|SECURITIES 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 March 31, 2002

[   ] 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 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
973-425-1200

(Address, including zip code, and telephone
number (including area code) of registrants principal executive office)



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 the number of shares outstanding of each of the
issuers classes of common stock, as of the last practicable date: at May 3, 2002 there were 39,881,902 shares of
common stock outstanding.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|DENDRITE INTERNATIONAL, INC.

INDEX
|-----------------------------------

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

|PART I. |  | FINANCIAL INFORMATION | 3
|------- |  | --------------------- | -

|ITEM 1. |  | Financial Statements (unaudited) | 3
|------- |  | -------------------------------- | -

| |  | Consolidated Statements of Operations 
          
Three months ended March 31, 2002 and 2001 | 3
| |  | -------------------------------------------------------------------------------------------- | -

| |  | Consolidated Balance Sheets 
          
March 31, 2002 and December 31, 2001 | 4
| |  | ---------------------------------------------------------------------------- | -

| |  | Consolidated Statements of Cash Flows
          
Three months ended March 31, 2002 and 2001 | 5
| |  | ------------------------------------------------------------------------------------------- | -

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

|ITEM 2. |  | Managements Discussion and Analysis of
        Financial Condition and Results of Operations | 8
|------- |  | --------------------------------------------------------------------------------------------- | -

|PART II. |  | OTHER INFORMATION | 16
|-------- |  | ----------------- | --

|ITEM 5. |  | Other Information | 16
|------- |  | ----------------- | --

|ITEM 6. |  | Exhibits and Reports on Form 8-K | 16
|------- |  | -------------------------------- | --

|Signatures |  |  | 17
|---------- |  |  | --

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|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 March 31,
|----------------------------------- | ----------------------------
|                                    | 2002                        
|Revenues:                           |                             
|License fees                        |                             
|Services                            |                             
|                                    |                             
|                                    |                             
|                                    |                             
|Cost of revenues:                   |                             
|Cost of license fees                |                             
|Cost of services                    |                             
|                                    |                             
|                                    |                             
|                                    |                             
|Gross margin                        |                             
|                                    |                             
|Operating expenses:                 |                             
|Selling, general and administrative |                             
|Research and development            |                             
|                                    |                             
|                                    |                             
|                                    |                             
|Operating income                    |                             
|Interest income                     |                             
|Other income/(expense)              |                             
|                                    |                             
|Income before income                |                             
|Income taxes                        |                             
|                                    |                             
|Net income                          |                             
|                                    |                             
|Net income per share:               |                             
|Basic                               |                             
|                                    |                             
|Diluted                             |                             
|                                    |                             
|Shares used in computing net income |                             
|per share:                          |                             
|Basic                               |                             
|                                    |                             
|Diluted                             |                             
|                                    |                             

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

---

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

|                                                           | March 31,2002 | December 31,2001
|---------------------------------------------------------- | ------------- | ----------------
|Assets                                                     |               |                 
|Current Assets:                                            |              
|Cash and cash equivalents                                  |               | $   63,600      
|Short-term investments                                     |               | 6,355           
|Accounts receivable, net                                   |               | 32,691          
|Prepaid expenses and other                                 |               | 5,951           
|Prepaid taxes                                              |               | 3,540           
|Deferred taxes                                             |               | 6,106           
|                                                           |               |                 
|Total current assets                                       |               | 118,243         
|                                                           |               |                 
|Property and equipment, net                                |               | 25,993          
|Facility held for sale                                     |               | 8,732           
|Other assets                                               |               | 100             
|Goodwill, net                                              |               | 4,830           
|Capitalized software development costs, net                |               | 5,463           
|Deferred taxes                                             |               | 1,571           
|                                                           |               |                 
|                                                           |               | $ 164,932       
|                                                           |               |                 
|Liabilities and Stockholders Equity                       |              
|Current Liabilities:                                       |              
|Accounts payable                                           |               | $     3,228     
|Accrued compensation and benefits                          |               | 5,081           
|Other accrued expenses                                     |               | 13,211          
|Accrued restructuring charge                               |               | 2,551           
|Deferred rent                                              |               | 29              
|Deferred revenues                                          |               | 7,510           
|                                                           |               |                 
|Total current liabilities                                  |               | 31,610          
|                                                           |               |                 
|Other non-current liabilities                              |               | 517             
|                                                           |               |                 
|Stockholders Equity                                       |              
|Preferred Stock, no par value, 10,000,000 shares           |              
|authorized, none issued                                    |               | --              
|Common Stock, no par value, 150,000,000 shares authorized, |              
|41,707,375 and 41,598,923 shares issued; 39,762,175 and    |              
|39,653,723 shares outstanding                              |               | 90,215          
|Retained earnings                                          |               | 65,013          
|Deferred compensation                                      |               | (108            
|Accumulated other comprehensive loss                       |               | (2,908          
|Less treasury stock, at cost                               |               | (19,407         
|                                                           |               |                 
|Total stockholders' equity                                 |               | 132,805         
|                                                           |               |                 
|                                                           |               | $ 164,932       
|                                                           |               |                 

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

---

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

|                                                                   | Three Months Ended March 31,
|------------------------------------------------------------------ | ----------------------------
|                                                                   | 2002                        
|Operating activities:                                              |                             
|Net income                                                         |                             
|Adjustments to reconcile net income to net cash                    |                             
|provided by operating activities:                                  |                             
|Depreciation and amortization                                      |                             
|Amortization of deferred compensation                              |                             
|Changes in assets and liabilities, net of effect from acquisition: |                             
|Decrease in accounts receivable                                    |                             
|Increase in prepaid expenses and other                             |                             
|Increase in other assets                                           |                             
|Decrease (increase) in prepaid income taxes                        |                             
|(Decrease) increase in accounts payable and accrued expenses       |                             
|Increase (decrease) in deferred rent                               |                             
|Decrease in accrued restructuring charge                           |                             
|(Decrease) increase 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                                    |                             
|Purchases of property and equipment                                |                             
|Additions to capitalized software development costs                |                             
|                                                                   |                             
|Net cash used in investing activities                              |                             
|                                                                   |                             
|Financing activities:                                              |                             
|Purchase of treasury stock                                         |                             
|Issuance of common stock                                           |                             
|                                                                   |                             
|Net cash provided by (used in) financing activities                |                             
|                                                                   |                             
|                                                                   |                             
|Effect of exchange rate changes on cash                            |                             
|                                                                   |                             
|Net (decrease) increase 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.
|----------------------------------------------------------------

---

|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 only 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 month periods ended March 31, 2002 and 2001. For further
information, refer to the consolidated financial statements and notes thereto, included
in the Companys Annual Report on Form 10-K for the year ended December 31, 2001.


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 months ended March 31, 2002 and 2001,
common stock equivalents used in computing diluted net income per share were 503,000 and
910,000 shares, respectively.


3.  Comprehensive Income


Assets
and liabilities of the Companys wholly-owned international subsidiaries are
translated at their respective year-end exchange rates and revenues and expenses are
translated at average currency exchange rates for the period. The resulting translation
adjustments are included as Accumulated other comprehensive loss and are
reflected as a separate component of stockholders equity. Total after-tax
comprehensive income for the three months ended March 31, 2002 and 2001 was $3,331,000
and $959,000, respectively.


4.  Reclassifications


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


5.  Restructuring Charge


On
June 14, 2001, the Company announced a restructuring of its business operations to
reflect a lower expected revenue growth model in the near term. The restructuring plan
consisted of the resizing of the Companys personnel by a reduction of 155 employees
and the elimination of 35 independent contractors across various departments in the
United States and Europe as well as 192 additional personnel associated with the closing
of the Companys facility in Stroudsburg, PA. The Stroudsburg, PA operations are
being relocated to the Companys facilities in New Jersey, Virginia and a new
facility in Bethlehem, PA. The exit costs have been included in the restructuring charge
while the moving and other start-up costs are not included in this restructuring charge
and are being expensed as incurred.


During
the second quarter of 2001, the Company recorded a charge of $6,134,000 associated with
this restructuring. This charge was reduced by $24,000 to $6,110,000 in the fourth
quarter of 2001 due to the variance between the amounts originally recorded and managements
current estimate of the total costs of the restructuring. Of the restructuring charge,
$2,551,000 related primarily to severance has not been paid as of March 31, 2002 and,
accordingly, is classified as accrued restructuring charge in the accompanying
consolidated balance sheet. The restructuring charges were based upon formal plans
approved by the Companys management using the information available at the time.
Management of the Company believes this provision will be adequate to cover the costs
incurred relating to the restructuring. The Company anticipates that the accrued
restructuring balance of $2,551,000 as of March 31, 2002 will be paid during 2002. The
activity on the accrued restructuring charge balance as of March 31, 2002 is summarized
in the table below:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                  |  | AccruedRestructuring
as of December 31,2001 |  | Cash Paymentsin 2002 |  | AccruedRestructuringas
of March 31,2002 | 
|--------------------------------- |  | ------------------------------------------- |  | -------------------- |  | --------------------------------------- | 
|                                  |  |                                             |  |                      |  |                                        
|Termination payments to employees |  | $2,218,000                                  |  | $   134,000          |  | $2,084,000                              | 
|Facility exit costs               |  | 495,000                                     |  | 62,000               |  | 433,000                                 | 
|Contract termination and other    | 
|restructuring costs               |  | 237,000                                     |  | 203,000              |  | 34,000                                  | 
|                                  |  |                                             |  |                      |  |                                        
|                                  |  | $2,950,000                                  |  | $   399,000          |  | $2,551,000                              | 
|                                  |  |                                             |  |                      |  |                                        

---

|6.  Customer and
Geographic Segment Data


In the
three months ended March 31, 2002, the Company derived approximately 49% of its revenues
from its two largest customers. In the three months ended March 31, 2001, the Company
derived approximately 43% of its revenues from its two largest customers.


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 Statement of Financial Accounting Standards (SFAS)
No. 131, Disclosure About Segments of an Enterprise and Related Information.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     | For the Three Months Ended March 31,
|-------------------- | ------------------------------------
|                     | 2002                                
|Revenues:            |                                     
|United States        |                                     
|All Other            |                                     
|                     |                                     
|                     |                                     
|                     |                                     
|                     |                                     
|                     |                                     
|Identifiable assets: |                                     
|United States        |                                     
|All Other            |                                     
|                     |                                     
|                     |                                     
|                     |                                     

|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.


7.  Impact Of Recently
Issued Accounting Standards


Effective
July 1, 2001 the Company adopted SFAS No. 141, Business Combinations (SFAS No.
141) and effective January 1, 2002 the Company adopted SFAS No. 142, Goodwill and
other Intangible Assets (SFAS No. 142). SFAS No. 141 requires business combinations
initiated after June 30, 2001 to be accounted for using the purchase method of
accounting. It also specifies the types of acquired intangible assets that are required
to be recognized and reported separate from goodwill. SFAS No. 142 requires that goodwill
and certain intangibles no longer be amortized, but instead tested for impairment at
least annually. SFAS No. 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 No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of (SFAS No. 121) which
was superceded by SFAS No. 144, Accounting for Impairment of Long-Lived Assets (SFAS
144). Based on the Companys analysis, there was no impairment of goodwill upon
adoption of SFAS No. 142 on January 1, 2002. The Company intends to conduct its annual
impairment testing of goodwill during the fourth quarter of each year.


Intangible
assets with identifiable useful lives that are subject to amortization consist of
developed capitalized software development costs. Accumulated amortization related to
developed capitalized software development costs was $9,996,000 and $9,348,000 at March
31, 2002 and December 31, 2001, respectively.


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

| | Year ending December 31, | 
| | ------------------------ | 
| | 2002                     | 
| | 2003                     | 
| | 2004                     | 
| | 2005                     | 
| | 2006                     | 
| | 2007 and thereafter      | 
| |                         
| |                          | 

|There
were no changes in the carrying amount of goodwill during the three months ended March
31, 2002.
|------------------------------------------------------------------------------------------------------

---

|The
pro forma results of operations for the three months ended March 31, 2001 assuming the
provisions of SFAS No. 142 were applied as follows:
|----------------------------------------------------------------------------------------------------------------------------------------------

|                                                            | March 31, 2001
|----------------------------------------------------------- | --------------
|                                                            |               
|Income from continuing operations (as reported)             |               
|Add back amortization of goodwill, net of income tax effect |               
|                                                            |               
|Adjusted income from continuing operations                  |               
|                                                            |               
|Basic and diluted net loss per common share:                |               
|Income from continuing operations (as reported)             |               
|Add back amortization of goodwill, net of income tax effect |               
|                                                            |               
|Adjusted income from continuing operations                  |               
|                                                            |               

|In
October 2001, the FASB issued SFAS No. 144, Accounting for Impairment or Disposal of
Long-lived Assets.  SFAS No. 144 supercedes SFAS No. 121, Accounting for the Impairment of
Long-lived Assets and for Long-Lived Assets to be Disposed Of, and addresses financial
accounting and reporting for the impairment or disposal of long-lived assets. This
statement is effective for fiscal years beginning after December 15, 2001. The Company
adopted this statement on January 1, 2002, and as a result, the adoption did not have an
impact on the Companys financial position or results of operations.


In
November 2001, the Financial Accounting Standards Board issued Emerging Issues Task Force
Rule No. 01-14, Income Statement Characterization of Reimbursements Received for Out-of-Pocket Expenses
Incurred  (EITF 01-14). EITF 01-14 requires that in cases where the contractor
acts as a principal, reimbursements received for out-of-pocket expenses incurred be
characterized as revenue and the associated costs be included as cost of services in
the income statement.


The Company applied
EITF 01-14 for the quarter ended March 31, 2002 and, as required, has also reclassified comparative
financial information for the quarter ended March 31, 2001.  The impact of applying this pronouncement was
to increase revenues and cost of services by $1,532,000 for the three months ended March 31, 2002 and to increase revenues and
cost of services by $933,000 for the three months ended March 31, 2001.  The implementation of EITF 01-14 has no impact upon earnings.


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


FORWARD-LOOKING
STATEMENTS


This
Form 10-Q contains certain forward-looking statements that we believe are within the
meaning of Section 27A of the Securities Act of 1933 and Section 21-E of the Securities
Exchange Act of 1934, and 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, financial
position and objectives of management. Those statements in this Form 10-Q containing the
words believes, anticipates, plans, expects,
looks, may, will or similar statements or variations
of such terms 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 industry. All such forward-looking statements involve risks and
uncertainties, including those risks identified 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 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, changes in assumptions or changes
in other factors affecting such forward-looking statements.


OVERVIEW


In
1991, Dendrite succeeded a business co-founded in 1986 by John E. Bailye, the Companys
Chairman and Chief Executive Officer. The business was established to provide sales force
automation solutions, which has expanded into our current solutions offerings. These
solutions enable companies to manage, coordinate, and control the activities of large
sales forces in complex selling environments, primarily in the pharmaceutical industry.
Today, our solutions combine software products with a wide range of specialized support
services. These services include software implementation, technical and hardware support,
and sales force support. We also offer analytical and consulting services and clinical
trial services. We develop, implement, and service sales force software products through
our own sales, support, and technical personnel located in 29 offices worldwide.


The
United States, the United Kingdom, France and Japan are currently our main markets. 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%
and 21% of our total revenues outside the United States during the three months ended
March 31, 2002 and 2001, respectively. Our operating profits by geographic segment are
shown in Note 5 of the Notes to Unaudited Consolidated Financial Statements.


CRITICAL ACCOUNTING
POLICIES


Financial
Reporting Release No. 60, which was recently released by the Securities and Exchange
Commission, 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 the 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 and impairments and income taxes.


The
Company charges customers license fees to use its proprietary computer software.
Customers generally pay one-time fees for perpetual licenses based upon the number of
users, territory covered, and the particular software licensed by the customer. The
Company generally recognizes license fees as revenue using the percentage-of-completion
method over a period of time that commences with the execution of the license agreement
and ends when the product configuration is complete and it is ready for use in the field.
This period of time usually includes initial configuration and concludes with quality
assurance and testing. When there is no initial configuration, the Company generally
recognizes the license fees from those products upon delivery as the services to be
provided are not essential to the functionality of the software. Additionally, license
revenues will be recognized immediately when the user count for previously delivered
software increases. The Companys software maintenance usually begins immediately
after an initial warranty period. The portion of the license fee associated with the
warranty period is unbundled from the license fee and is recognized as maintenance
revenue ratably over the warranty period. The Company does not recognize any license fees
unless persuasive evidence of an arrangement exists, delivery has occurred, the license
amount is fixed or determinable and collectability is probable.


The
Company recognizes license fees as revenue from certain third party software products,
which are embedded into the Companys products. These license fees are recognized as
revenue using the percentage-of-completion method over a period of time that commences
with the execution of the license agreement and ends when the product configuration is
completed and ready for use by the customer. The cost of third party software is included
in the cost of license fees in the accompanying consolidated statements of operations.


Sales
force support services are generally provided under multi-year contracts. The contracts
specify the payment terms, which are generally over the term of the contract and
generally provide for termination in the event of breach, as defined in the respective
contract. Service revenues consist primarily of facilities management, configuration,
training and software maintenance. Facilities management represents charges for help
desk, data center and project management, and are recognized on a monthly basis as
services are performed. Configuration includes initial implementation services following
sales of new software products to customers, as well as revenues relating to work orders
to perform configuration services for previously purchased software. Configuration
revenue is recognized as services are performed, when the related billings are on a time
and materials basis, and using the percentage-of-completion method for fixed fee
configuration or implementation contracts. Training revenue is recognized as the services
are performed. Software maintenance revenue is recognized ratably over the term of the
contract, generally one year.


We
review long-lived assets 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 carrying value of our long lived assets,
including intangibles and goodwill, in relation to estimates of future undiscounted cash
flows of the underlying business, which are based on judgment and assumptions.


We
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. Although realization is not assured, management
believes it is more likely than not that the recorded net deferred tax asset will be
realized.


RESULTS OF OPERATIONS


THREE MONTHS ENDED MARCH
31, 2002 AND 2001


REVENUES.  
Total revenues increased to $57,443,000 in the three months ended March 31, 2002, up
$4,631,000 or 9% from $52,812,000 in the three months ended March 31, 2001.


License
fee revenues increased to $3,179,000 in the three months ended March 31, 2002, up
$176,000 or 6% from $3,003,000 in the three months ended March 31, 2001. License fee
revenues as a percentage of total revenues remained the same at 6%. License fees are, by
nature, non-recurring items. The majority of license fees recognized during the three
months ended March 31, 2002 resulted from our performance of services related to licenses
being recognized using the percentage-of-completion method.


Service
revenues increased to $54,264,000 in the three months ended March 31, 2002, up $4,455,000
or 9% from $49,809,000 in the three months ended March 31, 2001. Service revenues as a
percentage of total revenues remained constant at 94% in the three months ended March 31,
2002. The increase in service revenues related to growth within our traditional business
of approximately $3,500,000 and growth in our clinical services business of approximately
$2,500,000. These increases in revenue were partially offset by a one-time payment during
the three months ended March 31, 2001 relating to a contractual adjustment from an
existing customer that had merged with another company.


COST
OF REVENUES.   Total cost of revenues increased to $30,151,000 in the three months ended
March 31, 2002, up $2,089,000 or 7% from $28,062,000 in the three months ended March 31,
2001.


Cost
of license fees decreased to $924,000 in the three months ended March 31, 2002 down
$39,000 or 4% from $963,000 in the three months ended March 31, 2001. Cost of license
fees for the three months ended March 31, 2002 is comprised of the amortization of
capitalized software development costs of $648,000 and third party vendor license fees of
$276,000. Cost of license fees for the same period in 2001 is comprised of the
amortization of purchased software and capitalized software development costs of $805,000
and third party vendor license fees of $158,000. The decrease in the amortization of
capitalized software development costs in the three months ended March 31, 2002 was
primarily due to the charge for impairment of purchased capitalized software that was
recorded during the second quarter of 2001. The costs associated with third party vendor
license fees increased due to an upgrade purchased by an existing customer during the
three months ended March 31, 2002.


Cost
of services increased to $29,227,000 in the three months ended March 31, 2002, up
$2,128,000 or 8% from $27,099,000 in the three months ended March 31, 2001. This increase
was due primarily to the corresponding increase in service revenue during the period.


Total
gross margin was 48% for the three months ended March 31, 2002 compared with 47% for the
three months ended March 31, 2001. Excluding the impact of recording reimbursable
out-of-pocket expenses within service revenue and cost of services, the gross margin
would have been 49% during the three months ended March 31, 2002. Excluding the
reimbursable out-of-pocket expenses within service revenue and cost of services and the
one-time payment during the three months ended March 31, 2001, relating to a contractual
adjustment from an existing customer that had merged with another company, the gross
margin would have been 46% for the three months ended March 31, 2001. The improvement in
gross margin during the three month period ended March 31, 2002 was due to efficiencies
gained from the Companys restructuring plan that took place during 2001.


SELLING,
GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES.   SG&A expenses decreased to
$19,500,000 in the three months ended March 31, 2002, down $962,000 or 5% from
$20,462,000 in the three months ended March 31, 2001. As a percentage of revenues, SG&A
expenses decreased to 34% in the three months ended March 31, 2002, as compared to 39% in
the three months ended March 31, 2001. The decrease in SG&A expenses was primarily
attributable to the implementation of the FASBs Statement of Financial Accounting
Standards No. 142, which resulted in a reduction of goodwill amortization expenses of
approximately $594,000 for the three months ended March 31, 2002. The decrease in SG&A
expenses was also impacted by operating efficiencies achieved during the period as the
result of our corporate restructuring plan.


RESEARCH
AND DEVELOPMENT (R&D) EXPENSES.   R&D expenses decreased to $2,629,000 in the three
months ended March 31, 2001 down $238,000 or 8% from $2,867,000 in the three months ended
March 31, 2001. As a percentage of revenues, R&D expenses were consistent at 5% in
the three month period ended March 31, 2002 and March 31, 2001.


INTEREST
INCOME.  Interest income decreased to $304,000 in the three months ended March 31, 2002,
down $622,000 or 67% from $926,000 in the three months ended March 31, 2001. The overall
decrease related to a lower balance of investable cash on hand, which resulted from our
purchases of treasury stock and our investments in new facilities during 2001.
Additionally, lower short term interest rates versus last year adversely impacted
interest income during the three months ended March 31, 2002.


PROVISION
FOR INCOME TAXES.   The effective tax rate remained the same at 36% in the three months
ended March 31, 2002 as compared to the three months ended March 31, 2001.


LIQUIDITY AND CAPITAL
RESOURCES


We
finance our operations primarily through cash generated by operations. Net cash provided
by operating activities was $3,333,000 for the three months ended March 31, 2002,
compared to $20,232,000 for the three months ended March 31, 2001. This decrease in cash
provided by operating activities was due primarily to cash generated from the reduction
of accounts receivable during the three months ended March 31, 2001, due to the
collection of an unusually high accounts receivable balance as of December 31, 2000. Cash
provided by operating activities during the three months ended March 31, 2002 was roughly
in line with net income for the period of $3,535,000.


Cash
used in investing activities remained fairly consistent at $5,479,000 in the three months
ended March 31, 2002 compared to $5,640,000 in the three months ended March 31, 2001.
Cash used in investing activities during the three months ended March 31, 2002 primarily
related to unusually high capital expenditures which were necessary to fund the
completion of our new facilities. Cash used in investing activities during the three
months ended March 31, 2001 primarily related to net purchases of short term investments,
and also included a normal level of capital expenditures.


Cash
provided by financing activities was $514,000 in the three months ended March 31, 2002
compared to cash used in financing activities of $8,016,000 in the three months ended
March 31, 2001. The difference of $8,530,000 was due primarily to purchases of treasury
stock under the stock repurchase program announced on January 31, 2001 for approximately
$10,000,000 during the three months ended March 31, 2001. The remaining difference
primarily relates to an overall decrease in the level of stock option exercises for the
three months ended March 31, 2002 compared to the three months ended March 31, 2001.


We
maintain a $15.0 million revolving line of credit agreement with JP Morgan Chase, N.A.
The 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 $105,000,000 plus
50% of our net income earned after January 1, 2002 and 75% of the net proceeds to us of
any stock offerings after September 30, 2001 (as defined in the agreement). This covenant
effectively limits the amount of cash dividends we may pay. The credit facility expires
on November 30, 2002. There were no borrowings outstanding under the agreement and we
were in compliance with all of our covenant obligations as of March 31, 2002 and December
31, 2001.


As of March 31, 2002,
we did not have any material commitments for capital expenditures.  Our principal commitments at
March 31, 2002 consisted primarily of obligations under operating leases.  These leases provide for us
to make aggregate guaranteed payments in the following estimated amounts:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Year ending December 31, | 
| | ------------------------ | 
| | 2002                     | 
| | 2003                     | 
| | 2004                     | 
| | 2005                     | 
| | 2006                     | 
| | 2007 and thereafter      | 
| |                         
| |                          | 

|As of March 31, 2002,
letters of credit for approximately $500,000 were outstanding.


At
March 31, 2002, our working capital was approximately $86,633,000. Total cash and
investments were 42% of total assets as of March 31, 2002 compared with 43% as of March
31, 2001. The Companys days sales outstanding in accounts receivable was 51 days as
of March 31, 2002 compared with 60 days as of March 31, 2001. 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 months.


We
regularly evaluate 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.


FACTORS THAT MAY AFFECT
FUTURE OPERATING RESULTS


OUR BUSINESS IS HEAVILY
DEPENDENT ON THE PHARMACEUTICAL INDUSTRY


Most
of our customer relationship management (CRM) and sales force effectiveness (SFE)
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; and
| |  | - |  | -------------------------------------------------------------------------------------------------

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

|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.


PROBLEMS
IN THE TRANSITION OF OUR INTERNAL JOB-COST AND FINANCIAL SYSTEMS MAY NEGATIVELY IMPACT
OUR ABILITY TO TIMELY REPORT ACCURATE FINANCIAL RESULTS FOR THE THIRD QUARTER 2002, BILL
OUR CUSTOMERS AND PAY OUR VENDORS


We are
currently transitioning our internal job-cost and financial systems for our U.S.
operations to an Oracle-based system. The actual transfer to Oracle is currently planned
to occur in August 2002. While we are taking significant measures to ensure a successful
transition, we cannot assure you that, despite our efforts, the transition will be free
from problems. Problems in the implementation could impact our ability to timely report
accurate financial results for the third quarter of 2002 and could also negatively impact
our ability to bill our customers and pay our vendors in a timely manner. Accordingly, we
cannot assure you that the transition of our internal job-cost and financial systems will
have no material adverse effect on our business, operating results or financial
condition.


OUR QUARTERLY RESULTS OF
OPERATIONS MAY FLUCTUATE SIGNIFICANTLY AND MAY NOT MEET MARKET EXPECTATIONS


Our
results of operations may vary from quarter to quarter due to lengthy sales and
implementation cycles for our products, our fixed expenses in relation to our fluctuating
revenues and variations in our customers budget cycles, each of which is discussed
below. As a result, you should not rely on quarter-to-quarter comparisons of our results
of operations as an indication of future performance. It is also possible that in some
future period our results of operations may be below our targeted goals and the
expectations of the public market analysts and investors. If this happens, the price of
our common stock may decline.


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


The
selection of a CRM 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 of the solution. Given the importance of the decision, senior
levels of management of our customers often are involved and, in some instances, its
board of directors may be involved in this process. As a result, the decision-making
process typically takes nine to eighteen months, and in certain cases even longer.
Accordingly, we cannot 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.


OUR BUSINESS IS AFFECTED
BY VARIATIONS IN OUR CUSTOMERS BUDGET CYCLES


We
have historically realized a greater percentage of our license fees and service revenues
in the second half of the year than in the first half because, among other things, our
customers typically spend more of their annual budget authorization for CRM and SFE
solutions in the second half of the year. However, the relationship between the amounts
spent in the first and second halves of a year may vary from year to year and from
customer to customer. In addition, changes in our customers budget authorizations
may reduce the amount of revenues we receive from the license of additional software or
the provision of additional services. As a result, our operating results could be
adversely affected.


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


Historically,
a limited number of 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 could have a materially adverse effect on the Companys
business. While we have lost some customers to software products and/or services offered
by our competitors or by our customers in-house staff, such events have not to-date
had a material adverse impact on the Company. We cannot, however, 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.


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:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | 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. Such errors have occurred in the past and we cannot assure you that,
despite our testing, our new products will be free from errors. Software errors could
cause delays in the commercial release of products until the errors have been corrected.
Software errors may cause damage to our reputation and cause us to commit significant
resources to their correction. Errors that result in 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 face similar risks from the competition of vendors that market
and sell CRM and SFE solutions in the consumer packaged goods (CPG) market.


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 products or support
services;
| |  | - |  | ---------------------------------------------------------------------------------------------------

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

| |  |  |  | development
and/or operation of in-house CRM 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.


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;
| |  | - |  | --------------------------------------------------------------------------------

| |  |  |  | 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.
| |  | - |  | ---------------------------------------------------------------------------

|WE MAY FACE RISKS
ASSOCIATED WITH ACQUISITIONS


Our
business could be materially and adversely affected as a result of the risks associated
with acquisitions. As part of our business strategy, we have acquired businesses that
offer complementary products, services or technologies. These acquisitions are
accompanied by the risks commonly encountered in an acquisition of a business, including:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

| |  |  |  | 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;
| |  | - |  | ------------------------------------------------------------------------

| |  |  |  | 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 MAY FACE RISKS
ASSOCIATED WITH EVENTS WHICH MAY AFFECT THE U.S. AND WORLD ECONOMIES


The
terrorist attacks of September 11, 2001 and subsequent world events created weakness in
the U.S. and world economies. While we did not experience any material impact to our
business during the time period immediately following the events of September 11, 2001,
we cannot assure you that the impact of these events, the threat of future terrorist
activity in the U.S. and other parts of the world, and any related U.S. military action
on the U.S. and world economies will not adversely affect our business or the businesses
of our customers.


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. Competition for such personnel is intense. 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.


AN INABILITY TO MANAGE
OUR 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.


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 customer, 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.


THERE ARE
CHARACTERISTICS IN THE CONSUMER PACKAGED GOODS MARKET THAT DIFFER FROM THE PHARMACEUTICAL
MARKET


We
market and sell CRM solutions to companies in the CPG market. The selling environment in
this market has unique characteristics that differentiate it from the pharmaceutical
market. In addition, we believe that the CPG market is composed of sub-markets, each of
which may have unique characteristics. Accordingly, we cannot assure you that we will be
able to replicate in this market the success we have achieved in the ethical
pharmaceutical market.


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.


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.


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 the archived data and normal operation of our business could
take several days to several weeks. 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.


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; and
| |  | - |  | -----------------------------------------------------------------------------

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

|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.


PART II.  OTHER
INFORMATION


Item 5.  Other Information
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | None
| | ----

|Item 6.  Exhibits and
Reports on Form 8-K
|-----------------------------------------

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

| |  |  |  | None
| |  |  |  | ----

| |  | (ii) |  | Reports
on Form 8-K
| |  | ---- |  | -------------------

| |  | (a) |  | The
Company filed a Current Report on Form 8-K on March 19, 2002, pursuant to Item 5.
Other Events  relating to certain employment agreements, indemnification agreements,
leases and related amendments.
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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:  May 15, 2002
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| |  | By: /s/ Luke M. Beshar
Luke M. Beshar,Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
| |  | -----------------------------------------------------------------------------------------------------------------------------------