8-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_________________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) October 23, 2003

DENDRITE INTERNATIONAL, INC.

_________________

(Exact Name of Registrant as Specified in Charter)

New Jersey 0-26138 22-2786386

(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification Number)

1200 Mount Kemble Avenue, Morristown, New Jersey 07960-6767

(Address of Principal Executive Offices) (Zip Code)

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

INFORMATION TO BE INCLUDED IN THE REPORT

Item 12.   Results of Operations and Financial Condition.

Attached and being furnished hereby as Exhibit 99.1 is a copy of a press release of Dendrite International, Inc. (“Dendrite”) dated October 23, 2003, reporting Dendrite’s financial results for the third quarter of 2003.

The discussion of Dendrite’s 2003 three month and nine month period historical results as well as its outlook for future results include, and where indicated exclude, the impact of items related to Dendrite’s June 16, 2003 acquisition of Synavant, Inc. (“Synavant”) and certain other indicated items. The adjusted items included in the 2003 three and nine month periods (and in its outlook) relate to operational earnings, revenue and other financial and operational amounts related to Synavant, including Synavant integration costs, foreign tax valuation adjustments in connection with the integration of Synavant, and other specified acquisition-related items in connection with the Synavant acquisition, as well as amortization of definite lived intangibles arising from Dendrite’s Synavant and SAI acquisitions. The 2002 items (which were previously disclosed and previously adjusted for the corresponding 2002 periods) related to severance payments from a work force reduction, an adjustment to the fair value of a building held for sale, and a benefit resulting from the reversal of a reserve related to anticipated loss contracts which were favorably resolved. These 2003 and 2002 period adjustments are further detailed in, and reconciled to GAAP, as part of the press release.

Dendrite believes that by reflecting the 2003 (and, as indicated in the press release, 2004) impact of these acquisition-related items, it provides investors with insight into the operating performance of Dendrite’s historic business as well as identifying the impact of the Synavant acquisition and the amortization of definite lived intangibles in connection with both the Synavant and SAI acquisitions. The Company also believes that information concerning Synavant’s contribution to 2003 second and third quarter revenues provides investors insight into Dendrite’s historical business performance.

Dendrite believes that by reflecting and breaking out the 2002 adjusted items as described above and as described in the press release, it similarly provides investors with insight into the historic operating performance of Dendrite’s business factoring out those designated specific items occurring in 2002.

Dendrite management also internally uses these Non-GAAP adjusted amounts in reviewing and evaluating its historic operating performance period-over-period as well as its combined business performance, and in managing its overall business. For 2003, these adjusted items allow management to evaluate progress on its historic business excluding the Synavant (and, as to amortization of definite lived intangibles, excluding both the Synavant and SAI acquisitions). Management uses various methods to evaluate and review its operations and does not depend exclusively on such Non-GAAP adjusted amounts or on any other single analysis model.

The Company has detailed in its financial data tables accompanying the press release all such adjusted items and reconciliation items in order to assist investors in reviewing such Non-GAAP adjusted amounts. All such Non-GAAP information is supplemental to information presented in accordance with generally accepted accounting principles (GAAP) and is not intended to represent a presentation in accordance with GAAP and should not be considered as a substitute for, or superior to, measures of financial performance prepared and presented in accordance with GAAP.

SIGNATURE

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

Dated:  October 23, 2003 DENDRITE INTERNATIONAL, INC.



By:      KATHLEEN E. DONOVAN
——————————————
Name: Kathleen E. Donovan
Title:   Senior Vice President and Chief
             Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of Dendrite International, Inc., dated October 23, 2003.

EX-99.1

Press Release

        FOR IMMEDIATE RELEASE

        Dendrite Reports Strong Third Quarter Results

        GAAP EPS improves 87% to $0.12

Adjusted EPS of $0.15 up 57% from prior year

On target to achieve second-half revenue and adjusted EPS outlook

         Morristown, NJ, October 23, 2003–Dendrite International, Inc. (NASDAQ: DRTE) today announced strong third quarter GAAP diluted earnings of $0.12 per share, up a dramatic 87% compared to GAAP earnings of $0.06 per share for the third quarter of 2002. GAAP diluted earnings per share for the third quarter 2003 included approximately $0.03 of acquisition related non-cash charges and other merger-related costs. Third quarter 2002 GAAP earnings included approximately $0.04 of items related to: severance payments from a workforce reduction, an adjustment to the fair value of a building held for sale, and a benefit resulting from the reversal of a reserve related to anticipated loss contracts which were favorably resolved. Excluding these items, third quarter 2003 adjusted earnings were $0.15 per diluted share, an improvement of 57% from an adjusted $0.10 per diluted share reported in the same period of the prior year. A reconciliation of GAAP to adjusted results can be found on Table 7 of the accompanying financials.

        “We are very pleased with our ability to deliver strong financial results in what has remained a relatively challenging pharmaceutical services market,” said Dendrite Chairman and Chief Executive Office John Bailye. “While we have yet to witness a release of spending within the industry, we have been able to weather the storm through the strength of our SFA products and services and our expanding non-SFA product footprint.”

Third Quarter Results

        Revenues for the quarter increased to $92.9 million, up 73% from prior year. The Company estimated that revenue from the Synavant acquisition contributed approximately $32.4 million of the year over year growth. Included in the Synavant revenue was approximately $2.8 million of postage pass-through. Excluding Synavant, third quarter revenue grew an impressive 13%, from $53.7 million in 2002 to $60.5 million in 2003. Favorable foreign currency movement accounted for approximately 1% of this increase.

        Dendrite delivered GAAP operating income of $8.3 million in the third quarter, a 67% improvement over the prior year’s third quarter GAAP operating income of $5.0 million.

        Income tax rates for the three months ended September 30, 2003 and September 30, 2002 were 40% and 50%, respectively. During the third quarter of 2002, the Dendrite effective tax rate had increased retroactively for the entire year, from 36% to 40%, as a result of a change in New Jersey tax laws.

Key Operating Statistics

        Dendrite ended the third quarter with $26.2 million in cash and cash equivalents. The Company noted that the $5.0 million of cash from operations reported for the third quarter also included over $6.4 million of payments related to merger and restructuring activities. Excluding these payments, cash generated from its ongoing operations was approximately $11.4 million. An $8.6 million decrease in the accounts receivable balance contributed to this strong cash generation. The Company was pleased to report accounts receivable days sales outstanding (DSO) of 62 days.

Recent Highlights

        Dendrite reported success in many aspects of its business. Highlights included:

• Signing 9 new agreements with customers in North America, Europe, and Asia/Pacific Rim.

• Adding over 600 additional sales force automation user licenses through business with new customers and expanded business with existing customers, and updating another 375 user licenses

• Signing a large license order with a major Japanese systems integrator for resale over the next six months

• Launching its One-Source Sample™ program, the pharmaceutical industry’s most comprehensive sample product promotion and management solution

• Winning a comprehensive business process outsourcing agreement with Purdue that included Dendrite’s new One-Source Sample program

• Establishing a CRM Center of Excellence at its Norcross, Georgia facility dedicated to providing services to pharmaceutical companies using SFA software applications developed internally or by third parties

• Renewing a support services contract with a leading pharmaceutical client currently implementing a third party-developed sales force application; services will be provided by Dendrite’s CRM Center of Excellence

• Completing a rollout of j-forceNET™ for AstraZeneca China. AstraZeneca has become the first pharmaceutical company in China to adopt j-forceNET™, Dendrite’s widely utilized sales channel management suite originally developed for the Japanese market and being introduced into other Asia/Pacific markets

• Launching a new CRM Software Enhancement Kit to provide industry-specific, best-of-breed software and service solutions to make third party-developed software installations more effective

• Completing its 100-day Synavant integration plan on a global basis

Outlook

        “We believe we are on track to meet the second-half revenue and adjusted earnings outlook we provided last quarter. We currently expect revenue of approximately $97 to $100 million in the fourth quarter and diluted adjusted EPS of $0.17 to $0.19 per share,” said Chief Financial Officer Kathleen Donovan. “Now that we have a clearer picture into the newly merged and much larger Dendrite, we have been looking at opportunities for even more cost savings in our business. As result, we have identified additional actions to be taken in the fourth quarter. To implement these plans, we anticipate incurring slightly higher charges in the fourth quarter than originally projected and therefore expect GAAP earnings in the range of $0.13 to $0.14 per diluted share. We feel that by taking these additional actions in the fourth quarter, we are further demonstrating Dendrite’s dedication to continuously improve our bottom-line results.”

        The Company also provided its customary six-month rolling guidance. “We believe that the combined revenue for the fourth quarter of this year and first quarter of 2004 will be in the range of $185 to $192 million. As usual, we expect the fourth quarter to be stronger than the first quarter, particularly as the new CRM effectiveness group completes a major Siebel rollout in the fourth quarter. Based on achieving this targeted revenue, we anticipate delivering GAAP earnings in the range of $0.24 to $0.27 per diluted share and adjusted earnings of $0.31 to $0.34 per diluted share over the next six months.” Please refer to Table 8 of this press release for a reconciliation of GAAP and adjusted EPS.

        This current outlook is based on current expectations and assumptions and constitutes “forward-looking information.” The Company can give no assurance that such expectations and assumptions will prove to be correct. The Company does not intend to update such outlook other than in connection with regularly scheduled earnings releases.

        Please visit our website at www.dendrite.com to participate in our earnings call webcast, which will be held October 23, 2003 at 5 p.m. EST.

About Dendrite

        Dendrite develops and delivers solutions that increase the productivity of sales, marketing, and clinical processes for pharmaceutical and other life science clients. For more information, visit www.dendrite.com.

Investor Relations
Christine Croft
908-541-5865
christine.croft@dendrite.com

Media Relations
Erik Kopp
908-541-5850
erik.kopp@dendrite.com

Note: Dendrite is a registered trademark of Dendrite International, Inc.

This document contains forward-looking statements that are based on Dendrite International, Inc.‘s current expectations, estimates and projections. The statements may be identified by such forward-looking terminology as “expect,” “believe,” “anticipate,” “will,” “intend,” “plan,” “outlook,” “guidance,” and similar statements or variations. Such forward-looking statements are based on our current expectations, estimates, assumptions and projections and involve significant risks and uncertainties, including that Dendrite will become involved in additional litigation regarding the acquisition of Synavant; risks that result from our dependence on the pharmaceutical industry; fluctuations in quarterly revenues due to lengthy sales and implementation cycles for our products; our fixed expenses in relation to fluctuating revenues and variations in customers’ budget cycles; dependence on major customers; changes in demand for our products and services attributable to the current weakness in the economy; successful and timely development and introduction of new products and versions; rapid technological changes; increased competition; international operations; acquisitions, including the success of the June 2003 acquisition of Synavant; events which may affect the U.S. and world economies; our ability to manage our growth; the protection of our proprietary technology; our ability to compete in the Internet-related products and services market; the continued demand for Internet-related products and services; the ability of our third party vendors to respond to technological change; our ability to maintain our relationships with third-party vendors; the potential for hostilities in the Middle East and Asia and the resulting impact on our business and the business and needs of our customers; and catastrophic events which could negatively affect our information technology infrastructure. Other important factors that should be considered are included in the Company’s 10-K, 10-Qs, and other reports filed with the SEC. Actual results may differ materially. The Company assumes no obligation for updating any such forward-looking statements to reflect actual results, changes in assumptions or other changes affecting such forward-looking statements.

####

TABLE 1
DENDRITE INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP

(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

	Three Months Ended September 30,
	2003			%		2002			%		Change
Revenues:
License fees	$	2,696			2.9%	$	2,276			4.2%		18%
Services		90,166			97.1%		51,385			95.8%		75%
		92,862			100.0%		53,661			100.0%		73%
Cost of sales:
Cost of license fees		1,133			1.2%		845			1.6%		34%
Cost of services		45,840			49.4%		24,510			45.7%		87%
		46,973			50.6%		25,355			47.3%		85%
Gross margin
License fees gross margin		1,563			58.0%		1,431			62.9%		(4.9)	Pt
Services gross margin		44,326			49.2%		26,875			52.3%		(3.1)	Pt
		45,889			49.4%		28,306			52.7%		(3.3)	Pt
Operating expense:
Selling, general and
administrative		34,746			37.4%		19,153			35.7%		81%
Research and development		2,863			3.1%		2,362			4.4%		21%
Asset Impairment		--			0.0%		1,832			3.4%		-100%
		37,609			40.5%		23,347			43.5%		61%
Operating income		8,280			8.9%		4,959			9.2%		67%
Interest income		58			0.1%		267			0.5%		-78%
Other expense		(55	)		-0.1%		(143	)		-0.3%		-62%
Income before income taxes		8,283			8.9%		5,083			9.5%		63%
Income taxes		3,314			3.6%		2,541			4.7%		30%
Net income	$	4,969			5.4%	$	2,542			4.7%		95%
Net income per share:
Basic	$	0.12				$	0.06
Diluted	$	0.12				$	0.06
Shares used in computing
net income per share:
Basic		40,442					39,943
Diluted		41,859					40,003

(1) Includes Synavant’s operating results for the period June 16, 2003 to September 30, 2003.

TABLE 1
DENDRITE INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP

(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

	Nine Months Ended September 30,
	2003 (1)			%		2002			%		Change
Revenues:
License fees	$	8,011			3.6%	$	7,761			4.6%		3%
Services		214,089			96.4%		160,955			95.4%		33%
		222,100			100.0%		168,716			100.0%		32%
Cost of sales:
Cost of license fees		3,405			1.5%		2,776			1.6%		23%
Cost of services		108,169			48.7%		81,485			48.3%		33%
		111,574			50.2%		84,261			49.9%		32%
Gross margin
License fees gross margin		4,606			57.5%		4,985			64.2%		(6.7)	Pt
Services gross margin		105,920			49.5%		79,470			49.4%		0.1	Pt
		110,526			49.8%		84,455			50.1%		(0.3)	Pt
Operating expense:
Selling, general and
administrative		75,968			34.2%		58,141			34.5%		31%
Research and development		8,775			4.0%		7,446			4.4%		18%
Asset Impairment		--			0.0%		1,832			1.1%		-100%
		84,743			38.2%		67,419			40.0%		26%
Operating income		25,783			11.6%		17,036			10.1%		51%
Interest income		612			0.3%		859			0.5%		-29%
Other expense		(21	)		0.0%		(107	)		-0.1%		-80%
Income before income taxes		26,374			11.9%		17,788			10.5%		48%
Income taxes		11,158			5.0%		7,115			4.2%		57%
Net income	$	15,216			6.9%	$	10,673			6.3%		43%
Net income per share:
Basic	$	0.38				$	0.27
Diluted	$	0.37				$	0.27
Shares used in computing
net income per share:
Basic		40,225					39,860
Diluted		41,090					40,181

(1) Includes Synavant’s operating results for the period June 16, 2003 to September 30, 2003.

TABLE 2
DENDRITE INTERNATIONAL, INC.

RECONCILIATION OF GAAP TO ADJUSTED (NON-GAAP) STATEMENT OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2003

(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

	Total Adjusted Q3			% of Rev.		Amortization (2)			Other Charges (3)			GAAP			% of Rev.
Revenues:
License fees	$	2,696			2.9%	$	--		$	--		$	2,696			2.9%
Services		90,166			97.1%		--			--			90,166			97.1%
		92,862			100.0%		--			--			92,862			100.0%
Cost of license fees		980			1.1%		153			--			1,133			1.2%
Cost of services		45,775			49.3%		65			--			45,840			49.4%
		46,755			50.3%		218			--			46,973			50.6%
License Gross Margin		1,716			63.6%		(153	)		--			1,563			58.0%
Services Gross Margin		44,391			49.2%		(65	)		--			44,326			49.2%
Gross margin		46,107			49.7%		(218	)		--			45,889			49.4%
Selling, general and administrative		32,561			35.1%		965			1,220			34,746			37.4%
Research and development		2,863			3.1%		--			--			2,863			3.1%
		35,424			38.1%		965			1,220			37,609			40.5%
Operating income		10,683			11.5%		(1,183	)		(1,220	)		8,280			8.9%
Interest income		58			0.1%		--			--			58			0.1%
Other expense		(55	)		-0.1%		--			--			(55	)		-0.1%
Income before income taxes		10,686			11.5%		(1,183	)		(1,220	)		8,283			8.9%
Income taxes		4,275			4.6%		473			488			3,314			3.6%
Net income	$	6,411	(1)		6.9%	$	(710	)	$	(732	)	$	4,969			5.4%
Net income per share
Basic	$	0.16				$	(0.02	)	$	(0.02	)	$	0.12
Diluted	$	0.15				$	(0.02	)	$	(0.02	)	$	0.12	(4)
Shares used in computing net
income (loss) per share:
Basic		40,442					40,442			40,442			40,442
Diluted		41,859					41,859			41,859			41,859

(1) See Table 7 for a more detailed reconciliation of net income for the three months ended September 30, 2003.

(2) Represents amortization expense of definite lived intangible assets resulting from the acquisitions of SAI and Synavant.

(3) Includes Dendrite severance and facility closure costs incurred as a result of the acquisition of Synavant along with other integration costs.

(4) Diluted EPS does not appear to foot across due to the mathematical rounding of the individual calculations.

TABLE 3
DENDRITE INTERNATIONAL, INC.

RECONCILIATION OF GAAP TO ADJUSTED (NON-GAAP) STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2003

(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

	Total Adjusted Q3			% of Rev.		Amortization (2)			Other Charges (3)			GAAP			% of Rev.
Revenues:
License fees	$	8,011			3.6%	$	--		$	--		$	8,011			3.6%
Services		214,089			96.4%		--			--			214,089			96.4%
		222,100			100.0%		--			--			222,100			100.0%
Cost of license fees		2,948			1.3%		457			--			3,405			1.5%
Cost of services		108,093			48.7%		76			--			108,169			48.7%
		111,041			50.0%		533			--			111,574			50.2%
License Gross Margin		5,063			63.2%		(457	)		--			4,606			57.5%
Services Gross Margin		105,996			49.5%		(76	)		--			105,920			49.5%
Gross margin		111,059			50.0%		(533	)		--			110,526			49.8%
Selling, general and administrative		73,221			33.0%		1,433			1,314			75,968			34.2%
Research and development		8,775			4.0%		--			--			8,775			4.0%
		81,996			36.9%		1,433			1,314			84,743			38.2%
Operating income		29,063			13.1%		(1,966	)		(1,314	)		25,783			11.6%
Interest income		612			0.3%		--			--			612			0.3%
Other expense		(21	)		0.0%		--			--			(21	)		0.0%
Income before income taxes		29,654			13.4%		(1,966	)		(1,314	)		26,374			11.9%
Income taxes		11,862			5.3%		786			(82	)		11,158			5.0%
Net income	$	17,792	(1)		8.0%	$	(1,180	)	$	(1,396	)	$	15,216			6.9%
Net income per share
Basic	$	0.44				$	(0.03	)	$	(0.03	)	$	0.38
Diluted	$	0.43				$	(0.03	)	$	(0.03	)	$	0.37
Shares used in computing
net income (loss) per share:
Basic		40,225					40,225			40,225			40,225
Diluted		41,090					41,090			41,090			41,090

Note: Includes Synavant’s operating results for the period June 16, 2003 to September 30, 2003.

(1) See Table 7 for a more detailed reconciliation of net income for the nine months ended September 30, 2003.

(2) Represents amortization expense of definite lived intangible assets resulting from the acquisitions of SAI and Synavant.

(3) Includes Dendrite severance and facility closure costs incurred as a result of the acquisition of Synavant and other integration costs as well as a foreign tax valuation adjustment made in connection with the integration of Synavant.

TABLE 4
DENDRITE INTERNATIONAL, INC.

ADJUSTED CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)

(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

	Three Months Ended September 30,
	2003 (1)			%		2002			%		Change
Revenues:
License fees	$	2,696			2.9%	$	2,276			4.2%		18%
Services		90,166			97.1%		51,385			95.8%		75%
		92,862			100.0%		53,661			100.0%		73%
Cost of license fees		980			1.1%		845			1.6%		16%
Cost of services		45,775			49.3%		25,449			47.4%		80%
		46,755			50.3%		26,294			49.0%		78%
License Gross Margin		1,716			63.6%		1,431			62.9%		0.7	Pt
Services Gross Margin		44,391			49.2%		25,936			50.5%		(1.3)	Pt
Gross margin		46,107			49.7%		27,367			51.0%		(1.3)	Pt
Operating expense:
Selling, general
and administrative		32,561			35.1%		17,798			33.2%		83%
Research and development		2,863			3.1%		2,362			4.4%		21%
		35,424			38.1%		20,160			37.6%		76%
Operating income		10,683			11.5%		7,207			13.4%		48%
Interest income		58			0.1%		267			0.5%		-78%
Other expense		(55	)		-0.1%		(143	)		-0.3%		-62%
Income before income taxes		10,686			11.5%		7,331			13.7%		46%
Income taxes		4,275			4.6%		3,440			6.4%		24%
Net income	$	6,411			6.9%	$	3,891			7.3%		65%
Net income per share:
Basic	$	0.16				$	0.10
Diluted	$	0.15				$	0.10
Shares used in computing
net income per share:
Basic		40,442					39,943
Diluted		41,859					40,003

Note: The non-GAAP financial information set forth above is not prepared in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company believes that disclosing non-GAAP statement of operations are more indicative of the operating performance of the Company and are useful to investors to help them analyze operating trends and perform comparisons across periods. Management uses the adjusted numbers to manage the business and evaluate operating performance period to period.

(1) See Table 2 for the Statement of Operations reconciliation from GAAP to non-GAAP for the three months ended September 30, 2003

(2) See Table 3 for the Statement of Operations reconciliation from GAAP to non-GAAP for the nine months ended September 30, 2003

TABLE 4
DENDRITE INTERNATIONAL, INC.

ADJUSTED CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)

(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

	Nine Months Ended September 30,
	2003 (2)			%		2002			%		Change
Revenues:
License fees	$	8,011			3.6%	$	7,761			4.6%		3%
Services		214,089			96.4%		160,955			95.4%		33%
		222,100			100.0%		168,716			100.0%		32%
Cost of license fees		2,948			1.3%		2,776			1.6%		6%
Cost of services		108,093			48.7%		82,424			48.9%		31%
		111,041			50.0%		85,200			50.5%		30%
License Gross Margin		5,063			63.2%		4,985			64.2%		(1.0)	Pt
Services Gross Margin		105,996			49.5%		78,531			48.8%		0.7	Pt
Gross margin		111,059			50.0%		83,516			49.5%		0.5	Pt
Operating expense:
Selling, general and administrative		73,221			33.0%		56,786			33.7%		29%
Research and development		8,775			4.0%		7,446			4.4%		18%
		81,996			36.9%		64,232			38.1%		28%
Operating income		29,063			13.1%		19,284			11.4%		51%
Interest income		612			0.3%		859			0.5%		-29%
Other expense		(21	)		0.0%		(107	)		-0.1%		-80%
Income before income taxes		29,654			13.4%		20,036			11.9%		48%
Income taxes		11,862			5.3%		8,014			4.7%		48%
Net income	$	17,792			8.0%	$	12,022			7.1%		48%
Net income per share:
Basic	$	0.44				$	0.30
Diluted	$	0.43				$	0.30
Shares used in computing
net income per share:
Basic		40,225					39,860
Diluted		41,090					40,181

Note: The non-GAAP financial information set forth above is not prepared in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company believes that disclosing non-GAAP statement of operations are more indicative of the operating performance of the Company and are useful to investors to help them analyze operating trends and perform comparisons across periods. Management uses the adjusted numbers to manage the business and evaluate operating performance period to period.

(1) See Table 2 for the Statement of Operations reconciliation from GAAP to non-GAAP for the three months ended September 30, 2003

(2) See Table 3 for the Statement of Operations reconciliation from GAAP to non-GAAP for the nine months ended September 30, 2003

TABLE 5
DENDRITE INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

	September 30, 2003			December 31, 2002    (1)
	(Unaudited)
Assets:
Current Assets:
Cash and cash equivalents	$	26,173		$	68,308
Short-term investments		--			1,295
Accounts receivable, net		60,948			39,853
Prepaid expenses and other current assets		5,779			4,962
Deferred taxes		12,808			3,380
Facility held for sale		6,900			6,900
Total current assets		112,608			124,698
Property and equipment, net		30,043			26,377
Other assets		2,272			1,713
Long-term receivable		3,157			6,314
Goodwill		69,155			12,353
Intangible assets, net		28,871			2,973
Purchased capitalized software, net		4,343			2,275
Capitalized software development costs, net		5,902			5,605
Deferred taxes		1,584			6,168
	$	257,935		$	188,476
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	7,720		$	1,274
Income taxes payable		9,315			5,659
Capital lease obligations		1,260			615
Accrued compensation and benefits		15,147			5,055
Other accrued expenses		28,067			16,749
Purchase accounting restructuring accrual		9,591			1,188
Accrued restructuring charge		--			260
Deferred revenues		9,299			7,861
Total current liabilities		80,399			38,661
Capital lease obligations		466			275
Purchase accounting restructuring accrual		8,595			2,064
Other non-current liabilities		933			717
Stockholders’ Equity:
Preferred stock, no par value, 15,000,000 shares
authorized, none issued		--			--
Common Stock, no par value, 150,000,000 shares authorized,
42,790,861 and 42,156,344 shares issued; 40,568,161 and
39,933,644 shares outstanding		98,151			93,037
Retained earnings		92,092			76,876
Deferred compensation		(25	)		(76	)
Accumulated other comprehensive loss		(1,800	)		(2,202	)
Less treasury stock, at cost		(20,876	)		(20,876	)
Total stockholders' equity		167,542			146,759
	$	257,935		$	188,476

(1) Amounts reflect reclassifications to conform to current year presentation.

TABLE 6
DENDRITE INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)
(UNAUDITED)

	Nine Months Ended September 30,
	2003			2002
Operating activities:
Net income	$	15,216		$	10,673
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		14,924			10,079
Asset impairment		--			1,832
Amortization of deferred compensation		(40	)		--
Deferred taxes		608			45
Changes in assets and liabilities, net of effects from acquisitions:
Decrease/(increase) in accounts receivable		15,443			(324	)
Decrease in prepaid expenses and other		1,399			972
Decrease in other assets		136			--
Decrease in prepaid income taxes		--			3,327
Decrease in accounts payable and accrued expenses		(21,034	)		(6,911	)
Decrease in purchase accounting restructuring accrual		(6,969	)		--
Increase in income taxes payable		2,163			--
Decrease in accrued restructuring charge		(260	)		(2,569	)
Decrease in deferred revenue		(8,968	)		(4,038	)
Increase in other non-current liabilities		288			137
Net cash provided by operating activities		12,906			13,223
Investing activities:
Purchases of short-term investments		--			(13,412	)
Sales of short-term investments		1,294			13,553
Acquisitions, net of cash acquired		(53,161	)		(12,948	)
Increase in other non-current assets		(50	)		(600	)
Purchases of property and equipment		(5,038	)		(8,360	)
Additions to capitalized software development costs		(2,362	)		(1,732	)
Net cash used in investing activities		(59,317	)		(23,499	)
Financing activities:
Borrowings from line of credit		8,000			--
Repayments of line of credit		(8,000	)		--
Purchases of treasury stock		--			(1,469	)
Cash paid for capital leases		(469	)		(38	)
Issuance of common stock		4,458			2,620
Net cash provided by financing activities		3,989			1,113
Effect of foreign exchange rate changes on cash		287			(29	)
Net decrease in cash and cash equivalents		(42,135	)		(9,192	)
Cash and cash equivalents, beginning of period		68,308			65,494
Cash and cash equivalents, end of period	$	26,173		$	56,302

TABLE 7
DENDRITE INTERNATIONAL, INC.

RECONCILIATION OF GAAP TO ADJUSTED RESULTS

(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2003		2002			2003		2002
Net income (See Table 1)	$	4,969	$	2,542		$	15,216	$	10,673
Non-GAAP Adjustments:
Purchased capitalized software
amortization, net of tax (1)
Synavant		40		--			46		--
SAI		91		--			274		--
Intangible assets amortization, net of tax (1)
Synavant		477		--			555		--
SAI		102		--			309		--
Integration costs, net of tax (2)		296		--			348		--
Dendrite related acquisition costs, net of tax (3)		436		--			436		--
Reduction in workforce, net of tax (4)		--		813			--		813
Asset impairment, net of tax (5)		--		1,099			--		1,099
Reversal of loss contracts, net of tax (6)		--		(563	)		--		(563	)
Income taxes (7)		--		--			608		--
Adjusted Net income	$	6,411	$	3,891		$	17,792	$	12,022
Adjusted Net income per share:
Basic	$	0.16	$	0.10		$	0.44	$	0.30
Diluted	$	0.15	$	0.10		$	0.43	$	0.30
Shares used in computing net income per share :
Basic		40,442		39,943			40,225		39,860
Diluted		41,859		40,003			41,090		40,181

Note: The non-GAAP financial information set forth above is not prepared in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company believes that disclosing non-GAAP adjusted results are more indicative of the operating performance of the Company and are useful to investors to help them analyze operating trends and perform comparisons across periods. Management uses the adjusted numbers to manage the business and evaluate operating performance period to period.

(1) Represents amortization expense, net of tax for definite lived assets resulting from the acquisitions of SAI and Synavant

(2) Represents costs associated with the integration of the Synavant business into the Dendrite business. These costs include but are not limited to, legal, consulting and moving charges as well as reconstruction of temporary facilities

(3) Represents costs related to workforce and facility redundancies identified in connection with the integration of the Synavant business into the Dendrite business. If the redundancies involved the Dendrite workforce or facilities they were charged to operations and have been identified above. If the redundancies involved the Synavant workforce or facilities they were recorded to goodwill.

(4) Represents costs of severance related to a reduction in workforce during the third quarter 2002 due to a slower than expected growth in revenue

(5) Represents an adjustment to the fair value of a building held for sale during the third quarter 2002

(6) Represents the reversal, during the third quarter 2002, of costs previously recorded in 2001, which related to the recognition of anticipated future losses on selected contracts for which the Company’s obligations were favorably resolved

(7) Represents a foreign tax valuation adjustment in connection with the integration of Synavant

TABLE 8
DENDRITE INTERNATIONAL, INC.

RECONCILIATION OF PROJECTED GAAP RESULTS TO ADJUSTED RESULTS

(IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)

	Fourth Quarter Outlook			Rolling 6 month outlook
	October 1, 2003 - December 31, 2003			October 1, 2003 - March 31, 2004
Projected Revenue Range	$     97	to	$     100	$     185	to	$     192
Projected GAAP EPS Range	$  0.13	to	$    0.14	$    0.24	to	$    0.27
Projected Per Share Impact of:
Intangible Asset Amortization (1)	$  0.02	to	$    0.02	$    0.04	to	$    0.04
Integration Costs (2)	$  0.03	to	$    0.03	$    0.04	to	$    0.03
Projected Adjusted EPS Range (3)	$  0.17	to	$    0.19	$    0.31	to	$    0.34

Note: The non-GAAP financial information set forth above is not prepared in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company believes that disclosing non-GAAP adjusted results are more indicative of the operating performance of the Company and are useful to investors to help them analyze operating trends and perform comparisons across periods. Management uses the adjusted numbers to manage the business and evaluate operating performance period to period.

(1) Includes amortization of both purchased capitalized software and intangible assets from the SAI and Synavant acquisitions.

(2) Includes charges from Dendrite severance and facility closure costs as a result of the acquisition of Synavant as well as costs incurred as part of the integration of Synavant.

(3) Projected Adjusted EPS Range does not appear to foot due to mathematical rounding of the individual calculations.