|SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 September 30, 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 its charter) | 
| | ------------------------------------------------------ | 

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

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

|1200 Mount Kemble Avenue
Morristown, NJ 07960
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.   Yes [  X  ]   No  [    ]



Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date: at November 8, 2002 there were 39,921,965 shares of
common stock outstanding.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

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

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

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

|ITEM 1. |  | Consolidated Financial Statements (Unaudited) | 3
|------- |  | --------------------------------------------- | -

| |  | Consolidated Statements of Operations 
          
Three months and nine months ended September 30, 2002 and 2001 | 3
| |  | ---------------------------------------------------------------------------------------------------------------- | -

| |  | Consolidated Balance Sheets 
          
September 30, 2002 and December 31, 2001 | 4
| |  | -------------------------------------------------------------------------------- | -

| |  | Consolidated Statements of Cash Flows
          
Nine months ended September 30, 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 | 10
|------- |  | ------------------------------------------------------------------------------------- | --

|ITEM 4. |  | Controls and Procedures | 22
|------- |  | ----------------------- | --

|PART II. |  | OTHER INFORMATION | 22
|-------- |  | ----------------- | --

|ITEM 6. |  | Exhibits and Reports on Form 8-K | 22
|------- |  | -------------------------------- | --

|SIGNATURES |  |  | 23
|---------- |  |  | --

|CERTIFICATIONS |  |  | 24
|-------------- |  |  | --

|2
|-

---

|PART I.     FINANCIAL
INFORMATION
ITEM 1.  Consolidated Financial Statements

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

|                                                  | THREE MONTHS ENDED SEPTEMBER 30, | NINE MONTHS ENDED SEPTEMBER 30,
|------------------------------------------------- | -------------------------------- | -------------------------------
|                                                  |                                  |                                
|
|                                                  |                                  |                                
|Revenues:                                         |                                  |                                
|License fees                                      |                                  | $   2,276                      
|Services                                          |                                  | 51,385                         
|                                                  |                                  |                                
|                                                  |                                  | 53,661                         
|                                                  |                                  |                                
|Cost of revenues:                                 |                                 
|Cost of license fees                              |                                  | 845                            
|Purchased software impairment                     |                                  | --                             
|Cost of services                                  |                                  | 24,510                         
|                                                  |                                  |                                
|                                                  |                                  | 25,355                         
|                                                  |                                  |                                
|Gross margin                                      |                                  | 28,306                         
|                                                  |                                  |                                
|Operating expenses:                               |                                 
|Selling, general and administrative               |                                  | 19,153                         
|Research and development                          |                                  | 2,362                          
|Restructuring charge                              |                                  | --                             
|Asset impairment                                  |                                  | 1,832                          
|                                                  |                                  |                                
|                                                  |                                  | 23,347                         
|                                                  |                                  |                                
|Operating income (loss)                           |                                  | 4,959                          
|Interest income                                   |                                  | 267                            
|Other expense                                     |                                  | (143                           
|                                                  |                                  |                                
|Income (loss) before income tax expense (benefit) |                                  | 5,083                          
|Income tax expense (benefit)                      |                                  | 2,541                          
|                                                  |                                  |                                
|Net income (loss)                                 |                                  | $   2,542                      
|                                                  |                                  |                                
|Net income (loss) per share:                      |                                 
|Basic                                             |                                  | $     0.06                     
|                                                  |                                  |                                
|Diluted                                           |                                  | $     0.06                     
|                                                  |                                  |                                
|Shares used in computing net income (loss) per    |                                 
|share:                                            |                                 
|Basic                                             |                                  | 39,943                         
|                                                  |                                  |                                
|Diluted                                           |                                  | 40,003                         
|                                                  |                                  |                                

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


3
|--------------------------------------------------------------------------------------------

---

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

|                                                    | SEPTEMBER 30,        2002 | DECEMBER 31,         2001
|--------------------------------------------------- | ------------------------- | -------------------------
|                                                    |                           |                          
|
|Assets                                              |                           |                          
|Current Assets:                                     |                          
|Cash and cash equivalents                           |                           | $   56,302               
|Short-term investments                              |                           | 6,242                    
|Accounts receivable, net                            |                           | 35,045                   
|Prepaid expenses and other                          |                           | 4,911                    
|Prepaid taxes                                       |                           | 1,433                    
|Deferred taxes                                      |                           | 6,106                    
|                                                    |                           |                          
|Total current assets                                |                           | 110,039                  
|                                                    |                           |                          
|Property and equipment, net                         |                           | 26,292                   
|Facility held for sale                              |                           | 6,900                    
|Other assets                                        |                           | 645                      
|Long term receivable                                |                           | 6,314                    
|Goodwill, net                                       |                           | 8,751                    
|Intangible assets, net                              |                           | 3,123                    
|Purchased capitalized software, net                 |                           | 3,468                    
|Capitalized software development costs, net         |                           | 5,306                    
|Deferred taxes                                      |                           | 1,571                    
|                                                    |                           |                          
|                                                    |                           | $ 172,409                
|                                                    |                           |                          
|Liabilities and Stockholders Equity                |                          
|Current Liabilities:                                |                          
|Accounts payable                                    |                           | $     1,694              
|Capital lease obligations                           |                           | 525                      
|Accrued compensation and benefits                   |                           | 5,483                    
|Other accrued expenses                              |                           | 13,149                   
|Accrued restructuring charge                        |                           | 602                      
|Deferred revenues                                   |                           | 6,880                    
|                                                    |                           |                          
|Total current liabilities                           |                           | 28,333                   
|                                                    |                           |                          
|Capital lease obligations                           |                           | 657                      
|Other non-current liabilities                       |                           | 654                      
|                                                    |                           |                          
|Stockholders Equity:                               |                          
|Preferred Stock, no par value, 10,000,000 shares    |                          
|authorized, none issued                             |                           | --                       
|Common Stock, no par value, 150,000,000 shares      |                          
|authorized; 42,069,715 and 41,598,923 shares issued |                          
|and 39,847,015 and
39,653,723 shares outstanding    |                           | 94,277                   
|Retained earnings                                   |                           | 72,153                   
|Deferred compensation                               |                           | (65                      
|Accumulated other comprehensive loss                |                           | (2,724                   
|Less treasury stock, at cost                        |                           | (20,876                  
|                                                    |                           |                          
|Total stockholders equity                          |                           | 142,765                  
|                                                    |                           |                          
|                                                    |                           | $ 172,409                
|                                                    |                           |                          
|                                                    |                          

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


4
|--------------------------------------------------------------------------------------------

---

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

|                                                                    | NINE MONTHS ENDED SEPTEMBER 30,
|------------------------------------------------------------------- | -------------------------------
|
|                                                                    |                                
|Operating activities:                                               |                                
|Net income (loss)                                                   |                                
|Adjustments to reconcile net income (loss) to net cash              |                                
|provided by operating activities:                                   |                                
|Depreciation and amortization                                       |                                
|Asset impairment                                                    |                                
|Restructuring charge                                                |                                
|Amortization of deferred compensation                               |                                
|Deferred income tax benefit                                         |                                
|Changes in assets and liabilities,
net of effect from acquisitions: |                                
|(Increase)/decrease in
accounts receivable                          |                                
|Decrease in prepaid
expenses and other                              |                                
|Decrease/(increase) in prepaid
income taxes                         |                                
|(Decrease)/increase in
accounts payable and other accrued expenses  |                                
|Payments relating to  restructuring charge                          |                                
|(Decrease)/increase in deferred revenue                             |                                
|Increase in other non-current liabilities                           |                                
|                                                                    |                                
|Net cash provided by operating activities                           |                                
|                                                                    |                                
|Investing activities:                                               |                                
|Purchases of short-term investments                                 |                                
|Sales of short-term investments                                     |                                
|Acquisitions, net of cash acquired                                  |                                
|Increase in other non-current assets                                |                                
|Purchases of property and equipment                                 |                                
|Investment in facility held for sale                                |                                
|Additions to capitalized software development costs                 |                                
|                                                                    |                                
|Net cash used in investing activities                               |                                
|                                                                    |                                
|Financing activities:                                               |                                
|Purchases of treasury stock                                         |                                
|Principal paid on capital leases                                    |                                
|Issuance of common stock                                            |                                
|                                                                    |                                
|Net cash provided by/(used in) financing activities                 |                                
|                                                                    |                                
|Effect of foreign exchange rate changes on cash                     |                                
|Net decrease in cash and cash equivalents                           |                                
|Cash and cash equivalents, beginning of period                      |                                
|                                                                    |                                
|Cash and cash equivalents, end of period                            |                                
|                                                                    |                                

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


5
|--------------------------------------------------------------------------------------------

---

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


1.  Basis of
Presentation


The
consolidated financial  statements of Dendrite International, Inc. and its subsidiaries
(the  Company) included in this Form 10-Q are unaudited and reflect all
adjustments (consisting of normal recurring adjustments except as disclosed  herein)
which are, in the opinion of management, necessary for a fair  presentation of the
financial position and operating results for the three and  nine month periods ended
September 30, 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
(Loss) Per Share


Basic
net income (loss) per share  was computed by dividing the net income (loss) for each
period by the weighted  average number of shares of common stock outstanding for each
period. Diluted  net income per share was computed by dividing net income for each period
by the  weighted average number of shares of common stock and common stock equivalents
(stock options) outstanding during each period. For the three and nine month  periods
ended September 30, 2002, common stock equivalents used in computing  diluted net income
per share were 60,000 and 321,000 shares, respectively. For  the three month period ended
September 30, 2001, common stock equivalents used  in computing diluted net income per
share was 417,000 shares. For the nine month  period ended September 30, 2001, common
stock equivalents were anti-dilutive and  were therefore excluded from the computation of
diluted net loss per share.


3.  Comprehensive Income


Assets
and liabilities of the  Companys wholly-owned international subsidiaries are
translated at their  respective period-end exchange rates and revenues and expenses are
translated at  average currency exchange rates for the period. The resulting translation
adjustments are included as Accumulated other comprehensive loss and  are
reflected as a separate component of stockholders equity. Total  comprehensive
income for the three months ended September 30, 2002 was  $2,448,000 compared to total
comprehensive income of $2,802,000 for the three  months ended September 30, 2001. Total
comprehensive income for the nine months  ended September 30, 2002 was $10,653,000
compared to total comprehensive loss of  $16,020,000 for the nine months ended September
30, 2001.


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
restructuring of the Companys facility in Stroudsburg, PA. The  Stroudsburg, PA
operations were substantially relocated to the Companys  facilities in New Jersey,
Virginia and a new facility in Bethlehem, PA. The exit  costs were included in the
restructuring charge while the moving and other  start-up costs were not included in this
restructuring charge and were 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, $602,000 related primarily to severance has not been  paid as of
September 30, 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 $602,000 as of September 30, 2002 will be  utilized
during 2002. The activity on the accrued restructuring charge balance  as of September
30, 2002 is summarized in the table below:


6
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|                                             | Accrued Restructuring
            as of December 31,
2001 | Cash Payments in 2002 | Accrued Restructuring 
            as of September 30, 2002
|-------------------------------------------- | --------------------------------------------------------- | --------------------- | -----------------------------------------------------------
|                                             |                                                           |                       |                                                            
|Termination payments to employees            |                                                           | $2,218,000            |                                                            
|Facility exit costs                          |                                                           | 495,000               |                                                            
|Contract termination and other restructuring |                                                          
|costs                                        |                                                           | 237,000               |                                                            
|                                             |                                                           |                       |                                                            
|                                             |                                                           | $2,950,000            |                                                            
|                                             |                                                           |                       |                                                            
|                                             |                                                          

|6.  Acquisitions


On
August 12, 2002, the Company  acquired Pharma Vision for cash consideration of
approximately $700,000. Pharma  Vision collects and sells data for customer targeting
that pharmaceutical  representatives use in Europe and provides support to pharmaceutical
customers  in Belgium and the Netherlands. The results of Pharma Visions operations
have been included in the consolidated financial statements from the date of
acquisition.


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


The
aggregate purchase price was  approximately $16,570,000 which included: cash of
approximately $14,923,000;  accrued professional service fees of approximately $410,000
and options to  purchase Dendrite common stock valued at approximately $1,237,000. The
fair  value of the stock options was estimated using the Black-Scholes valuation  model.


The
following table summarizes the  estimated fair value of the assets acquired and the
liabilities assumed at the  date of the acquisition. The Company is in the process of
finalizing a  third-party valuation of certain intangible assets, and evaluating its
facilities and personnel for redundancy. Therefore, the purchase price  allocation is
preliminary and subject to adjustment.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               | 
|------------------------------ | 
|Current Assets                 | 
|Property, plant, and equipment | 
|Intangible assets              | 
|Goodwill                       | 
|Other non-current assets       | 
|                               | 
|Total assets acquired          | 
|                               | 
|Current liabilities            | 
|Lease Obligations              | 
|                               | 
|Total liabilities assumed      | 
|                               | 
|Net assets acquired            | 
|                               | 
|                               | 

|Of the
$5,721,000 of acquired  intangible assets, approximately $732,000 was assigned to
registered trademarks  that are not subject to amortization. The remaining $4,989,000 of
acquired  intangible assets includes purchased software development costs of
approximately  $3,468,000 (5 year estimated useful life), approximately $328,000 of
non-compete  agreements (3 year estimated useful life) and approximately $1,193,000 of
customer relationship assets (3 year estimated useful life).


7.  Pro Forma
Results of Operations


The
Companys unaudited pro  forma results of operations for the three and nine months
ended September 30,  2002 and 2001 assuming that the acquisition of SAI described in Note
6 occurred  on January 1, 2001 are as follows:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         
|-------------------------
|                         
|2002                     
|                         
|Revenue                  
|Net Income/(loss)        
|Basic and diluted income/
|(loss) per share         

|The
unaudited pro forma results of  operations are not necessarily indicative of what the
actual results of  operations of the Company would have been had the acquisition occurred
as of  January 1, 2001, nor do they purport to be indicative of the future results of
operations of the Company.


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

---

|8.  Asset
Impairment


In
accordance with Statement of  Financial Accounting Standards (SFAS) No. 144,
Accounting for  the Impairment or Disposal of Long-Lived Assets, (SFAS No.
144), the  Company continues to examine the fair value of the facility held for sale in
accordance with the prior pronouncement SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed  Of (SFAS
No. 121) as the original disposal activity was initiated prior to  the adoption of SFAS
No. 144. During the three months ended September 30, 2002,  the Company determined that
an impairment existed due to continued increase in  vacancy rates in the surrounding
areas. Accordingly, the carrying value of the  facility held for sale was adjusted to its
fair value less costs to sell, or  approximately $6,900,000, based upon a third-party
valuation. The resulting  $1,832,000 impairment loss has been included within the asset
impairment line  item in the accompanying statement of operations.


9.   Long Term
Receivable


During
the nine months ended  September 30, 2002, the Company recorded a long term receivable of
$6,314,000  from a major U.S. pharmaceutical company as part of a five-year contract. The
Company expects that this long term receivable will grow to approximately  $6,700,000 by
December 31, 2002 and will be paid beginning in January 2003  through January 2005 as the
maturities come due. The Company has imputed  interest and accordingly, interest income
will be recognized as earned within  interest income on the Consolidated Statement of
Operations.


10.   Note
Receivable to Officer of the Company


In May
2002, the Company entered  into a note receivable with an officer of the Company in the
amount of $500,000  in connection with his relocation. The principal is secured by real
estate and  marketable securities and payable in four installments through December 31,
2005. Interest will be calculated on the principal balance and paid with each
installment payment at a rate equal to 7.25% per annum. The note receivable is  included
within Other Assets on the accompanying Consolidated Balance Sheet.


11.  Common
Stock Repurchase Program


On
July 31, 2002, the Company  announced that its Board of Directors had authorized the
Company to repurchase  up to $20,000,000 of its outstanding common stock over a two-year
period (the  2002 Stock Repurchase Plan). Under the 2002 Stock Repurchase
Plan,  the Company will repurchase shares on the open market or in privately negotiated
transactions from time to time. Repurchases of stock under the 2002 Stock  Repurchase
Plan are at managements discretion, depending upon price and  availability. The
repurchased shares are held as treasury stock, which may be  used to satisfy the Companys
requirements under its equity incentive and  other benefit plans and for other corporate
purposes. As of September 30, 2002,  the Company has repurchased under the 2002 Stock
Repurchase Plan 277,500 shares  of Company common stock at a purchase price of
$1,469,032.


12.   Customer
and Geographic Segment Data


In the
three months ended  September 30, 2002 and 2001, the Company derived approximately 51%
and 56% of  its revenues from its two largest customers, respectively. In the nine months
ended September 30, 2002 and 2001, the Company derived approximately 47% and 50%  of its
revenues from its two largest customers, respectively.


The
Company is organized by  geographic locations and has one reportable segment. All
transfers between  geographic areas have been eliminated from consolidated revenues.
Operating  income consists of total revenues recorded in the location less operating
expenses and does not include interest income, other expense or income taxes.  This data
is presented in accordance with SFAS No. 131, Disclosure About  Segments of an
Enterprise and Related Information.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        
|------------------------
|                        
|2002                    
|                        
|Revenues:               
|United States           
|All Other               
|                        
|                        
|                        
|Operating income (loss):
|United States           
|All Other               
|                        
|                        
|                        

|8
|-

---

|                    
|--------------------
|                    
|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.


13.   Impact of
Recently Issued Accounting Pronouncements


Effective
July 1, 2001 the Company  adopted SFAS No. 141, Business Combinations, and
effective January  1, 2002 the Company adopted SFAS No. 142, Goodwill and other
Intangible  Assets. 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, which was  superceded by SFAS No. 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 on
October  1 each year.


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

|                                             
|---------------------------------------------
|                                             
|                                             
|INTANGIBLE ASSETS SUBJECT TO AMORTIZATION    
|Purchased capitalized software               
|Capitalized software development costs       
|Customer relationship assets                 
|Non-compete covenants                        
|                                             
|Total                                        
|                                             
|INTANGIBLE ASSETS NOT SUBJECT TO AMORTIZATION
|Goodwill                                     
|Trademarks                                   
|                                             
|Total                                        
|                                             
|Total goodwill and intangible assets         
|                                             

|The
changes in the carrying amount  of goodwill for the nine months ended September 30, 2002
are as follows:
|------------------------------------------------------------------------------------------------------------

|Balance as of January 1, 2002    |  | $4,830,000 | 
|-------------------------------- |  | ---------- | 
|Goodwill acquired                |  | 3,921,000  | 
|                                 |  |           
|Balance as of September 30, 2002 |  | $8,751,000 | 
|                                 |  |           
|                                 | 

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

|Year ending December 31, |  |            | 
|------------------------ |  | ---------- | 
|2002                     |  | $3,010,000 | 
|2003                     |  | 3,986,000  | 
|2004                     |  | 3,201,000  | 
|2005                     |  | 1,459,000  | 
|2006 and thereafter      |  | 1,469,000  | 
|                         | 

|9
|-

---

|The
pro forma results of  operations  for the three months and nine months ended  September
30, 2001 assuming the  provisions of SFAS No.  142 had been applied are as follows:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                           
|-----------------------------------------------------------
|                                                           
|                                                           
|Net income/(loss) (as reported)                            
|Add back amortization of goodwill, net of income tax effect
|                                                           
|Adjusted net income/(loss)                                 
|                                                           
|Basic and diluted net income/(loss) per common share:      
|Net loss (as reported)                                     
|Add back amortization of goodwill, net of income tax effect
|                                                           
|Adjusted net income/(loss)                                 
|                                                           

|In
October 2001, the FASBissued SFAS No. 144, which 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, which did not have an
impact on the Companys financial position  or results of operations.


In
November 2001, the FASB 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 and, as required, has
also reclassified comparative financial  information for the period ended September 30,
2001. The impact of applying this  pronouncement was to increase both revenues and cost
of services by $439,000 and  $3,415,000 for the three months and nine months ended
September 30, 2002,  respectively, and to increase both revenues and cost of services by
$798,000 and  $2,715,000 for the three months and nine months ended September 30, 2001,
respectively. The implementation of EITF 01-14 has no impact upon earnings.


14.   Income
Taxes


In
July 2002, the State of New  Jersey enacted new tax legislation that adversely impacts
the effective state  tax rate of most companies operating in New Jersey. This legislation
is  retroactive to January 1, 2002. It is estimated that this legislation will  increase
the Companys effective tax rate from 36% to 40% for the 2002 tax  year. In
accordance with SFAS No. 109, Accounting for Income Taxes, the tax provision
for the three months ending September 30, 2002 reflects the  retroactive impact of the
higher effective tax rate for the six months ended  June 30, 2002 as well as a provision
on the current quarter pre-tax earnings of  approximately 40%. The retroactive impact on
the six months ended June 30, 2002  resulted in approximately $508,000 of additional
income tax expense in the three  months ending September 30, 2002.


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 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, future
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. Actual results may  differ
materially from those indicated by the forward-looking statements  included in this Form
10-Q. 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.


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|OVERVIEW


Dendrite
provides solutions to  enable pharmaceutical companies to optimize their sales and
marketing channels  and clinical resources. Co-founded in 1986 by John E. Bailye, the
Companys  Chairman and Chief Executive Officer, Dendrite was originally established
to  provide sales force automation (SFA) solutions to the global
pharmaceutical industry. These solutions allow clients to manage sales force  activities
in complex selling environments. Today, Dendrite also provides  customer relationship
management (CRM) solutions, advanced  analytics, clinical trial services and
eLearning. The Companys solutions  are combined with specialized support services
such as training and  implementation, technical and hardware support, as well as help
desk and data  center services. We develop, implement and service our products through
sales,  support and technical personnel located in 17 countries.


Dendrites
primary markets  are the United States, the United Kingdom, France, and Japan. We bill
services  provided by our foreign branches and subsidiaries in local currencies.
Operating  results generated in local currencies are translated into U.S. dollars at the
average exchange rate in effect for the reporting period. We generated  approximately 20%
and 19% of our total revenues outside the United States during  the nine months ended
September 30, 2002 and 2001, respectively. Our operating  profits by geographic segment
are shown in Note 12 of the Notes to Unaudited  Consolidated Financial Statements.


CRITICAL
ACCOUNTING POLICIES


Financial
Reporting Release No.  60, which was released by the SEC in December 2001, 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
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 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  reasonably assured.


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 goodwill for impairment  pursuant to SFAS No. 142, Goodwill and Other
Intangible Assets (SFAS  No. 142). Goodwill is tested for impairment at least
annually. Additionally, if  an event occurs or circumstances change, and it is more
likely than not that an  impairment has occurred, we will perform an interim test for
goodwill  impairment. We have chosen October 1 as the date to review our existing
goodwill  for impairment on an annual basis. SFAS No. 142 requires that an initial
impairment test be performed upon implementation on January 1, 2002. We have  only one
reportable segment and one reporting unit. Therefore, impairment is  tested at the entity
level. Based upon the excess of the Companys fair  value over its net book value at
January 1, 2002, there was no indication of an  impairment to goodwill and therefore, no
impairment was recorded upon  implementation of SFAS No. 142. We are in the process of
testing goodwill for  impairment again as of October 1, 2002.


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|We
review our long-lived assets  excluding goodwill for impairment pursuant to SFAS No. 144,
Accounting for  the Impairment or Disposal of Long-Lived Assets. Our
long-lived  assets, excluding goodwill, consist primarily of property and equipment, a
facility held for sale, a long term receivable and capitalized software  development
costs. Pursuant to the guidelines of SFAS No. 144, our facility held  for sale is
reviewed for impairment in accordance with SFAS No. 121 as the  original disposal
activity initiated prior to the adoption of SFAS No. 144. Our  facility held for sale is
carried at its estimated fair value less selling  costs. All other long-lived assets,
excluding goodwill, are classified as held  and used. These assets are tested for
recoverability whenever events or changes  in circumstances indicate that the respective
carrying amount may not be  recoverable.


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  periodically 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.


RECENT
DEVELOPMENTS


On
August 12, 2002, the Company acquired  Pharma Vision for cash consideration of
approximately $700,000. Pharma Vision  collects and sells data for customer targeting
that pharmaceutical  representatives use in Europe and provides support to pharmaceutical
customers  in Belgium and the Netherlands. The results of Pharma Visions operations
have been included in the consolidated financial statements from the date of
acquisition.


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


The
aggregate purchase price was  approximately $16,570,000 which included: cash of
approximately $14,923,000;  accrued professional service fees of approximately $410,000
and options to  purchase Dendrite common stock valued at approximately $1,237,000. The
fair  value of the stock options was estimated using the Black-Sholes valuation model.
The Company is in the process of finalizing a third-party valuation of certain
intangible assets, and evaluating its facilities and personnel for redundancy,  and
therefore, the purchase price allocation is preliminary and subject to  adjustment.


Of the
$5,721,000 of acquired  intangible assets, approximately $732,000 was assigned to
registered trademarks  that are not subject to amortization. The remaining $4,989,000 of
acquired  intangible assets includes purchased software development costs of
approximately  $3,468,000 (5 year estimated useful life), approximately $328,000 of
non-compete  agreements (3 year estimated useful life) and approximately $1,193,000 of
customer relationship assets (3 year estimated useful life).


RESULTS OF
OPERATIONS


THREE MONTHS
ENDED SEPTEMBER 30, 2002 AND 2001


REVENUES.
Total revenues decreased to $53,661,000 in the three months ended September 30,  2002,
down $4,250,000 or 7% from revenues of $57,911,000 in the three months  ended September
30, 2001.


License
fee revenues decreased to  $2,276,000 in the three months ended September 30, 2002, a
decrease of  $6,359,000 or 74% from $8,635,000 in the three months ended September 30,
2001.  License fee revenues as a percentage of total revenues were 4% in the three
months ended September 30, 2002, as compared to 15% in the three months ended  September
30, 2001. License fees are, by nature, non-recurring items. The  majority of license fees
recognized during the three months ended September 30,  2002 resulted from purchases of
additional user licenses by existing customers.  The higher license fee revenues for the
three months ended September 30, 2001  were primarily due to a major systems upgrade by
an existing customer.


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|Service
revenues increased to  $51,385,000 in the three months ended September 30, 2002, up
$2,109,000 or 4%  from $49,276,000 in the three months ended September 30, 2001. Service
revenues  as a percentage of total revenues were 96% in the three months ended September
30, 2002, as compared to 85% in the three months ended September 30, 2001. The  increase
in service revenues related to growth within our international services  business.


COST
OF REVENUES. Total cost of revenues decreased to $25,355,000 in the three months
ended  September 30, 2002, down $3,639,000 or 13% from $28,994,000 in the three months
ended September 30, 2001.


Cost
of license fees decreased to  $845,000 in the three months ended September 30, 2002, down
$686,000 or 45% from  $1,531,000 in the three months ended September 30, 2001. Cost of
license fees  for the three months ended September 30, 2002 is comprised of the
amortization  of capitalized software development costs of $648,000 and third party
vendor  license fees of $197,000. Cost of license fees for the same period in 2001 is
comprised of the amortization of purchased software and capitalized software  development
costs of $1,044,000 and third party vendor license fees of $487,000.  The decrease in the
amortization of capitalized software development costs in  the three months ended
September 30, 2002 was primarily due to the acceleration  of amortization of certain
purchased capitalized software during the third  quarter of 2001. The decrease in the
third party vendor license fees was  primarily due to the purchase of third party
software for a major system upgrade  by an existing customer during the third quarter of
2001.


Cost
of services decreased to  $24,510,000 in the three months ended September 30, 2002, down
$2,953,000 or 11%  from $27,463,000 in the three months ended September 30, 2001. The
decrease in cost of services was partially due to efficiencies gained from the  Companys
restructuring plan and the relocation of certain services to  locations with lower
operating expenses that took place during 2002 and 2001.  Also contributing to this
decrease was: i) the reversal during the three months ended September 30, 2002
of approximatley $939,000 of non-recurring costs previously recorded in June 2001,
which related to the recognition of anticipated future losses on selected contracts for which the
Companys obligations with respect to these contracts were favorably resolved; and ii)
approximately $500,000 of non-recurring  costs incurred during  the three months
ended September 30, 2001.


Total
gross margin for the three  months ended September 30, 2002 was 53%, up from 50% for the
three months ended  September 30, 2001. The improvement in gross margin during the three
month  period ended September 30, 2002 was due to a favorable mix shift within our
services business and the efficiencies gained from the Companys  restructuring plan
and the relocation of certain services to locations with  lower operating expenses that
took place during 2001. Also contributing to the  improvement was: i) the reversal during the three months ended September 30, 2002
of approximatley $939,000 of non-recurring costs previously recorded in June 2001,
which related to the recognition of anticipated future losses on selected contracts for which the
Companys obligations with respect to these contracts were favorably resolved; and ii) approximately $500,000
of non-recurring costs incurred during the  three months ended September 30, 2001.


SELLING,
GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES. SG&A expenses  decreased to
$19,153,000 in the three months ended September 30, 2002, down  $3,722,000 or 16% from
$22,875,000 in the three months ended September 30, 2001.  As a percentage of revenues, SG&A
expenses decreased to 36% in the three  months ended September 30, 2002, down from 40% in
the three months ended  September 30, 2001. The decrease in SG&A expenses for the
period ended  September 30, 2002 was partially attributable to approximately $1,100,000
of  non-recurring costs incurred during the three months ended September 30, 2001,  which
related to the transition of services from the Companys New Jersey  facility to its
new facility in Chesapeake, Virginia. Excluding these costs,  SG&A would have been
$21,775,000 for the three months ended September 30,  2001, which would have resulted in
a decrease of $2,622,000 or 12% for the three  months ended September 30, 2002. The
remaining decrease was due principally to: i) $1,200,000 of costs associated with the
Companys Customer Relationship  Management (CRM) launch in partnership
with Oracle Corporation for  the three months ended September 30, 2001; ii) the
efficiencies gained from the  restructuring plan during 2002 and 2001; iii) lower bonus
payout in 2002; and  iv) the implementation of SFAS No. 142, which would have resulted in
a reduction  of goodwill amortization expenses of approximately $245,000 had the
provision  been retroactively applied for the three months ended September 30, 2001.
These  decreases were partially offset by approximately $1,355,000 of non-recurring
costs incurred during the three months ended September 30, 2002, related to a  reduction
in the workforce effected during the quarter.


RESEARCH
AND  DEVELOPMENT  (R&D) EXPENSES. R&D expenses decreased to
$2,362,000  in  the three months ended September 30, 2002, down $327,000 or 12% from
$2,689,000  in  the three months ended September 30, 2001. As a percentage of revenues,  R&D
expenses  decreased to 4% in the three months ended September 30, 2002,  down from 5% in
the three  months ended September 30, 2001. This decrease was  principally due to reduced
payroll  and related costs during the three months  ended September 30, 2002.


ASSET
IMPAIRMENT. During the three months ended September 30, 2002, the  Company
reviewed the carrying value of its long-lived assets including the  facility held for
sale. Based upon this review, the carrying value of the  facility held for sale was
adjusted to its fair value less costs to sell,  amounting to approximately $6,900,000,
which was determined based upon a  third-party valuation. The resulting $1,832,000
impairment loss has been  recorded as a separate line item in the statement of
operations.



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|INTEREST
INCOME.Interest income decreased to $267,000 in the three months ended
September 30, 2002, down $229,000 or 46% from $496,000 in the three months ended
September 30, 2001. The decrease was principally due to lower short term  interest rates
versus last year.


PROVISION FOR INCOME
TAXES. The effective tax expense recorded in the three months
ended September 30, 2002 was 50%, as compared with 36% in the three months ended
September 30, 2001. In July 2002, the State of New Jersey enacted new tax
legislation that adversely impacts the effective state tax rate of most
companies operating in New Jersey. This legislation is retroactive to January 1,
2002. It is estimated that the effect of this legislation will increase the
Companys effective tax rate from 36% to 40% for the 2002 tax year. The tax
provision for the three months ending September 30, 2002 reflects the
retroactive impact of the higher effective tax rate for the six months ended
June 30, 2002 which resulted in approximately $508,000 of additional income tax
expense in the three months ending September 30, 2002 as well as a provision for
the current quarter pre-tax earnings of approximately 40%.


NINE MONTHS
ENDED SEPTEMBER 30, 2002 AND 2001


REVENUES.
Total revenues increased to $168,716,000 in the nine months ended September 30,  2002, up
$5,046,000 or 3% from $163,670,000 in the nine months ended September  30, 2001.


License
fee revenues decreased to  $7,761,000 in the nine months ended September 30, 2002, a
decrease of $8,150,000  or 51% from $15,911,000 in the nine months ended September 30,
2001. License fee  revenues as a percentage of total revenues were 5% in the nine months
ended  September 30, 2002, as compared to 10% in the nine months ended September 30,
2001. License fees are, by nature, non-recurring items. The majority of license  fees
recognized during the nine months ended September 30, 2002 resulted from  our performance
of services related to licenses being recognized using the  percentage-of-completion
method as well as purchases of additional user licenses  by existing customers. The
higher license fee revenues for the nine months ended  September 30, 2001 were primarily
due to a major system upgrade by an existing  customer.


Service
revenues increased to  $160,955,000 in the nine months ended September 30, 2002, up
$13,196,000 or 9%  from $147,759,000 in the nine months ended September 30, 2001. Service
revenues  as a percentage of total revenues were 95% in the nine months ended September
30, 2002, as compared to 90% in the nine months ended September 30, 2001. The  increase
in service revenues related to growth within our traditional SFA  business and growth in
our clinical services business.


COST
OF REVENUES. Total cost of revenues decreased to $84,261,000 in the nine months
ended  September 30, 2002, a decrease of $8,633,000 or 9% from $92,894,000 in the nine
months ended September 30, 2001.


Cost
of license fees decreased to  $2,776,000 in the nine months ended September 30, 2002, a
decrease of $916,000  or 25% from $3,692,000 in the nine months ended September 30, 2001.
Cost of  license fees for the nine months ended September 30, 2002 is comprised of the
amortization of capitalized software development costs of $1,945,000 and third  party
vendor license fees of $831,000. Cost of license fees for the same period  in 2001 is
comprised of the amortization of purchased software and capitalized  software development
costs of $2,732,000 and third party vendor license fees of  $960,000. The decrease in the
amortization of capitalized software development  costs in the nine months ended
September 30, 2002 was primarily due to the  acceleration of amortization of certain
purchased capitalized software during  the nine months ended September 30, 2001 of
approximately $570,000. The  remaining decrease relates to amortization recorded on
purchased capitalized  software costs from the Companys acquisition of Analytika
and ABC during  the nine months ended September 30, 2001 as discussed below. The decrease
in the  third party vendor license fees was primarily due to fewer sales of licenses.


During
the nine months ended  September 30, 2001, the Company recorded an impairment charge of
$2,614,000  related to its purchased capitalized software costs from its acquisitions of
Analytika and ABC. These operations have been modified to keep pace with the  developing
needs of the ethical pharmaceutical market. The projected  undiscounted future cash flows
of these operations were substantially less than  the carrying value of the related
long-lived assets, including identifiable  intangibles and goodwill. The fair value of
the long-lived assets was determined  based upon the discounted cash flows expected to be
derived from these  operations.


Cost
of services decreased to  $81,485,000 in the nine months ended September 30, 2002, down
$5,103,000 or 6%  from $86,588,000 in the nine months ended September 30, 2001. This
decrease was  due primarily to $3,053,000 of non-recurring costs incurred during the nine
months  ended September 30, 2001, which related to the recognition of future losses on
selected contracts for which we expected the costs of providing the future  services will
exceed the revenue to be received from the performance of the  services, which was
identified while examining the restructuring of our  Stroudsburg, PA facility.
The remaining decrease was principally due to: i) efficiencies gained from the Companys
restructuring plan and the relocation of certain services to locations with lower operating expenses that took
place during 2001; ii) the reversal during the nine months ended September 30,
2002 of approximately $939,000 of non-recurring costs previously recorded in June 2001,
which related to the recognition of anticipated future losses on selected contracts for which the Companys
obligations with respect to these contracts were favorably resolved; and iii)
$483,000 which related to other non-recurring exit  costs from our Stroudsburg, PA facility.


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|Total
gross margin for the nine  months ended September 30, 2002 was 50%, up from 43% for the
nine months ended  September 30, 2001. The margin in 2001 was impacted significantly by
$2,614,000 asset impairment and $4,106,000 of non-recurring costs within cost of
revenues that occurred in the nine months ended September 30, 2001. If not for  the
effects of these items, the gross margin would have been 47% for the nine  months ended
September 30, 2001. The improvement in gross margin during the nine  month period ended
September 30, 2002 was due to: i) efficiencies gained from the Companys restructuring plan
and the relocation of certain services to locations with lower operating expenses that took place
during 2001; ii) the reversal during the nine  months ended September 30,
2002 of approximately $939,000 of non-recurring costs  previously recorded relating to
the recognition of future anticipated losses on selected  contracts, for which the Companys
obligations with respect to these  contracts were favorably resolved; and iii)
a favorable mix shift within our services business.


SELLING,
GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES. SG&A expenses  decreased to
$58,141,000 in the nine months ended September 30, 2002, down  $13,829,000 or 19% from
$71,970,000 in the nine months ended September 30, 2001.  As a percentage of revenues, SG&A
expenses decreased to 34% in the nine  months ended September 30, 2002, as compared with
44% in the nine months ended  September 30, 2001. The decrease in SG&A expenses for
the period ended  September 30, 2002 was partially attributed to approximately $3,900,000
of  non-recurring costs incurred during the nine months ended September 30, 2001,  which
related to the transition of services from the Companys New Jersey  facility to its
new facility in Chesapeake, Virginia. Excluding these costs,  SG&A would have been
$68,070,000 for the nine months ended September 30,  2001, which would have resulted in a
decrease of $9,929,000 or 15% for the nine  months ended September 30, 2002. The
remaining decrease was principally due to: i) $3,200,000 of costs associated with the
Companys CRM launch in  partnership with Oracle Corporation during the nine months
ended September 30,  2001; ii) an improvement in operating efficiencies achieved during
the period as  the result of our corporate restructing plan; iii) a decrease in
management  bonuses in the nine months ended September 30, 2002; and iv) the
implementation  of SFAS No. 142, which would have resulted in a reduction of goodwill
amortization expenses of approximately $1,245,000 had the provisions been  retroactively
applied for the nine months ended September 30, 2001. These  decreases were partially
offset by approximately $1,355,000 of non-recurring  costs incurred during the nine
months ended September 30, 2002 related to a  reduction in the workforce effected in the
third quarter of 2002.


RESEARCH
AND DEVELOPMENT  (R&D) EXPENSES. R&D expenses decreased to $7,446,000 in
the nine months ended September 30, 2002, down $1,078,000 or 13% from $8,524,000  in the
nine months ended September 30, 2001. As a percentage of revenues,  R&D expenses
decreased to 4% in the nine months ended September 30, 2002,  down from 5% in the nine
months ended 2001. This decrease was primarily due to  reduced payroll and related costs
during the nine months ended September 30,  2002.


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 as well as
the restructuring of its facility located in  Stroudsburg, PA. The Stroudsburg, PA
operations have been substantially  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 were not included
in this restructuring charge and will continue to be expensed as incurred.  During the
nine months ended September 30, 2001, the Company recorded a charge  of $6,134,000
associated with this restructuring. The restructuring charges were  determined based upon
formal plans approved by the Companys management.


ASSET
IMPAIRMENT. During the nine months ended September 30, 2001, the  Company
reviewed the carrying values of its long-lived assets, including its  minority
investments in start-up ventures, identifiable intangibles and  goodwill. Based upon this
review, during the nine months ended September 30,  2001, the Company wrote off
$3,450,000 of cost method investments it had in two  start-up ventures due to a permanent
impairment in the fair value of these  investments. These entities experienced difficulty
in raising the additional  capital necessary to fund their start-up activities and the
situation at both  became especially severe in the second quarter of 2001.


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|In
connection with the  Companys announcement on June 14, 2001, relative to its
partnership with  Oracle Corporation to market an integrated CRM solution to meet the
specialized  needs of the worldwide pharmaceutical industry, the Companys vision
and  product platform changed. The operations acquired through the Companys
acquisitions of ABC and Analytika were modified to keep pace with the developing  needs
of the ethical pharmaceutical market. The projected undiscounted future  cash flows of
these operations were substantially less than the carrying value  of the related
long-lived assets, including identifiable intangibles and  goodwill. The fair value of
the long-lived assets was determined based upon the  discounted cash flows expected to be
derived from these operations. Management  of the Company believes that these operations
will generate negative cash flows  over the next several years due to the administrative
costs required to support  the projected revenue stream. Accordingly, the Company
recorded an impairment  charge of $8,787,000, consisting of $2,614,000 of purchased
capitalized software  and $6,173,000 of goodwill during the nine months ended September
30, 2001.  Relative to the operations acquired as a result of the MMI acquisition, the
Company now offers the mid-tier pharmaceutical market a product which is more  compatible
with the Companys vision of integrated CRM solutions.  Accordingly, the Company
reduced the remaining useful life of the purchased  capitalized software related to the
MMI acquisition to seven months as of June  2001. As the operations of the business
acquired in the MMI acquisition continue  to be successful, no impairment charge or
reduction in life was necessary for  the goodwill associated with MMI.


During
the three months ended  September 30, 2002, the Company reviewed the carrying value of
its long-lived  assets including the facility held for sale. Based upon this review, the
carrying value of the facility held for sale was adjusted to its fair value less  costs
to sell, amounting to approximately $6,900,000, which was determined based  upon a
third-party valuation. The resulting $1,832,000 impairment loss has been  recorded as a
separate line item in the statement of operations.


INTEREST
INCOME.Interest income decreased to $859,000 in the nine months ended
September 30, 2002, down $1,224,000 or 59% from $2,083,000 in the nine months  ended
September 30, 2001. The decrease was primarily due to a lower short term  interest rates
versus last year which adversely impacted interest income during  the nine months ended
September 30, 2002.


PROVISION
FOR INCOME  TAXES. The effective tax expense recorded in nine months ended
September 30, 2002 was 40%, as compared with an effective tax benefit of 33% in  the nine
months ended September 30, 2001. This increase resulted from a net loss  position offset
by the write-off of certain goodwill amounts which are not  deductible for tax purposes,
both of which occurred in the nine months ended  September 30, 2001.


Also
in July 2002, the State of  New Jersey enacted new tax legislation that will adversely
impact the effective  state tax rate of most companies operating in New Jersey. This
legislation is  retroactive to January 1, 2002. It is estimated that the effect of this
legislation will increase the Companys effective tax rate from 36% to 40%  for the
2002 tax year.


LIQUIDITY AND
CAPITAL RESOURCES


We
finance our operations  primarily through cash generated by operations. Net cash provided
by operating  activities was $13,223,000 for the nine months ended September 30, 2002,
compared to $29,731,000 for the nine months ended September 30, 2001. This  decrease was
due largely to cash generated from the reduction of accounts  receivable during the nine
months ended September 30, 2001, due to the  collection of an unusually high accounts
receivable balance as of December 31,  2000. Overall, accounts payable and accrued
expenses, including accrued  restructuring charges, decreased by $9,480,000 during the
nine months ended  September 30, 2002 due to a reduction in management bonuses and
continued  payments of one-time and restructuring accruals. These factors were offset by
the Companys net loss in the nine months ended September 30, 2001 compared  with
its net income in the nine months ended September 30, 2002.


Net
cash used in investing  activities was $23,499,000 in the nine months ended September 30,
2002. Cash  used in investing activities was for funding of the Companys
acquisitions  described in Note 6 to the Consolidated Financial Statements, investments
in  property and equipment, and additions to capitalized software development costs.  Net
cash used in investment activities was $30,272,000 in the nine months ended  September
30, 2001, which was primarily for the purchase of a new facility  (which is currently
held for sale), investments in property and equipment and  additions to capitalized
software.


Net
cash provided by financing  activities of $1,113,000 in the nine months ended September
30, 2002 includes  approximately $2,600,000 of cash proceeds from the issuance of common
stock  offset by approximately $1,500,000 of repurchases of common stock under the  stock
repurchase program announced on July 31, 2002. Net cash used in financing  activities of
$14,151,000 in the nine months ended September 30, 2001 includes  approximately
$3,300,000 of cash proceeds from the issuance of common stock  offset by approximately
$17,500,000 of repurchases of common stock under the  stock repurchase program announced
on January 31, 2001.


We
maintain a $15,000,000  revolving line of credit agreement with JP Morgan Chase Bank. 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 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 also limits the amount of cash dividends we may pay. The credit  facility
was recently extended for a one year period and currently expires on November 30, 2003. There were no borrowings outstanding  under the agreement
and we were in compliance with all of our covenant  obligations as of September 30, 2002
and December 31, 2001.


As of
September 30, 2002, we did  not have any material commitments for capital expenditures.
Our principal  commitments at September 30, 2002 consisted primarily of obligations under
operating leases. Future minimum rental payments on these leases are as follows:


16
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

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

|As of
September 30, 2002, letters of credit for approximately  $500,000 were outstanding.


The
Company has an agreement with  a venture capital fund with a commitment to contribute
$1,000,000 to the fund,  callable in $100,000 increments. As of September 30, 2002,
$200,000 has been  paid, with $800,000 of commitment remaining. The agreement has a
termination  date which is ten years from its effective date, subject to extension by the
general partner.


At
September 30, 2002, our working  capital was approximately $81,706,000. Total cash and
investments were 36% of  total assets as of September 30, 2002 compared with 43% as of
September 30,  2001. The Companys days sales outstanding in accounts receivable was
69  days as of September 30, 2002 compared with 52 days as of September 30, 2001.  The
September 30, 2002 days sales outstanding was adversely impacted due to the  inclusion of
the accounts receivable balances acquired in the SAI acquisition,  which closed late in
the third quarter of 2002. Had it not been for the  acquisition, the Companys days
sales outstanding would have been 61 days  as of September 30, 2002. 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 foreseeable future.


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.


On
July 31, 2002, the Company  announced that its Board of Directors had authorized the
Company to repurchase  up to $20,000,000 of its outstanding common stock over a two-year
period (the  2002 Stock Repurchase Plan). Under the 2002 Stock Repurchase
Plan,  the Company will repurchase shares on the open market or in privately negotiated
transactions from time to time. Repurchases of stock under the 2002 Stock  Repurchase
Plan are at managements discretion, depending upon price and  availability. The
repurchased shares are held as treasury stock, which may be  used to satisfy the Companys
current and near term requirements under its  equity incentive and other benefit plans
and for other corporate purposes. As of  September 30, 2002, the Company has repurchased
under the 2002 Stock Repurchase  Plan 277,500 shares of Company common stock at a
purchase price of $1,469,032.


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

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

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

|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.



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

---

|WE MAY ENCOUNTER
PROBLEMS WITH OUR RECENTLY IMPLEMENTED INTERNAL JOB-COST AND FINANCIAL SYSTEMS THAT COULD
NEGATIVELY IMPACT OUR  BUSINESS,  OPERATING RESULTS OR FINANCIAL CONDITION


We
transitioned our internal  job-cost and financial systems for our U.S. operations to an
Oracle-based system  in August 2002. While we took significant measures to ensure a
successful  transition and are confident that the implementation did not impact our
ability  to timely report accurate financial results for the third quarter of 2002, we
cannot assure you that, despite our efforts, the transition 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 or implementation 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 (which could include loss through  mergers and
acquisitions) 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.


18
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

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


Business
and economic pressures on  our major customers may result in budget constraints that
directly impact their  ability to purchase the Companys new products and services
offerings. We  cannot assure you that any decrease in demand caused by these pressures
will  have no material adverse effect on our business, operating results or financial
condition.


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
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.



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

---

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

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

| |  |  | hostilities in any of these countries.
| | - |  | --------------------------------------

|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 hostilities  in the
Middle East, 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 ONATTRACTING 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.



20
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|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.


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

|21
|--

---

| |  |  | 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.


Item 4.   Controls and Procedures.


The
Companys principal  executive officer and principal financial officer have
evaluated the  Companys disclosure controls and procedures as of a date within 90
days of  the filing date of this Form 10-Q and have found the disclosure controls and
procedures to be effective. There have been no significant changes in the  Companys
internal controls or in other factors that could significantly  affect these internal
controls subsequent to the date of their evaluation, nor  were any significant
deficiencies or material weaknesses in the Companys  internal controls found.


PART II.   OTHER INFORMATION



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

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

| |  | 10.44 | Acquisition  Agreement
dated September 19, 2002 by and among Dendrite International, Inc., SAI Acquisition
L.L.C., Software  Associates International, LLC, Software Associates International Inc.,
The Interpublic Group of Companies, Inc., IPG SAI Holding  Corp., Shaleen Gupta and Derek
Evans
| |  | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.45 | November 2002 Amendment to
Credit Agreement with JP Morgan Chase Bank
| |  | ----- | ---------------------------------------------------------------------

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

| |  | (a) | The
Company filed a Current  Report on Form 8-K on August 2, 2002 pursuant to Item 5.
Other  Events relating to the authorization by the Companys Board of
Directors of a stock repurchase program.
| |  | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (b) | The Company filed a Current
Report on Form 8-K on August 14, 2002 pursuant to Item 9. Regulation FD
Disclosure relating to correspondence filed with the Securities and
Exchange Commission in connection with the Companys Form 10-Q for the
quarterly period ending June 30, 2002 and relating to the Companys July
25, 2002 conference call to report second quarter results.
| |  | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (c) | The Company filed a Current
Report on Form 8-K on September 20, 2002 pursuant to Item 5. Other
Events relating to the acquisition of Software Associates International.
| |  | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|22
|--

---

|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:
November 14, 2002
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| |  | By: LUKE M. BESHAR
Luke M. BesharSenior Vice President
and Chief Financial Officer
(Principal Financial Officer)
| |  | ------------------------------------------------------------------------------------------------------------------------------

|23
|--

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|CERTIFICATION


I, John E. Bailye, certify that:
|------------------------------------------------

|1. |  | I
have reviewed this quarterly report on Form 10-Q of Dendrite International, Inc.;
|-- |  | -----------------------------------------------------------------------------------

|2. |  | Based
on my knowledge, this  quarterly report does not contain any untrue statement of a
material fact or  omit to state a material fact necessary to make the statements made, in
light of  the circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly report;
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Based
on my knowledge, the  financial statements, and other financial information included in
this quarterly  report, fairly present in all material respects the financial condition,
results  of operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | The
registrants other  certifying officer and I are responsible for establishing and
maintaining  disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
and  15d-14) for the registrant and we have:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | designed
such disclosure  controls and procedures to ensure that material information relating to
the  registrant, including its consolidated subsidiaries, is made known to us by  others
within those entities, particularly during the period in which this  quarterly report is
being prepared;
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | evaluated
the effectiveness of the registrant's  disclosure controls and procedures as of a date
within 90 days prior to the filing  date of this quarterly report (the "Evaluation
Date"); and
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | presented
in this quarterly report our conclusions about the  effectiveness of the disclosure
controls and procedures based on our  evaluation as of the Evaluation Date;
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | The
registrants other  certifying officer and I have disclosed, based on our most
recent evaluation, to  the registrants auditors and the audit committee of
registrants  board of directors (or persons performing the equivalent function):
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | all
significant  deficiencies in the design or operation of internal controls which could
adversely affect the registrant's ability  to record,  process,  summarize and report
financial  data and have  identified for the  registrants  auditors any  material
weaknesses in internal controls; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | any
fraud,  whether or not material,  that involves  management or other employees who have a
significant  role in the registrants  internal controls; and
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | The
registrants other  certifying officer and I have indicated in this quarterly report
whether or not  there were significant changes in internal controls or in other factors
that  could significantly affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date:  November 14, 2002 |  | JOHN E. BAILYE
John E. BailyeChairman and Chief Executive Officer
|------------------------ |  | -------------------------------------------------------------------------------

|24
|--

---

|CERTIFICATION


I, Luke M. Beshar, certify that:
|------------------------------------------------

|1. |  | I
have reviewed this quarterly report on Form 10-Q of Dendrite International, Inc.;
|-- |  | -----------------------------------------------------------------------------------

|2. |  | Based
on my knowledge, this  quarterly report does not contain any untrue statement of a
material fact or  omit to state a material fact necessary to make the statements made, in
light of  the circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly report;
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Based
on my knowledge, the  financial statements, and other financial information included in
this quarterly  report, fairly present in all material respects the financial condition,
results  of operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | The
registrants other  certifying officer and I are responsible for establishing and
maintaining  disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
and  15d-14) for the registrant and we have:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | designed
such disclosure  controls and procedures to ensure that material information relating to
the  registrant, including its consolidated subsidiaries, is made known to us by  others
within those entities, particularly during the period in which this  quarterly report is
being prepared;
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | evaluated
the effectiveness of the registrant's  disclosure controls and procedures as of a date
within 90 days prior to the filing  date of this quarterly report (the "Evaluation
Date"); and
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | presented
in this quarterly report our conclusions about the  effectiveness of the disclosure
controls and procedures based on our  evaluation as of the Evaluation Date;
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | The
registrants other  certifying officer and I have disclosed, based on our most
recent evaluation, to  the registrants auditors and the audit committee of
registrants  board of directors (or persons performing the equivalent function):
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | all
significant  deficiencies in the design or operation of internal controls which could
adversely affect the registrant's ability  to record,  process,  summarize and report
financial  data and have  identified for the  registrants  auditors any  material
weaknesses in internal controls; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | any
fraud,  whether or not material,  that involves  management or other employees who have a
significant  role in the registrants  internal controls; and
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | The
registrants other  certifying officer and I have indicated in this quarterly report
whether or not  there were significant changes in internal controls or in other factors
that  could significantly affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date:  November 14, 2002 |  | LUKE M. BESHAR
Luke M. BesharSenior Vice President and Chief Financial Officer
|------------------------ |  | --------------------------------------------------------------------------------------------

|25
|--

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|EXHIBIT INDEX
|-------------

| |  | Exhibit No. | Description
| |  | ----------- | -----------

| |  | 10.44 | Acquisition  Agreement
dated September 19, 2002 by and among Dendrite International, Inc., SAI Acquisition
L.L.C., Software  Associates International, LLC, Software Associates International Inc.,
The Interpublic Group of Companies, Inc., IPG SAI Holding  Corp., Shaleen Gupta and Derek
Evans
| |  | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.45 | November 2002 Amendment to
Credit Agreement with JP Morgan Chase Bank
| |  | ----- | ---------------------------------------------------------------------