EX-99.1 2 a6024438-ex991.htm EXHIBIT 99.1

Exhibit 99.1

Eclipsys Announces Second-Quarter 2009 Results

ATLANTA--(BUSINESS WIRE)--August 6, 2009--Eclipsys Corporation® (NASDAQ: ECLP), The Outcomes Company®, today announced results for the quarter ended June 30, 2009.

GAAP Results

Revenues for the quarter ended June 30, 2009 were $129.8 million, compared to revenues of $132.1 million for the quarter ended June 30, 2008.

GAAP net loss for the second quarter of 2009 was $4.1 million, or $0.07 per diluted common share, compared to GAAP net income of $8.5 million, or $0.15 per share on a diluted basis for the second quarter of 2008.

Non-GAAP Results

Non-GAAP net income for the second quarter of 2009 was $8.9 million, or $0.16 per diluted common share, compared to second quarter 2008 non-GAAP net income of $13.2 million, or $0.24 per diluted share.

Non-GAAP net income excludes stock-based compensation expense, acquisition related amortization, and certain additional items that the company does not consider to be indicative of its underlying business performance. For second quarter 2008, these additional items were costs associated with the relocation of the corporate headquarters from Boca Raton, FL, to Atlanta, GA; a gain resulting from completion of post-closing milestones associated with the sale of the Clinical Practice Model Resource Center business, which was completed in December 2007; and a reduction in general and administrative expenses associated with insurance recoveries from our previously disclosed derivative litigation that was ultimately settled in September 2008.

For second quarter 2009, these additional items were severance costs primarily associated with the resignation of the company’s former chief executive officer; and exclusion of tax expense related to discrete tax items in the quarter, primarily deferred tax asset adjustments for Canadian research and development credits, and non-GAAP tax adjustments to reflect the non-GAAP annual effective tax rate. Additionally, we excluded the effect of purchase accounting adjustments in connection with the acquisition of Premise Corporation, which was completed in December 2008.

A reconciliation of GAAP to non-GAAP results is included in the attached tables.

"In reviewing our operations and market potential over the last three months, it is clear that we have a significant opportunity to grow revenues while also increasing profitability," said Philip M. Pead, Eclipsys president and chief executive officer. "The American Recovery and Reinvestment Act of 2009 (ARRA) is driving increased activity with both clients and prospects. We expect this activity to accelerate as hospitals and physician practices gain a clearer understanding of what constitutes 'meaningful use.' In addition, we have several initiatives underway that will enable us to be more cost efficient, and we expect the positive effects on margins from these initiatives to become apparent in 2010 and beyond."

Change to Projected Non-GAAP Tax Rate and 2009 Financial Guidance

Eclipsys now anticipates that the full year 2009 non-GAAP income tax rate will be in the range of 37 to 38 percent, compared to the 33 to 35 percent tax rate previously communicated on the company’s first quarter 2009 conference call. This increase is primarily due to lower estimates of available research and development tax credits and revisions in projected income taxes related to foreign earnings.

Due to this anticipated increase in the company’s effective income tax rate for 2009, Eclipsys non-GAAP EPS for 2009 is now expected to range from $0.55 to $0.60.

Conference call

Eclipsys executives will discuss the second-quarter results on a teleconference scheduled for 4:30 p.m. Eastern time on August 6. Persons interested in participating in the teleconference should call (800) 230-1059 approximately 15 minutes before the conference call is slated to begin. For listen-only mode, participants can go to www.eclipsys.com prior to the conference call to register and download the necessary audio software.

Replay

About two hours after its completion, an audio replay of the call will be available on www.eclipsys.com for approximately 48 hours.

About Eclipsys

Eclipsys is a leading provider of advanced integrated clinical, revenue cycle and performance management software, clinical content and professional services that help healthcare organizations improve clinical, financial and operational outcomes. For more information, see www.eclipsys.com or email info@eclipsys.com.

Non-GAAP Measures

The company has provided net income and earnings per share financial measures on a non-GAAP basis for the three months ended June 30, 2009 and June 30, 2008, which exclude non-cash stock-based compensation expenses, amortization expense associated with acquisitions, and certain additional items that the company does not consider to be indicative of its underlying business performance, as listed on the attached GAAP to non-GAAP reconciliation tables. Because of the significance of the GAAP components excluded, these non-GAAP financial measures should not be considered a substitute for, or superior to, any measure derived in accordance with GAAP. These non-GAAP financial measures may also be inconsistent with the manner in which similar measures are derived or used by other companies. Management believes that the non-GAAP financial measures provided, when considered in conjunction with comparable GAAP financial measures, facilitate the understanding and evaluation of the company’s operating performance and future prospects, as well as comparisons of the company’s results with its prior period results that did not include these gains and/or charges, and with results of other companies on a more consistent basis. Internally, management uses non-GAAP net income and earnings for forecasting and to help make management decisions, as an indicator of business performance, and to evaluate management’s effectiveness and help determine bonuses for management and others.

The economic substance of omitting non-cash stock-based compensation expense in presenting non-GAAP earnings derives from providing investors with consistent measures of performance both before and after including non-cash stock-based compensation charges. The economic substance of omitting the other items incurred that the company does not consider to be indicative of its underlying business performance derives from the fact that such episodic gains and/or charges make it more difficult to compare operating results of different periods, not all of which include such gains and/or charges. However, the omission of non-cash stock-based compensation expense may mask an economic cost incurred by the company in connection with stock-based compensation, and the omission of the charges related to the company’s other non-GAAP adjustments may mask actual and expected future costs associated with such matters. Management compensates for these limitations by using both the GAAP and non-GAAP measures.

The company has provided reconciling tables attached to this release.

Caution Regarding Forward-Looking Statements

Certain statements in this news release or the investor call referenced herein, including those concerning the company’s second quarter 2009 financial results, operational initiatives, future performance expectations, and effects of economic conditions are forward-looking statements and actual results may differ materially from those projected or implied by the forward-looking statements due to a variety of risks and uncertainties. Future performance expectations are predicated upon achievement of various sales and performance targets that may be difficult to meet. Economic conditions are unstable and may cause hospitals and other healthcare providers to curtail HIT system spending. Eclipsys’ cost reduction and other initiatives in response to the challenging economic environment may not be effective, and it is difficult to predict what the company may be able to achieve. Eclipsys sales may fall below expectations due to market conditions, competition, and other factors, including client demands for pricing and financing concessions. Costs may be greater than anticipated due to the potential need to increase spending to ensure performance in accordance with commitments to clients, regulatory requirements, and other factors. Software development may take longer and cost more than expected, and incorporation of anticipated features and functionality may be delayed, due to various factors including programming and integration challenges and resource constraints. The market is highly competitive. Implementation and customization of Eclipsys software is complex and time-consuming. Results depend upon a variety of factors and can vary by client. Each client’s circumstances are unique and may include unforeseen issues that make it more difficult than anticipated to implement or derive benefit from software, implementation or consulting services. The success and timeliness of the company’s services will depend at least in part upon client involvement, which can be difficult to control. Eclipsys is required to meet specified performance standards and regulatory requirements, and clients can terminate contracts, assess penalties or reduce contract scope under certain circumstances. More information about company risks is available in recent Form 10-K and other filings made by Eclipsys from time to time with the Securities and Exchange Commission. Special attention is directed to the portions of those documents entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Eclipsys Corporation
Non-GAAP Income Statements

(in thousands, except per share amounts)

           
Non-GAAP Non-GAAP Non-GAAP Non-GAAP
Three Months Ended June 30, 2009 Three Months Ended June 30, 2008

$ Change

% Change Year-to-date June 30, 2009 Year-to-date June 30, 2008

$ Change

% Change
               
Revenues:
Systems and services $ 131,185 $ 126,308 $ 4,877 3.9 % $ 261,048 $ 245,446 $ 15,602 6.4 %
Hardware   2,275     5,834     (3,559 ) -61.0 %   4,317     11,076     (6,759 ) -61.0 %
Total revenues   133,460     132,142     1,318   1.0 %   265,365     256,522     8,843   3.4 %
 
Cost and expenses:
Costs of systems and services 68,334 67,413 921 1.4 % 134,916 133,072 1,844 1.4 %
Costs of hardware 1,979 3,615 (1,636 ) -45.3 % 3,679 7,951 (4,272 ) -53.7 %
Sales and marketing 21,016 20,916 100 0.5 % 41,272 40,242 1,030 2.6 %
Research and development 13,326 15,465 (2,139 ) -13.8 % 26,365 32,158 (5,793 ) -18.0 %
General and administrative 9,908 7,051 2,857 40.5 % 20,962 14,879 6,083 40.9 %
Depreciation and amortization 4,993 4,619 374 8.1 % 9,904 8,961 943 10.5 %
Restructuring - - - - - -
In-process research and development charge   -     -     -       -     -     -    
Total costs and expenses   119,556     119,079     477   0.4 %   237,098     237,263     (165 ) -0.1 %
 
Income (loss) from operations 13,904 13,063 841 6.4 % 28,267 19,259 9,008 46.8 %
Gain (loss) on sale of assets 838 - 838 * N/M 1,237 33 1,204 * N/M
Gain (loss) on ARS 691 - 691 * N/M 533 - 533 * N/M
Interest expense (961 ) (457 ) (504 ) 110.3 % (2,105 ) (720 ) (1,385 ) 192.4 %
Interest income   681     1,285     (604 ) -47.0 %   1,528     3,667     (2,139 ) -58.3 %
Income (loss) before income taxes 15,153 13,891 1,262 9.1 % 29,460 22,239 7,221 32.5 %
Provision for income taxes   6,265     737     5,528   * N/M   10,989     971     10,018   * N/M
Net income (loss) $ 8,888   $ 13,154   $ (4,266 ) -32.4 % $ 18,471   $ 21,268   $ (2,797 ) -13.2 %
Income allocated to participating securities   147     175     (28 ) -16.0 %   288     253     35   13.8 %
Net income (loss) available to common stockholders $ 8,741   $ 12,979   $ (4,238 ) -32.7 % $ 18,183   $ 21,015   $ (2,832 ) -13.5 %
 
Diluted income (loss) common per share $ 0.16 $ 0.24 $ (0.08 ) -33.3 % $ 0.33 $ 0.39 $ (0.06 ) -15.4 %
Shares used in computing earnings (loss) per common share
Basic 55,710 53,657 2,053 3.8 % 55,588 53,595 1,993 3.7 %
Diluted 56,346 54,468 1,878 3.4 % 55,914 54,481 1,433 2.6 %
 
 
 
Eclipsys Corporation
GAAP Income Statements

(in thousands, except per share amounts)

                   
GAAP GAAP GAAP GAAP
Three Months Ended June 30, 2009 Three Months Ended June 30, 2008

$ Change

% Change

Year-to-date June 30, 2009 Year-to-date June 30, 2008

$ Change

% Change

               
Revenues:
Systems and services $ 127,675 $ 126,308 $ 1,367 1.1 % $ 255,812 $ 245,446 $ 10,366 4.2 %
Hardware   2,173     5,834     (3,661 ) -62.8 %   4,202     11,076     (6,874 ) -62.1 %
Total revenues   129,848     132,142     (2,294 ) -1.7 %   260,014     256,522     3,492   1.4 %
 
Cost and expenses:
Costs of systems and services 68,315 69,316 (1,001 ) -1.4 % 135,189 136,876 (1,687 ) -1.2 %
Costs of hardware 1,950 3,615 (1,665 ) -46.1 % 3,606 7,951 (4,345 ) -54.6 %
Sales and marketing 27,394 22,781 4,613 20.2 % 50,144 43,652 6,492 14.9 %
Research and development 13,872 15,753 (1,881 ) -11.9 % 27,364 32,907 (5,543 ) -16.8 %
General and administrative 12,429 7,713 4,716 61.1 % 24,451 18,676 5,775 30.9 %
Depreciation and amortization 8,117 5,740 2,377 41.4 % 16,152 10,506 5,646 53.7 %
Restructuring - - - 5,434 - 5,434
In-process research and development charge   -     -     -       -     850     (850 ) -100.0 %
Total costs and expenses   132,077     124,918     7,159   5.7 %   262,340     251,418     10,922   4.3 %
 
Income (loss) from operations (2,229 ) 7,224 (9,453 ) -130.9 % (2,326 ) 5,104 (7,430 ) -145.6 %
Gain (loss) on sale of assets 838 1,451 (613 ) -42.2 % 1,237 3,515 (2,278 ) -64.8 %
Gain (loss) on ARS 691 - 691 533 - 533
Interest expense (961 ) (457 ) (504 ) 110.3 % (2,105 ) (720 ) (1,385 ) 192.4 %
Interest income   681     1,285     (604 ) -47.0 %   1,528     3,667     (2,139 ) -58.3 %
Income (loss) before income taxes (980 ) 9,503 (10,483 ) -110.3 % (1,133 ) 11,566 (12,699 ) -109.8 %
Provision for income taxes   3,120     992     2,128   214.5 %   3,834     2,766     1,068   38.6 %
Net income (loss) $ (4,100 ) $ 8,511   $ (12,611 ) -148.2 % $ (4,967 ) $ 8,800   $ (13,767 ) -156.4 %
 
Basic EPS:
Net income (loss) $ (4,100 ) $ 8,511 (12,611 ) -148.2 % $ (4,967 ) $ 8,800 (13,767 ) -156.4 %
Less: Income allocated to participating securities   -     115     (115 ) -100.0 %   -     107     (107 ) -100.0 %
Net income (loss) available to common shareholders $ (4,100 ) $ 8,396     (12,496 ) -148.8 % $ (4,967 ) $ 8,693     (13,660 ) -157.1 %
Basic weighted average common shares outstanding   55,710     53,657     2,053   3.8 %   55,588     53,595     1,993   3.7 %
Basic net income (loss) per common share $ (0.07 ) $ 0.16   $ (0.23 ) -143.8 % $ (0.09 ) $ 0.16   $ (0.25 ) -156.3 %
 
Diluted EPS:
Net income (loss) (4,100 ) 8,511 (12,611 ) -148.2 % (4,967 ) 8,800 (13,767 ) -156.4 %
Less: Income allocated to participating securities   -     113     (113 ) -100.0 %   -     105     (105 ) -100.0 %
Net income (loss) available to common shareholders $ (4,100 ) $ 8,398     (12,498 ) -148.8 % $ (4,967 ) $ 8,695     (13,662 ) -157.1 %
Basic weighted average common shares outstanding 55,710 53,657 2,053 3.8 % 55,588 53,595 1,993 3.7 %
Dilutive effect of potential common shares   -     811     (811 ) -100.0 %   -     886     (886 ) -100.0 %
Diluted weighted average shares common outstanding   55,710     54,468     1,242   2.3 %   55,588     54,481     1,107   2.0 %
Diluted earnings (loss) per common share $ (0.07 ) $ 0.15   $

(0.22

)

-146.7

% $ (0.09 ) $ 0.16   $ (0.25 )

-156.3

%
 
 
 
ECLIPSYS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
   
 
 
June 30, December 31,
  2009     2008  
(Unaudited)
Assets
Current assets:
Cash $ 120,925 $ 108,304
Marketable securities 154

Accounts receivable, net of allowance for doubtful accounts of $3,499
and $4,912, respectively

111,258 121,811
Prepaid expenses 24,197 23,975
Deferred tax asset 343 2,643
Other current assets   4,181     5,712  
Total current assets 260,904 262,599
 
Long-term investments 108,806 107,215
Property and equipment, net 58,436 53,996
Capitalized software development costs, net 44,908 37,718
Acquired technology, net 34,570 39,710
Intangible assets, net 8,834 10,258
Deferred tax asset 88,789 89,063
Goodwill 98,030 96,973
Other assets   14,862     11,343  
Total assets $ 718,139   $ 708,875  
 
 
 
Liabilities and Stockholders’ Equity
Current liabilities:
Deferred revenue $ 119,534 $ 123,733
Accounts payable 14,452 20,924
Accrued compensation costs 25,080 16,457
Deferred tax liability 2,939
Other current liabilities   21,159     22,481  
Total current liabilities 183,164 183,595
 
Deferred revenue 3,724 5,743
Long term debt & capital leases 105,917 105,000
Other long-term liabilities   15,403     16,540  
Total liabilities 308,208 310,878
 
Stockholders’ equity:

Common stock, $0.01 par value, 200,000,000 shares authorized;
issued and outstanding, 56,512,071 and 56,126,674, respectively

565 561
Additional paid-in capital 584,317 569,717
Accumulated deficit (169,679 ) (164,712 )
Accumulated other comprehensive income   (5,272 )   (7,569 )
Total stockholders’ equity   409,931     397,997  
Total liabilities and stockholders’ equity $ 718,139   $ 708,875  
 
 
 
ECLIPSYS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
           

For the Six Months Ended
June 30,

 

For the Three Months Ended
June 30,

  2009     2008     2009     2008  
 
Operating activities:
Net income $ (4,967 ) $ 8,800 $ (4,100 ) $ 8,511

Adjustments to reconcile net income to net cash
provided by operating activities:

 
Depreciation and amortization 24,833 20,551 12,798 10,363
Provision for bad debt 1,996 1,400 950 450
In-process research and development charge - 850 - -
Stock compensation expense 11,169 7,466 6,761 4,119
Gain on sale of assets (1,237 ) (3,515 ) (837 ) (1,451 )
Deferred provision for income taxes 3,674 367 3,222 299

Changes in operating assets and liabilities, excluding the
effect of acquisitions and dispositions:

0
Accounts receivable 1,948 (18,808 ) (1,747 ) (16,716 )
Prepaid expenses and other current assets 1,580 (4,086 ) 3,034 1,914
Other assets (497 ) 1,047 (260 ) 513
Deferred revenue (3,631 ) (8,505 ) (2,824 ) (5,154 )
Accrued compensation 8,633 (6,707 ) 1,168 (2,170 )
Accounts payable and other current liabilities (6,888 ) 3,898 (292 ) (2,054 )
Long-term liabilities 1,565 2,938 814 595
Other reconciling items   (425 )   862     (670 )   434  
Total adjustments   42,720     (2,242 )   22,117     (8,858 )
Net cash provided by operating activities   37,753     6,558     18,017     (347 )
Investing activities:
Purchases of property and equipment (12,555 ) (13,315 ) (5,282 ) (6,375 )
Purchase of marketable securities (102,000 ) - -
Proceeds from sales of marketable securities 150 153,641 - 18,850
Capitalized software development costs (14,651 ) (6,941 ) (7,435 ) (4,018 )
Proceeds from sale of assets 698 - -
Earnout out on disposition 1,241 2,582 399 2,182
Cash paid for acquisitions, net of cash acquired   (2,819 )   (54,370 )   (56 )   (736 )
Net cash used in investing activities (28,634 ) (19,705 ) (12,374 ) 9,903
Financing activities:
Proceeds from stock options exercised 3,306 2,439 3,232 953
Proceeds from employee stock purchase plan 454 375 212 206
Cash paid for debt issuance costs (421 ) - (421 )
Repayment of secured financing (45,000 ) - (45,000 )
Proceeds from secured financing 95,000 - 50,000
Other   (59 )     (59 )  
Net cash provided by financing activities 3,701 52,393 3,385 5,738
 
Effect of exchange rates on cash and cash equivalents   (199 )   (236 )   15     28  
Net increase (decrease) in cash and cash equivalents 12,621 39,010 9,043 15,322
Cash and cash equivalents — beginning of period   108,304     22,510     111,882     46,198  
Cash and cash equivalents — end of period $ 120,925   $ 61,520   $ 120,925   $ 61,520  
 
 
 
Eclipsys Corporation
Reconciliation of GAAP to Non-GAAP Pro Forma Results
(in thousands, except per share amounts)
               
GAAP Non-GAAP
Three Months Ended June 30, 2009 (Unaudited) Stock-based comp expense (1) Restructuring (2) Amortization (3) Premise (4) Tax (5) Three Months Ended June 30, 2009 (Unaudited)
             
Revenues:
Systems and services $ 127,675 $ 3,510 $ 131,185
Hardware   2,173           102     2,275  
Total revenues   129,848     -     -     -     3,612   -     133,460  
 
Cost and expenses:
Costs of systems and services 68,315 (506 ) 525 68,334
Costs of hardware 1,950 29 1,979
Sales and marketing 27,394 (4,237 ) (2,141 ) 21,016
Research and development 13,872 (546 ) 13,326
General and administrative 12,429 (1,470 ) (1,051 ) 9,908
Depreciation and amortization 8,117 (3,124 ) 4,993
Restructuring -
In-process research and development charge               -  
Total costs and expenses   132,077     (6,759 )   (3,192 )   (3,124 )   554   -     119,556  
 
Income (loss) from operations (2,229 ) 6,759 3,192 3,124 3,058 - 13,904
Gain/(loss) on sale of assets 838 838
Gain (loss) on ARS 691 691
Interest expense (961 ) (961 )
Interest income   681               681  
Income (loss) before income taxes (980 ) 6,759 3,192 3,124 3,058 - 15,153
Provision for income taxes   3,120     2,623     1,549     1,377     1,248   (3,652 )   6,265  
Net income (loss) $ (4,100 ) $ 4,136   $ 1,643   $ 1,747   $ 1,810 $ 3,652   $ 8,888  
Income allocated to participating securities   -     47     19     20     21   41     147  
Net income (loss) available to common stockholders $ (4,100 ) $ 4,089   $ 1,624   $ 1,727   $ 1,789 $ 3,611   $ 8,741  
 
Diluted income (loss) common per share $ (0.07 ) $ 0.07 $ 0.03 $ 0.03 $ 0.03 $ 0.06 $ 0.16
Shares used in computing earnings (loss) per common share
Basic 55,710 55,710 55,710 55,710 55,710 55,710 55,710
Diluted 55,710 56,346 56,346 56,346 56,346 56,346 56,346
 
1 Represents stock-based compensation expense.
 
2 Represents severance related costs primarily associated with the resignation of our former CEO.
 
3 This expense is the amortization of intangible assets associated with 2008 acquisitions.
 
4 This represents a deferred revenue adjustment of $3.6 million net of deferred costs adjustment of $0.6 million related to our December 2008 acquisition of Premise Corporation. The amounts represent the reduction of deferred revenue and related deferred costs acquired from Premise as a result of purchase accounting adjustments.
 
5 This amount represents a combination of discrete tax items in the quarter, primarily deferred tax asset adjustments for Canadian research and development credits, and non-GAAP tax adjustments to reflect the non-GAAP annual effective tax rate.
 
 
 
Eclipsys Corporation
Reconciliation of GAAP to Non-GAAP Pro Forma Results
(in thousands, except per share amounts)
               
GAAP Non-GAAP
Year-to-date June 30, 2009 (Unaudited) Stock-based comp expense (1) Restructuring (2) Amortization (3) Premise (4) Tax (5) Year-to-date June 30, 2009 (Unaudited)
             
Revenues:
Systems and services $ 255,812 $ 5,236 $ 261,048
Hardware   4,202           115     4,317  
Total revenues   260,014     -     -     -     5,351   -     265,365  
 
Cost and expenses:
Costs of systems and services 135,189 (999 ) 726 134,916
Costs of hardware 3,606 73 3,679
Sales and marketing 50,144 (6,731 ) (2,141 ) 41,272
Research and development 27,364 (999 ) 26,365
General and administrative 24,451 (2,438 ) (1,051 ) 20,962
Depreciation and amortization 16,152 (6,248 ) 9,904
Restructuring 5,434 (5,434 ) -
In-process research and development charge               -  
Total costs and expenses   262,340     (11,167 )   (8,626 )   (6,248 )   799   -     237,098  
 
Income (loss) from operations (2,326 ) 11,167 8,626 6,248 4,552 - 28,267
Gain/(loss) on sale of assets 1,237 1,237
Gain (loss) on ARS 533 533
Interest expense (2,105 ) (2,105 )
Interest income   1,528               1,528  
Income (loss) before income taxes (1,133 ) 11,167 8,626 6,248 4,552 - 29,460
Provision for income taxes   3,834     3,502     3,244     2,350     1,711   (3,652 )   10,989  
Net income (loss) $ (4,967 ) $ 7,665   $ 5,382   $ 3,898   $ 2,841 $ 3,652   $ 18,471  
Income allocated to participating securities   -     94     66     48     35   45     288  
Net income (loss) available to common stockholders $ (4,967 ) $ 7,571   $ 5,316   $ 3,850   $ 2,806 $ 3,607   $ 18,183  
 
Diluted income (loss) common per share $ (0.09 ) $ 0.14 $ 0.10 $ 0.07 $ 0.05 $ 0.06 $ 0.33
Shares used in computing earnings (loss) per common share
Basic 55,588 55,588 55,588 55,588 55,588 55,588 55,588
Diluted 55,588 55,914 55,914 55,914 55,914 55,914 55,914
 
1 Represents stock-based compensation expense.
 
2 This amount represents costs associated with the previously announced reduction in our professional services organization and other headcount and severance costs incurred primarily in the first quarter and severance costs primarily associated with the resignation of our former CEO in the second quarter.
 
3 This expense is the amortization of intangible assets associated with 2008 acquisitions.
 
4 This represents a deferred revenue adjustment of $5.4 million net of deferred costs adjustment of $0.8 million related to our December 2008 acquisition of Premise Corporation. The amounts represent the reduction of deferred revenue and related deferred costs acquired from Premise as a result of purchase accounting adjustments.
 
5 This amount represents a combination of discrete tax items in the quarter, primarily deferred tax asset adjustments for Canadian research and development credits, and non-GAAP tax adjustments to reflect the non-GAAP annual effective tax rate.
 
 
 
Eclipsys Corporation
Reconciliation of GAAP to Non-GAAP Pro Forma Results
(in thousands, except per share amounts)
               
GAAP Non-GAAP
Three Months Ended June 30, 2008 (Unaudited) Stock-based comp expense (1) Derivative Litigation (2) EPSI (3) Gain on sale of assets (4) Headquarter Relocation (5) Three Months Ended June 30, 2008
             
Revenues:
Systems and services $ 126,308 $ 126,308
Hardware   5,834               5,834  
Total revenues   132,142     -     -     -     -     -     132,142  
 
Cost and expenses:
Costs of systems and services 69,316 (1,777 ) (126 ) 67,413
Costs of hardware 3,615 3,615
Sales and marketing 22,781 (1,488 ) (377 ) 20,916
Research and development 15,753 (288 ) 15,465
General and administrative 7,713 (566 ) 658 (754 ) 7,051
Depreciation and amortization 5,740 (1,121 ) 4,619
Restructuring
In-process research and development charge   -               -  
Total costs and expenses   124,918     (4,119 )   658     (1,121 )   -     (1,257 )   119,079  
 
Income (loss) from operations 7,224 4,119 (658 ) 1,121 1,257 13,063
Gain/(loss) on sale of assets 1,451 (1,451 ) -
Gain (loss) on ARS - -
Interest expense (457 ) (457 )
Interest income   1,285               1,285  
Income (loss) before income taxes 9,503 4,119 (658 ) 1,121 (1,451 ) 1,257 13,891
Provision for income taxes   992     -     -     -     (255 )     737  
Net income (loss) $ 8,511   $ 4,119   $ (658 ) $ 1,121   $ (1,196 ) $ 1,257   $ 13,154  
Income allocated to participating securities   113     55     (9 )   15     (16 )   17     175  
Net income (loss) available to common stockholders $ 8,398   $ 4,064   $ (649 ) $ 1,106   $ (1,180 ) $ 1,240   $ 12,979  
 
Diluted income (loss) common per share $ 0.15 $ 0.07 $ (0.01 ) $ 0.02 $ (0.02 ) $ 0.02 $ 0.24
Shares used in computing earnings (loss) per common share
Basic 53,657 53,657 53,657 53,657 53,657 53,657 53,657
Diluted 54,468 54,468 54,468 54,468 54,468 54,468 54,468
 
1 Represents stock-based compensation expense.
 
2 This reduction in general and administrative expenses is associated with insurance recoveries related to the previously disclosed derivative litigation, the settlement of which is pending final court approval.
 
3 This expense is the amortization of intangible assets associated with the February 2008 acquisition of EPSi.
 
4 This gain resulted from the achievement of certain post-closing milestones associated with the December 2007 sale of the Clinical Practice Model Resource Center business.
 
5 This cost was related primarily to amounts incurred to relocate the corporate headquarters from Boca Raton to Atlanta. These include salaries and benefits associated with termination of employees not relocating and other administrative costs associated with the move.
 
 
 
Eclipsys Corporation
Reconciliation of GAAP to Non-GAAP Pro Forma Results
(in thousands, except per share amounts)
                 
GAAP Non-GAAP
Year-to-date June 30, 2008 (Unaudited) Stock-based comp expense (1) Derivative Litigation (2) EPSI (3) Gain on sale of assets (4) Headquarter Relocation (5) Tax Provision (6) Year-to-date June 30, 2008
               
Revenues:
Systems and services $ 245,446 $ 245,446
Hardware   11,076                 11,076  
Total revenues   256,522     -     -     -     -     -     -     256,522  
 
Cost and expenses:
Costs of systems and services 136,876 (3,385 ) (419 ) 133,072
Costs of hardware 7,951 - 7,951
Sales and marketing 43,652 (2,585 ) (825 ) 40,242
Research and development 32,907 (590 ) (159 ) 32,158
General and administrative 18,676 (907 ) (1,353 ) (1,537 ) 14,879
Depreciation and amortization 10,506 (1,545 ) 8,961
 
In-process research and development charge   850         (850 )         -  
Total costs and expenses   251,418     (7,467 )   (1,353 )   (2,395 )   -     (2,940 )   -     237,263  
 
Income (loss) from operations 5,104 7,467 1,353 2,395 2,940 19,259
Gain/(loss) on sale of assets 3,515 (3,482 ) 33
Gain (loss) on ARS - -
Interest expense (720 ) (720 )
Interest income   3,667                 3,667  
Income (loss) before income taxes 11,566 7,467 1,353 2,395 (3,482 ) 2,940 - 22,239
Provision for income taxes   2,766     -     -     -     (255 )     (1,540 )   971  
Net income (loss) $ 8,800   $ 7,467   $ 1,353   $ 2,395   $ (3,227 ) $ 2,940   $ 1,540   $ 21,268  
Income allocated to participating securities   105     89     16     29     (38 )   35     18     253  
Net income (loss) available to common stockholders $ 8,695   $ 7,378   $ 1,337   $ 2,366   $ (3,189 ) $ 2,905   $ 1,522   $ 21,015  
 
Diluted income (loss) common per share $ 0.16 $ 0.14 $ 0.02 $ 0.04 $ (0.06 ) $ 0.05 $ 0.03 $ 0.39
Shares used in computing earnings (loss) per common share
Basic 53,595 53,595 53,595 53,595 53,595 53,595 53,595 53,595
Diluted 54,481 54,481 54,481 54,481 54,481 54,481 54,481 54,481
 
 
1 Represents stock-based compensation expense.
 
2 These charges were incurred as a result of the voluntary stock option review completed in the second quarter 2007 and are related primarily to legal fees associated with the subsequent derivative litigation. These costs are net of insurance recoveries in the second quarter 2008.
 
3 These amounts relate to a charge of $850 for a write off of in-process research and development and amortization of intangible assets recorded as part of the purchase price allocation of the February 2008 acquisition of EPSi.
 
4 This gain was recorded in conjunction with contingent consideration earned related to the December 2007 sale of the Clinical Practice Model Resource Center business to Elsevier Inc.
 
5 This cost was related primarily to amounts incurred to relocate the corporate headquarters from Boca Raton to Atlanta. These include salaries and benefits associated with termination of employees not relocating and other administrative costs associated with the move.
 
6 FASB Interpretation 48 "Accounting for Uncertainty in Income Taxes" clarifies the criteria for recognizing income tax benefits. This charge was recorded as a result of the review of uncertain state tax positions.

CONTACT:
Eclipsys
Jason Cigarran, 404-847-5965
Vice President, Investor Relations
jason.cigarran@eclipsys.com