|SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, DC 20549



Form 10-K/A
AMENDMENT NO. 1
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934


[ X ] ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2002  
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
0-26138


_________________


Dendrite
International, Inc.


_________________


(Exact Name of
Registrant as Specified in Its Charter)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|New Jersey
 (State or Other Jurisdiction of Incorporation or Organization) |  | 22-2786386
(I.R.S. Employer Identification No.)
|-------------------------------------------------------------------------- |  | -----------------------------------------------

|1200 Mt. Kemble Avenue
Morristown, NJ 07960-6797


_________________


(Address of Principal Executive Offices)
Registrants telephone number, including area code 973-425-1200


SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:  NONE


SECURITIES REGISTERED
PURSUANT TO SECTION 12(g) OF THE ACT:


Title of Class


Common Stock, no par
value


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


Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.  [  X  ]


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


The aggregate market value of the shares of the common stock
held by non-affiliates of the registrant as of June 28, 2002 was approximately $357,004,000 based upon the closing price of the
common stock, which was $9.67, on June 28, 2002. The number of shares of common stock outstanding as of March 18, 2003
was 40,468,641.


DOCUMENTS INCORPORATED
BY REFERENCE


None.


Note:  
Dendrite®, ForceAdministrator®, ForceAnalyzer®, ForceAnalyzerCG, ForceCG,
ForceConfigurator, ForceMobile, ForceMobileCG, ForcePharma, j-force, j-forceMOBILE,
j-forceNET, j-forceWEB,  Medicheck, NUCLEUS Pharma, Organization Manager,
Sample Allocations, SampleEnforcer, Sample Guardian, Sample Reporting, ScripMaxIQ,
VisiForce, , WebForceCG, are either trademarks or
registered trademarks of Dendrite International, Inc. All other service marks, trademarks
and trade names referred to in this document are the property of their respective owners.
The Company and any of its U.S. or international subsidiaries are sometimes collectively
referred to as Dendrite, we, ouror the Company.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|INTRODUCTORY NOTE



Dendrite
International, Inc. (Dendrite or the Company) is filing this
Amendment No. 1 on Form 10-K/A for fiscal year 2002 to correct an amount included in Note
16 to the Companys Consolidated Financial Statements. During 2002, the Company
incurred $3,170,000 to a subcontractor for outsourcing activities relating to its clinical
services. Except for the above, no other changes are being made to the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2002.  The Company's financial statements,
including the consolidated balance sheets, statements of operations, statements of stockholders' equity and
statements of cash flow were unaffected by the correction.


Item
8 (Financial Statements and Supplementary Data) of the Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2002 cross-references the Companys
Consolidated Financial Statements in Item 15, which is being amended by this Amendment No.
1 on Form 10-K/A. All other unaffected items have not been repeated in this Amendment No.
1.




-1-
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---

PART IV

ITEM 15.   EXHIBITS,
FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)         The
following documents are filed as part of this report:

(a)         Schedule
II - Valuation and Qualifying Accounts

(b)      Reports on Form 8-K.

| | None
| | ----

-2-

---

SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|Date:  April 25, 2003 |  | DENDRITE INTERNATIONAL, INC.By: KATHLEEN E. DONOVAN
     Kathleen E. Donovan     Senior Vice President and Chief
     Financial Officer     (Principal Financial Offer)
|--------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|-3-
|---

---

|CERTIFICATIONS


I, John E. Bailye, certify that:


     1.    
          I have reviewed this annual report on Form 10-K/A of Dendrite International, Inc.;


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


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


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

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

|b) | Evaluated the effectiveness of the registrants disclosure controls and
          procedures as of a date within 90 days prior to the filing date of this annual
          report (the Evaluation Date); and
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

6.    
          The registrants other certifying officers and I have indicated in this
          annual report whether there were significant changes in internal controls or in
          other factors that could significantly affect internal controls subsequent to
          the date of our most recent evaluation, including any corrective actions with
          regard to significant deficiencies and material weaknesses.

|Dated:  April 25, 2003 |  | By:  JOHN E. BAILYE
[Signature]Chairman and Chief Executive Officer
|---------------------- |  | ---------------------------------------------------------------------------------

|-4-
|---

---

|I, Kathleen E. Donovan, certify that:


     1.    
          I have reviewed this annual report on Form 10-K/A of Dendrite International, Inc.;


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


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


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

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

|b) | Evaluated the effectiveness of the registrants disclosure controls and
          procedures as of a date within 90 days prior to the filing date of this annual
          report (the Evaluation Date); and
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

6.    
          The registrants other certifying officers and I have indicated in this
          annual report whether there were significant changes in internal controls or in
          other factors that could significantly affect internal controls subsequent to
          the date of our most recent evaluation, including any corrective actions with
          regard to significant deficiencies and material weaknesses.

|Dated:  April 25, 2003 |  | By:  KATHLEEN E. DONOVAN
[Signature] Senior Vice President and 
Chief Financial Officer
|---------------------- |  | -----------------------------------------------------------------------------------------------------

|-5-
|---

---

|REPORT OF INDEPENDENT
AUDITORS


The Board of Directors
and StockholdersDendrite International, Inc.


We have audited the accompanying consolidated
balance sheet of Dendrite International, Inc. (the Company) and subsidiaries as of
December 31, 2002 and the related consolidated statements of income, stockholders
equity and cash flows for the year then ended. Our audit also included the financial
statement schedule listed in the Index at Item 15(a)2. These financial statements and
schedule are the responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements and schedule based on our audit. The
consolidated financial statements of Dendrite International, Inc. as of December 31, 2001
and for the years ended December 31, 2001 and 2000 were audited by other auditors who have
ceased operations and whose report dated February 1, 2002 expressed an unqualified opinion
on those statements before the restatement adjustments described in Note 1.


We conducted our audit in accordance
with auditing standards generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit also includes assessing
the accounting principles used and significant estimates made by management as well as
evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.


In our opinion, the 2002 consolidated
financial statements referred to above present fairly, in all material respects, the
financial position of Dendrite International, Inc. and subsidiaries as of December 31,
2002 and the results of their operations and cash flows for the year ended, in conformity
with accounting principles generally accepted in the United States. Also, in our opinion,
the related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects the
information set forth therein.


As discussed above, the consolidated
financial statements of Dendrite International, Inc. as of December 31, 2001 and for the
years ended December 31, 2001 and 2000 were audited by other auditors who have ceased
operations. As described in Note 1, in 2002 the Company adopted the provisions of EITF
01-14, Income Statement Characterization of Reimbursements Received for
Out-of-Pocket Expenses Incurred which requires reclassification of comparative
financial statements for prior periods. We audited the adjustments that were applied to
restate revenues and cost of revenues in the 2001 and 2000 financial statements. Our
procedures included (a) agreeing the amount of reimbursable expenses incurred to the
Companys underlying records obtained from management, and (b) testing the
mathematical accuracy of the restated revenues and cost of revenues. In our opinion, such
adjustments are appropriate and have been properly applied. In addition, as described in
Note 1, these financial statements have been further revised to include the transitional
disclosures required by Statement of Financial Accounting Standards No. 142, Goodwill and
Other Intangible Assets, which was adopted by the Company as of January 1, 2002. Our
audit procedures with respect to the disclosures in Note 1 with respect to 2001 and 2000
included (a) agreeing the previously reported net income (loss) to the previously issued
financial statements and the adjustments to reported net income (loss) representing
amortization expense (including any related tax effects) recognized in those periods
related to goodwill, to the Companys underlying records obtained from management,
and (b) testing the mathematical accuracy of the reconciliation of adjusted net income
(loss) to reported net income (loss), and the related earnings-per-share amounts. In our
opinion, the disclosures for 2001 and 2000 in Note 1 are appropriate. However, we were not
engaged to audit, review or apply any procedures to the 2001 or 2000 financial statements
of the Company other than with respect to such adjustments and, accordingly, we do not
express an opinion or any other form of assurance on the 2001 or 2000 financial statements
taken as a whole.


As discussed in Note 1 to the
financial statements, in 2002 the Company changed its method of accounting for goodwill.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | /s/ Ernst & Young LLP
| |  | ---------------------

|MetroPark, New Jersey
January 29, 2003


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

---

|THIS IS A COPY OF AN
ACCOUNTANTS REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN LLP, AND HAS NOT BEEN
REISSUED BY ANDERSEN. SEE EXHIBIT 23.2 FOR FURTHER INFORMATION.





REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS


To Dendrite
International, Inc.:


We
have audited the accompanying consolidated balance sheets of Dendrite International, Inc.
(a New Jersey corporation) and subsidiaries as of December 31, 2001 and 2000, and the
related consolidated statements of operations, stockholders equity and cash flows
for each of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Companys management. Our responsibility is
to express an opinion on these financial statements based on our audits.


We
conducted our audits in accordance with auditing standards generally accepted in the
United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.


In
our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Dendrite International, Inc. and subsidiaries as of
December 31, 2001 and 2000, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | /s/ Arthur Andersen LLP
| |  | -----------------------

|Philadelphia, Pa.,
 February 1, 2002



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

---

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

|ASSETS                                                     |  | 
|---------------------------------------------------------- |  | 
|
|
|                                                           |  | 
|CURRENT ASSETS:                                            |  | 
|Cash and cash equivalents                                  |  | 
|Short-term investments                                     |  | 
|Accounts receivable, net of allowance for doubtful         |  | 
|accounts of $926,000 and $736,000                          |  | 
|Prepaid expenses and other current assets                  |  | 
|Prepaid taxes                                              |  | 
|Deferred taxes                                             |  | 
|Facility Held for Sale                                     |  | 
|                                                           |  | 
|Total current assets                                       |  | 
|PROPERTY AND EQUIPMENT, net                                |  | 
|OTHER ASSETS                                               |  | 
|LONG-TERM RECEIVABLE                                       |  | 
|GOODWILL                                                   |  | 
|INTANGIBLE ASSETS, net                                     |  | 
|PURCHASED CAPITALIZED SOFTWARE, net                        |  | 
|CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net                |  | 
|DEFERRED TAXES                                             |  | 
|                                                           |  | 
|                                                           |  | 
|                                                           |  | 
|                                                           |  | 
|LIABILITIES AND STOCKHOLDERS EQUITY                       |  | 
|CURRENT LIABILITIES:                                       |  | 
|Accounts payable                                           |  | 
|Income Taxes Payable                                       |  | 
|Capital Lease Obligation                                   |  | 
|Accrued compensation and benefits                          |  | 
|Other accrued expenses                                     |  | 
|Purchase accounting restructuring accrual                  |  | 
|Accrued restructuring charge                               |  | 
|Deferred revenues                                          |  | 
|                                                           |  | 
|Total current liabilities                                  |  | 
|                                                           |  | 
|CAPITAL LEASE OBLIGATIONS                                  |  | 
|OTHER NON-CURRENT LIABILITIES                              |  | 
|                                                           |  | 
|STOCKHOLDERS EQUITY:                                      |  | 
|Preferred stock, no par value,
15,000,000 shares           |  | 
|authorized, none issued or outstanding                     |  | 
|Common stock, no par value, 150,000,000 shares authorized: |  | 
|authorized; 42,156,344 and 41,598,923 shares issued;       |  | 
|39,933,644 and 39,653,723.shares outstanding               |  | 
|Retained earnings                                          |  | 
|Deferred compensation                                      |  | 
|Accumulated other comprehensive loss                       |  | 
|Less treasury stock, at cost                               |  | 
|                                                           |  | 
|Total stockholders equity                                 |  | 
|                                                           |  | 
|                                                           |  | 
|                                                           |  | 

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


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

---

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

|                                                      | YEAR ENDED DECEMBER 31,
|----------------------------------------------------- | -----------------------
|                                                      |                        
|
|                                                      |                        
|REVENUES:                                             |                        
|License fees                                          |                        
|Services                                              |                        
|                                                      |                        
|                                                      |                        
|                                                      |                        
|COSTS OF REVENUES:                                    |                        
|Cost of license fees                                  |                        
|Purchased software impairment                         |                        
|Cost of services                                      |                        
|                                                      |                        
|                                                      |                        
|                                                      |                        
|Gross margin                                          |                        
|                                                      |                        
|OPERATING EXPENSES:                                   |                        
|Selling, general and administrative                   |                        
|Research and development                              |                        
|Restructuring (benefit) charge                        |                        
|Asset impairment                                      |                        
|                                                      |                        
|                                                      |                        
|                                                      |                        
|Operating income (loss)                               |                        
|INTEREST INCOME, net                                  |                        
|OTHER (EXPENSE) INCOME                                |                        
|                                                      |                        
|Income (loss) before income tax expense (benefit)     |                        
|INCOME TAX EXPENSE (BENEFIT)                          |                        
|                                                      |                        
|NET INCOME (LOSS)                                     |                        
|                                                      |                        
|NET INCOME (LOSS) PER SHARE:                          |                        
|Basic                                                 |                        
|                                                      |                        
|Diluted                                               |                        
|                                                      |                        
|SHARES USED IN COMPUTING NET INCOME (LOSS) PER SHARE: |                        
|Basic                                                 |                        
|                                                      |                        
|Diluted                                               |                        
|                                                      |                        

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


9
|------------------------------------------------------------------------------

---

|DENDRITE INTERNATIONAL,
INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY 
(IN THOUSANDS)
|--------------------------------------------------------------------------------------------------------------

|                            | Common Stock | Retained | Deferred | AccumulatedOtherComprehensive | Comprehensive | Treasury | TotalStockholders
|--------------------------- | ------------ | -------- | -------- | ----------------------------- | ------------- | -------- | ------------------
|
|                            |              |          |          |                               |               |          |                   
|BALANCE, JANUARY 1, 2000    |              |          | 38,441   |                               |               | $61,550  |                   
|Acquisition of Analytika    |              |          | 216      |                               |               | 6,506    |                   
|Issuance of common stock    |              |          | 1,471    |                               |               | 9,050    |                   
|Changes in deferred         |              |         
|Compensation                |              |          | __       |                               |               | __       |                   
|Stock option                |              |         
|tax benefits                |              |          | __       |                               |               | 6,264    |                   
|Comprehensive income:       |              |         
|Net income                  |              |          | __       |                               |               | __       |                   
|Currency translation        |              |         
|adjustment                  |              |          | __       |                               |               | __       |                   
|                            |              |          |          |                               |               |          |                   
|Comprehensive income        |              |          | __       |                               |               | __       |                   
|                            |              |          |          |                               |               |          |                   
|BALANCE, DECEMBER 31, 2000  |              |          | 40,128   |                               |               | 83,370   |                   
|Purchase of treasury shares |              |          | (1,344   | )                             |               | __       |                   
|Issuance of common stock    |              |          | 870      |                               |               | 4,309    |                   
|Changes in deferred         |              |         
|Compensation                |              |          | __       |                               |               | __       |                   
|Stock option                |              |         
|tax benefits                |              |          | __       |                               |               | 1,934    |                   
|Comprehensive loss:         |              |         
|Net loss                    |              |          | __       |                               |               | __       |                   
|Currency translation        |              |         
|adjustment                  |              |          | __       |                               |               | __       |                   
|                            |              |          |          |                               |               |          |                   
|Comprehensive loss          |              |          | __       |                               |               | __       |                   
|                            |              |          |          |                               |               |          |                   
|BALANCE, DECEMBER 31, 2001  |              |          | 39,654   |                               |               | 89,613   |                   
|Purchase of treasury shares |              |          | (277     | )                             |               | __       |                   
|Issuance of common stock    |              |          | 557      |                               |               | 2,807    |                   
|Changes in deferred         |              |         
|Compensation                |              |          | __       |                               |               | __       |                   
|Stock option                |              |         
|tax benefits                |              |          | __       |                               |               | 856      |                   
|Acquisition of SAI          |              |          | __       |                               |               | 1,237    |                   
|Stock options tax benefit   |              |         
|adjustment                  |              |          | __       |                               |               | (1,476   | )                 
|Comprehensive income:       |              |          | __       |                               |               | __       |                   
|Net income                  |              |          | __       |                               |               | __       |                   
|Currency translation        |              |         
|adjustment                  |              |          | __       |                               |               | __       |                   
|                            |              |          |          |                               |               |          |                   
|Comprehensive income        |              |          | __       |                               |               | __       |                   
|                            |              |          |          |                               |               |          |                   
|BALANCE, DECEMBER 31, 2002  |              |          | 39,934   |                               |               | $93,037  |                   
|                            |              |          |          |                               |               |          |                   

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


10
|-------------------------------------------------------------------------------

---

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

|                                                               | YEAR ENDED DECEMBER 31,
|-------------------------------------------------------------- | -----------------------
|                                                               |                        
|
|                                                               |                        
|OPERATING ACTIVITIES:                                          |                        
|Net income (loss)                                              |                        
|Adjustments  to  reconcile  net  income  (loss)  to  net  cash |                        
|provided by operating activities:                              |                        
|Depreciation and amortization                                  |                        
|Asset impairment                                               |                        
|Restructuring (benefit) charge                                 |                        
|Amortization of
deferred compensation                          |                        
|Deferred income taxes (benefit)                                |                        
|Changes in assets and liabilities, net of effect from          |                        
|acquisitions:                                                  |                        
|(Increase) decrease in accounts receivable                     |                        
|Decrease (increase)  in  prepaid expenses and other            |                        
|current assets                                                 |                        
|Increase in other assets                                       |                        
|Decrease (increase) in prepaid income taxes                    |                        
|(Decrease) increase  in  accounts  payable  and  accrued       |                        
|expenses                                                       |                        
|Payments relating to restructuring charge                      |                        
|Increase in income taxes payable                               |                        
|(Decrease) increase in deferred revenues                       |                        
|Increase in other non-current liabilities                      |                        
|                                                               |                        
|Net cash provided by operating activities                      |                        
|                                                               |                        
|INVESTING ACTIVITIES:                                          |                        
|Purchases of short-term investments                            |                        
|Sales of short-term investments                                |                        
|Acquisitions, net of cash acquired                             |                        
|Increase in other non-current assets                           |                        
|Purchases of property and equipment                            |                        
|Investment in facility held for sale                           |                        
|Additions to capitalized software development costs            |                        
|                                                               |                        
|Net cash used in investing activities                          |                        
|                                                               |                        
|FINANCING ACTIVITIES:                                          |                        
|Payments on capital lease obligations                          |                        
|Purchase of treasury shares                                    |                        
|Issuance of common stock                                       |                        
|                                                               |                        
|Net cash provided by (used in) financing activities            |                        
|                                                               |                        
|EFFECT OF EXCHANGE RATE CHANGES ON CASH                        |                        
|                                                               |                        
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS           |                        
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                   |                        
|                                                               |                        
|CASH AND CASH EQUIVALENTS, END OF YEAR                         |                        
|                                                               |                        
|                                                               |                        

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


11
|-------------------------------------------------------------------------------

---

|DENDRITE INTERNATIONAL,
INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


1.  THE COMPANY AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES:


THE COMPANY


Dendrite
International, Inc. and its subsidiaries (the Company) provide a broad array
of sales force effectiveness solutions for the global life sciences industry. These
solutions enable companies to manage, coordinate, and control activities of sales forces
in complex selling environments, primarily in the pharmaceutical industry. The
Companys solutions combine software products with a wide range of specialized
support services: software implementation, technical and hardware support, and help desk
support.


SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES


Principles of
Consolidation


The
consolidated financial statements include the accounts of Dendrite International, Inc. and
its wholly-owned subsidiaries. All intercompany balances and transactions have been
eliminated in consolidation.


Foreign Currency


The
functional currency of the Companys foreign operations are deemed to be the local
countrys currency. As a result, assets and liabilities of the Companys
wholly-owned international subsidiaries are translated at their respective year-end
exchange rates and revenues and expenses are translated at average currency exchange rates
for the period. The resulting balance sheet translation adjustments are included in
Other Comprehensive Income (Loss) and are reflected as a separate component of
stockholders equity. Foreign currency transaction gains and losses are included in
other expense on the accompanying statements of operations and are immaterial in each
year. To date, the Company has not engaged in any foreign currency hedging activities.


12
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Use of Estimates


The
preparation of financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. On an ongoing basis, the Company
evaluates its estimates, including those related to bad debts. The Company bases its
estimates on historical experience and on various other assumptions that are believed to
be reasonable under the circumstances. Actual results could differ from those estimates.
The Company believes its critical accounting policies to be revenue recognition,
accounting for restructuring and impairments and income taxes.


Revenue Recognition


The
Company provides a comprehensive range of customer relationship management software
products and support services to the pharmaceutical industry. New customers generally
enter into a license contract and a services contract with the Company. The Companys
software licenses typically provide for a perpetual right to use the Companys
software and are contracted for within a license agreement that provides for license fees
billable upon contract execution. When purchasing new software, customers also purchase
implementation services, which are essential to the functionality of the Companys
software. These services are contracted for in a services contract, which generally
provides for payment terms over the course of the implementation project.


The
Company generally recognizes license fees as revenues using the percentage-of-completion
method as prescribed by AICPA Statement of Position 81-1 (SOP 81-1),
Accounting for Performance of Construction-Type and Certain Production-Type Contracts and
pursuant to paragraph 7 of AICPA Statement of Position 97-2 (SOP 97-2). The
Companys arrangements are segmented, in accordance with paragraphs 40 and 41 of SOP
81-1, into two primary elements or profit centers; one being the perpetual license fee and
implementation service element and the other being an ongoing sales force support services
element. The Company does not defer performance costs related to its arrangements, as
revenues are generally recognized as the associated costs are incurred. The Company uses a
consistent methodology to measure progress-to-completion for all contract accounting
arrangements. For the license fee and implementation services element, the input measure
of labor incurred is used to monitor progress-to-completion. The Company uses the output
measure of value delivered (i.e. completion of a months services) to measure
progress-to-completion for the ongoing sales force support services element in contract
accounting, partially due to the inherent difficulties in establishing input values for
measuring progress-to-completion for recurring monthly services. Under the terms of its
contracts with customers, the Company does not have the right to invoice for claims
relating to overruns in its fixed fee implementation projects. To the extent that a
customer submits a signed change of scope document, the Company will add the budgeted
revenues and costs to its existing percentage-of-completion model, as a change in
estimate, for that particular project. The expected gross margin for changes of scope
generally approximates that for the overall project, and therefore project revenue
recognition has not historically been impacted significantly by the addition of change of
scope work orders. The Company evaluates its contract elements for losses using the same
segmentation elements that it uses for revenue recognition. When it becomes evident that a
contract element will result in a loss, the Company will provide for this loss in the
period that such loss becomes evident. Contract profitability is measured at the gross
margin level, with no allocation of overhead or other inclusion of indirect costs.  The Company has offered
limited price protection under services agreements.  Any right to a future refund from such price protection is entirely
within the Company's control.  It is estimated that the likelihood of a future  payout due to price protection
is remote.


13
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|From
time to time, the Companys customers will expand their field sales force, and
consequently, purchase additional user licenses from the Company. When the customer orders
these additional licenses, there is no additional work effort required by the Company, the
customer wishes only to extend their previously developed software to new users. The
customer generally has the ability to create its own copies of the software for the new
users, and therefore, there is no need for the Company to deliver anything. Based upon
this, the related revenue is recognized at the time of the customer order.


The
Company only relies on Vendor Specific Objective Evidence of fair value (VSOE)
to allocate the portion of the arrangement fee that relates to post-contract customer
support (PCS). The PCS-related services offered consist only of software
maintenance and warranty services. The Companys maintenance services consist
primarily of the correction of errors in the software and the delivery of unspecified
upgrades and enhancements over the maintenance term. The Company establishes VSOE of fair
value for PCS using the maintenance renewal rate that is present in each of its service
contracts. The Companys maintenance is offered at a fee that is based upon a
percentage of license fees paid. All elements other than PCS are accounted for under
contract accounting.


The
Company will sometimes provide for a warranty period within its arrangements. The services
provided during the warranty period are the same as those provided under software
maintenance. These activities include correcting errors or bugs in the software, ensuring
that the software complies with defined specifications and providing unspecified upgrades
or enhancements on a when-and-if-available basis, during the term of the warranty period.
The warranties included in the Companys arrangements generally coincide with the
length of the projected software implementation period, typically 180 days from the
execution of the license contract and always end on a specific date. The Company allocates
a portion of the related license fee revenues to the value of services during the warranty
period, and recognizes such amounts ratably over the warranty period. VSOE for the
Companys warranty services is established using the maintenance renewal rate that is
present in each of the Companys service contracts.


Deferred Revenues


Deferred
revenues represent amounts collected from, or invoiced to, customers in excess of revenues
recognized. This predominantly occurs in two situations a) annual billings of software
maintenance fees; and b) upfront billings of license fees that are recognized over time.
The value of deferred revenue will increase and decrease based on the timing of invoices
and recognition of license revenues.



14
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Cash and Cash Equivalents


The
Company considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.


Supplemental Cash Flow
Information


For
the years ended December 31, 2002, 2001 and 2000, the Company paid interest of approximately $15,000, $0
and $13,000, respectively. For the years ended December 31, 2002, 2001 and 2000, the
Company paid income taxes of approximately $5,895,000, $3,622,000, and $11,840,000, respectively.


The
following table lists assets (other than cash) that were acquired and liabilities that
were assumed as a result of the acquisitions in 2002 and 2000 as discussed in Note 4:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            | December 31,
|------------------------------------------- | ------------
|
|                                            |             
|Assets:                                     |             
|Accounts receivable                         |             
|Prepaid expenses and other current assets   |             
|Deferred taxes                              |             
|Property and equipment                      |             
|Capitalized software development costs      |             
|Intangible assets                           |             
|Goodwill                                    |             
|                                            |             
|                                            |             
|Assumed liabilities:                        |             
|Accounts payable and other accrued expenses |             
|Capital leases                              |             
|Deferred revenues                           |             
|                                            |             
|Net assets acquired                         |             
|Value of stock options issued               |             
|Purchase price paid in stock                |             
|                                            |             
|Cash paid, net of cash acquired             |             
|                                            |             

|15
|--

---

|Short-Term Investments


The
Company holds investments in highly rated corporate and municipal bonds. These investments
are carried at cost which approximates fair value.


Customer Acquisition
Costs


Commissions
related to execution of new contracts are deferred and recognized over the period of
revenue recognition. All other commissions are expensed as incurred. Deferred commissions
at December 31, 2002 and 2001 were less than 1/2% of current assets.


Impairment of Long-Lived
Assets


In
October 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standard (SFAS) 144, Accounting for the
Impairment or Disposal of Long-Lived Assets which became effective in fiscal 2002.
SFAS 144 supersedes certain provisions of Accounting Principles Board (APB)
Opinion 30, Reporting the Results of Operations-Reporting the Effects of Disposal of
a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions (APB 30) and supersedes SFAS 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
Although retaining many of the fundamental recognition and measurement provisions of SFAS
121, the new rules significantly change the criteria that would have to be met to classify
an asset as held-for-sale. The adoption of SFAS 144 had no impact on the Companys
consolidated financial statements.


The
Company reviews its long-lived assets, including property and equipment, and intangible
assets subject to amortization for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be fully recoverable. To determine
the recoverability of its long-lived assets, the Company evaluates the estimated future
undiscounted cash flows that are directly associated with and that are expected to arise
as a direct result of the use and eventual disposition of the long-lived asset. If the
estimated future undiscounted cash flows demonstrate that recoverability is not probable,
an impairment loss would be recognized. An impairment loss would be calculated based on
the excess carrying amount of the long-lived asset over the long-lived assets fair
value. See Note 3.


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

---

|Property and Equipment


Fixed
assets, including software developed for internal purposes, are stated at cost, net of
depreciation. Depreciation and amortization are provided on a straight-line basis over the
estimated useful lives of the respective assets, which range from two to ten years.
Leasehold improvements are amortized on a straight-line basis over the estimated useful
life of the asset or the lease term, whichever is shorter. Maintenance, repairs and minor
replacements that do not extend the life or functionality of the related assets are
charged to expense as incurred.


Capitalized Software
Development Costs


In
accordance with SFAS 86, Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed, the Company capitalizes certain costs related to the
development of new software products or the enhancement of existing software products for
sale or license. These costs are capitalized from the point in time that technological
feasibility has been established, as evidenced by a working model or a detailed working
program design, to the point in time that the product is available for general release to
customers. Capitalized software development costs are amortized on a straight-line basis
over the estimated economic lives of the products (no longer than four years), beginning
with general release to customers. Research and development costs incurred prior to
establishing technological feasibility and costs incurred subsequent to general product
release to customers are charged to expense as incurred. The Company periodically
evaluates whether events or circumstances have occurred that indicate that the remaining
useful lives of the capitalized software development costs should be revised or that the
remaining balance of such assets may not be recoverable. As of December 31, 2002,
management believes that no revisions to the remaining useful lives or write-down of
capitalized development costs are required.


Capitalized
software development costs are presented in the accompanying consolidated balance sheets
net of accumulated amortization of $11,949,000 and $9,348,000 at December 31, 2002 and
2001, respectively. Amortization of capitalized software development costs for the years
ended December 31, 2002, 2001 and 2000 was $2,601,000, $2,072,000 and $1,627,000,
respectively, and is included in cost of license fees in the accompanying consolidated
statements of operations.


In
connection with certain business acquisitions (see Note 4), the Company purchased software
that was determined to have reached technological feasibility. The amount of purchased
capitalized software remaining as of December 31, 2002 and 2001 is as follows:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                  | December 31,
|--------------------------------- | ------------
|
|ABC                               |             
|MMI                               |             
|Analytika                         |             
|SAI                               |             
|                                  |             
|                                  |             
|Less -- Accumulated  amortization |             
|                                  |             
|                                  |             
|                                  |             

|During
the second quarter of 2001, the Company recorded an impairment charge relating to
purchased capitalized software costs. See Note 3.



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

---

|Subsequent
to the Marketing Management International, Inc. (MMI) acquisition, the Company
decided to offer the mid-tier pharmaceutical market a product more compatible with the
Companys vision of integrated customer relationship management (CRM)
solutions. Accordingly, during 2001, the Company reduced the remaining useful life of the
purchased capitalized software related to the MMI acquisition so that this asset was fully
amortized as of December 31, 2001. Amortization expense of purchased capitalized software
for the years ended December 31, 2002, 2001 and 2000 was $166,000, $1,530,000 and
$1,145,000, respectively, and is included in cost of license fees in the accompanying
consolidated statement of operations. Amortization for the year ended December 31, 2001
included $678,000 of accelerated amortization relating to the purchased capitalized
software of MMI. See Note 3.


Goodwill and Intangible
Assets


In
July 2001, the FASB issued SFAS  142, Goodwill and Other Intangible
Assets(SFAS 142). SFAS 142 requires goodwill to be tested for impairment
on an annual basis and between annual tests in certain circumstances, and written down
when impaired, rather than being amortized as previous accounting standards required.
Furthermore, SFAS 142 requires purchased intangible assets other than goodwill to be
amortized over their useful lives unless these lives are determined to be indefinite.


SFAS
142 is effective for fiscal years beginning after December 15, 2001. In accordance
with SFAS 142, the Company ceased amortizing goodwill. Amortization of goodwill for the
years ended December 31, 2002, 2001 and 2000 was $0, $1,302,000, and $2,390,000,
respectively and is included within selling, general and administrative expenses in the
accompanying consolidated statements of operations. Based on the impairment tests
performed, there was no impairment of goodwill in fiscal 2002; however, there can be no
assurance that future goodwill impairment tests will not result in a charge to earnings.


Purchased
intangible assets are carried at cost less accumulated amortization. Amortization is
computed over the estimated useful lives of the respective assets, generally two to five
years.


The
following table presents the impact of SFAS 142 on net income (loss) and net income
(loss) per share had the accounting standard been in effect for years ended:



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

---

|                                                            | December 31,
|----------------------------------------------------------- | ------------
|
|                                                            |             
|Net (loss) income (as reported)                             |             
|Add  back  amortization
of  goodwill,  net of  income  tax  |             
|effect                                                      |             
|                                                            |             
|Adjusted net (loss) income                                  |             
|                                                            |             
|Basic net (loss) income per common share:                   |             
|Net (loss) income (as reported)                             |             
|Add  back  amortization
of  goodwill,  net of  income  tax  |             
|effect                                                      |             
|                                                            |             
|Adjusted net (loss) income                                  |             
|                                                            |             
|Diluted net (loss) income per common share:                 |             
|Net (loss) income (as reported)                             |             
|Add  back  amortization  of  goodwill,  net of  income  tax |             
|effect                                                      |             
|                                                            |             
|Adjusted net (loss) income                                  |             
|                                                            |             

|In
the second quarter of 2001, the Company determined that the future undiscounted cash flows
from goodwill associated with its acquisitions of Associated Business Computing, N.V.
(ABC) and Analytika, Inc. (Analytika) would be negative, due
primarily to the lack of future revenue to be generated and the costs required to support
current contractual levels (see Note 3). Accordingly, the Company recorded an impairment
charge of $6,173,000 relating to the goodwill of ABC and Analytika to reduce the
respective net intangible assets to zero. This impairment charge is included within asset
impairment in the accompanying consolidated statements of operations.


Guarantees


The
Company provides certain indemnification provisions within its software licensing
agreements, to protect its customers from any liabilities or damages resulting from a
claim of misappropriation or infringement by third parties relating to its software. These
provisions continue in perpetuity, along with the Companys software licensing
agreements. The Company has never incurred a liability relating to one of these
indemnification provisions in the past and management believes that the likelihood of any
future payout relating to these provisions is remote. Therefore, the Company has not
recorded a liability during any period for these indemnification clauses.


Income Taxes


The
Company accounts for income taxes in accordance with SFAS 109, Accounting for Income
Taxes. Under SFAS 109, deferred tax assets and liabilities are based on differences
between the financial reporting and tax basis of assets and liabilities and are measured
using the enacted tax rates that are expected to be in effect when the differences
reverse. In addition, in accordance with SFAS 109, a valuation allowance is required to be
recognized if it is not believed to be more likely than not that a deferred
tax asset will be realized.


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

---

|At
December 31, 2002, there were approximately $5,479,000 of undistributed earnings of
non-U.S. subsidiaries that are considered to be reinvested indefinitely. If such earnings
were remitted to the Company, the applicable United States federal income and foreign
withholding taxes may be wholly or partially offset by foreign tax credits. As a result,
the determination of potential U.S. deferred income taxes on these unremitted earnings is
not practicable at December 31, 2002.


Concentration of Credit
Risk


Financial
instruments that potentially subject the Company to concentration of credit risk consist
principally of cash and short-term investment balances and trade accounts receivable. The
Company invests its excess cash with large banks. The Companys customer base
principally comprises companies within the ethical pharmaceutical industry. As a result,
the Company derives its revenues from a limited number of large pharmaceutical companies.
The Company performs evaluations of its customers financial condition. The Company
does not require collateral from its customers. See Note 17.


Stock Based Compensation


In
December 2002, the FASB issued SFAS 148, Accounting for Stock-Based Compensation
 Transition and Disclosure (SFAS 148). SFAS 148 amends SFAS 123,
Accounting for Stock-Based Compensation (SFAS 123) to provide
alternative methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS 148 amends the
disclosure requirements of SFAS 123 to require more prominent disclosures in both annual
and interim financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The additional
disclosure requirements of SFAS 148 are effective for fiscal years ending after December
15, 2002. The Company has elected to continue to follow the intrinsic value method of
accounting as prescribed by APB 25, Accounting for Stock Issued to Employees,
to account for employee stock options. In accordance with SFAS 148 the following table
illustrates the effects on net income/(loss) and income/(loss) per share if the Company
had applied the fair value recognition provisions of SFAS 123 to stock-based employee
compensation:


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

---

|                                                        | December 31,
|------------------------------------------------------- | ------------
|                                                        |             
|
|                                                        |             
|Net income (loss) as reported                           |             
|Add: Deferred compensation                              |             
|recognized in accordance  with APB                      |             
|25, net of related tax effects                          |             
|                                                       
|Deduct: Total stock-based employee compensation expense |             
|determined  under  the fair  value                      |             
|based  method for all awards,  net                      |             
|of related tax effects                                  |             
|                                                        |             
|Pro forma net income (loss)                             |             
|                                                        |             
|Earnings (loss) per share:                              |             
|Basic - as reported                                     |             
|Basic - pro forma                                       |             
|Diluted - as reported                                   |             
|Diluted - pro forma                                     |             
|                                                        |             

|Advertising Costs


Advertising
costs are expensed as incurred. Advertising expense was $3,245,000, $4,351,000 and
$1,755,000 for the years ended December 31, 2002, 2001 and 2000, respectively.


Net Income (Loss) Per
Share


The
Company calculates net income (loss) per share pursuant to SFAS 128, Earnings Per
Share.


Basic
net income (loss) per share was computed by dividing the net income (loss) for each year
by the weighted average number of shares of common stock outstanding for each year.
Diluted net income per share was computed by dividing net income for each year by the
weighted average number of shares of common stock and common stock equivalents outstanding
during each year. For the year ended December 31, 2001, approximately 601,000 common stock
equivalents were anti-dilutive and were, therefore, excluded from the computation of net
loss per share.


The
computation of basic and diluted net income (loss) per share is as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                    | Year Ended December 31,
|------------------- | -----------------------
|                    |                        
|
|                    |                        
|
|                    |                        
|
|                    |                        
|Net income (loss)   |                        
|Basic net income    |                        
|(loss) per share    |                        
|                    |                        
|Effect of dilutive  |                        
|stock options       |                        
|                    |                        
|Diluted  net income |                        
|(loss) per share    |                        
|                    |                        

|                   | Year Ended December 31, 2000
|------------------ | ----------------------------
|                   |                             
|
|                   |                             
|
|                   |                             
|Net income         |                             
|Basic net income   |                             
|per share          |                             
|                   |                             
|Effect of dilutive |                             
|stock options      |                             
|                   |                             
|Diluted net income |                             
|per share          |                             
|                   |                             

|21
|--

---

|Reclassifications


Certain
reclassifications have been made to prior year amounts to conform with current year
presentation.


Recent Accounting
Pronouncements


In
June 2002, the FASB issued SFAS 146, Accounting for Costs Associated with Exit or
Disposal Activities effective for exit or disposal activities initiated after
December 31, 2002. SFAS 146 nullifies Emerging Issues Task Force (EITF) Issue
94-3 Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a Restructuring). Under
SFAS 146 a liability for a cost associated with an exit or disposal activity shall be
recognized and measured initially at its fair value in the period in which the liability
is incurred rather than the date an entity commits to an exit plan. We expect the adoption
of SFAS 146 will have an impact on the timing of the recording of any future restructuring
charges.


In
November 2002, the FASB issued Interpretation 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others (FIN 45). FIN 45 changes current practice in the accounting for, and
disclosure of, guarantees. The Interpretation requires certain guarantees to be recorded
at fair value, which is different from current practice, which is generally to record a
liability only when a loss is probable and reasonably estimable, as those terms are
defined in FASB Statement 5, Accounting for Contingencies (SFAS 5). The
Interpretation also requires a guarantor to make significant new disclosures, even when
the likelihood of making any payments under the guarantee is remote, which is another
change from current practice. The Company has not issued any guarantee that meets the
initial recognition and measurement requirements of FIN 45. The Company has adopted the
disclosure requirements of FIN 45 for the year ended December 31, 2002, as required.


In
November 2002, the FASB issued EITF Issues 00-21, Accounting for Revenue
Arrangements with Multiple Deliverables (EITF 00-21). EITF 00-21
addresses the accounting for arrangements that involve the delivery or performance of
multiple products, services or rights to use assets. This consensus is applicable to
arrangements entered into on or after June 15, 2003 and requires companies to account for
existing arrangements as the cumulative effect of a change in accounting principles in
accordance with APB Opinion 20, Accounting Changes. The Company is currently
assessing the impact of EITF 00-21, but does not believe that it will have a material
impact on its consolidated financial statements.


In
November 2001, the FASB issued EITF 01-14, Income Statement Characterization of
Reimbursements Received for Out-of-Pocket Expenses Incurred  (EITF 01-14). EITF 01-14
requires that in cases where the contractor acts as a principal, reimbursements received
for out-of-pocket expenses incurred be characterized as revenue and the associated costs
be included as cost of services in the income statement. The Company applied EITF 01-14
and, as required, has reclassified comparative financial information for the years ended
December 31, 2001 and 2000. The impact of applying this pronouncement was to increase both
revenues and cost of services by $3,989,000, $3,405,000 and $3,733,000 for the years
December 31, 2002, 2001 and 2000, respectively. The implementation of EITF 01-14 had no
impact upon earnings.


2.  RESTRUCTURING CHARGE


On
June 14, 2001, the Company announced a restructuring of its business operations to reflect
a lower expected revenue growth model in the near term. As a result the Company
re-examined its cost structure and determined that there were duplicate employee costs and
excess overhead costs. The restructuring plan consisted of a reduction of 155 delivery and
staff positions and the termination of 35 independent contractors across various
departments in the United States and Europe. In addition, 192 additional positions were
eliminated as part of the closing of other Company facility in Stroudsburg, PA. The
Stroudsburg, PA operations were relocated to the Companys facilities in New Jersey,
Virginia and a new facility in Bethlehem, PA. The exit costs consisting of costs to
retrofit the Stroudsburg facility, lease termination costs and the write-off of leasehold
improvements were included in the restructuring charge while the moving and other start-up
costs were not included in this restructuring charge and were expensed as incurred.


During
the second quarter of 2001, the Company recorded a charge of $6,134,000 associated with
this restructuring. This charge was reduced by $24,000 to $6,110,000 in the fourth quarter
of 2001 due to the variance between the amounts originally recorded and managements
revised estimate of the total costs of the restructuring. This reduction of $24,000 was
recorded within restructuring charge on the accompanying consolidated statements of
operations. During the fourth quarter of 2002, the Company again reduced the restructuring
accrual by an additional $47,000 due to a revised estimate of the total costs of the
restructuring. Of the restructuring charge, $260,000 and $2,950,000 related primarily to
severance that had not been paid as of December 31, 2002 and 2001, respectively and,
accordingly, is classified as accrued restructuring charge in the accompanying
consolidated balance sheet. The restructuring charges were based upon formal plans
approved by the Companys management using the information available at the time.
Management of the Company believes this provision will be adequate to cover the costs
incurred relating to the restructuring. The Company anticipates that the accrued
restructuring balance of $260,000 as of December 31, 2002 will be paid in 2003. The
activity in accrued restructuring for the periods ended December 31, 2002 and 2001 is
summarized in the tables below:


22
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|                                  | Accruedrestructuring asof January 1, 2002 | Cash Paymentsin 2002 | Reversal ofaccrualin 2002 | AccruedRestructuringas of December 31, 2002
|--------------------------------- | ----------------------------------------- | -------------------- | ------------------------- | -------------------------------------------
|
|Termination payments to employees |                                           |                      | $                         | 2,218,000                                  
|Facility exit costs               |                                           |                      |                           | 495,000                                    
|Contract termination and other    |                                           |                     
|restructuring costs               |                                           |                      |                           | 237,000                                    
|                                  |                                           |                      |                           |                                            
|                                  |                                           |                      | $                         | 2,950,000                                  
|                                  |                                           |                      |                           |                                            

|                                  |  |  |  
|--------------------------------- |  |  | -
|
|                                  |  |  |  
|Termination payments to employees |  |  | $
|Facility exit costs               |  |  |  
|Contract termination and other    |  | 
|restructuring costs               |  |  |  
|                                  |  |  |  
|                                  |  |  | $
|                                  |  |  |  

|3. ASSET IMPAIRMENTS


During
the year ended December 31, 2001, the Company reviewed the carrying values of its
long-lived assets, including its minority investments in start-up ventures, identifiable
intangibles and goodwill. In connection with the Companys investments in two
start-up ventures, the Company followed APB 18, The Equity Method of Accounting for
Investments in Common Stock, which states that when a series of operating losses of
an investee or other factors indicate that a decrease in value of the investment has
occurred which is other than temporary, an impairment should be recognized. During the
review of both start-up ventures, the Company became aware of a series of operating losses
and the need of each start-up venture to obtain additional financing to continue
operations which became especially severe in the second quarter of 2001. In addition,
prior to the end of 2001 both start-up ventures filed for bankruptcy. As a result, during
the year ended December 31, 2001, the Company wrote off $3,450,000 of cost method
investments in these two start-up ventures due to an other than temporary decline in the
fair value of these investments.


As
part of its partnership with Oracle Corporation the Company announced on June 14, 2001 its
intention to market an integrated CRM solution to meet the specialized needs of the
worldwide pharmaceutical industry. As a result, the Companys vision and product
platform changed. The Company determined that it would no longer offer the Analytika and
ABC products, but would continue to support both products until existing customer contract
terms expired. As a result, no revenues were forecasted for either product for the future
other than those under existing contracts. Further, despite the lack of future revenue the
Company needed to maintain the infrastructure required to support our Analytika and ABC
product for the term of each contract. Since the forecasted revenue base was significantly
reduced yet the infrastructure and administrative costs remained relatively fixed, these
operations transitioned from positive to negative cash flows. In accordance with SFAS 121
the Company reviewed the future undiscounted net cash flows of the ABC and Analytika
products and determined the cash flows to be negative due to the fact the projected
revenue generated from new sales for each operation was zero. As a result, all of the
goodwill associated with ABC and Analytika was impaired during the quarter ended June 30,
2001. Accordingly, the Company recorded a goodwill impairment charge of $6,173,000 during
the year ended December 31, 2001.


During
the third quarter of 2002 and the fourth quarter of 2001, the Company recorded an asset
impairment of $1,832,000 and $2,100,000, respectively, related to a facility held for
sale. See Note 7.


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

---

|4. ACQUISITIONS


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


The
aggregate purchase price was approximately $16,739,000 which included: cash of
approximately $15,092,000 (approximately $1,600,000 in escrow as of December 31, 2002);
accrued professional service fees of approximately $410,000 and options to purchase
Dendrite common stock valued at approximately $1,237,000. The fair value of the stock
options was estimated using the Black-Scholes valuation model. The Company is in the
process of finalizing a third-party valuation of certain intangible assets, its evaluation
of acquired facilities and personnel for redundancy, and therefore, the purchase price
allocation is preliminary and subject to adjustment.


The
Company recorded $7,523,000 of goodwill and $4,694,000 of acquired intangible assets, of
which approximately $732,000 was assigned to registered trademarks that are not subject to
amortization. The remaining $3,962,000 of acquired intangible assets includes purchased
software development costs of approximately $2,441,000 (4 year estimated useful life),
approximately $328,000 of non-compete agreements (3 year estimated useful life) and
approximately $1,193,000 of customer relationship assets (3 year estimated useful life).
The weighted-average amortization period for the intangible assets subject to amortization
is approximately 3 years.


The
following table summarizes the estimated fair value of the assets acquired and the
liabilities assumed in connection with the SAI acquisition:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               | 
|------------------------------ | 
|
|Current Assets                 | 
|Property, plant, and equipment | 
|Intangible assets              | 
|Goodwill                       | 
|Deferred tax assets            | 
|Other non-current assets       | 
|                               | 
|Total assets acquired          | 
|Current liabilities            | 
|Purchase restructuring reserve | 
|Lease Obligations-LT           | 
|                               | 
|Total liabilities assumed      | 
|                               | 
|Net assets acquired            | 
|                               | 
|                               | 

|On
August 12, 2002, the Company acquired Pharma Vision LLC (Pharma Vision) for
cash consideration of approximately $700,000 which includes approximately $50,000 of
professional service fees. Pharma Vision collected and sold data for customer targeting
that pharmaceutical representatives use in Europe and support to pharmaceutical customers
in Belgium and The Netherlands. The results of Pharma Visions operations have been
included in the Consolidated Financial Statements from the date of acquisition.


On
January 6, 2000, the Company purchased all of the assets and assumed certain liabilities
of Analytika, Inc., a provider of advanced analytical products, consulting services and
outsourced operations services to the pharmaceutical industry. Under the terms of the
acquisition agreement, the Company paid $2,318,000 in cash, which included transaction
costs, and Dendrite common stock valued at $6,506,000. The acquisition was accounted for
using the purchase method with the purchase price allocated to the assets acquired and
liabilities assumed based on their respective fair market values at the acquisition date.
Of the purchase price, $2,890,000 was allocated to purchased capitalized software
development costs. The excess of the purchase price over the fair value of the net assets
acquired was allocated to goodwill ($5,979,000) based upon a third-party appraisal.
Analytikas results of operations have been included in the Companys
Consolidated Financial Statements from the date of acquisition.


The
Companys unaudited pro forma results of operations for the years ended December 31,
2002, 2001 and 2000 assuming that the acquisition of SAI described above occurred on
January 1, 2000 are as follows (in thousands, except per share data):
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                | December 31,
|------------------------------- | ------------
|                                |             
|
|                                |             
|Revenue                         |             
|Net Income/(Loss)               |             
|Basic Income/(Loss) per share   |             
|Diluted Income/(Loss) per share |             
|                                |             

|(A)    
          Net income includes a gain recognized by SAI on the sale of common units in a
          subsidiary, net of tax, of approximately $2,100,000.



5.   PURCHASE ACCOUNTING
RESTRUCTURING ACCRUAL


In
connection with the acquisition of SAI, discussed in Note 4, the Company developed an exit
plan to close the facility in Mt. Arlington, New Jersey and to relocate the operations to
the Companys facilities in New Jersey. The Company accrued as part of the
acquisition costs, the costs to terminate certain leases amounting to $3,252,000. The
Company anticipates finalizing the close of the facility during the first quarter of 2003.
As of December 31, 2002, the Company has made no payments or adjustments to the accrual.



6.  PROPERTY AND EQUIPMENT
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                      | December 31,
|------------------------------------- | ------------
|                                      |             
|
|                                      |             
|Computer hardware, software and other |             
|equipment                             |             
|Furniture and fixtures                |             
|Leasehold improvements                |             
|Capital Leases                        |             
|                                      |             
|                                      |             
|Less -- Accumulated depreciation and  |             
|Amortization                          |             
|                                      |             
|                                      |             
|                                      |             
|                                      |             

|Depreciation
expense, including amortization expense of capital leases, for the years ended December
31, 2002, 2001 and 2000 was $11,161,000, $10,082,000 and $5,898,000, respectively.


7.  FACILITY HELD FOR SALE


In
April 2001, the Company paid $10,832,000 to purchase a 145,000 square foot building in New
Jersey for the purpose of establishing a new U.S. operations facility to accommodate the
Companys growth. In connection with its 2001 restructuring, the Company made the
decision to shift its operations to other existing facilities and therefore decided to
sell the new facility (see Note 2). This building is classified as facility held for sale
in the accompanying consolidated balance sheets. This facility has been actively for sale
since the second quarter of 2001. Due to economic events, and the related impact on the
value of real estate, the Company recorded an asset impairment of $2,100,000 to reduce the
carrying value of this facility to its estimated fair market value during the fourth
quarter of 2001. During the third quarter of 2002, the Company determined an additional
impairment existed due to the continued increase in vacancy rates in the surrounding area.
Accordingly, the carrying value of the facility held for sale was adjusted the new fair
value less costs to sell of approximately $6,900,000, based upon a third party valuation.
The resulting $1,832,000 impairment loss is included in the asset impairment charge within
the accompanying consolidated statements of operations. See Note 3.


24
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|8.  GOODWILL AND INTANGIBLE ASSETS


Effective
July 1, 2001 the Company adopted SFAS 141, Business Combinations, and
effective January 1, 2002 the Company adopted SFAS 142, Goodwill and other
Intangible Assets. SFAS 141 requires business combinations initiated after June 30,
2001 to be accounted for using the purchase method of accounting. It also specifies the
types of acquired intangible assets that are required to be recognized and reported
separate from goodwill. SFAS 142 requires that goodwill and certain intangibles no longer
be amortized, but instead tested for impairment at least annually. SFAS 142 also requires
that intangible assets with finite useful lives be amortized over their respective
estimated useful lives and reviewed for impairment in accordance with SFAS 121, which was
superceded by SFAS 144. Based on the Companys analysis, there was no impairment of
goodwill upon adoption of SFAS 142 on January 1, 2002. The Company conducts its annual
impairment testing of goodwill on October 1 of each year. For the year ended December 31,
2002 there was no impairment recorded.


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

|                               | As of December 31, 2002 | As of December 31, 2001
|------------------------------ | ----------------------- | -----------------------
|
|                               |                         |                        
|INANGIBLE  ASSETS  SUBJECT  TO |                         |                        
|AMORTIZATION                   |                         |                        
|Purchased capitalized software |                         |                        
|Capitalized software           |                         |                        
|development costs              |                         |                        
|Customer relationship assets   |                         |                        
|Non-compete covenants          |                         |                        
|                               |                         |                        
|Total                          |                         |                        
|INTANGIBLE  ASSETS NOT SUBJECT |                         |                        
|TO AMORTIZATION                |                         |                        
|Goodwill                       |                         |                        
|Trademarks                     |                         |                        
|                               |                         |                        
|Total                          |                         |                        
|                               |                         |                        
|Total goodwill and intangible  |                         |                        
|assets                         |                         |                        
|                               |                         |                        

|The changes in the carrying
amount of goodwill for the year ended December 31, 2002 are as follows:
|---------------------------------------------------------------------------------------------------

|                                | 
|------------------------------- | 
|
|Balance as of January 1, 2002   | 
|Goodwill acquired               | 
|                                | 
|Balance as of December 31, 2002 | 
|                                | 

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

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

|9.   LONG TERM RECEIVABLE


During
the year ended December 31, 2002, the Company recorded a long term receivable of
$6,314,000 from a major U.S. pharmaceutical company as part of a five-year contract. This
long term receivable will be paid as the scheduled maturities come due through January 2005. The
Company has imputed interest and accordingly, interest income will be recognized as earned
within interest income on the Consolidated Statement of Operations.


10.   NOTE RECEIVABLE FROM
OFFICER OF THE COMPANY


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


11.  REVOLVING CREDIT


The
Company maintains a revolving line of credit agreement with The Chase Manhattan Bank,
N.A., which provides for borrowings of up to $15,000,000 and is available to finance
working capital needs and possible future acquisitions. The agreement requires, among
other covenants, that the Company maintain a minimum consolidated net worth, measured
quarterly, equal to $105,000,000 plus 50% of the Companys net income earned after
January 1, 2002, and 75% of the net proceeds to the Company of any stock offerings after
September 30, 2001. This covenant has the effect of limiting the amount of cash dividends
the Company may pay. As of December 31, 2002 and 2001, approximately $31,092,000 and
$23,013,000, respectively, were available for the payment of dividends under this
covenant. The line of credit expires on November 30, 2003. The Company has never had any
borrowings under this revolving line of credit.





25
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|As
of December 31, 2002, the Company also had letters of credit for approximately $475,000
outstanding.


12.  
          INCOME TAXES


The
components of income before income tax expense (benefit) were as follows:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|         | December 31,
|-------- | ------------
|         |             
|
|         |             
|Domestic |             
|Foreign  |             
|         |             
|         |             
|         |             

The components of income taxes were as follows:

|                   | December 31,
|------------------ | ------------
|                   |             
|
|                   |             
|Current Provision  |             
|(Benefit):         |             
|Federal            |             
|State              |             
|Foreign            |             
|                   |             
|                   |             
|Deferred Provision |             
|(Benefit):         |             
|Federal            |             
|State              |             
|Foreign            |             
|                   |             
|                   |             
|                   |             
|                   |             
|                   |             
|                   |             

|The reconciliation of the statutory
Federal income tax rate to the Companys effective income tax rate is as follows:
|---------------------------------------------------------------------------------------------------------------------

|                                               | December 31,
|---------------------------------------------- | ------------
|                                               |             
|
|                                               |             
|Federal statutory tax rate                     |             
|Difference between U.S. and non-U.S. rates     |             
|State income taxes, net of federal tax benefit |             
|Nondeductible expenses                         |             
|Tax credits utilized                           |             
|Other                                          |             
|                                               |             
|                                               |             
|                                               |             

|The
tax effect of temporary differences that give rise to deferred income assets and
liabilities is as follows:


26
|--------------------------------------------------------------------------------------------------------------------

---

|                                       | December 31,
|-------------------------------------- | ------------
|                                       |             
|
|                                       |             
|Gross deferred tax asset:              |             
|Depreciation and amortization          |             
|Foreign net operating losses           |             
|State net operating losses             |             
|Federal capital loss carryover         |             
|Federal foreign tax credit             |             
|carryover                              |             
|Accruals and reserves not currently    |             
|deductible                             |             
|Other                                  |             
|                                       |             
|                                       |             
|Less:  Valuation allowance             |             
|                                       |             
|                                       |             
|                                       |             
|Gross deferred tax liability:          |             
|Capitalized software development costs |             
|Other                                  |             
|                                       |             
|                                       |             
|                                       |             

|As
of December 31, 2002 and 2001, the Company has recorded a valuation allowance against its
net deferred tax assets of approximately $4,482,000 and $3,336,000 respectively. The
valuation allowance relates primarily to the state net operating loss carryforwards,
foreign tax credit carryforwards and capital loss carryforwards.


As of December 31, 2002, the Company
has available state net operating loss carryforwards of approximately $35,000,000 and
foreign net operating loss carryforwards of approximately $8,600,000 which expire in
varying amounts beginning in 2003 through 2022. Additionally, the Company also has
available foreign tax credit carryforwards of approximately $763,000 which expire in 2007.


     13.    
STOCKHOLDERS EQUITY


STOCK OPTION PLANS


The
Company has various stock option plans (the Plans) that provide for the
granting of options, the awarding of stock and the purchase of stock. Under the Plans, the
total number of shares of common stock that may be granted is 14,050,002. During 2002, the
Company obtained shareholder approval to increase the number of options available under
the Plans by 1,500,000 shares to 15,550,002 shares. Options granted under the
Plans generally vest over a four-year period and are exercisable over a period not to
exceed ten years as determined by the Board of Directors. Incentive stock options are
granted at fair value. Nonqualified options are granted at exercise prices determined by
the Board of Directors.


Information
with respect to the options under the Plans is as follows:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              |  | 
|----------------------------- |  | 
|
|                              |  | 
|Outstanding December 31, 1999 |  | 
|Granted                       |  | 
|Exercised                     |  | 
|Canceled                      |  | 
|                              |  | 
|Outstanding December 31, 2000 |  | 
|Granted                       |  | 
|Exercised                     |  | 
|Canceled                      |  | 
|                              |  | 
|Outstanding December 31, 2001 |  | 
|Granted                       |  | 
|Exercised                     |  | 
|Canceled                      |  | 
|                              |  | 
|Outstanding December 31, 2002 |  | 
|                              |  | 

|27
|--

---

|At
December 31, 2002, 2001 and 2000 there were 4,871,509, 3,361,772 and 2,325,272 options
exercisable with a weighted average exercise price of $14.81, $14.92 and $9.95,
respectively. As of December 31, 2002 there were 4,179,521 shares available for future
grants under the Plans.


The
Company has adopted the disclosure requirements of SFAS 123 as amended by SFAS 148. The
Company applies APB 25 and related interpretations in accounting for stock options granted
under the Plans. Accordingly, compensation cost has been computed for the Plans based on
the intrinsic value of the stock option at the date of grant, which represents the
difference between the exercise price and the fair value of the Companys stock. As
the exercise price of all stock options granted equaled the fair value of the
Companys stock at the date of option issuance, no compensation cost has been
recorded in the accompanying statements of operations. The pro forma information presented
in Note 1 has been determined as if employee stock options were accounted for under the
fair value method of SFAS 123. The fair value for these options were estimated at the date
of grant using a Black-Scholes option pricing model with the following assumption:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                | December 31,
|------------------------------- | ------------
|                                |             
|
|                                |             
|Expected dividend yield         |             
|Expected stock price volatility |             
|Risk free interest rate         |             
|Expected life of the option     |             

|The
weighted average fair value of options granted was $7.98, $8.96 and $17.26 for the years
ended December 31, 2002, 2001 and 2000, respectively.


Information
with respect to the options outstanding under the Plans at December 31, 2002 is as follows:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                |  |  |  |          
|--------------- |  |  |  | ---------
|
|                |  |  |  |          
|$0.00 - $3.32   |  |  |  | 41,112   
|$3.33 - $6.64   |  |  |  | 956,052  
|$6.65 -- $9.95  |  |  |  | 1,508,666
|$9.96 - $13.27  |  |  |  | 1,783,354
|$13.28 - $16.60 |  |  |  | 556,336  
|$16.61 - $19.91 |  |  |  | 1,238,496
|$19.92 - $23.23 |  |  |  | 630,531  
|$23.24 - $26.55 |  |  |  | 529,070  
|$26.56 - $29.87 |  |  |  | 169,200  
|$29.88 - $34.00 |  |  |  | 436,078  
|                |  |  |  |          
|                |  |  |  | 7,848,895
|                |  |  |  |          

|EMPLOYEE STOCK PURCHASE
PLAN


In
1997, the Company established an employee stock purchase plan that provides full-time
employees the opportunity to purchase shares at 85% of fair value on dates determined by
the Board of Directors, up to a maximum 10% of their eligible compensation or $21,250,
whichever is less. During 2002, the Company obtained shareholder approval to increase the
number of authorized shares available for purchase under this plan from 450,000 to
900,000, of which 150,048, 156,876 and 93,687 were purchased in 2002, 2001 and 2000,
respectively. There were 419,511 and 119,559 shares available for issuance under the plan
as of December 31, 2002 and 2001, respectively.




28
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|ANNIVERSARY STOCK PROGRAM


The
Company grants 200 shares of the Companys common stock to all employees who
commenced employment prior to December 31, 1998 in July following their fifth anniversary
of employment. The cost of the anniversary stock plan is accrued over the employment
period of the employees.


COMMON STOCK REPURCHASE
PROGRAM


On
January 31, 2001, the Company announced that its Board of Directors authorized a stock
repurchase program of up to $20,000,000 of its outstanding common stock over a two-year
period (the 2001 Stock Repurchase Plan). As of December 31, 2001, the Company
has repurchased a total of 1,343,700 shares under the 2001 Stock Repurchase Plan for a
total value of $17,480,000. On July 29, 2002, the Board of Directors cancelled the 2001
Stock Repurchase Plan.


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


SHAREHOLDER RIGHTS PLAN


On
February 16, 2001, the Companys Board of Directors adopted a shareholder rights plan
(the Rights Plan). The Rights Plan is designed to deter coercive or unfair
takeover tactics and to prevent a person or group from acquiring control of the Company
without offering a fair price to all shareholders. The adoption of the Rights Plan was not
in response to any known effort to acquire control of the Company.


Under
the Rights Plan, each shareholder of record on March 5, 2001 received a distribution of
one Right for each share of common stock of the Company (Rights). At present,
the Rights are represented by the Companys common stock certificates, are not traded
separately from the common stock and are not exercisable. The Rights will become
exercisable only if a person acquires, or announces a tender offer that would result in
ownership of 15% or more of the Companys common stock, at which time each Right
would enable the holder to buy one one-hundredth of a share of the Companys Series A
preferred stock at an exercise price of $120, subject to adjustment. Following the
acquisition of 15% or more of the Companys common stock, the holders of Rights
(other than the acquiring person or group) will be entitled to purchase shares of the
Companys common stock at one-half of the market price, and in the event of a
subsequent merger or other acquisition of the Company, to buy shares of common stock of
the acquiring entity at one-half of the market price of those shares.



29
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|The
Company may redeem the Rights for $0.01 per Right, subject to adjustment, at any time
before the acquisition by a person or group of 15% or more of the Companys ordinary
shares. The Rights will expire on February 20, 2011.


     14.    
SAVINGS AND DEFERRED COMPENSATION PLANS


The
Company maintains Employee Savings Plans (the Plans) that cover substantially
all of its full-time U.S., U.K. and Belgium employees. All eligible employees may elect to
contribute a portion of their wages to the Plans, subject to certain limitations. In
addition, the Company contributes to the plans at the rate of 50% of the employees
contributions up to a maximum of 3% of the employees salary. The Companys
contributions to the Plans were $1,233,000, $1,191,000 and $773,000 in the years ended
December 31, 2002, 2001 and 2000, respectively.


The
Company also maintains a noncontributory pension plan that covers substantially all of its
full-time Japanese employees. All contributions to this pension plan are made by the
Company in accordance with prescribed statutory requirements. The Companys
contributions to the plan were $169,000, $24,000 and $421,000 for the years ended December
31, 2002, 2001 and 2000, respectively.


In
1998, the Company created a deferred compensation plan. Under the plan, eligible, highly
compensated employees (as defined) can elect to defer a portion of their compensation and
determine the nature of the investments, which will be used to calculate earnings on the
deferred amounts.


     15.    
COMMITMENTS AND CONTINGENCIES


The
Company leases office facilities and equipment under various capital and operating leases
with remaining lease terms generally in excess of one year. Rent expense was $11,438,000,
$10,547,000 and $8,410,000 for the years ended December 31, 2002, 2001 and 2000,
respectively. Future minimum rental payments on these leases including amounts accrued for
in purchase accounting restructuring accruals are as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                |  | 
|------------------------------- |  | 
|
|                                |  | 
|2003                            |  | 
|2004                            |  | 
|2005                            |  | 
|2006                            |  | 
|2007                            |  | 
|Thereafter                      |  | 
|                                |  | 
|Total                           |  | 
|                                |  | 
|Less: Amount representing       |  | 
|interest                        |  | 
|                                |  | 
|Present value of net minimum    |  | 
|lease payments                  |  | 
|                                |  | 
|Less: Current portion of        |  | 
|obligation under capital leases |  | 
|                                |  | 
|Obligations under capital       |  | 
|leases, excluding current       |  | 
|portion                         |  | 
|                                |  | 

|30
|--

---

|From
time to time, the Company is involved in certain legal actions arising in the ordinary
course of business. In the Companys opinion, the outcome of such actions will not
have a material adverse effect on the Companys financial position or results of
operations.


The
Company has employment agreements with certain officers that provide for, among other
things, salary, bonus, severance and change in control provisions.


The
Company has an agreement with a venture capital fund with a commitment to contribute
$1,000,000 to the fund, callable in $100,000 increments. As of December 31, 2002, $300,000
has been paid with $700,000 of commitment remaining. The agreement has a termination date
of December 11, 2010, subject to extension by the limited partners.


     16.    
RELATED-PARTY TRANSACTIONS


For
the years ended December 31, 2002, 2001 and 2000, the Company incurred approximately
$434,000, $304,000 and $257,000, respectively, of costs for rental and use of aircraft for
Company business payable to certain third party charter companies. While none of these
third party charter companies are affiliated with the Company or any of its officers or
directors, in some instances, the aircraft provided by these third party companies was
leased from an entity whose members are the Companys Chairman and Chief Executive
Officer and his spouse. As of December 31, 2002 and 2001 approximately $0 and $127,000,
respectively, of rental charges were included in other accrued expenses.


For
the years ended December 31, 2002, 2001 and 2000, the Company also incurred approximately
$236,000, $592,000 and $338,000, respectively, of costs for air travel for Company
business payable to the entity owned by the Chairman and Chief Executive Officer and his
spouse. These costs, which were incurred either directly or indirectly through expense
reimbursements, were charged to the Company on a reimbursement rate basis, in accordance
with FAA expense reimbursement rates. As of December 31, 2002 and 2001 approximately $0
and $192,000, respectively, of air travel costs were included in other accrued expenses.


During
the year ended December 31, 2002 and 2001, the Company incurred $3,170,000 and $1,432,000,
respectively, to a subcontractor for certain outsourcing activities related to its
clinical services. The Chairman and Chief Executive Officer of the Company and a member of
the Companys Board of Directors serve on the Board of Directors of this
subcontractor. One of the Companys Directors is also the Managing Partner of a
venture fund which is a 52% shareholder of this subcontractor. The Company terminated its
relationship with this subcontractor in October 2002. As of December 31, 2002 and 2001,
approximately $426,000 and $644,000, respectively, of outsourcing activities were included
in other accrued expenses.


For
the years ended December 31, 2002, 2001, and 2000, the Company incurred approximately
$912,000, $851,000 and $459,000, respectively, to a third party contractor that provides
consultants for computer programming services. The father of the Chairman and Chief
Executive Officer of the Company was a 43% shareholder of this contractor; however, during
the third quarter of 2002 he divested himself of all such ownership interest. As of
December 31, 2002 and 2001 approximately $89,000 and $200,000, respectively, of consulting
costs were included in other accrued expenses.


31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|17.    
CUSTOMER AND GEOGRAPHIC INFORMATION


For
the year ended December 31, 2002, the Company derived approximately 36% and 9% of its
revenue from its two largest customers. In the year ended December 31, 2001, the Company
derived approximately 41% and 10% of its revenue from its two largest customers. In the
year ended December 31, 2000, the Company derived approximately 31%, 11% and 10% of its
revenues from its three largest customers.


See
Note 1 for a brief description of the Companys business. The Company is organized by
geographic locations and has one reportable segment. All transfers between geographic
areas have been eliminated from consolidated revenues. Operating income consists of total
revenues recorded in the location less operating expenses and does not include interest
income, other expense or income taxes. This data is presented in accordance with SFAS 131,
Disclosure About Segments of an Enterprise and Related Information.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         | December 31,
|------------------------ | ------------
|                         |             
|
|                         |             
|Revenues:                |             
|United States            |             
|All Other                |             
|                         |             
|                         |             
|                         |             
|Operating (loss) income: |             
|United States            |             
|All Other                |             
|                         |             
|                         |             
|                         |             
|Identifiable assets:     |             
|United States            |             
|All Other                |             
|                         |             
|                         |             
|                         |             
|                         |             

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


32
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|DENDRITE INTERNATIONAL, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
|---------------------------------------------------------------------------------------------------------------------------------

|                              | Balance at theBeginning of the year | Additions chargedto expense or other accounts | Deductions fromreserves | Balance at theEnd of the year
|----------------------------- | ----------------------------------- | --------------------------------------------- | ----------------------- | -----------------------------
|                              |                                     |                                               |                         |                              
|Year Ended December 31, 2002: |                                     |                                               |                         |                              
|Allowance  for  doubtful      |                                    
|accounts                      |                                     | $   736,000                                   |                         | $   348,000                  
|Deferred  tax  valuation      |                                    
|allowance                     |                                     | $3,336,000                                    |                         | $1,146,000                   
|                              |                                    
|Year Ended December 31, 2001: |                                    
|Allowance  for  doubtful      |                                    
|accounts                      |                                     | $   593,000                                   |                         | $   180,000                  
|Deferred  tax  valuation      |                                    
|allowance                     |                                     | $1,171,000                                    |                         | $2,165,000                   
|                             
|Year Ended December 31, 2000: |                                    
|Allowance  for  doubtful      |                                    
|accounts                      |                                     | $   415,000                                   |                         | $   362,000                  
|Deferred  tax  valuation      |                                    
|allowance                     |                                     | $1,091,000                                    |                         | $   169,000                  

|33
|--

---

---

|EXHIBIT INDEX


     3.    
          Exhibits:


Articles of
Incorporation and By-Laws:
|----------------------------------------------------------------------------------------

| |  | 3.1 |  | Restated
Certificate of Incorporation of Dendrite  International,  Inc.  (incorporated herein by
                        reference  to  Exhibit  3.1 to the  Company's  Quarterly  Report
on Form  10-Q,  filed  with the                         Securities and Exchange
Commission (the "Commission") on August 14, 1996)
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 3.1 |  | (a)
        Certificate   of  Amendment  to  the  Restated   Certificate   of   Incorporation
  of  Dendrite                         International,  Inc.  (incorporated  herein by
 reference  to  Exhibit  3.1(a) to the  Company's                         Current Report
on Form 8-K, filed with the Commission on March 30, 2001)
| |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 3.1 |  | (b)
        Certificate   of  Amendment  to  the  Restated   Certificate   of   Incorporation
  of  Dendrite                         International,  Inc.  (incorporated  herein by
 reference  to Exhibit  3.1 (b) to the  Company's                         Current Report
on Form 8-K, filed with the Commission on March 30, 2001)
| |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 3.1 |  | (c)
Certificate of Amendment to the Restated Certificate of Incorporation of Dendrite
International, Inc. Setting Forth the Terms of Series A Junior Participating Preferred
Stock (incorporated herein by reference to Exhibit 3.1 (c) to the Companys Current
Report on Form 8-K, filed with the Commission on March 30, 2001)
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 3.2 |  | Amended
and Restated By-laws of Dendrite  International,  Inc. (incorporated herein by reference
                        to Exhibit 3 to the Company's  Current Report on Form 8-K, filed
with the Commission on February                         21, 2001)
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Instruments
Defining Rights of Security Holders, including Indentures:

| |  | 4.1 |  | Specimen
of Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the Companys
Registration Statement on Form S-1, filed with the Commission on May 17, 1995)
| |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 4.2 |  | Registration
Rights Agreement dated October 2, 1991 between the several purchasers named therein and
the Company (incorporated herein by reference to Exhibit 4.2 to the Companys
Registration Statement on Form S-1, filed with the Commission on May 17, 1995)
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 4.3 |  | Amendment
to Registration Rights Agreement dated April 23, 1992 between the Company and the parties
named therein as shareholders of the Company (incorporated herein by reference to Exhibit
4.3 of Amendment 1 to the Companys Registration Statement on Form S-1, filed with
the Commission on May 17, 1995)
| |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 4.4 |  | Rights
Agreement dated as of February 20, 2001 between Dendrite International, Inc. and
Registrar and Transfer Company, as Rights Agent, which includes, as Exhibit A the Form of
Certificate of Amendment to Restated Certificate of Incorporation, as Exhibit B the Form
of Rights Certificate and as Exhibit C the Form of Summary of Rights (incorporated herein
by reference to Exhibit 4 of the Companys Current Report on Form 8-K, filed with
the Commission on February 21, 2001)
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|34
|--

---

Material
Contracts and Compensatory Plans and Arrangements:

| |  | 10.1 |  | 1992
Stock Plan, as amended (incorporated herein by reference to Exhibit 10.36 to the Companys
Registration Statement on Form S-1, filed with the Commission on May 17, 1995; Exhibit A
to the Companys Definitive Proxy Statement for the 1999 Annual Meeting of
Shareholders, filed with the Commission on April 16, 1999; and Exhibit 10.1 to the Companys
Annual Report on Form 10-K, filed with the Commission on March 30, 2000)*
| |  | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.2 |  | 1992
Senior Management Incentive Stock Option Plan, as amended (incorporated herein by
reference to Exhibit 10.37 to the Companys Registration Statement on Form S-1,
filed with the Commission on May 17, 1995; Exhibit B to the Companys Definitive
Proxy Statement for the 1999 Annual Meeting of Shareholders, filed with the Commission on
April 16, 1999; and Exhibit 10.2 to the Companys Annual Report on Form 10-K, filed
with the Commission on March 30, 2000)*
| |  | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.3 |  | 1997
Stock Incentive Plan, as amended (incorporated herein by reference to Exhibit 10.4 to the
Companys Quarterly Report on Form 10-Q, filed with the Commission on August 14,
1997; Exhibit 4.2 to the Companys Registration Statement on Form S-8, filed with
the Commission on September 16, 1997; Exhibit 4.2 to the Companys Registration
Statement on Form S-8, filed with the Commission on November 10, 1997; Exhibit 10.2 to
the Companys Quarterly Report on Form 10-Q, filed with the Commission on November
14, 1997; Exhibit 4.2 to the Companys Registration Statement on Form S-8, filed
with the Commission on April 21, 1998; Exhibit A to the Companys Definitive Proxy
Statement for the 1998 Annual Meeting of Shareholders, filed with the Commission on April
30, 1998; Appendix A to the Companys Definitive Proxy Statement for the 1999 Annual
Meeting of Shareholders, filed with the Commission on April 16, 1999; Exhibit 10.3 to the
Companys Annual Report on Form 10-K, filed with the Commission on March 30, 2000;
Appendix A to the Companys Definitive Proxy Statement for the 2000 Annual Meeting
of Shareholders, filed with the Commission on April 17, 2000; Exhibit 4 to the Companys
Registration Statement on Form S-8, filed with the Commission on October 20, 2000; and
Appendix A to the Companys Definitive Proxy Statement for the 2001 Annual Meeting
of Shareholders, filed with the Commission on April 13, 2001 )*
| |  | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|35
|--

---

| |  | 10.4 |  | 1997
Employee Stock Purchase Plan (incorporated herein by reference to; Exhibit 4.2 to the
Companys Registration Statement on Form S-8, filed with the Commission on April 1,
1997; Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q, filed with the
Commission on August 14, 1997; and Exhibit A to the Companys Definitive Proxy
Statement for the 1999 Annual Meeting of Shareholders, filed with the Commission on April
16, 1999)*
| |  | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.5 |  | Lease
of 1200 Mount Kemble Avenue, Morristown, New Jersey (incorporated herein by reference to
Exhibit 10.40 to the Companys Registration Statement on Form S-1, filed with the
Commission on May 17, 1995)
| |  | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.6 |  | Amended
and Restated Credit Agreement, entered into as of November 30, 1998, between the Company
and The Chase Manhattan Bank, N.A. (incorporated herein by reference to Exhibit 10.7 to
the Companys Annual Report on Form 10-K, filed with the Commission on March 26,
1999)
| |  | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.7 |  | Employment
 Agreement  dated  as of  March  25,  1997,  between  Dendrite
International,  Inc.  and John  E.  Bailye  (incorporated  herein  by  reference  to
 Exhibit  10.1  to the  Company's                         Quarterly Report on Form
10-Q/A, filed with the Commission on May 16, 1997)*
| |  | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.8 |  | Employment
Agreement dated as of June 2, 1997, between Dendrite  International,  Inc. and George
                        T. Robson  (incorporated  herein by reference to Exhibit 10.1 to
the Company's  Quarterly Report                         on Form 10-Q, filed with the
Commission on August 14, 1997)*1
| |  | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.9 |  | Deferred
Compensation Plan dated as of September 1, 1998 (incorporated herein by reference to
Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q, filed with the
Commission on August 14, 1998)*
| |  | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.10 |  | Deferred
Compensation Plan Trust Agreement dated as of September 1, 1998 (incorporated herein by
reference to Exhibit 10.2 of the Companys Quarterly Report on Form 10-Q, filed with
the Commission on August 14, 1998)*
| |  | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.11 |  | Employment
Agreement dated as of August 7, 1997, between Dendrite International, Inc. and Kathleen
Donovan (incorporated herein by reference to Exhibit 10.17 of the Companys Current
Report on Form 8-K, filed with the Commission on March 30, 2001)*
| |  | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.12 |  | Employment
Agreement dated as of September 8, 1998, between Dendrite International, Inc. and
Christine Pellizzari (incorporated herein by reference to Exhibit 10.18 of the Companys
Current Report on Form 8-K, filed with the Commission on March 30, 2001)*
| |  | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.13 |  | Amendment
to Employment Agreement dated as of May 26, 1999, between Dendrite International, Inc.
and George T. Robson (incorporated herein by reference to Exhibit 10.22 of the Companys
Current Report on Form 8-K, filed with the Commission on March 30, 2001)*1
| |  | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|36
|--

---

| |  | 10.14 |  | Amendment
to Employment Agreement dated as of January 25, 2000, between Dendrite International,
Inc. and Kathleen Donovan (incorporated herein by reference to Exhibit 10.23 of the
Companys Current Report on Form 8-K, filed with the Commission on March 30, 2001)*
| |  | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.15 |  | Amendment
to Employment Agreement dated as of August 1, 2000, between Dendrite International, Inc.
and Christine Pellizzari (incorporated herein by reference to Exhibit 10.24 of the Companys
Current Report on Form 8-K, filed with the Commission on March 30, 2001)*
| |  | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.16 |  | Employment
Agreement dated as of August 7, 2000, between Dendrite International, Inc. and Marc
Kustoff (incorporated herein by reference to Exhibit 10.25 of the Companys Current
Report on Form 8-K, filed with the Commission on March 30, 2001)*
| |  | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.17 |  | Agreement
of Purchase and Sale between Dendrite International, Inc. and Townsend Property Trust
Limited Partnership dated January 5, 2001 (incorporated herein by reference to Exhibit
10.26 of the Companys Current Report on Form 8-K, filed with the Commission on
March 30, 2001)*
| |  | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.18 |  | Deed
of Lease between Liberty Property Limited Partnership and Dendrite International, Inc.
for Dendrite Building I of the Liberty Executive Park in Chesapeake, Virginia
(incorporated herein by reference to Exhibit 10.27 of the Companys Current Report
on Form 8-K, filed with the Commission on March 30, 2001)
| |  | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.19 |  | Deed
of Lease between Liberty Property Limited Partnership and Dendrite International, Inc.
for Dendrite Building II of the Liberty Executive Park in Chesapeake, Virginia
(incorporated herein by reference to Exhibit 10.28 of the Companys Current Report
on Form 8-K, filed with the Commission on March 30, 2001)
| |  | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.20 |  | Employment
Agreement (including Amendment), dated as of May 16, 2001, between Dendrite
International, Inc. and Paul Zaffaroni (incorporated herein by reference to Exhibit 10.29
of the Companys Current Report on Form 8-K, filed with the Commission on March 19,
2002)*
| |  | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.21 |  | Indemnification
Agreement, dated as of October 1, 2001, between Dendrite International, Inc. and Paul
Zaffaroni (incorporated herein by reference to Exhibit 10.30 of the Companys
Current Report on Form 8-K, filed with the Commission on March 19, 2002)*
| |  | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.22 |  | Employment
Agreement, dated as of June 19, 1997, between Dendrite International, Inc. and Brent
Cosgrove (incorporated herein by reference to Exhibit 10.33 of the Companys Current
Report on Form 8-K, filed with the Commission on March 19, 2002)*
| |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|37
|--

---

| |  | 10.23 |  | Amendment
to Employment Agreement, dated as of November 8, 2001, between Dendrite International,
Inc. and Brent Cosgrove (incorporated herein by reference to Exhibit 10.34 of the Companys
Current Report on Form 8-K, filed with the Commission on March 19, 2002)*
| |  | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.24 |  | Indemnification
Agreement, dated as of November 8, 2001, between Dendrite International, Inc. and Brent
Cosgrove (incorporated herein by reference to Exhibit 10.35 of the Companys Current
Report on Form 8-K, filed with the Commission on March 19, 2002)*
| |  | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.25 |  | Agreement
 of Lease,  dated as of February  12,  2001,  between  SCC II,  L.L.C.  and  Dendrite
                        International,  Inc.  (incorporated  herein by  reference  to
 Exhibit  10.36 of the  Company's                         Current Report on Form 8-K,
filed with the Commission on March 19, 2002)
| |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.26 |  | First
Amendment to Lease, dated as of August 17, 2001, between 1200 Mount Kemble Limited
Partnership and Dendrite International, Inc. (incorporated herein by reference to Exhibit
10.37 of the Companys Current Report on Form 8-K, filed with the Commission on
March 19, 2002)
| |  | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.27 |  | November
2001 Amendment  to Credit  Agreement,  dated as of  November  6,  2001,  between
     Dendrite   International,   Inc.  and  The  Chase   Manhattan   Bank,  N.A.
     (incorporated herein by reference to Exhibit 10.38 of the Company's Current
     Report  on Form  8-K,  filed  with  the  Commission  on  March  19,  2002)
| |  | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.28 |  | Indemnification
Agreement, dated as of October 28, 1998, between Dendrite International, Inc. and John
Bailye (incorporated herein by reference to Exhibit 10.39 of the Companys Current
Report on Form 8-K, filed with the Commission on March 19, 2002)*
| |  | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.29 |  | Indemnification
Agreement, dated as of October 28, 1998, between Dendrite International, Inc. and George
Robson (incorporated herein by reference to Exhibit 10.40 of the Companys Current
Report on Form 8-K, filed with the Commission on March 19, 2002)*1
| |  | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.30 |  | Indemnification
Agreement, dated as of January 25, 2001, between Dendrite International, Inc. and
Christine Pellizzari (incorporated herein by reference to Exhibit 10.41 of the Companys
Current Report on Form 8-K, filed with the Commission on March 19, 2002)*
| |  | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.31 |  | Indemnification
Agreement, dated as of January 25, 2001, between Dendrite International, Inc. and
Kathleen Donovan (incorporated herein by reference to Exhibit 10.42 of the Companys
Current Report on Form 8-K, filed with the Commission on March 19, 2000)*
| |  | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|38
|--

---

| |  | 10.32 |  | 1994
Incentive and Non-Qualified Stock Plan of CorNet International,  Ltd. (incorporated
herein                         by reference to Exhibit 4.2 of the  Companys
 Registration  Statement on Form S-8,  filed with                         the Commission
on June 29, 1999)*
| |  | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.33 |  | First
Amended SAI Holdings,  Inc. Long-Term Incentive Stock Option Plan (incorporated herein by
                        reference to Exhibit 99.1 of the Company's  Registration
 Statement on Form S-8, filed with the                         Commission on October 25,
2002)*
| |  | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.34 |  | Dendrite
International, Inc. New Hire Option Grant Authorization  (incorporated herein by
     reference to Exhibit 99.1 of the Companys  Registration  Statement on
     Form S-8, filed with the Commission on November 6, 2002)*
| |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.35 |  | Indemnification
Agreement, dated as of April 6, 2001, between Dendrite  International,  Inc. and
     Patrick J. Zenner (incorporated herein by reference to Exhibit 10.37 of the
     Companys  Current  Report on Form 8-K,  filed with the  Commission on
     March 26, 2003)*
| |  | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.36 |  | Retirement
Agreement and  General  Release,  dated as of June 30,  2002,  between  Dendrite
     International,  Inc. and George Robson (incorporated herein by reference to
     Exhibit 10.38 of the Companys  Current Report on Form 8-K, filed with
     the Commission on March 26, 2003)*1
| |  | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.37 |  | November
2002 Amendment  to Credit  Agreement,  dated as of  November  6,  2001,  between
     Dendrite   International,   Inc.  and  The  Chase   Manhattan   Bank,   N.A
     (incorporated herein by reference to Exhibit 10.39 of the Companys Current
     Report  on Form  8-K,  filed  with the  Commission  on March  26,  2003)
| |  | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Subsidiaries:

| |  | 21 |  | Subsidiaries
of the Registrant
| |  | -- |  | ------------------------------

Consent of Independent Auditors:

| |  | 23.1 |  | Consent
of Ernst & Young LLP
| |  | ---- |  | ----------------------------

| |  | 23.2 |  | Notice
regarding Consent of Arthur Andersen LLP
| |  | ---- |  | -----------------------------------------------

* Management contract or compensatory plan.

1 Ceased as executive
officer.

39