EX-99.1 2 a6184894-ex991.htm EXHIBIT 99.1

Exhibit 99.1

Eclipsys Announces Fourth-Quarter and Year-End 2009 Results

ATLANTA--(BUSINESS WIRE)--February 18, 2010--Eclipsys Corporation® (NASDAQ: ECLP), The Outcomes Company®, today announced results for the fourth quarter and year ended December 31, 2009.

Revenues for the quarter ended December 31, 2009 were $133.7 million, compared to revenues of $126.8 million for the quarter ended December 31, 2008. Revenues for the year ended December 31, 2009 were $519.2 million, compared to $515.8 million for the year ended December 31, 2008.

Non-GAAP revenues for the fourth quarter 2009 were $135.7 million and for the year ended 2009 were $527.2 million.

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

GAAP Income

GAAP operating income for the year ended December 31, 2009 was $9.4 million, or 1.8 percent of revenues, compared to $9.4 million, or 1.8 percent in the prior year.

On a GAAP basis, net income for the fourth quarter 2009 was $3.8 million, or $0.07 per diluted common share, compared to net income of $3.3 million, or $0.06 per diluted common share in the fourth quarter 2008.

GAAP net income for the year ended December 31, 2009 was $2.7 million, or $0.05 per diluted common share, compared to $99.5 million, or $1.79 per diluted common share in 2008.

GAAP net income for 2008 included an income tax benefit of $85.5 million, or $1.54 per diluted common share, associated with the reversal of the company’s deferred tax valuation allowance in the third quarter 2008.

Non-GAAP Income

Non-GAAP operating income for the year ended December 31, 2009 was $56.7 million, or 10.8 percent of non-GAAP revenues, compared to $39.0 million, or 7.6 percent in the prior year.

Non-GAAP net income for the fourth quarter 2009 was $9.8 million, or $0.17 per diluted common share, compared to non-GAAP net income for the fourth quarter 2008 of $4.1 million, or $0.07 per diluted common share.

Non-GAAP net income for the year ended December 31, 2009 was $36.5 million, or $0.64 per diluted common share, compared to $41.7 million, or $0.75 per diluted common share in 2008.

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

“We ended 2009 with very strong fourth quarter results,” said Philip M. Pead, Eclipsys president and chief executive officer. “For the year, we exceeded our earnings guidance and generated significant cash flows.”


Balance Sheet Update

In the fourth quarter 2009, Eclipsys repaid $31.0 million of debt on its credit facility, reducing the company’s long-term debt to $29.0 million. These payments were funded through available cash and operating cash flows, and Eclipsys ended the quarter with $123.2 million of cash and $86.0 million in long-term investments.

For the year ended December 31, 2009, Eclipsys generated $55.7 million in free cash flows, compared to $30.1 million for the year ended 2008. The company defines free cash flow as operating cash flows less capitalized software development costs and capital expenditures.

2010 Guidance

Eclipsys current expectations for full-year 2010 results are as follows:

  • Non-GAAP diluted earnings per share to range from $0.70 to $0.75.
  • New business bookings growth of 20 percent to 30 percent. The company defines new business bookings as the total amount of all new contracts signed in a particular period, excluding renewals.
  • Revenue growth of 6 percent to 8 percent.
  • Non-GAAP operating income margin to range from 12 percent to 13 percent.

Eclipsys 2010 projected non-GAAP results exclude stock-based compensation expense and acquisition related amortization. Eclipsys non-GAAP results may also exclude other items that the company does not consider indicative of its underlying business performance.

Today’s Conference Call

Eclipsys executives will discuss the final results for the fourth quarter and year ended December 31, 2009 on a teleconference scheduled for 4:30 p.m. Eastern time on February 18, 2010. Persons interested in participating in the teleconference should call 800-230-1059 (in the U.S.) or 612-332-0819 (international) 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 conference 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 revenue financial measures on a non-GAAP basis for the three months and year ended December 31, 2009, which include deferred revenue adjustments net of deferred costs adjustments related to the company’s December 2008 acquisition of Premise Corporation. The company has also provided net income and earnings per share financial measures on a non-GAAP basis for the three months and year ended December 31, 2009 and December 31, 2008, which exclude non-cash stock-based compensation expense, 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. When considered in conjunction with comparable GAAP financial measures, management believes that the non-GAAP financial measures provide useful supplemental information to management and investors to facilitate the understanding and evaluation of the company’s underlying 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 also 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 company adds back the Premise deferred revenue adjustment for non-GAAP revenue because the inclusion of this amount directly correlates to the underlying business performance of Eclipsys’ operations and facilitates comparisons of the legacy Premise business to that of the company's post-merger results. The company omits non-cash stock-based compensation because such expense can vary significantly between periods as a result of the timing (which determines various input assumptions that impacts the compensation expense amount) and number of new equity-based incentive awards in any one period, including grants in connection with acquisitions. The company omits non-cash acquisition-related amortization expense arising from the acquisition of intangible assets in presenting non-GAAP earnings because such expense in any one period may not directly correlate to its underlying business performance and because such expense can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired intangible assets. This adjustment also provides management and investors with consistent measures of performance both before and after including such non-cash acquisition-related amortization 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. Although the company has provided 2010 guidance for non-GAAP diluted earnings per share and non-GAAP operating income margin, a quantitative reconciliation to the equivalent GAAP guidance financial measures is not available given the number of variables that affect the reconciliation.

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 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, including initiatives designed to improve operational efficiencies, 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 (including as required to comply with ARRA and related regulations, as well as other certification standards) 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
GAAP Income Statements

(in thousands, except per share amounts)

               
GAAP GAAP
Three Months Ended Year-to-date
December 31, 2009 December 31, 2008 $ Change % Change   December 31, 2009 December 31, 2008 $ Change % Change  
Revenues:

(Unaudited)

(Unaudited)

(Unaudited)

Systems and services

$ 129,777 $ 122,622 $ 7,155 5.8 % $ 509,060 $ 495,643 $ 13,417 2.7 %

Hardware

  3,907     4,194     (287 ) -6.8 %   10,124     20,119     (9,995 ) -49.7 %

Total revenues

  133,684     126,816     6,868   5.4 %   519,184     515,762     3,422   0.7 %
 
Cost and expenses:

Costs of systems and services

69,756

70,652

(896

)

-1.3

%

271,400

280,694

(9,284

)

-3.3

%

Costs of hardware

3,265 3,537 (272 ) -7.7 % 8,543 16,945 (8,402 ) -49.6 %

Sales and marketing

20,472

22,761

(2,289

)

-10.1

%

91,493

85,911

5,582

6.5

%

Research and development

15,041

14,333

708

4.9

%

55,610

61,435

(5,825

)

-9.5

%

General and administrative

9,873

11,580

(1,707

)

-14.7

%

45,095

38,457

6,638

17.3

%

Depreciation and amortization

8,049 6,447 1,602 24.8 % 32,180 22,098 10,082 45.6 %

Restructuring

- - - 5,434 - 5,434

*

In-process research and development charge

  -     -     -       -     850     (850 ) -100.0 %

Total costs and expenses

  126,456     129,310     (2,854 ) -2.2 %   509,755     506,390     3,365   0.7 %
 
Income (loss) from operations 7,228 (2,494 ) 9,722 * 9,429 9,372 57 0.6 %
Gain (loss) on sale of assets 502 170 332 195.3 % 2,549 4,370 (1,821 ) -41.7 %
Gain (loss) on ARS 133 (609 ) 742 * (205 ) (609 ) 404 *
Interest expense (548 ) (898 ) 350 * (3,368 ) (2,117 ) (1,251 ) *
Interest income   292     1,274     (982 ) -77.1 %   2,136     6,074     (3,938 ) -64.8 %
Income (loss) before income taxes 7,607 (2,557 ) 10,164 * 10,541 17,090 (6,549 ) -38.3 %
Provision for income taxes   3,814     (5,867 )   9,681   *   7,833     (82,416 )   90,249   *  
Net income (loss) $ 3,793   $ 3,310   $ 483   14.6 % $ 2,708   $ 99,506   $ (96,798 ) -97.3 %
 

Basic EPS:

Net income (loss) $ 3,793 $ 3,310 $ 483 14.6 % $ 2,708 $ 99,506 $ (96,798 ) -97.3 %
Less: Income allocated to participating securities   30     40     (9 ) -24.0 %   28     1,176     (1,148 ) -97.6 %
Net income (loss) available to common shareholders $ 3,763   $ 3,270   $ 492   15.1 % $ 2,680   $ 98,330   $ (95,650 ) -97.3 %

Basic weighted average common shares outstanding

  56,537     55,293     1,244   2.3 %   55,940     54,089     1,851   3.4 %

Basic net income (loss) per common share

$ 0.07   $ 0.06   $ 0.01   12.5 % $ 0.05   $ 1.82   $ (1.77 ) -97.4 %
 

Diluted EPS:

Net income (loss) $ 3,793 $ 3,310 $ 483 14.6 % $ 2,708 $ 99,506 $ (96,798 ) -97.3 %
Less: Income allocated to participating securities   29     39     (10 ) -24.8 %   28     1,160     (1,132 ) -97.6 %
Net income (loss) available to common shareholders $ 3,764   $ 3,271   $ 493   15.1 % $ 2,680   $ 98,346   $ (95,666 ) -97.3 %

Basic weighted average common shares outstanding

56,537 55,293 1,244 2.3 % 55,940 54,089 1,851 3.4 %

Dilutive effect of potential common shares

  1,038     441     596   135.1 %   681     763     (82 ) -10.8 %
Diluted weighted average shares common outstanding   57,575     55,734     1,841   3.3 %   56,621     54,851     1,769   3.2 %
Diluted earnings (loss) per common share $ 0.07   $ 0.06   $ 0.01   11.4 % $ 0.05   $ 1.79   $ (1.75 ) -97.4 %
 

* N/M - not meaningful

 
 
Total basic weighted average shares outstanding 56,988 55,961 56,528 54,736
Less: Participating securities   451     668     588     647  
basic weighted average shares - common 56,537 55,293 55,940 54,089
 
Total diluted weighted average shares outstanding 58,026 56,402 57,208 55,498
Less: Participating securities   451     668     588     647  
Diluted weighted average shares - common 57,575 55,734 56,621 54,851
 
Dilutive effect of potential common shares 1,038 441 681 763
 

ECLIPSYS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
   
As of December 31,
2009 2008

(Unaudited)

Assets

 

Current assets:
Cash $ 123,160 $ 108,304
Marketable securities - 154

Accounts receivable, net of allowance for doubtful accounts of $2,994
and $4,912, respectively

111,712 121,811
Prepaid expenses 26,832 23,975
Deferred tax asset - 2,643
Other current assets   4,250     5,712  

Total current assets

265,954 262,599
 
Long-term investments 85,988 107,215
Property and equipment, net 56,579 53,996
Capitalized software development costs, net 51,889 37,718
Acquired technology, net 29,557 39,710
Intangible assets, net 7,411 10,258
Goodwill 100,008 96,973
Deferred tax asset

86,639

89,063
Other assets   13,039     11,343  

Total assets

$

697,064

  $ 708,875  
 
 
Liabilities and Stockholders’ Equity
Current liabilities:
Deferred revenue $ 135,185 $ 123,733
Accounts payable 14,752 20,924
Accrued compensation costs 34,034 16,457
Deferred tax liability 6,033 -
Other current liabilities   20,994     22,481  

Total current liabilities

210,998 183,595
 
Deferred revenue 4,896 5,743
Long term debt and capital lease obligations 29,727 105,000
Other long-term liabilities  

15,616

    16,540  

Total liabilities

261,237

310,878
 
Stockholders’ equity:

Common stock, $0.01 par value, 200,000,000 shares authorized; issued
and outstanding, 57,162,466 and 56,126,674, respectively

572 561
Additional paid-in capital 599,111 569,717
Accumulated deficit (162,004 ) (164,712 )
Accumulated other comprehensive income   (1,852 )   (7,569 )

Total stockholders’ equity

  435,827     397,997  

Total liabilities and stockholders’ equity

$

697,064

  $ 708,875  
 

ECLIPSYS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)
 
 

For the Years Ended
December 31,

 

For the Three Months
Ended December 31,

  2009       2008     2009       2008  

(Unaudited)

(Unaudited)

(Unaudited)

Operating activities:
Net income $ 2,708 $ 99,506 $ 3,795 $ 3,309

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

Depreciation and amortization 49,228 41,376 12,214 11,558
Provision for bad debt 2,896 5,995 450 3,340
In-process research and development charge 850 - -
Stock compensation expense 18,162 17,282 3,394 4,189
Deferred income taxes 8,083 (93,031 ) 4,186 (14,847 )
Gain on sale of marketable securities (1,508 )

(133

) -
Gain on sale of assets (2,548 ) (4,370 ) (502 ) (172 )
Changes in operating assets and liabilities, excluding the effect of acquisitions and dispositions: - -
Accounts receivable 1,827 (20,881 ) (5,239 ) 730
Prepaid expenses and other current assets (42 ) 2,054 (1,462 ) 1,299
Inventory - - - -
Other assets 833 (329 ) 774 (40 )
Deferred revenue 12,578 13,528 13,795 16,906
Accrued compensation 17,714 (10,562 ) 750 (5,533 )
Accounts payable and other current liabilities (9,624 ) 8,955 2,871 3,019
Long-term liabilities 1,215 12,480 (524 ) 8,509
Other   4,895     548    

1,851

    (415 )
Total adjustments   103,709     (26,105 )   32,425     28,543  
Net cash provided by operating activities   106,417     73,401     36,220     31,852  
Investing activities:
Purchases of property and equipment (21,243 ) (25,092 ) (3,687 ) (4,660 )
Purchase of marketable securities (102,000 ) 0 0
Proceeds from sales of marketable securities 23,686 153,641 (375 ) 0
Proceeds from sale of assets 835 0 137
Proceeds from sale of debt and equity securities 0 0 0
Capitalized software development costs (29,492 ) (18,176 ) (6,764 ) (5,759 )
Restricted Cash 0 1,964 0 1
Earnout out on disposition 2,079 3,578 0 0
Cash paid for acquisitions, net of cash acquired   (3,077 )   (111,522 )   (93 )   (56,929 )
Net cash used in investing activities (28,047 ) (96,772 ) (10,919 ) (67,210 )
Financing activities:
Proceeds from stock options exercised 11,779 6,254 6,192 971
Proceeds from employee stock purchase plan 855 822 189 207
Cash paid for debt issuance costs (1,440 ) - (10 )
Repayment of secured financing (76,000 ) (95,000 ) (31,000 ) -
Proceeds from secured financing 200,000 - 54,000
Other   (186 )     (106 )   -  
Net cash provided by (used in) financing activities (63,552 ) 110,636 (24,725 ) 55,168
 
Effect of exchange rates on cash and cash equivalents   38     (1,471 )   478     (883 )
Net increase (decrease) in cash and cash equivalents 14,856 85,794 1,054 18,927
Cash and cash equivalents — beginning of period   108,304     22,510     122,106     89,377  
Cash and cash equivalents — end of period $ 123,160   $ 108,304   $ 123,160   $ 108,304  
 

Eclipsys Corporation
Reconciliation of GAAP (Unaudited) to Non-GAAP Items
(in thousands, except per share amounts)
       

Three Months Ended
December 31, 2009

Three Months Ended
December 31, 2008

Year-to-date
December 31, 2009

Year-to-date
December 31, 2008

Revenues:
GAAP Revenues $ 133,684 $ 126,817 $ 519,184 $ 515,762
Premise acquisition accounting (1)   2,030     -     7,975     -  
Non-GAAP revenues $ 135,714   $ 126,817   $ 527,159   $ 515,762  
 
GAAP Recurring revenues $ 92,659 $ 85,293 $ 360,094 $ 334,256
Premise acquisition accounting (1)   67       949    
Non-GAAP Recurring revenues $ 92,726   $ 85,293   $ 361,043   $ 334,256  
 
GAAP Professional services revenues $ 26,146 $ 28,325 $ 110,763 $ 124,268
Premise acquisition accounting (1)   218       1,300    
Non-GAAP Professional services revenues $ 26,364   $ 28,325   $ 112,063   $ 124,268  
 
GAAP Periodic revenues $ 10,972 $ 9,005 $ 38,203 $ 37,119
Premise acquisition accounting (1)   1,745       5,592    
Non-GAAP Periodic revenues $ 12,717   $ 9,005   $ 43,795   $ 37,119  
 
GAAP Hardware revenues $ 3,907 $ 4,194 $ 10,124 $ 20,119
Premise acquisition accounting (1)   -       134    
Non-GAAP Hardware revenues $ 3,907   $ 4,194   $ 10,258   $ 20,119  
 
Gross Margin
Revenues $ 133,684 $ 126,817 $ 519,184 $ 515,762
Costs of systems and services

69,756

70,652

271,400

280,694
Costs of hardware   3,265     3,537     8,543     16,945  
GAAP Gross margin (A)

60,663

52,628

239,241

218,123
Adjustments
Premise acquisition accounting (1) 1,780 6,818
Stock-based compensation expense (2) 475 1,528 1,975 7,346
Headquarter relocation (3) 419
Restructuring (4) 585
Professional Services Reorganization (5) 1,080
Non-recurring items (6)         782  
Non-GAAP gross margin $

62,918

  $ 54,156   $

248,619

  $ 227,750  
 
GAAP gross margin percentage

45.4

% 41.5 %

46.1

% 42.3 %
Non-GAAP gross margin percentage

46.4

% 42.7 %

47.2

% 44.2 %
 
Operating Expenses
GAAP operating expenses (B) $

53,435

$ 55,121 $

229,812

$ 208,751
Adjustments
Stock-based compensation expense (2) (2,919 ) (2,662 ) (16,185 ) (9,935 )
Headquarter relocation (3) (2,521 )
Restructuring (4) (9,182 )
Professional Services Reorganization (5) (298 )
Derivative litigation (7) (1,353 )
Amortization (8) (3,124 ) (2,164 ) (12,496 ) (4,830 )
EPSI research and development charge (9) (850 )
Valuation allowance reversal (10)         (177 )
Non-GAAP operating expenses $

47,392

  $ 50,295   $

191,949

  $ 188,787  
 

Eclipsys Corporation
Reconciliation of GAAP (Unaudited) to Non-GAAP Items
(in thousands, except per share amounts)
 
 

Three Months Ended
December 31, 2009

 

Three Months Ended
December 31, 2008

 

Year-to-date
December 31, 2009

 

Year-to-date
December 31, 2008

 
Gross Research and Development Expenses
GAAP research and development $

15,041

$ 14,333 $

55,610

$ 61,435
Adjustments
Stock-based compensation expense (2) (706 ) (330 ) (2,270 ) (1,321 )
Headquarter relocation (3) (159 )
Restructuring (4)       (40 )   -  
Non-GAAP research and development

14,335

14,003

53,255

59,955
Capitalized software and development costs   6,764     5,760     29,492     18,177  
Non-GAAP gross research and development expenses $

21,099

  $ 19,763   $

82,792

  $ 78,132  
 
 
Operating Income
GAAP operating income $ 7,228 $ (2,494 ) $ 9,429 $ 9,372
Adjustments
Premise acquisition accounting (1) 1,780 - 6,818 -
Stock-based compensation expense (2) 3,394 4,190 18,160 17,281
Headquarter relocation (3) 2,940
Restructuring (4) 9,767
Professional Services Reorganization (5) 1,378
Non-recurring items (6) 782
Derivative litigation (7) 1,353
Amortization (8) 3,124 2,164 12,496 4,830
EPSI research and development charge (9) 850
Valuation allowance reversal (10)         177  
Non-GAAP operating income $ 15,526   $ 3,860   $ 56,670   $ 38,963  
 
GAAP Operating Margin 5.4 % -2.0 % 1.8 % 1.8 %
Non-GAAP Operating Margin 11.4 % 3.0 % 10.8 % 7.6 %
 
 
Pre-tax income
GAAP pre-tax income $ 7,607 $ (2,557 ) $ 10,541 $ 17,090
Adjustments
Premise acquisition accounting (1) 1,780 - 6,818 -
Stock-based compensation expense (2) 3,394 4,190 18,160 17,281
Headquarter relocation (3) 2,940
Restructuring (4) - - 9,767 -
Professional Services Reorganization (5) 1,378
Non-recurring items (6) 782
Derivative litigation (7) 1,353
Amortization (8) 3,124 2,164 12,496 4,830
EPSI research and development charge (9) 850
Valuation allowance reversal (10) 177
Gain on sale of assets (11) (3,482 )
ARS Sale (12)       1,114    
Non-GAAP pre-tax income $ 15,905   $ 3,797   $ 58,896   $ 43,199  
 

Eclipsys Corporation
Reconciliation of GAAP (Unaudited) to Non-GAAP Items
(in thousands, except per share amounts)
       

Three Months Ended
December 31, 2009

Three Months Ended
December 31, 2008

Year-to-date
December 31, 2009

Year-to-date
December 31, 2008

 
 
Net Income
GAAP net income $ 3,793 $ 3,310 $ 2,708 $ 99,506
Adjustments
Premise acquisition accounting (1) 1,780 - 6,818 -
Stock-based compensation expense (2) 3,394 4,190 18,160 17,281
Headquarter relocation (3) - - - 2,940
Restructuring (4) - - 9,767 -
Professional Services Reorganization (5) - - - 1,378
Non-recurring items (6) - - - 782
Derivative litigation (7) - - - 1,353
Amortization (8) 3,124 2,164 12,496 4,830
EPSI research and development charge (9) - - - 850
Valuation allowance reversal (10) - - - 177
Gain on sale of assets (11) - - - (3,482 )
ARS Sale (12) - - 1,114 -
State tax provision (13) 1,540
Taxes (14)   (2,270 )   (5,589 )   (14,541 )   (85,466 )
Non-GAAP net income $ 9,821   $ 4,075   $ 36,522   $ 41,689  
 
 
Diluted earnings per share
Diluted earnings per share $ 0.07 $ 0.06 $ 0.05 $ 1.79
Adjustments
Premise acquisition accounting (1) 0.03 - 0.12 -
Stock-based compensation expense (2) 0.06 0.07 0.32 0.31
Headquarter relocation (3) - - - 0.05
Restructuring (4) - - 0.17 -
Professional Services Reorganization (5) - - - 0.02
Non-recurring items (6) - - - 0.01
Derivative litigation (7) - - - 0.02
Amortization (8) 0.05 0.04 0.22 0.09
EPSI research and development charge (9) - - - 0.02
Valuation allowance reversal (10) - - - 0.00
Gain on sale of assets (11) - - - (0.06 )
ARS Sale (12) - - 0.02 -
State tax provision (13) - - - 0.03
Taxes (14)   (0.04 )   (0.10 )   (0.25 )   (1.54 )
Non-GAAP diluted earnings per share $ 0.17   $ 0.07   $ 0.64   $ 0.75  
 

Eclipsys Corporation
Reconciliation NOTES of GAAP (Unaudited) to Non-GAAP Items
   
1 Deferred revenue adjustments net of deferred costs adjustments related to the Company's 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.
 
2 Represents stock based compensation expense.
 
3 Amounts incurred to relocate the corporate headquarters from Boca Raton to Atlanta, including salaries and benefits associated
with the termination of employees not relocating and other administrative costs associated with the move.
 
4 Severance related activity primarily in the Company's professional services organization. Also includes severance costs in the
second quarter of 2009 associated with the departure of the Company's CEO.
 
5 Severance costs associated with the reorganization of the Company's professional services organization in the third quarter of 2008.
 
6 Nonrecurring adjustments from prior years.
 
7 Charges incurred as a result of the voluntary stock option review completed in the second quarter of 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 of 2008.
 
8 Amortization of intangible assets associated with 2008 acquisitions.
 
9 Write off of in-process research and development associated with our acquisition of EPSI.
 
10 Income tax benefit associated with the reversal of the Company's deferred tax valuation allowance.
 
11 Gain resulted from the achievement of certain post-closing milestones associated with the December 2007 sale of the Clinical Practice
Model Resource Center (CPMRC) business.
 
12 Realized loss on the sale of one of the Company's auction rate securities for $23.6 million.
 
13 Accounting rule issued related to Uncertainty in Income Taxes clarified the criteria for recognizing income tax benefits. This charge was
recorded as a result of the review of uncertain state tax positions.
 
14 Represents a combination of discrete tax items, primarily deferred tax asset adjustments for Canadian research and development
credits in the second quarter of 2009 and non-GAAP tax adjustments to reflect the non-GAAP annual effective tax rate.
 
Notes
 
A GAAP gross margin equals revenue less costs of systems and services and costs of hardware.
 
B GAAP operating expenses include sales and marketing expense, research and development expense , general and administrative expense,
depreciation and amortization expense, restructuring charge, and in process research and development charge.
 

Eclipsys Corporation
Stock-Based Compensation Expense (unaudited)
(in thousands, except per share amounts)
                   
 

Three Months
Ended March 31,
2008

Three Months
Ended June 30,
2008

Three Months
Ended September 30,
2008

Three Months
Ended December 31,
2008

Year-to-date
2008

Three Months
Ended March 31,
2009

Three Months
Ended June 30,
2009

Three Months
Ended September 30,
2009

Three Months
Ended December 31,
2009

Year-to-date
2009

 
Cost and expenses:
Costs of systems and services

$

1,608

$

1,777

$

2,433

$

1,528

$

7,346

$

493

$

506

$

501

$

475

$

1,975

Costs of hardware - -
Sales and marketing 1,097 1,488 1,896 1,763 6,244 2,494 4,237 1,774 1,373 9,878
Research and development 302 288 401 330 1,321 453 546 565 706 2,270
General and administrative 341 566 894 569 2,370 968 1,470 759 840 4,037
Depreciation and amortization - -
Restructuring           -           -
Total costs and expenses

$

3,348

$

4,119

$

5,624

$

4,190

$

17,281

$

4,408

$

6,759

$

3,599

$

3,394

$

18,160

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