EX-99.1 3 q3pressrelease102303.htm Press Release of October 23, 2003
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.