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SECURITIES AND EXCHANGE COMMISSIONWashington, D. C. 20549

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FORM 10-Q

|/x/                                          | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|-------------------------------------------- | ----------------------------------------------------------------------------------------
|For the quarterly period ended June 30, 2001
|OR                                          
|/ /                                          | 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: 0-30822

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SYNAVANT Inc.(Exact name of registrant as specified in its charter)

Delaware

22-2940965(State of Incorporation)

(I.R.S. Employer Identification No.)3445 Peachtree Road NE, Suite 1400
Atlanta, GA

30326(Address of principal executive offices)

(Zip Code)


Registrant's telephone number, including area code(404) 841-4000

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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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:

Title of Class

Shares Outstanding
at August 1, 2001Common Stock,
par value $.01 per share

14,952,685 Shares


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SYNAVANT Inc.        FORM 10-Q  FOR THE QUARTER ENDED JUNE 30, 2001

INDEX

|           |  |                                                                                                        |  | PAGE
|---------- |  | ------------------------------------------------------------------------------------------------------ |  | ----
|PART I.    |  | FINANCIAL INFORMATION                                                                                  |  |     
|ITEM 1.    |  | FINANCIAL STATEMENTS (UNAUDITED)                                                                       |  |     
|           |  | Condensed Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000                        |  | 2   
|           |  | Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2001 and 2000 |  | 3   
|           |  | Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2001 and 2000                  |  | 4   
|           |  | Notes to Condensed Consolidated Financial Statements                                                   |  | 5   
|ITEM 2.    |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                  |  | 9   
|ITEM 3.    |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                             |  | 23  
|PART II.   |  | OTHER INFORMATION                                                                                      |  |     
|ITEM 1.    |  | LEGAL PROCEEDINGS                                                                                      |  | 24  
|ITEM 2.    |  | CHANGES IN SECURITIES AND USE OF PROCEEDS                                                              |  | 24  
|ITEM 3.    |  | DEFAULTS UPON SENIOR SECURITIES                                                                        |  | 24  
|ITEM 4.    |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                    |  | 24  
|ITEM 5.    |  | OTHER INFORMATION                                                                                      |  | 24  
|ITEM 6.    |  | EXHIBITS AND REPORTS ON FORM 8-K                                                                       |  | 24  
|SIGNATURES |  | 25                                                                                                    

1

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PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

SYNAVANT Inc.        CONDENSED CONSOLIDATED BALANCE SHEETS(Dollar amounts in thousands, except per share data)

|                                           |                                                                                                            | June 30,
2001
(Unaudited) |         | December 31,
2000
(Audited)
|------------------------------------------ | ---------------------------------------------------------------------------------------------------------- | ------------------------- | ------- | ---------------------------
|ASSETS:                                   
|CURRENT ASSETS:                            |                                                                                                            |                           |         |                            
|                                           | Cash and cash equivalents                                                                                  |                           | $       | 9,131                      
|                                           | Marketable equity securities                                                                               |                           |         | 3,289                      
|                                           | Accounts receivablenet                                                                                    |                           |         | 42,794                     
|                                           | Other receivables (see note 2)                                                                             |                           |         | 520                        
|                                           | Other current assets                                                                                       |                           |         | 7,372                      
|                                           |                                                                                                            |                           |         |                            
|TOTAL CURRENT ASSETS                       |                                                                                                            |                           | 63,106  |                            
|                                           |                                                                                                            |                           |         |                            
|                                           | Property, plant and equipmentnet                                                                          |                           |         | 11,515                     
|                                           | Computer softwarenet                                                                                      |                           |         | 9,860                      
|                                           | Goodwillnet                                                                                               |                           |         | 46,500                     
|                                           | Long term notes receivable                                                                                 |                           |         | 1,000                      
|                                           | Other assets                                                                                               |                           |         | 2,756                      
|                                           |                                                                                                            |                           |         |                            
|TOTAL LONG TERM ASSETS                     |                                                                                                            |                           | 71,631  |                            
|                                           |                                                                                                            |                           |         |                            
|TOTAL ASSETS                               |                                                                                                            | $                         | 134,737 |                            
|                                           |                                                                                                            |                           |         |                            
|LIABILITIES AND STOCKHOLDERS' EQUITY:     
|CURRENT LIABILITIES:                       |                                                                                                            |                           |         |                            
|                                           | Accounts payable                                                                                           |                           | $       | 10,139                     
|                                           | Accrued and other current liabilities                                                                      |                           |         | 13,949                     
|                                           | Accrued income taxes                                                                                       |                           |         | 4,182                      
|                                           | Deferred revenues                                                                                          |                           |         | 11,762                     
|                                           |                                                                                                            |                           |         |                            
|TOTAL CURRENT LIABILITIES                  |                                                                                                            |                           | 40,032  |                            
|                                           |                                                                                                            |                           |         |                            
|                                           | Deferred taxes                                                                                             |                           |         | 416                        
|                                           | Accrued liability due to former parent                                                                     |                           |         | 9,000                      
|                                           | Other liabilities                                                                                          |                           |         | 311                        
|                                           |                                                                                                            |                           |         |                            
|TOTAL LIABILITIES                          |                                                                                                            |                           | 49,759  |                            
|                                           |                                                                                                            |                           |         |                            
|Commitments and contingencies (see note 3) |                                                                                                            |                           |         |                            
|Minority interests                         |                                                                                                            |                           |        |                            
|STOCKHOLDERS' EQUITY:                      |                                                                                                            |                           |         |                            
|                                           | Common stock, par value $.01, authorized 41,000,000 shares; 14,938,661 shares outstanding at June 30, 2001 |                           |         | 149                        
|                                           | Other stockholders' equity                                                                                 |                           |         | 84,829                     
|                                           |                                                                                                            |                           |         |                            
|TOTAL STOCKHOLDERS' EQUITY                 |                                                                                                            |                           | 84,978  |                            
|                                           |                                                                                                            |                           |         |                            
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |                                                                                                            | $                         | 134,737 |                            
|                                           |                                                                                                            |                           |         |                            

See
accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

2

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SYNAVANT Inc.        CONSOLIDATED STATEMENTS OF OPERATIONS        (Unaudited)(Dollar amounts in thousands, except per
share data)

|                                                       |                       | Three Months Ended
June 30, |        | Six Months Ended
June 30, |  
|------------------------------------------------------ | --------------------- | --------------------------- | ------ | ------------------------- | -
|
|REVENUES:                                              |                       |                             |        |                           |  
|                                                       | Software fees         |                             | $      | 4,019                     |  
|                                                       | Software services     |                             |        | 22,296                    |  
|                                                       | Interactive marketing |                             |        | 20,358                    |  
|                                                       |                       |                             |        |                           |  
|TOTAL REVENUES                                         |                       |                             | 46,673 |                           |  
|                                                       |                       |                             |        |                           |  
|OPERATING COSTS:                                       |                       |                             |        |                           |  
|                                                       | Software fees         |                             |        | 2,321                     |  
|                                                       | Software services     |                             |        | 17,580                    |  
|                                                       | Interactive marketing |                             |        | 16,897                    |  
|                                                       |                       |                             |        |                           |  
|TOTAL OPERATING COSTS                                  |                       |                             | 36,798 |                           |  
|                                                       |                       |                             |        |                           |  
|Research & development                                 |                       |                             | 2,089  |                           |  
|Selling and administrative expenses                    |                       |                             | 8,824  |                           |  
|Depreciation and amortization                          |                       |                             | 5,338  |                           |  
|Spin related costs                                     |                       |                             | 350    |                           |  
|                                                       |                       |                             |        |                           |  
|OPERATING LOSS                                         |                       |                             | (6,726 | )                         |  
|Other incomenet                                       |                       |                             | 299    |                           |  
|                                                       |                       |                             |        |                           |  
|LOSS BEFORE PROVISION (BENEFIT) FOR INCOME TAXES       |                       |                             | (6,427 | )                         |  
|                                                       |                       |                             |        |                           |  
|Income tax (Provision) Benefit                         |                       |                             | 213    |                           |  
|                                                       |                       |                             |        |                           |  
|NET LOSS                                               |                       | $                           | (6,214 | )                         | $
|                                                       |                       |                             |        |                           |  
|Net loss per share of common stock: basic and diluted  |                       | $                           | (0.42  | )                         | $
|Weighted average shares outstanding: basic and diluted |                       |                             | 14,909 |                           |  

See
accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

3

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SYNAVANT Inc.        CONSOLIDATED STATEMENTS OF CASH FLOWS        (Unaudited)(Dollar amounts in thousands)

|                                                                                                                                              |                                                   | Six Months Ended
June 30, |        
|--------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ------------------------- | -------
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                         |                                                   |                           |        
|                                                                                                                                              | Net loss                                          |                           | $      
|Adjustments to reconcile net loss to net cash provided (used) by operating activities:                                                        |                                                   |                           |        
|                                                                                                                                              | Depreciation and amortization                     |                           |        
|                                                                                                                                              | Amortization of capitalized computer software     |                           |        
|                                                                                                                                              | Deferred income taxes                             |                           |        
|Changes in operating assets and liabilities:                                                                                                  |                                                   |                           |        
|                                                                                                                                              | Accounts and other receivable                     |                           |        
|                                                                                                                                              | Accounts payable                                  |                           |        
|                                                                                                                                              | Accrued liabilities and other current liabilities |                           |        
|                                                                                                                                              | Accrued income taxes                              |                           |        
|                                                                                                                                              | Deferred revenues                                 |                           |        
|                                                                                                                                              | Other                                             |                           |        
|                                                                                                                                              |                                                   |                           |        
|NET CASH USED BY OPERATING ACTIVITIES                                                                                                         |                                                   |                           | (8,681 
|                                                                                                                                              |                                                   |                           |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                                         |                                                   |                           |        
|                                                                                                                                              | Capital expenditures                              |                           |        
|                                                                                                                                              | Additions to computer software                    |                           |        
|                                                                                                                                              | Other                                             |                           |        
|                                                                                                                                              |                                                   |                           |        
|NET CASH USED IN INVESTING ACTIVITIES                                                                                                         |                                                   |                           | (1,664 
|                                                                                                                                              |                                                   |                           |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                                         |                                                   |                           |        
|                                                                                                                                              | Payments for deferred loan fees                   |                           |        
|                                                                                                                                              | Transfers from IMS HEALTH                         |                           |        
|                                                                                                                                              |                                                   |                           |        
|NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES                                                                                              |                                                   |                           | (195   
|                                                                                                                                              |                                                   |                           |        
|Effect of exchange rate changes on cash and cash equivalents                                                                                  |                                                   |                           | (97    
|                                                                                                                                              |                                                   |                           |        
|Decrease in cash and cash equivalents                                                                                                         |                                                   |                           | (10,637
|Cash and cash equivalents, beginning of period                                                                                                |                                                   |                           | 19,768 
|                                                                                                                                              |                                                   |                           |        
|Cash and cash equivalents, end of period                                                                                                      |                                                   | $                         | 9,131  
|                                                                                                                                              |                                                   |                           |        
|Supplemental Disclosure of Cash Flow Information:                                                                                             |                                                   |                           |        
|Cash payments for foreign, state and local income taxes were $1,784 and $3,111 for the six months ended June 30, 2001 and 2000, respectively. |                                                   |                           |        

See
accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

4

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SYNAVANT Inc.        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation.The accompanying unaudited condensed consolidated financial statements have been prepared in
accordance with U.S. generally accepted accounting principles for interim financial information and with the rules and regulations of the Securities and Exchange Commission (the "SEC"). The condensed
consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes of SYNAVANT Inc. (the "Company" or "SYNAVANT") on
Form 10-K. These condensed consolidated financial statements include estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent
assets, and amounts of revenues and expenses. Actual results may differ from those estimated. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair
presentation of financial position, results of operations and cash flows for the periods presented have been included. Certain information and footnote disclosures have been condensed or omitted
pursuant to SEC rules and regulations. However, management believes that the disclosures made are adequate for a fair presentation of the results of all interim periods reported herein.

Organization.On August 31, 2000, IMS HEALTH INCORPORATED ("IMS HEALTH") completed the spin off of SYNAVANT to
its stockholders (the "Distribution" or "Spin"). As a result of the Spin, SYNAVANT became a separate legal entity. SYNAVANT serves the pharmaceutical industry by developing and selling pharmaceutical
relationship management solutions that support sales and marketing decision-making and program implementation. SYNAVANT's business is composed of the pharmaceutical industry automated sales and
marketing support business of the former IMS HEALTH Strategic Technologies, Inc., certain other former foreign subsidiaries of IMS HEALTH; substantially all of IMS HEALTH's former interactive
and direct marketing businesses, including the business of Clark-O'Neill, Inc. ("Clark O'Neill"); and Permail Pty., Ltd. ("Permail"), of which SYNAVANT owns 51%. These businesses, prior
to the Spin, were managed by IMS HEALTH and reported within IMS HEALTH's consolidated financial statements. In connection with the Spin, the Company and IMS
HEALTH entered into a Distribution Agreement, dated August 31, 2000, which described certain matters related to the transaction (SeeNote 2).

The
Company operated as a business unit of IMS HEALTH for all periods prior to August 31, 2000 ("Respective Periods"). The financial statements during the Respective Periods
have been prepared using IMS HEALTH's historical basis in the assets and liabilities and historical results of operations related to the Company's business, which were all under the common control of
IMS HEALTH. The financial statements generally reflect the financial position, results of operations, and cash flows of the Company as if it were a separate entity for all periods presented.

The
financial statements during the respective periods include allocations of certain IMS HEALTH corporate and other expenses (including cash management, legal, accounting, tax,
employee benefits, insurance services, data services and other corporate overhead) relating to the Company's business for the Respective Periods. Management believes the methods used to allocate these
costs are reasonable. The financial statements exclude allocations of revenues and costs for related party transactions with IMS HEALTH as it relates to the licensing of data, except for the periods
subsequent to the Distribution, which include costs consistent with agreements executed in connection with the Spin. The financial information for the Respective Periods included herein may not
necessarily reflect the financial position, results of operations, and cash flows of the Company in the future or what they would have been if the Company had been a separate entity during the periods
presented.

5

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Reclassifications.Certain prior period amounts have been reclassified to conform with current period presentation.

Earnings Per Share.Basic and diluted earnings per share ("EPS") are calculated in accordance with Statement of
Financial Standards No. 128. For the Company's calculation, the numerator is the same for the calculation of both basic and diluted EPS. The denominator for basic and diluted EPS is the same
for both the three month and six month periods ended June 30, 2001 and 2000 as the loss from operations would otherwise cause the inclusion of common stock options to be
anti-dilutive. Options to purchase 7,731,874 shares of common stock at a weighted average price of $10.18 were outstanding but not included in the computation of diluted EPS for the three
and six months ended June 30, 2001.

The
Distribution resulted in a tax-free dividend to shareholders of IMS HEALTH who received one share of SYNAVANT Common Stock for every 20 shares of IMS HEALTH common
stock held as of July 28, 2000. Basic and diluted income per share and the average number of shares outstanding for the three and six months ended June 30, 2000 were adjusted to reflect
the twenty-for-one reverse stock split. The EPS computation for the three and six months ended June 30, 2000 includes the weighted average number of IMS HEALTH common
shares outstanding.

Recently Issued Accounting Standards.In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 requires that all derivative instruments be recorded on the balance sheet at their fair value.
In July 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging ActivitiesDeferral of the Effective Date of SFAS No. 133an
amendment of FASB Statement No. 133". Citing concerns about companies' ability to modify their information systems in time to apply SFAS No. 133, the FASB delayed its effective date for
one year, to fiscal years beginning after June 15, 2000 (January 1, 2001 for the Company). The adoption of the statement has not had a material impact on the Company's consolidated
financial statements.

In
July 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS No. 142 "Goodwill and other Intangibles". Under these new standards the FASB
eliminated accounting for certain mergers and acquisitions as poolings of interests, eliminated amortization of goodwill and indefinite life intangible assets, and established new impairment
measurement procedures for goodwill. For the Company, the standards become effective for all acquisitions completed on or after June 30, 2001. Changes in financial statement treatment for
goodwill and intangible assets arising from mergers and acquisitions completed prior to June 30, 2001 become effective January 1, 2002. We are currently assessing the impact of
implementing these standards.

NOTE 2. DISTRIBUTION AGREEMENT

Pursuant to the Distribution Agreement, the Company was contractually entitled to receive shares of Gartner Group common stock with a fair value of
$4.0 million as of the close of business on the Distribution date and a note receivable from a third party with a carrying value of $2.5 million. During the second quarter, the Gartner
Group common stock was transferred to the Company. The Gartner Group shares are subject to certain contractual restrictions on transfer and voting that were agreed to as part of the Gartner Group
distribution from IMS HEALTH in 1999. As a result of the stock being transferred, the Company has classified the value of the Gartner Group shares on the balance sheet as Marketable equity securities
as of June 30, 2001. These shares were included in Other receivables as of December 31, 2000. The Company has accounted for them in accordance with the underlying securities. The note
receivable from a third party has yet to be transferred as of June 30, 2001. The Company has classified the note receivable from a third party as a long term note receivable and is accounting
for it in accordance with the underlying asset to be received. During the second quarter, the Company revalued this note receivable to $1.0 million. This valuation has appropriately been
reflected in the

6

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financial statements as of June 30, 2001. In addition, the value of the Gartner Group shares is $3.3 million as of June 30, 2001. This cumulative decline in value of the Gartner
Group shares has been recorded as an other comprehensive loss.

To
facilitate the Distribution, IMS HEALTH had committed to certain credit support arrangements with SYNAVANT. The IMS HEALTH credit support letter would, if necessary, provide
certain credit support sufficient to meet the working capital needs of SYNAVANT up to the one-year anniversary of the Distribution. On April 27, 2001, SYNAVANT Inc. entered
into a stand-alone revolving credit facility with Foothill Capital Corporation (the "Foothill Facility"), a wholly-owned subsidiary of Wells Fargo & Company. The Foothill Facility has a term of
five years with a maximum credit line of $20 million (See"Management's Discussion and AnalysisLiquidity and Capital Resources). As
of June 30, 2001, the Company has not required the use of the Foothill Facility. Concurrent with the Foothill Facility obtained by the Company, IMS HEALTH was relieved of its obligation to
provide this credit support. In addition, SYNAVANT and IMS HEALTH have agreed in principal to resolutions regarding other outstanding matters in connection with the Distribution relating to the
Company's cash balances at the time of the Distribution, the transfer of the Company's Scriptrac businesses in Canada and Australia to IMS HEALTH, the transfer of IMS HEALTH's Call Reporting
businesses in Latin America to the Company, the formalization of real estate leases between the Company and IMS HEALTH, and the payment of outstanding invoices owed to IMS HEALTH. The resolution of
these matters will not result in any additional charge to the Company's Statement of Operations.

NOTE 3. CONTINGENCIES

SYNAVANT has from time to time been involved in legal proceedings and litigation arising in the ordinary course of business. In the opinion of management, the
outcome of all current proceedings, claims and litigation will not materially affect SYNAVANT's consolidated financial position. In addition, the Company is subject to certain other contingencies
discussed below.

In
connection with the Distribution, SYNAVANT is jointly and severally liable to other parties in connection with prior IMS HEALTH Distribution Agreements for the liabilities relating
to certain tax matters as well as a legal matter ("Distribution Liabilities"). Under the Distribution Agreement, IMS HEALTH and SYNAVANT agreed that SYNAVANT would have a maximum liability of
$9.0 million for the Distribution Liabilities. Management believes it is probable that at least one of these matters will have an unfavorable outcome and as a result the Company has recorded a
$9.0 million liability associated with these matters as part of the Distribution. The Distribution Agreement required that if an unfavorable outcome occurred, the amount due up to
$9.0 million is due and payable in 2003. In concurrence with the Foothill Facility obtained by the Company (See"Management's Discussion and
AnalysisLiquidity and Capital Resources), IMS HEALTH has agreed to defer any payments associated with the Distribution Liabilities until 2005. Under the
Distribution Agreement, SYNAVANT would be liable for amounts in excess of $9.0 million, related to the Distribution Liabilities, only to the extent that all of the parties involved do not have
sufficient combined assets to settle such contingencies.

NOTE 4. INCOME TAX

The Company's consolidated tax provision was a benefit of $0.2 million for the three months and a provision of $2.0 million for the six months
ended June 30, 2001, respectively, compared with a benefit of $3.7 million and provision of $0.1 million for the same periods in the prior year. The Company's effective tax rate
is different than the U.S. federal statutory tax rate due to taxable income in certain
foreign jurisdictions, non-deductible goodwill amortization, and losses for which a full valuation has been provided.

7

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NOTE 5. OPERATIONS BY SEGMENT

The Company delivers pharmaceutical relationship management solutions globally in approximately 30 countries. The Company's chief operating decision-makers
evaluate the business on a global basis with consideration of resource allocation on a geographic basis. The Americas Segment principally consists of operations for the United States, the Company's
country of domicile. The Europe Segment includes, but is not limited to, the operations of the United Kingdom, which is the largest region in this segment. The Asia Pacific Segment consists
principally of the operations of Australia. For further information on material individual countries see the additional disclosure in the second table of this note.

|                               |                                             | Americas |         | Europe |        | Asia Pacific |       | Total |        
|------------------------------ | ------------------------------------------- | -------- | ------- | ------ | ------ | ------------ | ----- | ----- | -------
|
|Six Months Ended June 30, 2001 |                                             |          |         |        |        |              |       |       |        
|                               | Operating revenues                          |          | 54,866  |        | 28,458 |              | 7,427 |       | 90,751 
|                               | Segment operating income (loss)             |          | (15,728 | )      | 1,769  |              | (171  | )     | (14,130
|                               | Non-operating income (loss)                 |          | 328     |        | (130   | )            | 23    |       | 221    
|                               | Loss before income taxes                    |          | (15,400 | )      | 1,639  |              | (148  | )     | (13,909
|                               | Provision for income taxes                  |          |         |        |        |              |       |       | (1,952 
|                               | Net loss                                    |          |         |        |        |              |       |       | (15,861
|                               | Segment total depreciation and amortization |          | 10,995  |        | 416    |              | 322   |       | 11,733 
|                               | Segment capital expenditures                |          | 385     |        | 655    |              | 298   |       | 1,338  
|                               | Identifiable assets at June 30, 2001        |          | 100,251 |        | 27,785 |              | 6,701 |       | 134,737

|                               |                                             | Americas |         | Europe |        | Asia Pacific |       | Total |        
|------------------------------ | ------------------------------------------- | -------- | ------- | ------ | ------ | ------------ | ----- | ----- | -------
|Six Months Ended June 30, 2000 |                                             |          |         |        |        |              |       |       |        
|                               | Operating revenues                          |          | 54,046  |        | 29,829 |              | 9,333 |       | 93,208 
|                               | Segment operating income (loss)             |          | (13,906 | )      | 2,808  |              | 556   |       | (10,542
|                               | Non-operating income (loss)                 |          | 195     |        | (32    | )            | (59   | )     | 104    
|                               | Loss before income taxes                    |          | (13,711 | )      | 2,776  |              | 497   |       | (10,438
|                               | Provision for income taxes                  |          |         |        |        |              |       |       | (81    
|                               | Net loss                                    |          |         |        |        |              |       |       | (10,519
|                               | Segment total depreciation and amortization |          | 12,440  |        | 736    |              | 379   |       | 13,555 
|                               | Segment capital expenditures                |          | 1,046   |        | 495    |              | 141   |       | 1,682  
|                               | Identifiable assets at June 30, 2000        |          | 221,232 |        | 31,633 |              | 6,279 |       | 259,144

Information
about the Company's operations and long-lived assets by geography is as follows:

|                               |                      | US |         | UK |        | Australia |       | Rest of
World(2) |        | Total
|------------------------------ | -------------------- | -- | ------- | -- | ------ | --------- | ----- | ---------------- | ------ | -----
|Six Months Ended June 30, 2001 |                      |    |         |    |        |           |       |                  |        |      
|                               | Operating revenues   |    | 51,809  |    | 10,893 |           | 6,851 |                  | 21,198 |      
|                               | Long-lived assets(1) |    | 62,276  |    | 3,601  |           | 818   |                  | 2,180  |      
|Six Months Ended June 30, 2000 |                      |    |         |    |        |           |       |                  |        |      
|                               | Operating revenues   |    | 49,620  |    | 12,232 |           | 8,924 |                  | 22,432 |      
|                               | Long-lived assets(1) |    | 190,405 |    | 9,287  |           | 1,203 |                  | 2,364  |      

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8

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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following "Management's Discussion and Analysis of Financial Condition and Results of Operations" includes forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact made in this Quarterly Report on Form 10-Q are forward-looking, which
can be identified by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," "estimate," "believe," "continue" or other similar words. Such forward-looking statements are
based on management's current plans and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking
statements. Factors that could cause or contribute to such differences include, but are not limited to: risks associated with operating on a global basis; the ability to identify, consummate and
integrate acquisitions, alliances and ventures on satisfactory terms; the ability to develop new or advanced technologies, systems or products; the ability to successfully maintain historic effective
tax rates; regulatory, legislative and enforcement initiatives; the ability to obtain future financing on satisfactory terms and consolidation in the pharmaceutical industry. These risks and
uncertainties are not intended to be exhaustive and should be read in conjunction with other cautionary statements made herein including, but not limited to, the material set forth herein under the
heading "Factors That May Affect Future Performance." The Company assumes no obligation to update any such forward-looking statements.

This
discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes contained in Item I of this report and with
the Company's Annual Report on Form 10-K for the year ended December 31, 2000.

OVERVIEW

On August 31, 2000 ("Distribution Date"), SYNAVANT was spun off from IMS HEALTH, a provider of information solutions to the pharmaceutical and
healthcare industries. SYNAVANT serves the pharmaceutical industry by developing and selling pharmaceutical relationship management solutions that support sales and marketing decision-making and
program implementation. Simultaneous with the spin-off, Clark-O'Neill, another wholly-owned subsidiary of IMS HEALTH, merged into SYNAVANT.

Pursuant
to the spin-off, shares of SYNAVANT common stock were distributed to the shareholders of IMS HEALTH. This transaction was structured as a tax-free
dividend to the stockholders of IMS HEALTH, who received one share of our Common Stock (together with the associated preferred share purchase right) for every 20 shares of IMS HEALTH common stock held
as of the record date for the
distribution. Prior to August 31, 2000, these businesses and products were managed as part of the core IMS segment of IMS HEALTH.

SIEBEL ALLIANCE

On July 19, 2000, the Company announced a five-year strategic alliance (the "Alliance") with Siebel Systems, Inc. ("Siebel"), a
leading provider of eBusiness application software, to develop, market, and sell an integrated eBusiness software and service solution featuring Siebel ePharma, a pharmaceutical version of Siebel
eBusiness Applications, and the Company's global implementation and support capabilities.

As
part of the Alliance, the Company has agreed with Siebel to a revenue-sharing agreement for certain new client contracts that incorporate a joint solution offering as well as for
certain new client contracts based on the Company's existing Cornerstone and PremiereSM offerings.

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Under the terms of the Alliance, the Company is contractually obligated to discontinue the future enhancement and development of its Cornerstone and
PremiereSM products, but continues to support users of these products under current and future contr ©acts. The Company anticipates that it will eventually phase out these
products and replace them with a new generation of joint solution offerings incorporating Siebel technology.

The
Company has incurred significant costs to make the transition from implementing and supporting proprietary software to implementing and supporting third party software. In
addition, business volumes associated with the resale and implementation of Siebel applications have not yet reached the levels required to make this relationship profitable. The pace at which these
sales volumes increase will have a significant impact on the Company's financial results for 2001.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2001 COMPARED WITH THREE MONTHS ENDED
JUNE 30, 2000.

REVENUE

Total revenues for the three months ended June 30, 2001 remained essentially unchanged at $46.7 million from $47.0 million for the three
months ended June 30, 2000. Increases in Software fees and Software services was offset by a stronger U.S. Dollar, the divestiture of EMRON and a decline in interactive marketing revenues.
Excluding the impact of a stronger U.S. Dollar and the impact of the EMRON divestiture, revenues were up 6.0%. EMRON, an operating unit of the Interactive marketing segment, was divested during the
fourth quarter 2000.

SOFTWARE FEES.Software fees increased to $4.0 million for the three months ended June 30, 2001 from
$2.5 million for the three months ended June 30, 2000, an increase of $1.5 million and 61.5%. The increase in Software fees is primarily due to revenue generated from customer
sales representative expansions in North America and initial Siebel implementations. Excluding the impact of a stronger U.S. Dollar, Software fees revenue increased 65.1%.

SOFTWARE SERVICES.Software services revenue increased to $22.3 million for the three months ended
June 30, 2001 from $21.4 million for the three months ended June 30, 2000, an increase of $0.9 million and 4.0%. The increase in revenue from Software services is
principally due to hardware and software rebills associated with customer sales representative expansions in North America. Excluding the impact of a stronger U.S. dollar, Software services revenue
increased 6.6%.

INTERACTIVE MARKETING.Interactive marketing revenue declined to $20.4 million for the three months ended
June 30, 2001 from $23.1 million for the three months ended June 30, 2000, a decline of $2.7 million and 11.9%. The decline in revenue from Interactive marketing is
primarily due to the absence of EMRON, which was divested in late 2000, lower performance at Permail, our non-strategic 51% owned direct mail business in Australia, and a stronger U.S.
Dollar, partially offset by the inclusion of Pharbase license revenue from IMS HEALTH in 2001. Excluding the impact of the EMRON divestiture, a stronger U.S. Dollar, and the inclusion of Pharbase
revenue on a consistent basis, Interactive marketing revenue declined by 3.1%.

OPERATING COSTS

COST OF SOFTWARE FEES.Cost of Software fees increased to $2.3 million for the three months ended
June 30, 2001, from $0.6 million for the three months ended June 30, 2000, an increase of $1.7 million. The increase is due to higher third party software royalties
associated with the Siebel Alliance and higher software revenue.

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COST OF SOFTWARE SERVICES.Cost of Software services increased to $17.6 million for the three months ended
June 30, 2001, from $13.6 million for the three months ended June 30, 2000, an increase of 29.6%. The increase in Cost of Software services is primarily due to hardware and
software rebills relating to customer sales representative expansions in North America, the costs associated with mobilizing the organization to begin implementing and supporting the new SYNAVANT
solution with technology from Siebel and investments made in selected markets in Europe and Asia.

COST OF INTERACTIVE MARKETING.Cost of Interactive marketing revenue declined to $16.9 million for the three
months ended June 30, 2001, from $20.0 million for the three months ended June 30, 2000. The decline in the Cost of Interactive marketing is primarily driven by the absence of
EMRON, divested in late 2000 and lower volumes at Permail, our non-strategic 51% owned direct mail business in Australia.

OPERATING EXPENSES

RESEARCH AND DEVELOPMENT.Research and development expenses declined by 50.5% to $2.1 million for the three
months ended June 30, 2001 from $4.2 million for the three months ended June 30, 2000. The decline in research and development costs is principally attributable to a change in
development priorities driven by the Siebel Alliance. Development resource levels have been reduced and priorities have been realigned since the Company entered into the Siebel Alliance in
July 2000. Development efforts in the future will be focused on the development of applications that are proprietary to SYNAVANT and compatible with the Siebel technology.

SELLING AND ADMINISTRATIVE.Selling and administrative expenses increased to $8.8 million for the three months
ended June 30, 2001 from $8.6 million for the three months ended June 30, 2000. The increase in Selling and administrative expenses is principally due to higher costs associated
with running an independent public company.

DEPRECIATION AND AMORTIZATION.Depreciation and amortization for the three months ended June 30, 2001 declined
to $5.3 million from $5.8 million for the same period in the prior year. The decline is primarily driven by the impact of the Goodwill impairment charge recorded in the quarter ended
September 30, 2000.

OPERATING LOSS

Operating loss increased to $6.7 million for the three months ended June 30, 2001 compared with an operating loss of $5.8 million for the
three months ended June 30, 2000. The $0.9 million increase in operating loss is primarily due to the costs associated with mobilizing the organization to implement and support the
SYNAVANT solution using Siebel technology and the higher costs associated with running an independent public company. Also impacting the operating loss, as compared to the essentially unchanged
revenue in the same period in the prior year, is the increased hardware and software rebills related to the customer sales representative expansions in North America during the second quarter of the
current year, which produces lower operating margins.

TAXES

The Company's consolidated tax provision was a benefit of $0.2 million for the three months ended June 30, 2001, compared with a benefit of
$3.7 million for the three months ended June 30, 2000. The change reflects the absence of tax benefits that were realized in 2000 and the impact of global tax planning initiatives in
2001. The Company's effective tax rate is different than the U.S. federal statutory tax rate due to taxable income in certain foreign jurisdictions, non-deductible goodwill amortization,
and losses for which a full valuation has been provided.

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SIX MONTHS ENDED JUNE 30, 2001 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2000.

REVENUE

Total revenues for the six months ended June 30, 2001 decreased by $2.5 million and 2.6% to $90.7 million from $93.2 million for
the six months ended June 30, 2000. This decrease was due to a stronger U.S. Dollar, the divestiture of EMRON and lower Interactive marketing partially offset by
increased software fees. Excluding the impact of a stronger U.S. Dollar and the EMRON divestiture, revenues were up 4.0%. EMRON, an operating unit of the Interactive marketing segment, was divested
during the fourth quarter 2000.

SOFTWARE FEES.Software fees increased to $7.2 million for the six months ended June 30, 2001 from
$4.3 million for the six months ended June 30, 2000, an increase of $2.9 million and 67.5%. The increase in Software fees is primarily due to revenue from customer sales
representative expansions in North America and initial Siebel implementations. Excluding the impact of a stronger U.S. Dollar, Software fees revenue increased 72.8%.

SOFTWARE SERVICES.Software services revenue was essentially unchanged at $43.8 million for the six months ended
June 30, 2001 from $43.4 million for the six months ended June 30, 2000. Increases in revenue from Software services, principally due to hardware and software rebills associated
with customer sales representative expansions in North America, were offset by a stronger U.S. Dollar. Excluding the impact of a stronger U.S. dollar, Software services revenue increased 3.5%.

INTERACTIVE MARKETING.Interactive marketing revenue declined to $39.8 million for the six months ended
June 30, 2001 from $45.5 million for the six months ended June 30, 2000, a decline of $5.7 million and 12.5%. The decline in revenue from Interactive marketing is primarily
due to the absence of EMRON, which was divested in late 2000, lower volumes at Permail, our non-strategic 51% owned direct mail business in Australia, and a stronger U.S. Dollar, partially
offset by the inclusion of Pharbase license revenue from IMS HEALTH in 2001. Excluding the impact of a stronger U.S. Dollar, the EMRON divestiture, and the inclusion of Pharbase revenue on a
consistent basis, Interactive marketing revenue declined by 4.0%.

OPERATING COSTS

COST OF SOFTWARE FEES.Cost of Software fees increased to $4.5 million for the six months ended June 30,
2001, from $1.1 million for the six months ended June 30, 2000, an increase of $3.4 million. The increase is due to higher third party software royalties associated with the
Siebel Alliance and higher software revenue.

COST OF SOFTWARE SERVICES.Cost of Software services increased to $33.6 million for the six months ended
June 30, 2001, from $27.9 million for the six months ended June 30, 2000, an increase of $5.7 million. The increase in Cost of Software services is primarily due to
hardware and software rebills relating to customer sales representative expansions in North America, the costs associated with mobilizing the organization to begin implementing and supporting the new
SYNAVANT solution with technology from Siebel and investments made in selected markets in Europe and Asia.

COST OF INTERACTIVE MARKETING.Cost of Interactive marketing revenue declined to $32.8 million for the six
months ended June 30, 2001, from $39.4 million for the six months ended June 30, 2000, a decrease of $6.6 million. The decline in the Cost of Interactive marketing is
primarily driven by the absence of EMRON, divested in late 2000, and lower business volumes at Permail, our non-strategic 51% owned direct mail business in Australia.

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OPERATING EXPENSES

RESEARCH AND DEVELOPMENT.Research and development expenses declined by 34.5% to $4.5 million for the six months
ended June 30, 2001 from $6.8 million for the six months ended June 30, 2000. The decline in research and development costs is principally attributable to a change in development
priorities driven by the Siebel Alliance. Development resource levels have been reduced and priorities have been realigned since the Company entered into the Siebel Alliance in July 2000.
Development efforts in the future will be focused on the development of applications that are proprietary to SYNAVANT and compatible with the Siebel technology.

SELLING AND ADMINISTRATIVE.Selling and administrative expenses increased to $18.2 million for the six months
ended June 30, 2001 from $15.9 million for the six months ended June 30, 2000. The increase in Selling and administrative expenses is principally due to costs associated with cost
containment actions and higher costs associated with running an independent public company.

DEPRECIATION AND AMORTIZATION.Depreciation and amortization for the six months ended June 30, 2001 declined to
$10.7 million from $12.6 million for the same period in the prior year. The decline is primarily driven by the impact of the Goodwill impairment charge recorded in the quarter ended
September 30, 2000.

OPERATING LOSS

Operating loss increased to $14.1 million for the six months ended June 30, 2001 compared with a loss of $10.5 million for the six months
ended June 30, 2000. The $3.6 million increase in operating loss is primarily due to the costs associated with mobilizing the organization to implement and support the SYNAVANT solution
using Siebel technology and the costs associated with running an independent
public company. Also impacting the operating loss, as compared to the change in revenue from the same period in the prior year, is the increased hardware and software rebills related to the customer
sales representative expansions in North America during the first half of the current year, which produced lower operating margins.

TAXES

The Company's consolidated tax provision was $2.0 million for the six months ended June 30, 2001, compared with a provision of
$0.1 million for the six months ended June 30, 2000. The change reflects the absence of tax benefits which were realized in 2000 and the impact of global tax planning initiatives in
2001. The Company's effective tax rate is different than the U.S. federal statutory tax rate due to taxable income in certain foreign jurisdictions, non-deductible goodwill amortization,
and losses for which a full valuation has been provided.

RESULTS BY SEGMENT

THE AMERICAS.Revenue for the six months ended June 30, 2001 was $54.9 million compared with
$54.0 million for the six months ended June 30, 2000. The slight increase was due to customer sales representative expansions in North America, offset by lower interactive marketing
volumes and the divesture of EMRON. The operating loss for the six months ended June 30, 2001 was $15.7 million compared to a loss of $13.9 million for the six months ended
June 30, 2000 primarily due to the additional costs associated with running an independent public company.

EUROPE.Revenue for the six months ended June 30, 2001 was $28.5 million compared with
$29.8 million for the six months ended June 30, 2000. The decrease was largely driven by lower Interactive marketing volumes and the negative impact of foreign currency fluctuations.
Operating income for the six months ended June 30, 2001 decreased to $1.8 million from $2.8 million in the six

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months ended June 30, 2000 due to lower revenues and the costs associated with investments in selected European countries.

ASIA PACIFIC.Revenue for the six months ended June 30, 2001, decreased to $7.4 million compared to
$9.3 million for the six months ended June 30, 2000. The decrease was driven by lower revenues at Permail and the negative impact of foreign currency fluctuations. The operating loss for
the six months
ended June 30, 2001 was $0.2 million compared to an operating income of $0.6 million for the six months ended June 30, 2000. Excluding the Permail operation, revenue and
operating income both decreased by $0.2 million.

NON-U.S. OPERATING AND MONETARY ASSETS

SYNAVANT operates globally, deriving 43% of its revenues in the first six months of 2001 from non-U.S. operations. As a result, fluctuations in the
value of foreign currencies relative to the U.S. Dollar may increase the volatility of reported U.S. Dollar operating results.

Non-U.S.
monetary assets are maintained in currencies other than the U.S. Dollar, principally those of the Euro, the Pound Sterling and the Australian Dollar. Changes in
the value of these currencies relative to the U.S. Dollar are charged or credited to stockholders' equity. The effect of exchange rate changes during the six months ended June 30, 2001
decreased the U.S. Dollar amount of cash and cash equivalents by $0.1 million.

LIQUIDITY AND CAPITAL RESOURCES

The Company operated as an entity wholly-owned by IMS HEALTH prior to the Distribution Date and, as such, was dependent on IMS HEALTH for cash management,
credit and financial resources on an as needed basis to fund operations and to fund seasonal cash needs. The Company had a credit support letter from IMS HEALTH that provided certain credit support.

On
March 6, 2001, the Company entered into a revolving credit facility (the "ABN Facility") with ABN AMRO that was guaranteed by IMS HEALTH. The Company did not require the use
of the Facility, which was terminated by the Company on April 27, 2001 concurrently with the commencement of the stand-alone revolving credit facility with Foothill Capital Corporation (the
"Foothill Facility"), a wholly-owned subsidiary of Wells Fargo & Company.

On
April 27, 2001, SYNAVANT Inc. entered into the Foothill Facility, which has a term of five years with a maximum credit line of $20 million. The available line
is determined based on a percentage of the eligible accounts receivable in the U.S. Any borrowing against the line will be at a rate of Prime plus 100 basis points. As of June 30, 2001, the
Company has not required the use of the Foothill Facility. The Company has filed an 8-K on May 8, 2001 related to the closing of the Foothill Facility.

Concurrent
with the Foothill Facility, IMS HEALTH has agreed to defer any payments associated with the Distribution Liabilities (See Note 3) until January 1, 2005. In
addition, SYNAVANT and IMS HEALTH have also agreed in principal to resolutions on other outstanding matters in connection with
the Distribution relating to the Company's cash balances at the time of the Distribution, the transfer of the Company's Scriptrac businesses in Canada and Australia to IMS HEALTH, the transfer of IMS
HEALTH's Call Reporting businesses in Latin America to the Company, the formalization of real estate leases between the Company and IMS HEALTH, and the payment of outstanding invoices owed to IMS
HEALTH. The resolution of these matters will not result in any additional charge to the Company's Statement of Operations.

We
currently estimate that our cash and working capital needs for the next twelve months can be met by cash on hand, marketable securities, amounts available under our credit
facility, and cash flow from operations. If our expectations change regarding our capital needs due to market conditions,

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strategic opportunities or otherwise, then our capital requirements may vary materially from those currently anticipated.

CASH FLOWS

Net cash used in operating activities totaled $8.7 million for the six months ended June 30, 2001 compared with net cash used by operating
activities of $1.3 million for the six months ended June 30, 2000. The increase of $7.4 million primarily reflects a larger Net Loss and capital used for computer equipment
associated with customer sales representative expansions in North America along with the recognition of deferred revenue.

Net
cash used in investing activities totaled $1.7 million for the six months ended June 30, 2001 compared with cash used in investing activities of $4.8 million
for the six months ended June 30, 2000. The decrease in the cash outflow of $3.1 million was primarily due to lower capitalization of software development costs.

Net
cash used in financing activities totaled $0.2 million for the six months ended June 30, 2001 compared with net cash provided by financing activities of
$5.0 million for the six months ended June 30, 2000. The decrease in cash flows was due to the absence of transfers from the Company's former parent, IMS HEALTH, that occurred in the
first half of 2000.

CHANGES IN FINANCIAL POSITION AT JUNE 30, 2001 COMPARED WITH DECEMBER 31, 2000

Cash and cash equivalents were $9.1 million as of June 30, 2001 compared with $19.7 million as of December 31, 2000. The decrease
in cash and cash equivalents of $10.6 million was primarily due to the net loss for the period as well as the timing in working capital requirements.

Accounts ReceivablesNet.Decreased to $42.8 million at June 30, 2001 from
$44.4 million at December 31, 2000 due to the focused efforts on collections.

Other Current Assets.Increased $1.4 million to $7.4 million primarily due to the purchase of computer
equipment to be delivered as part of a customer sales representative expansion in the United States.

Computer Software.Decreased $3.2 million to $9.9 million due to amortization of the remaining book value
based on the greater straight line or revenue based amortization.

GoodwillNet.Decreased to $46.5 million at June 30, 2001 from $52.9 million at
December 31, 2000. The reduction was primarily due to amortization of the remaining book value on a straight line basis.

Accrued and Other Current Liabilities.Decreased to $13.9 million at June 30, 2001 from
$15.9 million at December 31, 2000. The decrease reflected the timing of certain supplier payments made during the period.

Deferred Revenue.Decreased to $11.8 million at June 30, 2001 from $13.2 million at
December 31, 2000. The decrease related to delivery of previously contracted commitments for certain customers in North America.

Total Equity.Decreased to $85.0 million at June 30, 2001 from $101.6 million at
December 31, 2000. The reduction was primarily due to the Net Loss during the period.

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FACTORS THAT MAY AFFECT FUTURE PERFORMANCE

In addition to other information in this quarterly report on Form 10-Q, the following risk factors should be
carefully considered in evaluating us and our business because such factors currently may have a significant impact on our business, operating results and financial condition. As a result of the risk
factors set forth below, actual results could differ materially from those projected in any forward-looking statements.

COMPETITION FROM OTHER PROVIDERS OF PHARMACEUTICAL RELATIONSHIP MANAGEMENT SOLUTIONS MAY REDUCE DEMAND FOR OUR PRODUCTS AND SERVICES OR CAUSE US TO REDUCE THE PRICE OF OUR
PRODUCTS AND SERVICES.

We compete with other companies that sell sales force software products and services and interactive marketing services that specifically target the
pharmaceutical industry. We also face competition from many vendors that market and sell CRM solutions in the consumer packaged goods industry. In addition, we compete with various companies that
provide support services and interactive marketing services similar to our services.

We
may not compete effectively in our markets. Competitive pressure may result in our reducing the price of our products and services, which would negatively affect our revenues and
operating margins. If we are unable to compete effectively in our markets, our business, results of operations and financial condition would be materially and adversely affected.

Increased
competition is anticipated based on the growing strategic focus on Customer Relationship Management ("CRM") and the success of Siebel Systems eBusiness solutions. Large
established companies such as Oracle and SAP that are well established providers of ERP software solutions are expected to offer new CRM solutions that may compete with SYNAVANT solutions based on
Siebel products. During the second quarter of 2001, Dendrite International and Oracle announced a relationship designed to jointly develop products for this marketplace. It is unclear what impact this
relationship will have in the marketplace.

Some
of our competitors and potential competitors are part of large corporate groups and have longer operating histories and significantly greater financial, sales and marketing,
technology and other resources than we have. In the event that we are unable to compete successfully with these companies, it could have a material adverse effect on our business, operating results or
financial condition.

IF OUR ALLIANCE WITH SIEBEL IS UNSUCCESSFUL, OUR BUSINESS MAY SUFFER MATERIALLY.

You should note the following risk factors relating to our Alliance with Siebel:



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WE MAY NEED ADDITIONAL FINANCING TO MEET OUR FUTURE CAPITAL REQUIREMENTS.

We invest in research and development as well as in capital projects to enhance existing products and services and develop new products and services in
response to technological and marketplace changes. We will need to make significant capital expenditures over the next several years, particularly in light of the rapid technological changes affecting
our business. In addition, the strategic Alliance with Siebel requires us to make significant investments during 2001 to launch our joint offering. To the extent that we need additional funding in the
future to finance our operations and capital expenditures, we may not be able to access the capital markets or otherwise obtain necessary financing, or to obtain such financing in a timely manner or
on commercially favorable terms. In the event that we satisfy our financing needs through the issuance of additional equity securities, such issuance would be dilutive to existing stockholders.

THE LOSS OF OUR KEY PERSONNEL COULD NEGATIVELY IMPACT OUR BUSINESS AND RESULTS OF OPERATIONS.

Our success depends on our continuing ability to attract, hire, train and retain a substantial number of highly skilled managerial, technical, sales, marketing
and customer support personnel. In particular, our Chairman and Chief Executive Officer, Wayne P. Yetter, is integral to our future success and is not currently bound by an employment
agreement. Competition for qualified personnel is intense, and we may fail to retain our key employees or to attract or retain other highly qualified personnel. In particular, there is a shortage of,
and significant competition for, research and development and sales personnel. Even if we are able to attract qualified personnel, new hires frequently require extensive training before they achieve
desired levels of productivity. If we are unable to hire or fail to retain competent personnel, our business, results of operations and financial condition could be materially and adversely affected.
None of our key employees are bound by an employment agreement.

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OUR FAILURE TO INTRODUCE NEW OR ENHANCED PRODUCTS IN A TIMELY MANNER COULD RENDER OUR PRODUCTS OBSOLETE AND UNMARKETABLE.

We compete in businesses that develop and market sophisticated information systems, software and other technology. We expect that these systems, software and
other technology will be subject to refinements as such systems and underlying technologies are upgraded and advanced. As various systems and technologies become outdated, we may not be able to
enhance or replace them, to enhance or replace them as quickly as our competition, or to develop and market new or enhanced products and services in the future on schedule and on a
cost-effective basis. Our failure to develop and market new or enhanced products that compete with other available products could materially and adversely affect our business, results of
operations and financial condition.

Our
success will depend in part upon our ability to:



We
are devoting significant resources to the enhancement of our solutions offerings.

DEFECTS IN OUR PRODUCTS COULD DELAY MARKET ADOPTION OF OUR SOFTWARE OR CAUSE US TO COMMIT SIGNIFICANT RESOURCES TO REMEDIAL EFFORTS.

Software products frequently contain errors or failures, especially when first introduced or when new versions or enhancements are released. We could be forced
to delay the commercial release of products
until software problems have been corrected. We could lose revenues as a result of software errors or defects. Our products are intended for use in sales and marketing applications that may be
critical to a customer's business. As a result, we expect that customers and potential customers will have a greater sensitivity to product defects than the market for software products generally.
Testing errors may also be found in new products, enhancements or releases after commencement of commercial shipments, resulting in loss of revenue or delay in market acceptance, damage to our
reputation, or increased service and warranty costs, any of which could have a material adverse effect on our business, operating results or financial condition. The foregoing would also be applicable
to Siebel products that we intend to redistribute. With respect to such products, we would also depend on Siebel for the correction of errors and the delivery of any required modifications relating to
such products.

OUR SUCCESS DEPENDS ON THE STRENGTH OF THE PHARMACEUTICAL INDUSTRY.

Our products and services are primarily used in connection with the marketing and sale of prescription-only drugs. The market for
prescription-only drugs is undergoing a number of significant changes, including:



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Our
failure to respond effectively to any or all of these and other changes in the marketplace for prescription-only drugs could have a material and adverse effect on our
business, operating results and financial condition.

FORECASTING FUTURE RESULTS MAY BE DIFFICULT SINCE WE HAVE ONLY RECENTLY BEGUN OPERATIONS AS AN INDEPENDENT COMPANY.

We have a limited operating history as an independent public company and have relied on IMS HEALTH for various financial and administrative services in
conducting our operations. As an independent company, we may not continue to generate cash flow at the same level as we did as a wholly-owned subsidiary of IMS HEALTH. Additionally, the Company may
not be able to establish the financial and administrative structure necessary to operate successfully as an independent public company. Finally, the development of such structure may require a
significant amount of management's time and other resources.

SIGNIFICANT FLUCTUATIONS IN OUR QUARTERLY AND ANNUAL OPERATING RESULTS MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.

We believe that our quarterly and annual operating results are likely to fluctuate significantly in the future, and our results of operations may fall below
the expectations of securities analysts and investors. If this occurs or if market analysts perceive that it will occur, our market value could decrease substantially. The selection of a PRM software
product often entails an extended decision-making process because of the strategic implications and substantial costs associated with a customer's license of the software. As a result, the
decision-making process typically takes nine to eighteen months, although in some cases it may take 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 nine months is customary before the software is rolled out to a customer's sales force. Other factors may cause significant fluctuations
in our quarterly and annual operating results, including:



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AS WE EXPAND OUR INTERNATIONAL SALES AND MARKETING ACTIVITIES, OUR BUSINESS WILL BE MORE SUSCEPTIBLE TO NUMEROUS RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS.

We operate globally, deriving 43% of our revenues in the first six months of 2001 from foreign operations. As a result, fluctuations in the value of foreign
currencies relative to the U.S. Dollar may increase the volatility of our operating results. To be successful, we believe we must expand our operations in emerging markets such as eastern Europe,
Mexico, South America and Asia and hire additional international personnel. As a result, we expect to commit significant resources to expand our
international sales and marketing activities. If successful, we will be subject to a number of risks associated with international business activities. These risks generally include:



EXPOSURE TO CERTAIN CONTINGENT LIABILITIES MAY MATERIALLY AND ADVERSELY AFFECT US.

We are subject to certain material contingent liabilities. As a condition to our spin-off from IMS HEALTH, we are required to undertake to be
jointly and severally liable to certain corporate predecessors of IMS HEALTH for IMS HEALTH's obligations under certain agreements with such entities, including potential liability relating to a
complaint filed against such entities alleging violations of federal antitrust laws and seeking $350 million in damages. Pursuant to our agreement with IMS HEALTH, IMS HEALTH will indemnify us
for any liability we incur in connection with such contingent liabilities in excess of $9.0 million. In concurrence with the Foothill Facility obtained by the Company, IMS HEALTH has agreed to
defer any payments associated with the Distribution Liabilities
until 2005 (see Note 3). Any failure of IMS HEALTH to fulfill its indemnification obligations that resulted in our obligation to fund a substantial portion of such excess liabilities could have
a material adverse effect on our business, operating results and financial condition.

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POTENTIAL TAXATION.

If the distribution of SYNAVANT shares of common stock to IMS HEALTH shareholders, pursuant to the spin off, were not to qualify under Section 355 of
the Internal Revenue Code, the aggregate corporate tax liability could be approximately $100 million and SYNAVANT could be severally liable for such tax. In the event that SYNAVANT were
obligated to fund a substantial portion of such liability, it would have a material adverse effect on SYNAVANT'S financial condition. Moreover, each IMS HEALTH stockholder that received shares of
SYNAVANT common stock in the spin off would be treated as if such stockholder had received a taxable distribution in an amount equal to the fair market value of the SYNAVANT common stock received.

GOVERNMENTAL REGULATION MAY MATERIALLY AND ADVERSELY AFFECT OUR ABILITY TO DISTRIBUTE CONTROLLED SUBSTANCES THROUGH THE MAIL.

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

WE RELY ON OUR ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY.

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. The steps we have taken or will take in the future may not prevent misappropriation of our 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. Despite our efforts to protect our products' proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard as
proprietary. Litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend
against claims of infringement or invalidity. Such
litigation could result in substantial costs and diversion of resources and could harm our business, operating results and financial condition.

CLAIMS AGAINST US REGARDING OUR PROPRIETARY TECHNOLOGY COULD REQUIRE US TO PAY LICENSING OR ROYALTY FEES OR TO MODIFY OR DISCONTINUE OUR PRODUCTS.

Any claim that our products infringe on the intellectual property rights of others could materially and adversely affect our business, results of operations
and financial condition. Because knowledge of a third party's patent rights is not required for a determination of patent infringement and because the United States Patent and Trademark Office is
issuing new patents on an ongoing basis, infringement claims against us are a continuing risk.

Infringement
claims against us could cause product release delays, require us to redesign our products or require us to enter into royalty or license agreements. These agreements may
be unavailable on acceptable terms. Litigation, regardless of the outcome, could result in substantial cost, divert management attention and delay or reduce customer purchases. Claims of infringement
are becoming increasingly common as the software industry matures and as courts apply expanded legal protections to software products. Third parties may assert infringement claims against us regarding
our proprietary technology and intellectual property licensed from others. Generally, third-party software licensors indemnify us from claims of infringement. However, licensors may be unable to
indemnify us fully for such claims, if at all.

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If a court determines that one of our products violates a third party's patent or other intellectual property rights, there is a material risk that the revenue from the sale of the
infringing product will be significantly reduced or eliminated, as we may have to:



In
addition, if a court finds that one of our products infringes a third party's patent or other intellectual property rights, then we may be liable to that third party for actual
damages and attorneys' fees. If a court finds that we wilfully infringed on a third party's patent, the third party may be able to recover treble damages, plus attorneys' fees and costs.

OUR CERTIFICATE OF INCORPORATION, OUR BYLAWS AND OUR AGREEMENT WITH IMS HEALTH CONTAIN PROVISIONS THAT MAY DISCOURAGE A TAKEOVER.

Our Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws contain provisions that may have the effect of discouraging
an acquisition of control of the Company not approved by our Board of Directors. Such provisions may also have the effect of discouraging third parties from making proposals involving an acquisition
or change of control of the Company, although such proposals, if made, might be considered desirable by a majority of our stockholders. Such provisions could further have the effect of making it more
difficult for third parties to cause the replacement of our Board of Directors. These provisions include:



These
provisions have been designed to enable us to develop our businesses and foster our long-term growth without disruptions caused by the threat of a takeover not
deemed by our Board of Directors to be in the best interests of us and our stockholders. In addition, under the Distribution Agreement we entered into with IMS HEALTH, we agree that until
August 31, 2002 we will not, among other things,
merge or consolidate with another corporation, sell or transfer all or substantially all of our assets, or take any other action which would result in one or more persons acquiring a 50 percent
or greater interest in us, unless, before taking such action, we obtain a written opinion of a law firm or a ruling from the Internal Revenue Service that such action will not affect the
tax-free treatment of the distribution. Such provisions may have the effect of discouraging third parties from making proposals involving an acquisition or change of control of the
Company.

We
have a stockholder rights plan that is designed to protect our stockholders in the event of an unsolicited offer and other takeover tactics that, in the opinion of our Board of
Directors, could impair

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the Board's ability to represent stockholder interests. The provisions of our stockholder rights plan may render an unsolicited takeover of the Company more difficult or less likely to occur or might
prevent such a takeover.

Pursuant
to the Distribution Agreement with IMS HEALTH, we are each subject to certain non-competition arrangements that restrict our respective business activities for a
specified period after the distribution. Pursuant to the terms of the Distribution Agreement, the restrictions would generally be binding on an entity that acquires us or is the survivor in a business
combination with the Company. Such restrictions may have the effect of discouraging third parties from making proposals involving an acquisition or change of control of the Company. We are also
subject to the provisions of Delaware corporate law, which may restrict certain business combination transactions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information in response to this Item is set forth in "Non-U.S. Operating and Monetary Assets" and "Market Risk" under Management's Discussion and
Analysis of Financial Condition and Results of Operations.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Information in response to this Item is set forth in "Note 3. Contingencies" of the Notes to Condensed Consolidated Financial Statements.

Item 2. Changes In Securities

None.

Item 3. Default Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

(a) The
Annual Meeting of Shareholders (the "Annual Meeting") of the Company was held on April 30, 2001. There were present at the Annual Meeting, in person or
by proxy, holders of 12,518,504 shares or (84.10%) of the common stock entitled to vote.

(b) The
following directors were elected to hold office for a term as designated below or until their successors are elected and qualified, with the vote for each
director being reflected below:

|Name                                                  |  | Votes For  |  | Votes Withheld
|----------------------------------------------------- |  | ---------- |  | --------------
|Elected to hold office until the 2004 Annual Meeting: |  |            |  |               
|Wayne P. Yetter                                       |  | 10,539,036 |  | 1,979,467     
|Mary A. Madden                                        |  | 10,539,036 |  | 1,979,467     

The
affirmative vote of the holders of a plurality of the outstanding shares of common stock represented at the Annual Meeting was required to elect each director.

(c) The
appointment of PricewaterhouseCoopers LLP as independent public accountants to audit the accounts of the Company and its subsidiaries for the year ending
December 31, 2001, was ratified with 12,508,742 affirmative votes cast, 7,475 negative votes cast and 2,287 abstentions. The affirmative vote of the holders of a majority of the outstanding
shares of common stock represented at the annual meeting was required to ratify the appointment of PricewaterhouseCoopers LLP.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K



|10.1 |  | Foothill Capital Credit Facility (Incorporated by reference from Exhibit 10.1 to the Company's Form 8-K filed on May 8, 2001 (File No. 0-30822)).
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

SYNAVANT INC.

|Signature |  | Title                                             |  | Date                                                                              
|--------- |  | ------------------------------------------------- |  | ----------------------------------------------------------------------------------
|          |  |                                                   |  |                                                                                   
|By:       |  | /s/WAYNE P. YETTERWayne P. Yetter                 |  | Chairman and Chief Executive Officer (Principal Executive Officer)                
|By:       |  | /s/CRAIG S. KUSSMANCraig S. Kussman               |  | Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|By:       |  | /s/CLIFFORD A. FARREN, JR.Clifford A. Farren, Jr. |  | Vice President, Finance and Controller (Principal Accounting Officer)             

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EXHIBIT INDEX

|Exhibit Number |  | Title                                                                                         
|-------------- |  | ----------------------------------------------------------------------------------------------
|10.1           |  | Credit Facility, dated April 27, 2001, between SYNAVANT Inc. and Foothill Capital Corporation.

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