|UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q


[  X  ] Quarterly Report pursuant
to Section 13 or 15(d) of the Securities
Exchange Act of 1934For the quarterly period ended June 30, 2003

[   ] Transition Report
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from ___ to ___

Commission File Number  0-26138
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Dendrite International, Inc. | 
| | ---------------------------- | 

| | (Exact name of registrant as specified in its charter) | 
| | ------------------------------------------------------ | 

|New Jersey |  | 22-2786386
|---------- |  | ----------

|(State or other jurisdiction of 
incorporation or organization) |  | (I.R.S. Employer Identification No.)
|--------------------------------------------------------------- |  | ------------------------------------

|1200 Mount Kemble Avenue
Morristown, NJ 07960
(Address, including zip code, of
principal executive offices)




(973) 425-1200
(Registrants telephone number, including area code)



Indicate by check mark whether the  registrant:
(1) has filed all reports  required to be filed by Section 13 or 15(d) of the  Securities  Exchange Act of 1934 during the  preceding  12 months (or for such
shorter period that the registrant was required to file such reports),  and (2) has been subject to such filing  requirements  for
the past 90 days.    [  X  ]


Indicate by check mark
whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act):
    [  X  ]


Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the last practicable date: at August 11, 2003 there were 40,419,646 shares of
common stock outstanding.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|DENDRITE INTERNATIONAL, INC.
INDEX
|----------------------------------

| |  |  | PAGE NO
| |  |  | -------

|PART I. |  | FINANCIAL INFORMATION | 
|------- |  | --------------------- | 

|ITEM 1. |  | Financial Statements | 3
|------- |  | -------------------- | -

| |  | Consolidated Statements of Operations (unaudited)
          
Three months and six months ended June 30, 2003 and 2002 | 3
| |  | --------------------------------------------------------------------------------------------------------------------- | -

| |  | Consolidated Balance Sheets
          
June 30, 2003 (unaudited) and December 31, 2002 | 4
| |  | -------------------------------------------------------------------------------------- | -

| |  | Consolidated Statements of Cash Flows (unaudited)
          
Six months ended June 30, 2003 and 2002 | 5
| |  | ---------------------------------------------------------------------------------------------------- | -

| |  | Notes to Unaudited Consolidated Financial Statements | 6
| |  | ---------------------------------------------------- | -

|ITEM 2. |  | Managements Discussion and
Analysis of Financial Condition
and Results of Operations | 12
|------- |  | ------------------------------------------------------------------------------------- | --

|ITEM 4. |  | Controls and Procedures | 23
|------- |  | ----------------------- | --

|PART II. |  | OTHER INFORMATION | 
|-------- |  | ----------------- | 

|ITEM 4. |  | Submission of Matters to a Vote of Security Holders | 23
|------- |  | --------------------------------------------------- | --

|ITEM 6. |  | Exhibits and Reports on Form 8-K | 24
|------- |  | -------------------------------- | --

|Signatures |  |  | 25
|---------- |  |  | --

|2
|-

---

|PART I.     
FINANCIAL INFORMATION


ITEM 1.      Financial
Statements


DENDRITE
INTERNATIONAL, INC. 
CONSOLIDATED STATEMENTS OF OPERATIONS 
(IN THOUSANDS, EXCEPT PER SHARE DATA)(UNAUDITED)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                        | Three Months Ended June 30, | Six Months Ended June 30,
|--------------------------------------- | --------------------------- | -------------------------
|                                        |                             |                          
|
|                                        |                             |                          
|Revenues:                               |                             |                          
|License fees                            |                             | $  2,752                 
|Services                                |                             | 66,776                   
|                                        |                             |                          
|                                        |                             | 69,528                   
|                                        |                             |                          
|Cost of revenues:                       |                            
|Cost of license fees                    |                             | 1,204                    
|Cost of services                        |                             | 33,578                   
|                                        |                             |                          
|                                        |                             | 34,782                   
|                                        |                             |                          
|Gross margin:                           |                            
|License gross margin                    |                             | 1,548                    
|Services gross margin                   |                             | 33,198                   
|                                        |                             |                          
|                                        |                             | 34,746                   
|                                        |                             |                          
|Operating expenses:                     |                            
|Selling, general and administrative     |                             | 20,983                   
|Research and development                |                             | 3,215                    
|                                        |                             |                          
|                                        |                             | 24,198                   
|                                        |                             |                          
|Operating income                        |                             | 10,548                   
|Interest income                         |                             | 312                      
|Other income (expense)                  |                             | 25                       
|                                        |                             |                          
|Income before income taxes              |                             | 10,885                   
|Income tax expense                      |                             | 4,962                    
|                                        |                             |                          
|Net income                              |                             | $  5,923                 
|                                        |                             |                          
|Net income per share:                   |                            
|Basic                                   |                             | $    0.15                
|                                        |                             |                          
|Diluted                                 |                             | $    0.14                
|                                        |                             |                          
|Shares used in computing net income per |                            
|share:                                  |                            
|Basic                                   |                             | 40,220                   
|                                        |                             |                          
|Diluted                                 |                             | 41,101                   
|                                        |                             |                          

|The
accompanying notes are an integral part of these statements. 3
|------------------------------------------------------------------

---

|DENDRITE
INTERNATIONAL, INC. 
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
|-------------------------------------------------------------------------------------------

|                                                           | June 30,2003(unaudited) | December 31,2002
|---------------------------------------------------------- | ----------------------- | ----------------
|                                                           |                         |                 
|Assets                                                     |                         |                 
|Current Assets:                                            |                        
|Cash and cash equivalents                                  |                         | $   23,189      
|Short-term investments                                     |                         | --              
|Accounts receivable, net                                   |                         | 69,740          
|Prepaid expenses and other current assets                  |                         | 7,628           
|Deferred taxes                                             |                         | 12,808          
|Facility held for sale                                     |                         | 6,900           
|                                                           |                         |                 
|Total current assets                                       |                         | 120,265         
|Property and equipment, net                                |                         | 33,136          
|Other assets                                               |                         | 2,914           
|Long-term receivable                                       |                         | 3,157           
|Goodwill                                                   |                         | 68,504          
|Intangible assets, net                                     |                         | 29,825          
|Purchased capitalized software, net                        |                         | 4,560           
|Capitalized software development costs, net                |                         | 5,608           
|Deferred taxes                                             |                         | 1,584           
|                                                           |                         |                 
|                                                           |                         | $ 269,553       
|                                                           |                         |                 
|Liabilities and Stockholders' Equity                       |                        
|Current Liabilities:                                       |                        
|Accounts payable                                           |                         | $   14,116      
|Income taxes payable                                       |                         | 7,628           
|Capital lease obligations                                  |                         | 1,166           
|Accrued compensation and benefits                          |                         | 15,039          
|Other accrued expenses                                     |                         | 28,345          
|Purchase accounting restructuring accrual                  |                         | 15,107          
|Accrued restructuring charge                               |                         | --              
|Deferred revenues                                          |                         | 17,277          
|                                                           |                         |                 
|Total current liabilities                                  |                         | 98,678          
|                                                           |                         |                 
|Capital lease obligations                                  |                         | 789             
|Purchase accounting restructuring accrual                  |                         | 9,482           
|Other non-current liabilities                              |                         | 692             
|Stockholders' Equity                                       |                        
|Preferred Stock, no par value, 15,000,000 shares           |                        
|authorized, none issued                                    |                         | --              
|Common Stock, no par value, 150,000,000 shares authorized, |                        
|42,559,074 and 42,156,344 shares issued; 40,336,374 and    |                        
|39,933,644 shares outstanding                              |                         | 95,819          
|Retained earnings                                          |                         | 87,123          
|Deferred compensation                                      |                         | (39             
|Accumulated other comprehensive loss                       |                         | (2,115          
|Less treasury stock, at cost                               |                         | (20,876         
|                                                           |                         |                 
|Total stockholders' equity                                 |                         | 159,912         
|                                                           |                         |                 
|                                                           |                         | $ 269,553       
|                                                           |                         |                 
|                                                           |                        

|The
accompanying notes are an integral part of these statements. 4
|------------------------------------------------------------------

---

|DENDRITE
INTERNATIONAL, INC. 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
|----------------------------------------------------------------------------------------------

|                                                          | Six Months Ended June 30,
|--------------------------------------------------------- | -------------------------
|                                                          |                          
|
|                                                          |                          
|Operating activities:                                     |                          
|Net income                                                |                          
|Adjustments to reconcile net income to net cash           |                          
|provided by operating activities:                         |                          
|Depreciation and amortization                             |                          
|Amortization of deferred compensation, net of forfeitures |                          
|Deferred taxes                                            |                          
|Changes in assets and liabilities:                        |                          
|Decrease (increase) in accounts receivable                |                          
|Increase in prepaid expenses and other                    |                          
|Increase in other assets                                  |                          
|Decrease in prepaid income taxes                          |                          
|Decrease in accounts payable and accrued expenses         |                          
|Increase in income taxes payable                          |                          
|Decrease in accrued restructuring charge                  |                          
|Decrease in deferred revenues                             |                          
|Increase in other non-current liabilities                 |                          
|                                                          |                          
|Net cash provided by operating activities                 |                          
|                                                          |                          
|Investing activities:                                     |                          
|Purchases of short-term investments                       |                          
|Sales of short-term investments                           |                          
|Acquisition, net of cash acquired                         |                          
|Increase in other non-current assets                      |                          
|Purchases of property and equipment                       |                          
|Additions to capitalized software development costs       |                          
|                                                          |                          
|Net cash used in investing activities                     |                          
|                                                          |                          
|Financing activities:                                     |                          
|Borrowings from line of credit                            |                          
|Repayments of line of credit                              |                          
|Payments on capital lease obligations                     |                          
|Issuance of common stock                                  |                          
|                                                          |                          
|Net cash provided by financing activities                 |                          
|                                                          |                          
|Effect of exchange rate changes on cash                   |                          
|Net decrease in cash and cash equivalents                 |                          
|Cash and cash equivalents, beginning of period            |                          
|                                                          |                          
|Cash and cash equivalents, end of period                  |                          
|                                                          |                          

|The
accompanying notes are an integral part of these statements. 5
|------------------------------------------------------------------

---

|DENDRITE
INTERNATIONAL, INC. 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


1. Basis of Presentation


The
consolidated financial statements of Dendrite International, Inc. and its subsidiaries
(the Company) included in this Form 10-Q are unaudited and reflect all
adjustments (consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and operating
results for the three and six month periods ended June 30, 2003 and 2002. For further
information, refer to the consolidated financial statements and notes thereto included in
the Companys Annual Report on Forms 10-K and 10-K/A for the year ended December 31,
2002.


Our
interim operating results may not be indicative of operating results for the full year.


2. Net Income Per Share


Basic
net income per share was computed by dividing the net income for each period by the
weighted average number of shares of common stock outstanding for each period. Diluted net
income per share was computed by dividing net income for each period by the weighted
average number of shares of common stock and common stock equivalents (stock options)
outstanding during each period. For the three and six months ended June 30, 2003 common
stock equivalents used in computing diluted net income per share were 880,000 and 589,000
shares, respectively. For the three and six months ended June 30, 2002 common stock
equivalents used in computing diluted net income per share were 400,000 and 451,000
shares, respectively.


3. Comprehensive Income


Assets
and liabilities of the Companys wholly-owned international subsidiaries are
translated at their respective period-end exchange rates and revenues and expenses are
translated at average currency exchange rates for the period. The resulting foreign
currency translation adjustments from assets and liabilities are included as
Accumulated other comprehensive loss and are reflected as a separate component
of stockholders equity. Total after-tax comprehensive income, which is calculated by
adding the foreign currency translation adjustment to net income, for the three months
ended June 30, 2003 was $6,139,000 compared to $4,874,000 for the three months ended June
30, 2002. Total after-tax comprehensive income for the six months ended June 30, 2003 was
$10,334,000 compared to $8,207,000 for the six months ended June 30, 2002.


4. Reclassifications


Certain
prior period balances have been reclassified to conform with current year presentation.


5. Stock Based
Compensation


The
Company has adopted the disclosure requirements of Statement of Financial Accounting
Standards (SFAS) 123, Accounting for Stock-Based Compensation, as
amended by SFAS 148 Accounting for Stock-Based Compensation  Transition and
Disclosure. The Company applies Accounting Principles Board (APB) 25,
Accounting for Stock Issued to Employees and related interpretations in
accounting for stock options granted under the Companys stock option plans (the
Plans). Accordingly, compensation cost has been computed for the Plans based
on the intrinsic value of the stock option at the date of grant, which represents the
difference between the exercise price and the fair value of the Companys stock. As
the exercise price of all stock options granted equaled the fair value of the
Companys stock at the date of option issuance, no compensation cost related to stock
options has been recorded in the accompanying statements of operations. Had compensation
cost for the Plans and the employee stock purchase plan been determined consistent with
SFAS 123, the Companys net income and net income per share would have been adjusted
to the following pro forma amounts:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            | For the Three Months Ended | For the Six Months Ended
|------------------------------------------- | -------------------------- | ------------------------
|                                            |                            |                         
|
|                                            |                            |                         
|Net income as reported                      |                            | $      5,923,000        
|                                            |                            |                         
|Add/(Deduct): Deferred compensation         |                           
|amortization, net of forfeitures recognized |                           
|in accordance with APB 25, net of related   |                            | (2,000                  
|tax effects                                 |                           
|                                            |                            |                         
|Deduct: Total stock-based employee          |                           
|compensation expense determined under the   |                           
|fair value based method for all awards, net |                            | (3,199,000              
|of related tax effects                      |                           
|                                            |                            |                         
|Pro forma net income                        |                            | $      2,722,000        
|                                            |                            |                         
|                                            |                            |                         
|Earnings per share:                         |                           
|Basic - as reported                         |                            | $                    0  
|Basic - pro forma                           |                            | $                    0  
|                                            |                            |                         
|Diluted - as reported                       |                            | $                    0  
|Diluted - pro forma                         |                            | $                    0  

|6
|-

---

|6. Restructuring Charge


The
activity in accrued restructuring as of June 30, 2003 is summarized in the table below:
|---------------------------------------------------------------------------------------------------------------------

|                                  | AccruedRestructuring as of January 1, 2003 | Cash Paymentsin 2003 | AccruedRestructuring as of June 30, 2003
|--------------------------------- | ------------------------------------------ | -------------------- | ----------------------------------------
|                                  |                                            |                      |                                         
|Termination payments to employees |                                            | $260,000             |                                         
|                                  |                                            |                      |                                         
|                                  |                                            | $260,000             |                                         
|                                  |                                            |                      |                                         

|7. Acquisitions


On
September 19, 2002, the Company acquired Software Associates International
(SAI), a privately-held company based in New Jersey. SAI provided software
products and solutions that enhanced corporate level sales and marketing analysis for
pharmaceutical companies. These solutions are complementary to the Companys core
suite of business products. The results of SAIs operations have been included in the
Consolidated Financial Statements since the acquisition date.


The
aggregate purchase price was approximately $16,739,000 which included: cash of
approximately $15,092,000 (approximately $1,600,000 in escrow as of June 30, 2003);
accrued professional service fees of approximately $410,000; and options to purchase
Dendrite common stock valued at approximately $1,237,000. The fair value of the stock
options was estimated using the Black-Scholes valuation model. The Company is in the
process of finalizing a third-party valuation of certain intangible assets and its own
evaluation of acquired facilities, and therefore, the purchase price allocation is
preliminary and subject to adjustment.


On
June 16, 2003, the Company completed its acquisition of Synavant Inc.
(Synavant). Synavant provided a broad range of knowledge-based services to
biopharmaceutical and healthcare companies around the world. Its comprehensive global
solutions included pharmaceutical Customer Relationship Management (CRM) and e-Business
applications, interactive marketing, server and database management, dedicated local
helpline support, training, telemarketing, sample management, and product recall services.
Synavant was headquartered in Atlanta, Georgia and had offices in 21 countries. The
combining of the resources of Synavant with Dendrite created a comprehensive information,
software, and services company dedicated to the global pharmaceutical industry, and
further enhanced Dendrites ability to provide market leading solutions to the sales,
marketing and clinical functions of pharmaceutical and other life science companies. The
results of Synavants operations have been included in the accompanying Consolidated
Financial Statements since the date of acquisition.


The
Synavant acquisition was completed pursuant to an Agreement and Plan of Merger, dated as
of May 9, 2003 and amended as of May 16, 2003 (as amended, the Merger
Agreement) by and among Dendrite, Synavant, and Amgis Acquisition Co.
(Amgis), a wholly-owned subsidiary of Dendrite. Amgis and Dendrite conducted
an all cash tender offer followed by a second step merger, to acquire all of the outstanding shares of common stock of
Synavant, at a price of $3.22 per share. The consideration paid in the acquisition was a
result of a bidding process and arms-length negotiations between the executive officers
and the boards of directors of Synavant and Dendrite.


The
aggregate purchase price was approximately $54,813,000 and included consideration paid for
the common stock and approximately $3,128,000 of legal and professional fees incurred in
connection with the transaction.


A
condensed balance sheet of Synavant, reflecting the amount assigned to each major asset
and liability category as of June 16, 2003 is as follows (thousands):





7
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|                                  | 
|--------------------------------- | 
|Assets Acquired                   | 
|Current assets                    | 
|Cash                              | 
|Accounts receivable               | 
|Other current assets              | 
|                                  | 
|Total current assets              | 
|Long-term assets                  | 
|Property and equipment            | 
|Other assets                      | 
|Intangibles                       | 
|Goodwill                          | 
|                                  | 
|Total assets                      | 
|                                  | 
|Liabilities Assumed               | 
|Current liabilities               | 
|Restructuring reserve - current   | 
|Deferred revenue                  | 
|Other current liabilities         | 
|                                  | 
|Total current liabilities         | 
|Long-term liabilities             | 
|Restructuring reserve - long-term | 
|Other long-term liabilities       | 
|                                  | 
|Total liabilities                 | 
|                                  | 
|Net assets acquired               | 
|                                  | 

|In
connection with the Synavant acquisition, the Company recorded $56,101,000 of goodwill and
$29,900,000 of acquired intangible assets of which approximately $6,000,000 was assigned
to Trademarks, which are not subject to amortization. The remaining $23,900,000
(approximately 11 year weighted average amortization period) has been assigned to the
following intangible assets: non-compete agreements  $2,100,000 (3 year
amortization); backlog  $4,500,000 (3 year amortization); purchased capitalized
software  $2,600,000 (10 year amortization); and customer relationships 
$14,700,000 (15 year amortization). The goodwill and intangible assets recorded for
financial statement purposes are not deductible for tax purposes. The Company is in the
process of finalizing a third party valuation of certain intangible assets, as well as its
evaluation of acquired facilities and personnel for redundancy and, therefore, the
purchase price allocation is preliminary and subject to adjustment.



8
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Pro-forma
results of operations of the Company as if the Synavant and SAI acquisitions had occurred
as of January 1, 2002 for the three and six month periods ended June 30, 2003 are as
follows:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              | For the Three Months Ended | For the Six Months Ended
|----------------------------- | -------------------------- | ------------------------
|
|
|Revenue                       |                            | $    99,796,000         
|Net income (loss)             |                            | $     (4,813,000        
|Basic income (loss) per share |                            | $              (0.12    
|Diluted income (loss) per     |                            | $              (0.12    
|share                         |                           

|(A)

          Net income (loss) includes approximately $500,000 of restructuring charges from
          Synavant as well as early termination fees related to Synavants lines of
          credit of approximately $800,000(B)

          Net income (loss) includes approximately $1,300,000 of restructuring charges
          from Synavant as well as early termination fees related to Synavants lines
          of credit of approximately $1,850,0008.

           Purchase Accounting Restructuring AccrualIn
connection with the acquisition of SAI, discussed in Note 7, the Company developed an exit
plan to close SAIs facility in Mt. Arlington, New Jersey and to relocate the
operations to other Company facilities in New Jersey. The Company accrued as part of the
acquisition costs the costs to terminate certain leases amounting to $3,252,000. The
Company exited the facility during the first quarter of 2003. The activity related to the
SAI purchase accounting restructuring accrual as of June 30, 2003 is summarized in the
table below:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        | Purchaseaccountingrestructuringaccrual as ofJanuary 1, 2003 | Cash Paymentsin 2003 | Purchaseaccountingrestructuringaccrual as ofJune 30, 2003
|----------------------- | ----------------------------------------------------------- | -------------------- | ---------------------------------------------------------
|                        |                                                             |                      |                                                          
|Lease termination costs |                                                             | $3,252,000           |                                                          
|                        |                                                             |                      |                                                          
|                        |                                                             | $3,252,000           |                                                          
|                        |                                                             |                      |                                                          

|In
connection with the acquisition of Synavant, discussed in Note 7, the Company plans to
restructure the Synavant operations, to exit certain facilities of Synavant and to
terminate the employment of certain Synavant employees in connection with the
restructuring. The Company has accrued approximately $22,102,000 at June 16, 2003 for
liabilities associated with the cost of completing the restructuring plan. The components
of this accrued liability are as follows; severance costs for Synavant employees being
involuntarily terminated as a result of the acquisition  approximately $13,042,000
and costs to exit facilities for Synavant facilities being vacated as a result of the
acquisition  approximately $9,060,000.


The
liability accrued for expenses incurred in exiting certain facilities of Synavant includes
assumptions related to sublease income offsetting future lease obligations. The underlying
subleases are not in place for all facilities and the future placement of subleases
including timing of subleases and terms and conditions of subleases could be different
than the assumptions.


The
Company anticipates that the majority of the accrued restructuring balance relating to
terminated employees will be utilized during 2004. The activity related to the Synavant
purchase accounting restructuring accrual as of June 30, 2003 is summarized in the table
below:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                  | Purchase accountingrestructuringaccrual as of June 16, 2003 | Cash Payments in 2003 | Purchase accountingrestructuringaccrual as of June 30, 2003
|--------------------------------- | ----------------------------------------------------------- | --------------------- | -----------------------------------------------------------
|                                  |                                                             |                       |                                                            
|Termination payments to employees |                                                             | $13,042,000           |                                                            
|Facility exit costs               |                                                             | 9,060,000             |                                                            
|                                  |                                                             |                       |                                                            
|                                  |                                                             | $22,102,000           |                                                            
|                                  |                                                             |                       |                                                            

|9
|-

---

|9. Goodwill and
Intangible Assets


Effective January 1, 2002 the Company adopted SFAS 142, Goodwill and other
Intangible Assets. SFAS 142 requires that goodwill and certain intangibles no longer
be amortized, but instead be tested for impairment at least annually. SFAS 142 also
requires that intangible assets with finite useful lives be amortized over their
respective estimated useful lives and reviewed for impairment in accordance with SFAS 121,
which was superceded by SFAS 144. Based on the Companys analysis, there was no
impairment of goodwill upon adoption of SFAS 142 on January 1, 2002. The Company conducts
its annual impairment testing of goodwill on October 1 of each year. For the year ended
December 31, 2002 there was no impairment recorded.


The
total gross carrying amount and accumulated amortization for goodwill and intangible
assets are as follows:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               | As of June 30, 2003 | As of December 31, 2002
|------------------------------ | ------------------- | -----------------------
|                               |                     |                        
|
|                               |                     |                        
|INTANGIBLE ASSETS SUBJECT TO   |                     |                        
|AMORTIZATION                   |                    
|Purchased capitalized software |                     | $    5,041,000         
|Capitalized software           |                    
|development costs              |                     | 18,928,000             
|Customer relationship assets   |                     | 15,893,000             
|Backlog                        |                     | 4,500,000              
|Non-compete covenants          |                     | 3,344,000              
|                               |                     |                        
|Total                          |                     | 47,706,000             
|INTANGIBLE ASSETS NOT SUBJECT  |                    
|TO AMORTIZATION                |                    
|Goodwill                       |                     | 68,504,000             
|Trademarks                     |                     | 6,732,000              
|                               |                     |                        
|Total                          |                     | 75,236,000             
|                               |                     |                        
|Total goodwill and intangible  |                    
|assets                         |                     | $122,942,000           
|                               |                     |                        

|The
activity in the carrying amount of goodwill for the six month period ended June 30, 2003
is as follows:
|-----------------------------------------------------------------------------------------------------------

|         | Balance as of January 1, 2003 | Additions   | Balance as ofJune 30, 2003
|-------- | ----------------------------- | ----------- | --------------------------
|         |                               |             |                           
|Goodwill |                               | $12,353,000 |                           
|         |                               |             |                           

|10
|--

---

|Aggregate
annual amortization expense for intangible assets is estimated to be:
|-------------------------------------------------------------------------------

|Year ending December 31, | 
|------------------------ | 
|2003                     | 
|2004                     | 
|2005                     | 
|2006                     | 
|2007                     | 
|Thereafter               | 
|                         | 

|10. Line of Credit


The
Company entered into a credit agreement (the Agreement) as of June 16, 2003,
in the amount of $30 million with JPMorgan Chase Bank as the agent. The Agreement replaces the $15
million credit facility, which was terminated. The Agreement is available to finance
working capital needs and possible future acquisitions. The terms of this Agreement
require the Company to maintain a minimum consolidated net worth, among other covenants,
measured quarterly, which is equal to $130 million, plus 50% of net income earned after
April 1, 2003 and 75% of net proceeds of any offering of new equity interests issued after
June 30, 2003. This covenant effectively limits the amount of any cash dividends. The
Agreement expires on July 1, 2005. During the second quarter of 2003, the Company borrowed
$5,000,000 from the line of credit under the Agreement, which was repaid prior to June 30,
2003. At June 30, 2003, there were no borrowings outstanding under the Agreement and the
Company was in compliance with all of covenant obligations.


11. Customer and
Geographic Segment Data


For
the three months ended June 30, 2003 and 2002, the Company derived approximately 44% of
its revenues from its largest customer and approximately 46% of its revenues from its
largest two customers, respectively. For the six months ended June 30, 2003 and 2002, the
Company derived approximately 45% of its revenues from its largest customer, and
approximately 55% of its revenues from its three largest customers, respectively.


The
Company is organized by geographic locations and has one reportable segment. All transfers
between geographic areas have been eliminated from consolidated revenues. Operating income
consists of total revenues recorded in the location less operating expenses and does not
include interest income, other expense or income taxes. This data is presented in
accordance with SFAS 131, Disclosure About Segments of an Enterprise and Related
Information.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                  | For the three months ended June 30, | For the six months ended June 30,
|----------------- | ----------------------------------- | ---------------------------------
|                  |                                     |                                  
|
|                  |                                     |                                  
|Revenues:         |                                     |                                  
|United States     |                                     | $52,249,000                      
|All Other         |                                     | 17,279,000                       
|                  |                                     |                                  
|                  |                                     | $69,528,000                      
|                  |                                     |                                  
|Operating income: |                                    
|United States     |                                     | $  7,949,000                     
|All Other         |                                     | 2,599,000                        
|                  |                                     |                                  
|                  |                                     | $10,548,000                      
|                  |                                     |                                  

|                     | June 30, 2003 | December 31, 2002
|-------------------- | ------------- | -----------------
|                     |               |                  
|Identifiable assets: |               |                  
|United States        |               | $195,451,000     
|All Other            |               | 74,102,000       
|                     |               |                  
|                     |               | $269,553,000     
|                     |               |                  

|For
segment reporting purposes, license revenues have been allocated to the sales office of
the respective country in which the sale is made, although the actual contract is with the
U.S. entity for legal and tax purposes.


12. Income Taxes


In
connection with the integration of the Synavant acquisition discussed in Note 7, the
Company performed a reforecast of projected taxable income by jurisdiction and recognized
a full valuation allowance on net operating loss carry forward for one of its foreign
subsidiaries of approximately $608,000.


13. Recent Accounting
Pronouncements


In
November 2002, the FASB issued EITF Issues 00-21, Accounting for Revenue
Arrangements with Multiple Deliverables (EITF 00-21).EITF 00-21
addresses the accounting for arrangements that involve the delivery or performance of
multiple products, services or rights to use assets. This consensus is applicable to
arrangements entered after June 15, 2003. The Company adopted EITF 00-21 on June 15, 2003,
and it did not have a material impact on its consolidated financial statements.




11
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|ITEM 2.       Managements Discussion and Analysis
 of Financial Condition and Results of Operations.



FORWARD-LOOKING
STATEMENTS


This
Form 10-Q may contain certain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21-E of the Securities Exchange Act of 1934,
which are intended to be covered by the safe harbors created by such acts. For this
purpose, any statements that are not statements of historical fact may be deemed to be
forward-looking statements, including the statements under Managements
Discussion and Analysis of Financial Condition and Results of Operations regarding
our strategy, future operations, future expectations or future estimates, future financial
position and future plans and objectives of management. Those statements in this Form 10-Q
containing the words believes, anticipates, plans,
expects and similar expressions constitute forward-looking statements,
although not all forward-looking statements contain such identifying words. These
forward-looking statements are based on our current expectations, assumptions, estimates
and projections about our Company and the pharmaceutical and consumer packaged goods
industries. All such forward-looking statements involve significant risks and
uncertainties, including those risks identified in this Form 10-Q under Factors That
May Affect Future Operating Results, many of which are beyond our control. Although
we believe that the assumptions underlying our forward-looking statements are reasonable,
any of the assumptions could be inaccurate and actual results may differ materially from
those indicated by the forward-looking statements included in this Form 10-Q, as more
fully described under Factors That May Affect Future Operating Results. In
light of the significant uncertainties inherent in the forward-looking statements included
in this Form 10-Q, you should not consider the inclusion of such information as a
representation by us or anyone else that we will achieve such results. Moreover, we assume
no obligation to update these forward-looking statements to reflect actual results. In
addition, our financial and performance outlook concerning future revenues, margins,
earnings and earnings per share and other operating or performance results does not
include the impact of any future acquisitions or future acquisition-related expenses or
any future restructuring or other charges that may occur from time to time due to
management decisions and changing business circumstances and conditions.


OVERVIEW


Co-founded in 1986 by John E. Bailye, the Companys Chairman and Chief
Executive Officer, and incorporated in 1987, Dendrite was established to provide sales
force automation solutions for the pharmaceutical industry. Since then, it has broadened
its offerings to include multiple sales and marketing solutions and related services to
life sciences clients. Dendrites solutions now comprise a broad array of
knowledge-based, technology-driven solutions that increase the effectiveness of sales,
marketing, and clinical processes for pharmaceutical and other life sciences clients,
including: Customer Relationship Management (CRM) Solutions, Information Management,
Business Intelligence and Analytics, and Commercial Operations Management.


Dendrites
primary markets are the United States, the United Kingdom, France, Spain and Japan. We
bill services provided by our foreign branches and subsidiaries in local currencies.
Operating results generated in local currencies are translated into U.S. dollars at the
average exchange rate in effect for the reporting period. We generated approximately 19%
of our total revenues outside the United States during each of the six months ended June
30, 2003 and 2002. Our operating profits by geographic segment are shown in Note 11 of the
Notes to Unaudited Consolidated Financial Statements.


CRITICAL ACCOUNTING
POLICIES, JUDGMENTS AND ESTIMATES


Securities
and Exchange Commission Financial Reporting Release 60 requires companies to include a
discussion of critical accounting policies or methods used in the preparation of financial
statements. A critical accounting policy is one that is both very important to the
portrayal of a companys financial position and results of operations, and requires
managements most difficult, subjective or complex judgments. The Company believes
its critical accounting policies to be revenue recognition, accounting for restructuring,
acquisitions, impairments and income taxes.


Revenue RecognitionThe
area of revenue recognition requires the Companys management to make significant
judgments and estimates. AICPA Statement of Position (SOP) 97-2, Software Revenue
Recognition, governs revenue recognition for arrangements that include software
which is more than incidental to the arrangement. Under SOP 97-2, if a sale of software
includes services that are essential to the functionality of the software, then the entire
arrangement is to be accounted for using contract accounting as described in Accounting
Research Bulletin 45, Long-Term Construction-Type Contracts, and SOP 81-1,
Accounting for Performance of Construction-Type and Certain Production-Type
Contracts. The determination of whether or not services are essential to the
functionality of the software can differ from arrangement to arrangement, and requires the
use of significant judgment by management. Factors used in determining whether or not
services are essential to the functionality may include: whether or not physical changes
are being made to the softwares underlying source code; the complexity of software
configuration services; the level of effort required to build interfaces; the overall
relationship of the service fees to the license fees; the length of time expected to
complete the services and whether or not the services can be obtained by a customer from
their internal resources or another third-party vendor. If services are not considered to
be essential to the software, SOP 97-2 generally allows companies to recognize revenue for
software licenses upon delivery of the licenses, prior to configuration or implementation
services, provided that the other requirements of the SOP are met. In managements
judgment, the Companys configuration and implementation services generally are
essential to the functionality of its software. Therefore, the Company typically
recognizes revenues using the percentage-of-completion method as detailed in SOP 81-1.





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|The
Companys arrangements are segmented, in accordance with SOP 81-1, into two primary
elements or profit centers, one being the license fee and implementation service element
and the other being an ongoing sales force support services element. The Company believes
that its arrangements meet all of the criteria under SOP 81-1 to allow for the
segmentation of the two elements. If the segmentation criteria could not be met, it would
result in recognition of the Companys license and implementation service revenues
over the term of its multi-year support service agreements.


The
percentage-of-completion method of revenue recognition requires management to use
significant estimates in measuring the progress-to-completion for each project. For its
license fee and implementation service projects, the Company uses the input measure of
labor incurred as compared with total expected labor for the entire project. The
determination of total project labor requires the use of significant judgment and
estimates. We review these estimates on a monthly basis. Actual results could differ from
these estimates, which would have impacted the amount of revenue previously recognized,
had better estimates been available at the time.


Accounting for
RestructuringDuring
2001, the Company recognized costs in connection with a restructuring plan, which involved
a reduction in size of the Companys work force, downsizing of certain facilities and
relocation of certain activities. During 2002, in connection with the purchase accounting
related to the acquisition of SAI, the Company established an accrual related to costs in
connection with exiting SAIs facility. During 2003, in connection with the purchase
accounting related to the acquisition of Synavant, the Company established an accrual
related to costs in connection with exiting multiple Synavant facilities as well as a
reduction in the size of the work force.


Accounting for
AcquisitionsThe
purchase combinations carried out by us require management to estimate the fair value of
the assets acquired and liabilities assumed in the combinations. These estimates of fair
value are based on our business plan for the entities acquired including planned
redundancies, restructuring, use of assets acquired and assumptions as to the ultimate
resolution of obligations assumed for which no future benefit will be received. We also
utilize appraisal reports issued by independent appraisers. Should actual use of assets or
resolution of obligations differ from our estimates, revisions to the estimated fair
values would be required.


Accounting for
ImpairmentsWe
review long-lived assets other than goodwill for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset might not be recoverable. If
indicators of impairment are present, we evaluate the recoverability of the long-lived
assets by estimating future undiscounted cash flows that are directly associated with and
that are expected to arise as a direct result of the use and eventual disposition of the
long-lived asset. If this estimate of future undiscounted cash flows demonstrates that
recoverability is not probable, an impairment loss would be calculated and recognized. An
impairment loss would be calculated based on the excess carrying amount of the long-lived
asset over the long-lived assets fair value. The estimate of the fair value and the
future undiscounted cash flows of the underlying long-lived assets are based on
significant judgment and assumptions.


We
review capitalized software development costs and purchased capitalized development
software costs for impairment at each balance sheet date to determine if the unamortized
capitalized costs of a computer software product is greater than the net realizable value
of that product. In those instances where the unamortized capitalized costs are greater
than the net realizable value, we will record an impairment.


We
assess the impairment of goodwill and indefinite lived intangibles on an annual basis
(October 1 of each year), and whenever events or changes in circumstances indicate that
the carrying value may not be recoverable. Some factors we consider important which could
trigger an impairment review include the following:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Significant
underperformance relative to expected historical or projected                     future
operating results;
| | - |  | -----------------------------------------------------------------------------------------------------------------------

| |  |  | Significant
changes in the manner of our use of the                     acquired assets or the
strategy for our overall business; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Significant
                    negative industry or economic trends.
| | - |  | ---------------------------------------------------------------------

|On
an annual basis, or when we determine that the carrying value of goodwill and indefinite
lived intangibles may not be recoverable based upon the existence of one or more of the
above indicators of impairment, we compare the fair value of the reporting unit to its
carrying value, including goodwill (step one of the required test). If the carrying value
exceeds fair value, we would perform step two of the required test. Under step two, we
would calculate the implied fair value of the goodwill for the reporting unit and compare
it to the carrying value of the goodwill for the reporting unit. If the implied fair value
of the goodwill is less than the carrying value of the goodwill, we would recognize in our
Statement of Operations an impairment loss equal to such difference, not to exceed the
carrying value.





13
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|Accounting for Income
TaxesWe
recognize deferred tax assets and liabilities based on the differences between the
financial statement carrying amounts and the tax bases of assets and liabilities. The
Company regularly reviews its deferred tax assets for recoverability and establishes a
valuation allowance based on historical taxable income, projected future taxable income,
and the expected timing of the reversals of existing temporary differences, all of which
require significant management judgments. Realization is dependent on generating
sufficient taxable income of a correct character prior to the expiration of the loss
carryforwards, capital loss and foreign tax credit carryforwards. Although realization is
not assured, management currently believes it is more likely than not that the recorded
net deferred tax asset will be realized; however, the asset could be reduced in the near
term if estimates of future taxable income during the carryforward period are reduced.


RECENT DEVELOPMENTS


On
June 16, 2003, the Company completed its acquisition of Synavant. Synavant provided a
broad range of knowledge-based services to biopharmaceutical and healthcare companies
around the world. Its comprehensive global solutions included pharmaceutical Customer
Relationship Management (CRM) and e-Business applications, interactive marketing, server
and database management, dedicated local helpline support, training, telemarketing, sample
management, and product recall services. Synavant was headquartered in Atlanta, Georgia,
USA and had offices in 21 countries. The combining of the resources of Synavant with
Dendrite created a comprehensive information, software, and services company dedicated to
the global pharmaceutical industry, and further enhanced Dendrites ability to
provide market leading solutions to the sales, marketing and clinical functions of
pharmaceutical and other life science companies. The results of Synavants operations
have been included in the accompanying Consolidated Financial Statements since the date of
acquisition.


The
acquisition was completed pursuant to an Agreement and Plan of Merger, dated as of May 9,
2003 and amended as of May 16, 2003 (as amended, the Merger Agreement) by and
among Dendrite, Synavant, and Amgis Acquisition Co. (Amgis), a wholly-owned
subsidiary of Dendrite. Amgis and Dendrite conducted an all cash tender offer followed by a second
step merger to acquire
all of the outstanding shares of common stock of Synavant, at a price of $3.22 per share.
The consideration paid in the acquisition was a result of a bidding process and
arms-length negotiations between the executive officers and the boards of directors of
Synavant and Dendrite.


The
aggregate purchase price was approximately $54,813,000 and included consideration paid for
the common stock and approximately $3,128,000 of legal and professional fees incurred in
connection with the transaction. The Company is in the process of finalizing a third party
valuation of certain intangible assets, its evaluation of acquired facilities and
personnel for redundancy and, therefore, the purchase price allocation is preliminary and
subject to adjustment.


In
connection with the acquisition of Synavant the Company plans to restructure the Synavant
operations, to exit certain facilities of Synavant and to terminate the employment of
certain Synavant employees in connection with the restructuring. The Company has accrued
approximately $22,102,000 at June 16, 2003 for liabilities associated with the cost of
completing the restructuring plan. The components of this accrued liability are as
follows; severance costs for Synavant employees being involuntarily terminated as a result
of the acquisition  approximately $13,042,000 and costs to exit facilities for
Synavant facilities being vacated as a result of the acquisition  approximately
$9,060,000.


The
liability accrued for expenses incurred in exiting certain facilities of Synavant includes
assumptions related to sublease income offsetting future lease obligations. The underlying
subleases are not in place for all facilities and the future placement of subleases
including timing of subleases and terms and conditions of subleases could be different
than the assumptions.


RESULTS OF OPERATIONS


In
the following discussion of the Companys results of operations includes the results
of Synavant for the period from the June 16, 2003 acquisition date. The following
discussion of our results of operations also, where indicated, segregates the results of
Synavant. The discussion also reconciles the segregated Synavant results to total Company
results. The Company believes that segregating Synavants results from the date of
acquisition provides investors with useful information, on a comparative basis, on the
impact of Synavant on overall Company operations for the three and six months ended June
30, 2003.




14
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|THREE MONTHS ENDED JUNE
30, 2003 AND 2002


     REVENUES. Total revenues increased to $69,528,000 in the three
          months ended June 30, 2003, up $11,916,000 or 21% from $57,612,000 in the three
          months ended June 30, 2002. Total revenues for the three months ended June 30,
          2003 includes $7,426,000 of revenues recognized from Synavant subsequent to the
          Companys acquisition. Due to the timing of several large deals within the
          quarter, Synavant performed a substantial amount of services during the last two
          weeks of the quarter which caused a higher than expected amount of revenue to be
          recognized. Excluding the revenue recognized from Synavant, revenues increased
          by $4,490,000, or 8%, in the three months ended June 30, 2003 over the prior
          year period.


License
fee revenues increased to $2,752,000 in the three months ended June 30, 2003, up $446,000
or 19% from $2,306,000 in the three months ended June 30, 2002. License fee revenues as a
percentage of total revenues were 4% in the three months ended June 30, 2003 and June 30,
2002. License fee revenues for the three months ended June 30, 2003 includes $86,000 of
revenues recognized from Synavant subsequent to the Companys acquisition. Excluding
the results of Synavant, license fee revenues increased $360,000, or 16% in the three
months ended June 30, 2003 over the prior year period. The increase in license revenues
was driven by additional users in our Japanese market.


Service
revenues increased to $66,776,000 in the three months ended June 30, 2003, up $11,470,000
or 21% from $55,306,000 in the three months ended June 30, 2002. Service revenues for the
three months ended June 30, 2003 includes $7,340,000 of revenue recognized from Synavant
subsequent to the Companys acquisition. Excluding the results of Synavant, service
revenues increased $4,130,000, or 7%, in the three months ended June 30, 2003 over the
prior year period. This increase is a result of approximately 20% growth in our technical
services revenue, approximately 19% increase in our international services, and growth in
consulting and data businesses of more than 100%. This increase was offset by a decrease
in our low gross margin or reimbursable revenue of approximately $2,464,000 to $1,025,000
for the three months ended June 30, 2003 from $3,489,000 in the three months ended June
30, 2002.


COST OF REVENUES. Total cost of revenues increased to $34,782,000 in the
three months ended June 30, 2003, up $6,027,000 or 21% from $28,755,000 in the three
months ended June 30, 2002. Total cost of revenues in the three months ended June 30, 2003
includes $4,858,000 of costs recognized from Synavant subsequent to the acquisition.
Excluding the results of Synavant, cost of revenues increased $1,169,000, or 4% for three
months ended June 30, 2003 over the prior year period.


Cost
of license fees increased to $1,204,000 in the three months ended June 30, 2003, up
$197,000 or 20% from $1,007,000 in the three months ended June 30, 2002. Cost of license
fees for the three months ended June 30, 2003 is comprised of the amortization of
capitalized and purchased software costs of $850,000 and third party-vendor license fees
of $354,000. Cost of license fees for the same period in 2002 is comprised of the
amortization of capitalized and purchased software costs of $648,000 and third party
vendor license fees of $359,000. The increase in amortization of capitalized and purchased
software costs relates primarily to amortization of the assets obtained from the
acquisitions of SAI while third party vendor license fees remained relatively constant.


Cost
of services increased to $33,578,000 in the three months ended June 30, 2003, up
$5,830,000 or 21% from $27,748,000 in the three months ended June 30, 2002. This increase
was due primarily to a $4,858,000 incremental increase in cost of services related to the
Synavant acquisition. Excluding the results of Synavant, cost of services for the period
increased $972,000 or 4% over the prior year period. This increase is due to the
additional costs from the increase in headcount due to the acquisition of SAI in September
2002 as well as additional outside consultants related to the integration work for our
largest customer. These increases were offset by a decrease in low-gross margin or
reimbursable revenue.


GROSS MARGIN.Total gross margin for the three months ended June 30, 2003
and June 30, 2002 was 50%. Excluding the impact of Synavant, as discussed above, total
gross margin for the three months ended June 30, 2003 was 52%.


Gross
margin for license fees was 56% in the three months ended June 30, 2003 and June 30, 2002.
Excluding the result of Synavant, discussed above, gross margin for license fees was 55%
for the three months ended June 30, 2003. The gross margin decreased slightly due
primarily to an increase in amortization of capitalized and purchased software costs
offset by the increase in license fee revenues.


Gross
margin for services was 50% in the three months ended June 30, 2003 and June 30, 2002.
Excluding the results of Synavant discussed above, gross margin for the three months ended
June 30, 2003 was 52%. The gross margin increased due to approximately 20% growth in our
technical services revenue, approximately 19% growth in our international services and a
decrease in the low gross margin or reimbursable revenue, offset by increase in employment
costs related to the increase in headcount from the SAI acquisition as well as additional
outside consultants related to the integration work for our largest customer.


SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES. SG&A expenses
increased to $20,983,000 in the three months ended June 30, 2003, up $1,495,000 or 8% from
$19,488,000 in the three months ended June 30, 2002. This increase in expense primarily
reflects a $1,246,000 increase in SG&A expenses related to the acquisition of
Synavant. Excluding the results of Synavant, SG&A expenses decreased to $19,351,000 or
31% of revenues for the three months ended June 30, 2003, as compared to 34% of revenues
for the three months ended June 30, 2002. Improvement in SG&A as a percentage of
revenues primarily reflects the positive operating leverage attained through the
Companys acquisition of SAI, as well as the positive impact of the Companys
cost reduction actions in the third quarter of 2002 offset by an increase of amortization
expense related to definite lived assets from acquisitions.





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|RESEARCH
AND DEVELOPMENT (R&D) EXPENSES. R&D expenses increased to
$3,215,000 in the three months ended June 30, 2003, up $760,000 or 31% from $2,455,000 in
the three months ended June 30, 2002. As a percentage of revenues, R&D expenses
slightly increased to 5% in the three month period ended June 30, 2003 compared to 4% for
the three months ended June 30, 2002. R&D expenses for the three months ended June 30,
2003 includes $198,000 of costs recognized from Synavant subsequent to the acquisition.
Excluding the results of Synavant, R&D expenses increased $562,000 or 23% for the
three months ended June 30, 2003. This increase relates to higher employment costs due to
an increase in headcount from the acquisition of SAI.


PROVISION
FOR INCOME TAXES.The effective tax expense rate was 46% in the three
months ended June 30, 2003 as compared to 36% for the three months ended June 30, 2002. In
connection with the Synavant integration, the Company performed a reforecast of projected
taxable income by jurisdiction and recognized a full valuation allowance on net operating
loss carryforward for one of its foreign subsidiaries of approximately $608,000 which
increased the effective tax expense rate by 6%. Prior to the acquisition of Synavant, the
Companys forecasted effective tax expense rate for the three months ended June 30,
2003 was 40%. In July 2002, the State of New Jersey enacted new tax legislation that
adversely impacted the effective state tax rate of most companies operating in New Jersey.
At June 30, 2002, the legislation had not yet been enacted and the effective tax rate
originally reported for the three months ended June 30, 2002 was 36%.


SIX MONTHS ENDED JUNE
30, 2003 AND 2002


     REVENUES. Total revenues increased to $129,238,000 in the six
          months ended June 30, 2003, up $14,183,000 or 12% from $115,055,000 in the six
          months ended June 30, 2002. Total revenues for the six months ended June 30,
          2003 includes $7,426,000 of revenue recognized from Synavant subsequent to the
          Companys acquisition. Due to the timing of several large deals within the
          quarter, Synavant performed a substantial amount of services during the last two
          weeks of the quarter which caused a higher than expected amount of revenue to be
          recognized. Excluding the revenue recognized from Synavant, revenues increase
          $6,757,000 or 6% for the six months ended June 30, 2003 over the prior year
          period.


License
fee revenues decreased $170,000 or 3% to $5,315,000 in the six months ended June 30, 2003
from $5,485,000 in the six months ended June 30, 2002. License fee revenues as a
percentage of total revenues were 4% in the six months ended June 30, 2003, as compared to
5% in the six months ended June 30, 2002. License fee revenues for the six months ended
June 30, 2003 includes $86,000 of revenues recognized from Synavant subsequent to the
Companys acquisition. Excluding the results of Synavant, license fee revenues
decreased $256,000 or 5% in the six months ended June 30, 2003 over the prior year period.
License fees are, by nature, non-recurring items. The majority of license fees recognized
during the six months ended June 30, 2003 related to licenses being recognized using the
percentage-of-completion method as services were performed.


Service
revenues increased to $123,923,000 in the six months ended June 30, 2003, up $14,353,000
or 13% from $109,570,000 in the six months ended June 30, 2002. Service revenues as a
percentage of total revenues were 96% in the six months ended June 30, 2003, compared to
95% in the six months ended June 30, 2002. Service revenues for the six months ended June
30, 2003 includes $7,340,000 of revenue recognized from Synavant subsequent to the
acquisition. Excluding the results of Synavant, service revenues increased $7,013,000 or
6% compared to the same period for the prior year. The relative increase in service
revenues reflects growth of approximately 20% in implementation revenue related to the
integration work for our largest customer, growth of approximately 5% in our technical
services as well as growth of more than 100% in our data business partially offset by
decreases in low gross margin or reimbursable revenue. In addition, favorable foreign
currency movements accounted for 2% of the period-on-period growth.


COST OF REVENUES. Total cost of revenues increased to $64,601,000 in the
six months ended June 30, 2003, an increase of $5,694,000 or 10% from $58,907,000 in the
six months ended June 30, 2002. Total cost of revenues in the six months ended June 30,
2003 includes $4,858,000 of costs recognized from Synavant subsequent to the acquisition.
Excluding the results of Synavant, cost of revenues increased $836,000 or 1% compared to
the same period for the prior year.


Cost
of license fees increased to $2,283,000 in the six months ended June 30, 2003, an increase
of $32,000 or 1% from $2,251,000 in the six months ended June 30, 2002. Cost of license
fees for the six months ended June 30, 2003 is comprised of the amortization of
capitalized and purchased software costs of $1,688,000 and third party vendor license fees
of $595,000. Cost of license fees for the same period in 2002 is comprised of the
amortization of capitalized and purchased software costs of $1,297,000 and third party
vendor license fees of $954,000. The increase in amortization of capitalized and purchased
software costs relates primarily to amortization of the assets obtained from the
acquisition of SAI, which occurred in September 2002.




16
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|Cost
of services increased to $62,318,000 in the six months ended June 30, 2003, up $5,662,000
or 10% from $56,656,000 in the six months ended June 30, 2002. This increase was due
primarily to the $4,858,000 incremental increase in cost of services related to
Synavants operations. Excluding the results of Synavant, cost of services increased
$804,000 or 1% in the six months ended June 30, 2003 compared to the prior year period.
This increase is due to the additional costs from the increase in headcount due to the
acquisition of SAI in September 2002 as well as additional outside consultants related to
the integration work for our largest customer. These increases were offset by a decrease
in low-gross margin or reimbursable revenue.


GROSS MARGIN. Total gross margin for the six months ended June 30, 2003 was
50%, up from 49% for the six months ended June 30, 2002. For the reasons described above,
the Synavant acquisition negatively impacted gross margin for the six months ended June
30, 2003 by 1%. Excluding the results of Synavant, total gross margin was 51% for the six
months ended June 30, 2003.


Gross
margin for license fees was 57% in the six months ended June 30, 2003, down from 59% for
the six months ended June 30, 2002. The decrease in gross margin was primarily impacted by
decreasing license fee revenue as well as an increase in amortization of capitalized and
purchased software costs which relates primarily to amortization of the assets obtained
from the acquisition of SAI, which occurred in September 2002.


Gross
margin for services was 50% in the six months ended June 30, 2003, up from 48%. The
Synavant acquisition negatively impacted gross margin for services for the six months
ended June 30, 2003 by 1%. Excluding the impact of Synavant, gross margin for services was
51% in the six months ended June 30, 2003. This increase is driven by a decrease in the
amount of low gross margin or reimbursable revenue, increase in implementation revenues of
approximately 20% related to the integration work for our largest customer, increase in
technical service revenues of approximately 5% as well as growth of more than 100% in our
data business partially offset by additional costs from the increase in headcount due to
the acquisition of SAI in September 2002 as well as additional outside consultants related
to the integration work for our largest customer. Also contributing to margin improvement
were the efficiencies gained from the Companys cost reduction actions in the third
quarter of 2002.


SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES. SG&A
expenses increased to $41,222,000 in the six months ended June 30, 2003, up $2,235,000 or
6% from $38,987,000 in the six months ended June 30, 2002. As a percentage of revenues,
SG&A expenses decreased to 32% of revenues in the six months ended June 30, 2003, as
compared with 34% of revenues in the six months ended June 30, 2002. The increase in
SG&A reflects a $1,246,000 increase related to the acquisition of Synavant. Excluding
the results of Synavant, SG&A increased $989,000 or 3%. This increase reflects the
additional operating costs from the acquisition of SAI, higher employment costs, higher
professional fees and amortization expense related to definite lived assets from acquisitions,
partially offset by the impact of the Companys cost reduction actions in the third
quarter of 2002.


RESEARCH
AND DEVELOPMENT (R&D) EXPENSES. R&D expenses increased to
$5,912,000 in the six months ended June 30, 2003, up $829,000 or 16% from $5,083,000 in
the six months ended June 30, 2002. As a percentage of revenues, R&D expenses
increased slightly to 5% in the six months ended June 30, 2003, up from 4% in the six
months ended 2002. R&D expenses for the six months ended June 30, 2003 includes
$198,000 of costs recognized from Synavant subsequent to the acquisition. Excluding the
results of Synavant, R&D expenses increased $631,000 or 12% for the six months ended
June 30, 2003. This increase relates to higher employment costs due to an increase in
headcount from the acquisition of SAI.


PROVISION
FOR INCOME TAXES. The effective tax expense recorded in six months ended
June 30, 2003 was 43% as compared with 36% in the six months ended June 30, 2002. In
connection with the Synavant integration, the Company performed a reforecast of projected
taxable income by jurisdiction and recognized a full valuation allowance on net operating
loss carryforward for one of its foreign subsidiaries of approximately $608,000, which
increased the effective tax expense rate by 3%. Prior to the acquisition of Synavant, the
Companys forecasted effective tax expense rate for the six months ended June 30,
2003 was 40%. In July 2002, the State of New Jersey enacted new tax legislation that
adversely impacted the effective state tax rate of most companies operating in New Jersey.


LIQUIDITY AND CAPITAL
RESOURCES


We
finance our operations primarily through cash generated by operations. Net cash provided
by operating activities was $7,926,000 for the six months ended June 30, 2003, compared to
$3,809,000 for the six months ended June 30, 2002. This increase in cash provided by
operating activities was due primarily to increases in net income and cash collections
from accounts receivable and a decrease in the amount of accrued restructuring payments
offset by an increase in the amount of accrued expenses paid compared to the prior year
period. The increase in accrued expenses paid related primarily to the payment of
approximately $16 million of Synavant liabilities as of the acquisition date.


Cash
used in investing activities was $55,725,000 in the six months ended June 30, 2003,
compared to $15,991,000 in the six months ended June 30, 2002. The increase of $39,734,000
is attributable to the acquisition of Synavant offset by lower purchases of property and
equipment as well as no purchases of short term investments during the six months ended
June 30, 2003 compared to the prior year period.



17
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Cash
provided by financing activities was $2,279,000 in the six months ended June 30, 2003,
compared to $2,010,000 in the six months ended June 30, 2002. The increase of $269,000 is
attributable to an increase in stock option exercises during the six months ended June 30,
2003. Due to the timing of the disbursement of cash for the acquisition, the Company
borrowed $5,000,000 from its line of credit, which was paid back from accounts receivable
collections prior to June 30, 2003.


At
June 30, 2003, working capital was approximately $21,587,000. Total cash and investments
were 9% of total assets as of June 30, 2003, compared with 37% as of December 31, 2002.
The Companys days sales outstanding in accounts receivable was 94 days as of June
30, 2003 compared with 73 days as of December 31, 2002. Excluding the impact of Synavant,
the Companys days sales outstanding as of June 31, 2003 was 61 days. We believe that
available funds, anticipated cash flows from operations and our line of credit will
satisfy our currently projected working capital and capital expenditure requirements,
exclusive of cash required for possible acquisitions of businesses, products and
technologies, for the next twelve to eighteen months.


The
Company regularly evaluates opportunities to acquire products or businesses complementary
to our operations. Such acquisition opportunities, if they arise and are successfully
completed, may involve the use of cash or equity instruments.


Contractual Obligations
and Commitments


The
Company entered into a credit agreement as of June 16, 2003, in the amount of $30 million
with JPMorgan Chase Bank as the agent. The credit agreement replaces the $15 million credit facility,
which has been terminated. The credit agreement is available to finance working capital
needs and possible future acquisitions. The terms of this agreement require us to maintain
a minimum consolidated net worth, among other covenants, measured quarterly, which is
equal to $130 million, plus 50% of net income earned after April 1, 2003 and 75% of net
proceeds of any offering of new equity interests issued after June 30, 2003. This covenant
effectively limits the amount of any cash dividends. The credit facility expires on July
1, 2005. At June 30, 2003, there were no borrowings outstanding under the agreement and
the Company was in compliance with all of its covenant obligations.


As
of June 30, 2003, the Company did not have any material commitments for capital
expenditures. Our principal commitments at June 30, 2003 consisted primarily of
obligations under operating and capital leases as well as future minimum guarantees to
certain vendors. Future minimum payments on these obligations are as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          | Payments due by period
|------------------------- | ----------------------
|                          |                       
|
|                          |                       
|Capital Lease Obligations |                       
|                          |                       
|Minimum Guarantees        |                       
|                          |                       
|                          |                       
|Operating Leases          |                       
|                          |                       
|                          |                       
|Total                     |                       
|                          |                       

|As of June 30, 2003, letters of
credit for approximately $996,000 were outstanding.


The
Company has an agreement with a venture capital fund with a commitment to contribute
$1,000,000 to the fund, callable at the discretion of the general partner in $100,000
increments. As of June 30, 2003, $400,000 has been paid, with $600,000 of commitment
remaining. The agreement has a termination date of December 11, 2010, subject to extension
with the consent of a majority in interest of the limited partners.


FACTORS THAT MAY AFFECT
FUTURE RESULTS


OUR BUSINESS IS
HEAVILY DEPENDENT ON THE PHARMACEUTICAL INDUSTRY


Most
of our customer relationship management (CRM), sales force effectiveness (SFE) and data
products and services are currently used in connection with the marketing and sale of
prescription-only drugs. This market is undergoing a number of significant changes. These
include:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | the
 significant  consolidation  of the  pharmaceutical  industry  as well as the  timing
 and  sequencing  of sales to our               customers may reduce the number of our
existing and potential customers;
| |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | regulatory
changes that permit the over-the-counter sale of formerly prescription-only drugs;
| |  | - |  | ---------------------------------------------------------------------------------------------

| |  |  |  | increasing
Food and Drug Administration activism; and
| |  | - |  | -----------------------------------------------------

| |  |  |  | competitive
pressure on the pharmaceutical industry resulting from the continuing shift to delivery
of healthcare through managed care organizations.
| |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

|18
|--

---

|We
cannot assure you that we can respond effectively to any or all of these and other changes
in the marketplace. Our failure to do so could have a material adverse effect on our
business, operating results or financial condition.


WE DEPEND ON A FEW
MAJOR CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR REVENUES


Historically,
a limited number of our customers have contributed a significant percentage of the
Companys revenues. The Company anticipates that its operating results in any given
period will continue to depend significantly upon revenues from a small number of
customers. The loss of any of these customers (which could include loss through mergers
and acquisitions) could have a materially adverse effect on the Companys business.
We cannot make any assurances that we will retain our existing customers or attract new
customers that would replace the revenue that could be lost if one or more of these
customers failed to renew its agreement(s) with the Company.


BUSINESS AND ECONOMIC
PRESSURES ON OUR MAJOR CUSTOMERS MAY CAUSE A DECREASE IN DEMAND FOR OUR NEW PRODUCTS AND
SERVICES


Business
and economic pressures on our major customers may result in budget constraints that
directly impact their ability to purchase the Companys new products and services
offerings. We cannot assure you that any decrease in demand caused by these pressures will
not have a material adverse effect on our business, operating results or financial
condition.


OUR LENGTHY SALES AND
IMPLEMENTATION CYCLES MAKE IT DIFFICULT TO PREDICT OUR QUARTERLY REVENUES


The
selection of a CRM or SFE solution generally entails an extended decision-making process
by our customers because of the strategic implications and substantial costs associated
with a customers license or implementation of the solution. Given the importance of
the decision, senior levels of management of our customers are often involved in the
process and, in some instances, its board of directors may also be involved. As a result,
the decision-making process typically takes nine to eighteen months, and in certain cases
longer. Accordingly, we cannot fully control or predict the timing of our execution of
contracts with customers.


In
addition, an implementation process of three to six or more months before the software is
rolled out to a customers sales force is customary. However, if a customer were to
delay or extend its implementation process, our quarterly revenues may decline below
expected levels and could adversely affect our results of operations.


OUR FIXED COSTS MAY
LEAD TO FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS IF REVENUES FALL BELOW
EXPECTATIONS


We
establish our expenditure levels for product development, sales and marketing and some of
our other operating expenses based in large part on our expected future revenues and
anticipated competitive conditions. In particular, we frequently add staff in advance of
new business to permit adequate time for training. If the new business is subsequently
delayed, canceled or not awarded, we will have incurred expenses without the associated
revenues. In addition, we may increase sales and marketing expenses if competitive
pressures become greater than originally anticipated. Since only a small portion of our
expenses varies directly with our actual revenues, our operating results and profitability
are likely to be adversely and disproportionately affected if our revenues fall below our
targeted goals or expectations.


WE MAY BE UNABLE TO
SUCCESSFULLY INTRODUCE NEW PRODUCTS OR RESPOND TO TECHNOLOGICAL CHANGE


The
market for CRM and SFE products changes rapidly because of frequent improvements in
computer hardware and software technology. Our future success will depend, in part, on our
ability to:





19
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

| |  |  |  | use
available  technologies  and data sources to develop new products and services and to
enhance our current  products and               services;
| |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | introduce
new solutions that keep pace with developments in our target markets; and
| |  | - |  | -----------------------------------------------------------------------------------

| |  |  |  | address
the changing and increasingly sophisticated needs of our customers.
| |  | - |  | ---------------------------------------------------------------------------

|We
cannot assure you that we will successfully develop and market new products or product
enhancements that respond to technological advances in the marketplace, or that we will do
so in a timely fashion. We also cannot assure you that our products will adequately and
competitively address the needs of the changing marketplace.


Competition
for software products has been characterized by shortening product cycles. We may be
materially and adversely affected by this trend if the product cycles for our products
prove to be shorter than we anticipate. If that happens, our business, operating results
or financial condition could be adversely affected.


To
remain competitive, we also may have to spend more of our revenues on product research and
development than we have in the past. As a result, our results of operations could be
materially and adversely affected.


Further,
our software products are technologically complex and may contain previously undetected
errors or failures. We cannot assure you that, despite our testing, our new products will
be free from significant errors. Software errors could cause delays in the commercial
release of products until the errors have been corrected. Software errors may cause us to
be in breach of our agreements with customers, which could result in termination of the
agreements and monetary damages. Software errors may cause damage to our reputation and
cause us to commit significant resources to their correction. Errors that result in
termination of agreements, monetary damages, losses or delays could have a material
adverse effect on our business, operating results or financial condition.


INCREASED COMPETITION
MAY RESULT IN PRICE REDUCTIONS AND DECREASED DEMAND FOR OUR PRODUCTS AND SERVICES


There
are a number of other companies that sell CRM and SFE products and related services that
specifically target the pharmaceutical industry, including competitors that are actively
selling CRM and SFE software products in more than one country and competitors that also
offer CRM and SFE support services. Some of our competitors and potential competitors are
part of large corporate groups and have significantly greater financial, sales, marketing,
technology and other resources than we have.


While
we believe that the CRM and SFE software products and/or services offered by most of our
competitors do not address the variety of pharmaceutical customer needs that our solutions
address, increased competition may require us to reduce the prices for our products and
services. Increased competition may also result in decreased demand for our products and
services.


We
believe our ability to compete depends on many factors, some of which are beyond our
control, including:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | the
number and success of new market entrants supplying competing CRM and SFE products or
support services;
| |  | - |  | -----------------------------------------------------------------------------------------------------------

| |  |  |  | expansion
of product lines by, or consolidation among, our existing competitors; and
| |  | - |  | ------------------------------------------------------------------------------------

| |  |  |  | development
and/or operation of in-house CRM and SFE software products or services by our customers and
potential customers.
| |  | - |  | ----------------------------------------------------------------------------------------------------------------------------

|Any one of these factors can lead to
price reductions and/or decreased demand and we cannot assure you that we will be able to
continue to compete successfully or that competition will not have a material adverse
effect on our business, operating results or financial condition.


WE MAY NOT BE ABLE TO COMPETE  EFFECTIVELY IN THE  INTERNET-RELATED  PRODUCTS AND SERVICES MARKET NOR CAN WE PROVIDE ASSURANCES
THAT THE DEMAND FOR INTERNET-RELATED PRODUCTS AND SERVICES WILL INCREASE


The
success of parts of our business will depend, in part, on our ability to continue
developing Internet-related products and responding to technological advances and changing
commercial uses of the Internet. We cannot assure you that our Internet-related products
and services will adequately respond to such technological advances and changing uses. Nor
can we assure you that the demand for Internet-related products and services will
increase.


OUR INTERNATIONAL
OPERATIONS HAVE RISKS THAT OUR DOMESTIC OPERATIONS DO NOT


The
sale of our products and services in foreign countries accounts for, and is expected in
the future to account for, a material part of our revenues. These sales are subject to
risks inherent in international business activities, including:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | any
adverse change in the political or economic environments in these countries or regions;
| |  | - |  | -------------------------------------------------------------------------------------------

| |  |  |  | any
adverse change in tax, tariff and trade or other regulations;
| |  | - |  | -----------------------------------------------------------------

| |  |  |  | the
absence or significant lack of legal protection for intellectual property rights;
| |  | - |  | -------------------------------------------------------------------------------------

| |  |  |  | exposure
to exchange rate risk for service revenues which are denominated in currencies other than
U.S. dollars; and
| |  | - |  | --------------------------------------------------------------------------------------------------------------------

| |  |  |  | difficulties
in managing an organization spread over various jurisdictions.
| |  | - |  | ---------------------------------------------------------------------------

|20
|--

---

|WE MAY FACE RISKS
ASSOCIATED WITH OUR ACQUISITIONS


Our
business may be materially and adversely affected as a result of the risks associated with
our acquisitions including our recent acquisitions of Synavant and SAI. As part of our
business strategy, in the future we may also acquire businesses that offer
complementary products, services or technologies. These acquisitions are accompanied by
substantial risks, including:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | the
effect of the acquisitions on our financial and strategic position;
| |  | - |  | -----------------------------------------------------------------------

| |  |  |  | our
inability to successfully integrate the acquired business as we had originally expected;
| |  | - |  | --------------------------------------------------------------------------------------------

| |  |  |  | the
failure of an acquired business to further our strategies;
| |  | - |  | --------------------------------------------------------------

| |  |  |  | our
inability to achieve the expected cost and business synergies;
| |  | - |  | ------------------------------------------------------------------

| |  |  |  | the
difficulty of integrating the acquired business;
| |  | - |  | ----------------------------------------------------

| |  |  |  | the
diversion of our management's attention from other business concerns;
| |  | - |  | -------------------------------------------------------------------------

| |  |  |  | the
impairment of relationships with customers of the acquired business;
| |  | - |  | ------------------------------------------------------------------------

| |  |  |  | unexpected
problems, liabilities, risks or costs associated with the acquired business;
| |  | - |  | ---------------------------------------------------------------------------------------

| |  |  |  | the
potential loss of key employees of the acquired company; and
| |  | - |  | ----------------------------------------------------------------

| |  |  |  | the
maintenance of uniform, company-wide standards, procedures and policies.
| |  | - |  | ----------------------------------------------------------------------------

|These
factors could have a material adverse effect on our revenues and earnings. We expect that
the consideration paid for future acquisitions, if any, could be in the form of cash,
stock, rights to purchase stock, or a combination of these. To the extent that we issue
shares of stock or other rights to purchase stock in connection with any future
acquisition, existing shareholders will experience dilution and potentially decreased
earnings per share.


We
are currently integrating the Synavant business with our other operations. While we have
had success integrating acquired entities into our operations in the past, we cannot
guarantee that we will successfully integrate this new business into our operations.


AN INABILITY TO MANAGE
GROWTH COULD ADVERSELY AFFECT OUR BUSINESS


To
manage our growth effectively we must continue to strengthen our operational, financial
and management information systems and expand, train and manage our work force. However,
we may not be able to do so effectively or on a timely basis. Failure to do so could have
a material adverse effect upon our business, operating results or financial condition.


WE MAY FACE RISKS
ASSOCIATED WITH EVENTS WHICH MAY AFFECT THE WORLD ECONOMY


The
terrorist attacks of September 11, 2001 and subsequent world events weakened the world
economy. While we did not experience any material impact to our business during the time
period immediately following September 11, 2001, we cannot assure you that the resulting
impact which the terrorist attacks, threat of future terrorist activity, current U.S.
military action in the Middle East and elsewhere, or hostilities in the Middle East, Asia
and other geographical areas, had or may have on the U.S. and world economies will not
adversely affect our business or the businesses of our customers.


CATASTROPHIC EVENTS
COULD NEGATIVELY AFFECT OUR INFORMATION TECHNOLOGY INFRASTRUCTURE


The
efficient operation of our business, and ultimately our operating performance, depends on
the uninterrupted use of our critical business and information technology systems. Many of
these systems require the use of specialized hardware and other equipment that is not
readily available. Although we maintain these systems at more than one location, a natural
disaster, a fire or other catastrophic event at any of these locations could result in the
destruction of these systems. In such an event, the replacement of these systems and
restoration of archived data and normal operation of our business could take several days
to several weeks, or more. During the intervening period when our critical business and
information technology systems are fully or partially inoperable, our ability to conduct
normal business operations could be significantly and adversely impacted and as a result
our business, operating results and financial conditions could be adversely affected.



21
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|OUR SUCCESS DEPENDS ON
RETAINING OUR KEY SENIOR MANAGEMENT TEAM AND ON ATTRACTING AND RETAINING QUALIFIED
PERSONNEL


Our
future success depends, to a significant extent, upon the contributions of our executive
officers and key sales, technical and customer service personnel. Our future success also
depends on our continuing ability to attract and retain highly qualified technical and
managerial personnel. Due to competition for such personnel, we have at times experienced
difficulties in recruiting qualified personnel and we may experience such difficulties in
the future. Any such difficulties could adversely affect our business, operating results
or financial condition.


OUR BUSINESS DEPENDS
ON PROPRIETARY TECHNOLOGY THAT WE MAY NOT BE ABLE TO PROTECT COMPLETELY


We
rely on a combination of trade secret, copyright and trademark laws, non-disclosure and
other contractual agreements and technical measures to protect our proprietary technology.
We cannot assure you that the steps we take will prevent misappropriation of this
technology. Further, protective actions we have taken or will take in the future may not
prevent competitors from developing products with features similar to our products. In
addition, effective copyright and trade secret protection may be unavailable or limited in
certain foreign countries. In response to a request by our customers, we have also on
occasion entered into agreements which require us to place our source code in escrow to
secure our service and maintenance obligations.


Further,
while we believe that our products and trademarks do not infringe upon the proprietary
rights of third parties, third parties may assert infringement claims against us in the
future that may result in the imposition of damages or injunctive relief against us. In
addition, any such claims may require us to enter into royalty arrangements. Any of these
results could materially and adversely affect our business, operating results or financial
condition.


IF
OUR THIRD PARTY VENDORS ARE UNABLE TO SUCCESSFULLY RESPOND TO TECHNOLOGICAL CHANGE OR IF
WE DO NOT MAINTAIN OUR RELATIONSHIPS WITH THIRD PARTY VENDORS, INTERRUPTIONS IN THE SUPPLY
OF OUR PRODUCTS MAY RESULT


Some
of our software is provided by third party vendors. If our third party vendors are unable
to successfully respond to technological change or if our relationships with certain third
party vendors are terminated, we may experience difficulty in replacing the functionality
provided by the third party software currently offered with our products. Although we
believe there are other sources for all of our third party software, any significant
interruption in the supply of these products could adversely impact our sales unless and
until we can secure another source. The absence of or any significant delay in the
replacement of functionality provided by third party software in our products could
materially and adversely affect our sales.


THE RESULTS DERIVED
FROM CURRENT AND FUTURE STRATEGIC RELATIONSHIPS MAY PROVE TO BE LESS FAVORABLE THAN
ANTICIPATED


We
are involved in a number of strategic relationships with third parties and are frequently
pursuing others. Should these relationships, or any of them, prove to be more costly than
anticipated or fail to meet revenue expectations or other anticipated synergies, we cannot
guarantee that such events will have no material impact upon our business, operating
results or financial condition.


OUR DATA SOLUTIONS
ARE DEPENDENT UPON STRATEGIC RELATIONSHIPS WHICH, IF NOT MAINTAINED, COULD UNDERMINE THE
CONTINUED VIABILITY OF THESE SOLUTIONS


Our
data and analytics solutions are sourced, in part, from data provided through strategic
relationships. The termination of any of these relationships could diminish the breadth or
depth of our data solutions and we cannot guarantee that this would not negatively impact
our business, operating results or financial condition.


FEDERAL AND STATE LAWS
AND REGULATIONS COULD DEPRESS THE DEMAND FOR SOME OF OUR SOLUTIONS


While
we believe our data and analytics solutions are not violative of current federal or state
laws and regulations pertaining to patient privacy or health information, including the
Health Insurance Portability and Accountability Act of 1996 (HIPAA), we cannot guarantee
that future laws or regulations or interpretations of existing laws and statutes will not
impact negatively upon our ability to market these solutions or cause a decrease in demand
for such solutions from customers that see an increased risk in any such new laws or
regulations.


GOVERNMENTAL REGULATION
MAY MATERIALLY AND ADVERSELY AFFECT THE COMPANYS ABILITY TO DISTRIBUTE CONTROLLED
SUBSTANCES THROUGH THE MAIL



Through
the interactive marketing business we acquired in the Synavant acquisition, we currently
distribute controlled substances to doctors offices through the mail as part of
certain interactive marketing programs provided on behalf of pharmaceutical
manufacturers.  It is important to the business that this practice of distributing
prescription-only drugs continues. Future legislation may restrict our ability to provide
these types of services.  If any such legislation is enacted, it could have a
material and adverse effect on our business, operating results and financial condition.





22
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------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|DIFFICULTIES IN
SUBLEASING, SELLING OR OTHERWISE DISPOSING OF CERTAIN OF OUR FACILITIES MAY NEGATIVELY
IMPACT UPON OUR EARNINGS


We
are currently marketing our Piscataway, New Jersey facility. We also expect to sublease
all or a portion of certain other facilities, including facilities acquired as part of the
Synavant acquisition. If the recent real estate downturn continues, it could negatively
impact upon our ability to effectively market these facilities. An inability to
successfully dispose or sublet, as applicable, any of these facilities or to obtain
favorable pricing or sublease terms could negatively impact our earnings.


UNANTICIPATED CHANGES IN
OUR ACCOUNTING POLICIES MAY BE REQUIRED BECAUSE OF MANDATES BY ACCOUNTING STANDARDS
SETTING ORGANIZATIONS AND COULD HAVE A MATERIAL IMPACT ON OUR FINANCIAL STATEMENTS


In
reporting our financial results we rely upon the accounting policies and standards then in
effect at the time of our report. Future regulations, standards or interpretations may
require us to adjust or restate financial results previously reported. A required
restatement could have an unfavorable impact upon past financial results or current
comparison to previous results.


PROVISIONS OF OUR
CHARTER DOCUMENTS AND NEW JERSEY LAW MAY DISCOURAGE AN ACQUISITION OF DENDRITE


Provisions
of our Restated Certificate of Incorporation, as amended, our By-laws, as amended, and New
Jersey law may make it more difficult for a third party to acquire us. For example, the
Board of Directors may, without the consent of the stockholders, issue preferred stock
with rights senior to those of the common stock. In addition, the Company has a
Shareholder Rights Plan which may limit the ability of a third party to attempt a hostile
acquisition of the Company.


OUR COMMON STOCK MAY
BE SUBJECT TO PRICE FLUCTUATIONS


The market price of our common stock
may be significantly affected by the following factors:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | the
announcement or the introduction of new products by us or our competitors;
| |  | - |  | ------------------------------------------------------------------------------

| |  |  |  | quarter-to-quarter
 variations in our operating  results or changes in revenue or earnings  estimates or
failure to meet or               exceed revenue or earnings estimates;
| |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | market
conditions in the technology, healthcare and other growth sectors;
| |  | - |  | -------------------------------------------------------------------------

| |  |  |  | general
 consolidation  in the  healthcare  information  industry  which may  result in the
market  perceiving  us or other               comparable companies as potential
acquisition targets; and
| |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | future
acquisitions.
| |  | - |  | --------------------

|Further,
the stock market has experienced on occasion extreme price and volume fluctuations. The
market prices of the equity securities of many technology companies have been especially
volatile and often have been unrelated to the operating performance of such companies.
These broad market fluctuations may have a material adverse effect on the market price of
our common stock.


ITEM 4.      Controls and
Procedures


The Companys Chief Executive
Officer and Chief Financial Officer, with the assistance of other members of the
Companys management, have evaluated the effectiveness of the Companys
disclosure controls and procedures as of the end of the period covered by this Quarterly
Report on Form 10-Q. Based on such evaluation, the Companys Chief Executive Officer
and Chief Financial Officer have concluded that the Companys disclosure controls and
procedures are effective.


The Companys Chief Executive
Officer and Chief Financial Officer have also concluded that there have not been any
changes in the Companys internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, the Companys
internal control over financial reporting.




23
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|PART II.       OTHER INFORMATION


ITEM 4.     Submission
of Matters to a Vote of Security Holders
|--------------------------------------------------------------------------------------------------

| | The
Companys Annual Meeting of Shareholders was held on May 20, 2003. The following was
considered and voted upon at the Annual Meeting:
| | -----------------------------------------------------------------------------------------------------------------------------------------

| | Election
of Directors. The following directors were nominated for election to the Board of
Directors until the next Annual Meeting or until their successors are duly chosen and
qualified: John E. Bailye, John A. Fazio, Bernard M. Goldsmith, Edward J. Kfoury, Paul A.
Margolis, John H. Martinson, Terence H. Osborne and Patrick J. Zenner. The votes cast and
withheld for such nominees were as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Name                 | For | Withheld  
|-------------------- | --- | ----------
|John E. Bailye       |     | 36,747,708
|John A. Fazio        |     | 37,510,475
|Bernard M. Goldsmith |     | 36,379,374
|Edward J. Kfoury     |     | 36,580,137
|Paul A. Margolis     |     | 37,510,550
|John H. Martinson    |     | 37,510,250
|Terence H. Osborne   |     | 34,704,128
|Patrick J. Zenner    |     | 37,498,400

|Based
on these voting results, each of the directors nominated was elected.


ITEM 6.     
Exhibits and Reports on Form 8-K


(i)    Exhibits
|---------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.39 |  | Distribution Agreement between IMS Health Incorporated and Synavant Inc. dated as of
August 31, 2000.
| |  | ----- |  | -----------------------------------------------------------------------------------------------------

| |  | 10.40 |  | Amendment
to Distribution Agreement between IMS Health Incorporated and Synavant Inc. dated as of
June 16, 2003.
| |  | ----- |  | ----------------------------------------------------------------------------------------------------------------

| |  | 10.41 |  | Restated Xponent Data License Agreement between IMS Health  Incorporated and Synavant
Inc. dated as of April                   26, 2001.
| |  | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.42 |  | Amendment
to Restated Xponent Data License  Agreement  between IMS Health  Incorporated,  Synavant
Inc. and Dendrite                   International, Inc. dated as of June 16, 2003.
| |  | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.43 |  | Synavant
Inc. 2000 Savings Equalization Plan.
| |  | ----- |  | ---------------------------------------------

| |  | 10.44 |  | Cross License between IMS Health Incorporated and
Synavant Inc. dated as of August 31, 2000.
| |  | ----- |  | --------------------------------------------------------------------------------------------

| |  | 31.1 |  | Certification
 of John E.  Bailye,  Chairman of the Board and Chief  Executive  Officer of the
 Company,  pursuant to                   Securities Exchange Act Rule 13a-14(a).
| |  | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 31.2 |  | Certification
of Kathleen E. Donovan,  Senior Vice President and Chief Financial Officer of the
Company,  pursuant to                   Securities Exchange Act Rule 13a-14(a).
| |  | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 32 |  | Certifications
 Pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of                   2002, signed by John E. Bailye,  Chairman of the
Board and Chief Executive  Officer of the Company,  and Kathleen E.
                  Donovan, Senior Vice President and Chief Financial Officer of the
Company.
| |  | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(ii)                 Reports
on Form 8-K

|(a) |  | The Company filed a Current Report on Form 8-K on July 1, 2003, pursuant to
               Item 2. Acquisition or Disposition of Assets and Item 7.
               Financial Statements, Pro Forma Financial Information and Exhibits
               relating to its acquisition of Synavant Inc.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | The Company filed a Current Report on Form 8-K on June 20, 2003, pursuant to
               Item 5. Other Events and Regulation FD Disclosure and Item 7.
               Financial Statements, Pro Forma Financial Information and Exhibits
               relating to a credit agreement by and among the Company, certain lenders and
               JPMorgan Chase Bank.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | The Company filed a Current Report on Form 8-K on May 20, 2003, pursuant to
               Item 5. Other Events and Regulation FD Disclosure and Item 7.
               Financial Statements, Pro Forma Financial Information and Exhibits
               relating to an amendment to the Agreement and Plan of Merger by and among the
               Company, Synavant Inc. and Amgis Acquisition Co. and a promissory note by and
               between the Company and Synavant Inc.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) |  | The Company filed a Current Report on Form 8-K on May 19, 2003, pursuant to
               Item 5. Other Events and Regulation FD Disclosure and Item 7.
               Financial Statements, Pro Forma Financial Information and Exhibits
               relating to an amendment to the Agreement and Plan of Merger by and among the
               Company, Synavant Inc. and Amgis Acquisition Co.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) |  | The Company filed a Current Report on Form 8-K on May 12, 2003, pursuant to
               Item 5. Other Events and Regulation FD Disclosure and Item 7.
               Financial Statements, Pro Forma Financial Information and Exhibits
               relating to the Agreement and Plan of Merger by and among the Company, Synavant
               Inc. and Amgis Acquisition Co.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) |  | The Company furnished a Current Report on Form 8-K on April 24, 2003, pursuant
               to Item 7. Financial Statements, Pro Forma Financial Information and
               Exhibits, Item 9. Regulation FD Disclosure and Item 12.
               Results of Operations and Financial Condition relating to its financial
               results for the first quarter of 2003.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|24
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---

|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 thereunto duly authorized.


Date: August 13, 2003
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | By:  JOHN E. BAILYE
John E. Bailye, Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
| |  | ---------------------------------------------------------------------------------------------------------------------------------

| |  | By:  KATHLEEN E. DONOVAN
Kathleen E. Donovan, Senior Vice President
and Chief Financial Officer
(Principal Financial Officer)
| |  | -------------------------------------------------------------------------------------------------------------------------------------------

|25
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