plan are salaried employees of Dendrite International, Inc. and Subsidiaries (the Company) who have attained the age of 21.
The accompanying financial statements have been prepared using the accrual basis of accounting in accordance with the AICPA Audit and Accounting Guide, “Audits of Employee Benefit Plans”.
The preparation of financial statements in conformity with generally accepted accounting principles, requires the plan administrator to make estimates and assumptions that affect the reported amounts of net assets available for plan benefits at the date of the financial statements and the reported amounts of contributions, earnings and disbursements during the reporting period. Actual results could differ from those estimates.
In September 1999, the American Institute of Certified Public Accountants issued Statement of Position (“SOP”) No. 99-3, “Accounting for and Reporting of Certain Defined Contribution Benefit Plan Investments and Other Disclosure Matters”. SOP No. 99-3, among other things, eliminated the previous requirement of presenting the plan’s investments by type for participant directed investments. SOP No. 99-3 was effective for financial statements for plan years ended after December 15, 1999 and required reclassification of amounts in earlier periods. The Plan adopted SOP No. 99-3 in 1999. Accordingly, these financial statements do not include any information regarding the activity of the Plan’s investment options.
Contributions
Participants may make elective salary deferral contributions up to 15% of their pretax compensation. Employee elected salary deferrals are limited to the maximum allowable under the Internal Revenue Code ($10,000 in 1999). Distributions from other qualified retirement plans can also be transferred into the Plan and retained as a rollover contribution.
The Company makes matching contributions to the participant accounts of participants who have completed one year of service with the Company. The match is equal to 50% of the participant’s contributions, which does not exceed 6% of the participant’s total compensation.
Participant accounts
Each participant’s account is credited with the participant’s elected salary deferral, employer matching contributions, and an allocation of the Plan’s earnings. Earnings are allocated by fund based on the ratio of a participant’s account invested in a particular fund to all participants’ investments in that fund. The benefit to which a participant is entitled is the balance in their account. Terminated participants forfeit non-vested Company contributions.
Valuation of investments
Quoted market prices are used to value investments. All realized and unrealized gains and losses are included as part of net appreciation in fair value of investments in the Statement of Changes in Net Assets Available for Plan Benefits. Cash equivalents are stated at cost which approximates fair value.
Investment options
Participants may elect to invest their salary deferrals, along with the employer matching contribution, in the following thirteen investment options with Merrill Lynch or in the Company’s common stock. Merrill Lynch is also the trustee of the Plan.
Fund name Description
--------- -----------
AIM Japan Growth Fund AIM Japan Growth Fund seeks long-term capital growth.
The fund normally invests at least 65% of assets in
equity securities issued by companies domiciled in
Japan. It may invest the balance of assets in
convertibles, debt securities, and equity securities of
issuers located outside of Japan.
Alliance Premier Growth Fund Alliance Premier Growth Fund's investment objective is
long-term growth of capital by investing predominantly
in equity securities of a limited number of large,
carefully selected high-quality U.S. companies that
are judged likely to achieve superior earnings growth.
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Alliance Technology Fund Alliance Technology Fund's investment objective is
growth of capital. Current income is incidental to the
fund's objective.
Davis New York Venture Fund Davis New York Venture Fund seeks growth of capital.
The fund invests primarily in equities issued by
companies with market capitalizations of at least $250
million, though it may also hold securities of smaller
companies. It may invest in securities of foreign
issuers.
Dreyfus Premier Balance Fund Dreyfus Premier Balanced Fund seeks to outperform an
unmanaged hybrid index, 60% of which is the Standard &
Poor's 500 Composite Stock Price Index and 40% of which
is the Lehman Brothers Intermediate Government/Corporate
Bond Index.
IVY International Fund IVY International Fund seeks to achieve its principal
objective of long-term capital growth by investing
primarily in equity securities principally traded in
European, Pacific Basin and Latin American markets. The
fund invests in a variety of economic sectors and
industry segments to reduce the effects of price
volatility in any one area, and usually is invested in
at least three different countries.
Merrill Lynch Healthcare Fund Merrill Lynch Healthcare Fund seeks long-term capital
appreciation. The fund invests in equities issued by
companies producing healthcare products and services,
primarily in developed markets. It may invest up to 15%
of assets in venture-capital investments. The fund is
nondiversified.
Merrill Lynch Pacific Fund Merrill Lynch Pacific Fund seeks long-term capital
appreciation. The fund normally invests at least 80% of
assets in equities issued by companies domiciled in Far
Eastern or western Pacific countries. It may purchase
ADRs, EDRs, GDRs, and debt of any credit quality. The
fund may engage in hedging strategies against
investment, interest-rate, and currency risks.
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Merrill Lynch Retirement Preservation Merrill Lynch Retirement Preservation Trust Fund seeks
Trust Fund to provide preservation of capital, liquidity and
current income at levels that are typically higher than
those provided by money-market funds. The Trust invests
primarily in a broadly diversified portfolio of
Guaranteed Investment Contracts and in high-quality
money-market securities. Participants purchase units
that the Trust seeks to maintain at $1 per unit,
although this cannot be assured.
Merrill Lynch S&P 500 Index Fund Merrill Lynch S & P 500 Index Fund's objective is to
match the performance of the Standard & Poor's 500
Composite Stock Price Index as closely as possible
before the deduction of fund expenses.
Oppenheimer Enterprise Fund Oppenheimer Enterprise Fund seeks capital appreciation.
The fund invests mainly in common stocks of
small-capitalization U.S. companies. Under normal
market conditions, the fund will invest at least 65% of
its total assets in common stocks and other equity
securities of growth companies having a small market
capitalization. The fund currently defines a “small cap”
issuer as one having a market capitalization of up to
$1.8 billion.
PIMCO Total Return Fund PIMCO Total Return Fund seeks to achieve its investment
objective by investing under normal circumstances at
least 65% of its assets in a diversified portfolio of
fixed income instruments of varying maturities. The
average portfolio duration of this fund normally varies
within a three to six year time frame based on PIMCO's
forecast for interest rates.
Van Kampen Emerging Growth Fund Van Kampen Emerging Growth Fund is a mutual fund with
the investment objective of capital appreciation. Any
income received from portfolio securities is incidental
to the fund’s investment objective. Under normal
market conditions, the fund’s investment adviser
seeks to achieve the fund’s investment objective by
investing at least 65% of the fund’s total assets in
a portfolio of common stocks of emerging growth companies.
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Participants are allowed to redirect their future investment contributions, or exchange their existing account balances among investment options, as defined in the Plan document.
The fair market value of individual investments that represent 5% or more of the Plan’s total net assets available for plan benefits as of December 31, 1999 and 1998, are as follows:
December 31,
----------------------------------
1999 1998
---- ----
Investment
Goldman Sachs:
Capital Growth Fund $ - $ 2,922,343
Growth & Income Fund - 1,729,650
Balanced Fund - 790,148
Money Market Fund - 455,075
Dendrite International, Inc. Common Stock 1,689,770 1,054,328
Merrill Lynch:
Retirement Preservation Trust Fund 724,477 -
S&P 500 Index Fund 2,219,131 -
Alliance Premier Growth Fund 4,675,297 -
IVY International Fund 1,076,850 -
Dreyfus Premier Balance Fund 1,075,249 -
Vesting
Participants are immediately 100% vested in their employee elected salary deferrals and earnings thereon. Vesting in employer matching contributions, forfeitures, and earnings on these amounts is based on years of service. Participants vest at a rate of 20% per year, becoming fully vested after five years of credited service or attainment of normal retirement age, as defined.
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Forfeitures
Forfeitures occur when participants terminate employment before becoming entitled to their full benefits under the Plan. All forfeitures are allocated among participants employed as of the last day of the plan year as additional matching contributions. As of December 31, 1999, the value of nonvested employer matching contributions for participants who terminated service totaled $21,023, and no forfeitures were allocated to participants during the year. All nonvested balances and unallocated forfeitures are included in the statement of net assets available for plan benefits at December 31, 1999 and 1998.
Administrative expenses
Administrative expenses incurred in the operation of the Plan have been paid by the Company and are not reflected in the accompanying financial statements. The amount of these administrative expenses was approximately $25,000 in 1999.
3. Participant loans:
Under defined conditions, participants are entitled to borrow in a limited capacity from the Plan. Loans are limited to the lesser of $50,000 or 50% of the participant’s vested account balance with a minimum loan amount of $1,000. Loan repayments are made in the form of direct withdrawals from the participant’s payroll funds. Loans bear interest at the prime rate and are repayable over no more than five years, unless the loan provides funding for the purchase of the participant’s principal residence. As of December 31, 1999, interest rates ranged from 7.5% to 10.5% on loans outstanding.
4. Distributions to participants:
Distributions to retiring or terminated participants are generally made in the year following retirement or termination. Distributions due participants as of December 31, 1999 and 1998, amounted to $91,291 and $207,433, respectively. These amounts are recorded as a liability in the Plan’s Form 5500; however, these amounts are not reflected as a liability in the accompanying statements of net assets available for plan benefits in accordance with accounting principles generally accepted in the United States. See Note 8 for reconciliation of financial statements to Form 5500.
5. Tax status:
The Plan has been amended to include all changes to comply with the Tax Reform Act of 1986. On January 16, 1998, the Plan, as amended, received a favorable letter of determination from the Internal Revenue Service.
In 1994 and 1995, the Plan did not meet certain requirements to qualify as non-discriminatory under the Internal Revenue Code. In order to meet these requirements, the Company was required to make qualified non-elective contributions (QNEC) to the Plan. As of December 31, 1997, the Company recorded $174,449 as an estimate of the total QNEC. This included a contribution to the Plan to compensate the participants for the appreciation on the QNEC which would have occurred from 1994 and 1995, to the date the QNEC was actually paid. In 1998, the Company and the Internal Revenue Service agreed upon an amount for the QNEC, and the Company contributed $96,419 to the Plan. Accordingly, as the settlement amount was less than the estimated amount by $70,453, the Plan recorded this reduction in 1998. In 1999, the Company contributed and recorded the remainder of $7,577 as reconstructed earnings on cash deposited for Plan contributions in 1994 and 1995 into a non-interest bearing account prior to crediting the participant accounts.
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6. Non-exempt transactions:
During the year ended December 31, 1998, the Company failed to remit employee contributions to the Plan within 15 business days of the following month. This represented a non-exempt transaction between the Company and the Plan. The Company contributed $36,164 to the Plan in 1999 to fully compensate participants for losses related to these transactions. This amount is included in contributions by employer in the accompanying statement of changes in net assets available for plan benefits.
7. Plan termination:
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue their contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.
8. Reconciliation of financial statements to Form 5500;
The following table reconciles net assets available for plan benefits per the financial statements to the Form 5500 as filed by the Plan;
Benefits
Net assets available for Payable to Benefits
plan benefits Participants Paid
------------- ------------ --------
1999 1998 1999 1999
---- ---- ---- ----
Per the financial
statements $ 12,080,927 $ 7,721,843 $ - $ 624,714
1999 amounts pending
distribution to
participants (91,291) - 91,291 91,291
1998 amounts pending
distribution to
participants - (207,433) - (207,433)
Less - Mandatory
sponsor contribution
receivable (Note 6) - (36,164) - -
------------- ------------- ------------ ----------
Per Form 5500 $ 11,989,636 $ 7,478,246 $ 91,291 $ 508,572
============= ============= ============ ==========
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Dendrite 401(k) Plan
Schedule H, Part IV, Item (i)-- Schedule of Assets Held for
Investment Purposes
As of December 31, 1999
Description of investment Par value
or number Fair market
of shares Cost Value
------------- ---- ----------
AIM Japan Growth Fund 2 $ 37 $ 48
Alliance Premier Growth Fund 128,090 4,476,622 4,675,297
Alliance Technology Fund 802 96,528 102,986
Davis New York Venture Fund 2,227 64,331 64,033
Dreyfus Premier Balance Fund 69,416 1,089,350 1,075,249
IVY International Fund 22,868 1,035,858 1,076,850
Merrill Lynch
Healthcare Fund 7,341 40,300 43,311
Pacific Fund 1,023 30,547 33,810
Retirement Preservation Trust Fund 724,477 724,477 724,477
S&P 500 Index Fund 123,148 2,139,676 2,219,131
Oppenheimer Enterprise Fund 769 29,316 31,473
Pimco Total Return Fund 510 5,056 5,044
Van Kampen Emerging Growth Fund 897 72,925 78,386
Dendrite International, Inc.
Common Stock 49,883 555,051 1,689,770
----------- -----------
$10,360,074 $11,819,865
=========== ===========
Loans to participants (7.5% to 10.5%) $ 74,774 $ 74,774
=========== ===========
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*Represents related party
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | By:_________________________________ |
| | | Christine A. Pellizzari
Trustee |
Date: September 17, 2001
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EXHIBIT INDEX
Exhibit No Description
23.1 Consent of Arthur Andersen LLP
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