10-Q

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

Form 10-Q

Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the quarterly period ended September 30, 2005

Commission File Number   001-16379

Dendrite International, Inc.

(Exact name of registrant as specified in its charter)

New Jersey	22-2786386
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1405 U.S. Highway 206

Bedminster, NJ 07921

(Address, including zip code, of

principal executive offices)

(908) 443-2000

(Registrant’s telephone number, including area code)

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, and (2) has been subject to such filing requirements for the past 90 days.
ý yes o no

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act): ýyes o no

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): oyes ý no

As of October 31, 2005, 43,417,840 shares of Dendrite International, Inc. no par value common stock were outstanding.

DENDRITE INTERNATIONAL, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2005

PART I.	FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Consolidated Statements of Operations (unaudited) Three and nine months ended September 30, 2005 and 2004	3
	Consolidated Balance Sheets (unaudited) September 30, 2005 and December 31, 2004	4
	Consolidated Statements of Cash Flows (unaudited) Nine months ended September 30, 2005 and 2004	5
	Notes to Unaudited Consolidated Financial Statements	6
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
ITEM 4.	Controls and Procedures	31
PART II.	OTHER INFORMATION	31
ITEM 6.	Exhibits	31
Signatures		32

2

PART I.     FINANCIAL INFORMATION

ITEM 1.     Financial Statements

DENDRITE INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2005			2004			2005			2004
Revenues	$	114,360		$	99,428		$	328,873		$	294,399
Operating Costs & Expenses:
Operating costs	61,252			51,578			173,732			151,807
Selling, general and administrative	33,395			32,832			103,258			98,923
Research and development	1,343			1,673			4,615			7,417
Facility and other charges	—			—			9,372			—
Amortization of acquired intangible assets	960			1,214			3,340			3,467
Other operating (income)	—			(368		)	—			(707		)
Total operating costs & expenses	96,950			86,929			294,317			260,907
Operating income	17,410			12,499			34,556			33,492
Interest (income) expense, net	(150		)	14			(315		)	11
Other expense (income), net	35			(190		)	32			(251		)
Income before income tax expense	17,525			12,675			34,839			33,732
Income tax expense	6,747			4,880			13,413			12,987
Net income	$	10,778		$	7,795		$	21,426		$	20,745
Net income per share:
Basic	$	0.25		$	0.19		$	0.50		$	0.50
Diluted	$	0.24		$	0.18		$	0.49		$	0.48

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

3

DENDRITE INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

	September 30,			December 31,
	2005			2004
Assets
Current Assets:
Cash and cash equivalents	$	64,618		$	64,020
Accounts receivable, net of allowance for doubtful accounts of $1,021 and $2,034, respectively	76,184			71,653
Prepaid expenses and other current assets	7,079			6,935
Deferred income taxes	6,757			5,029
Total current assets	154,638			147,637
Property and equipment, net of accumulated depreciation of $58,400 and $56,499, respectively	55,507			45,283
Other assets	9,025			7,922
Goodwill	91,409			80,963
Intangible assets, net	25,685			19,876
Purchased capitalized software, net	598			1,056
Capitalized software development costs, net	10,339			9,170
Deferred income taxes	9,640			9,873
	$	356,841		$	321,780
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable	$	10,495		$	8,171
Income taxes payable	8,265			12,013
Capital lease obligations	1,467			1,689
Accrued compensation and benefits	16,047			14,662
Accrued professional and consulting fees	6,320			7,413
Accrued facility and other charges	2,103			—
Other accrued expenses	15,135			19,284
Purchase accounting restructuring accrual	1,925			3,000
Deferred revenues	13,870			13,347
Total current liabilities	75,627			79,579
Capital lease obligations	2,068			3,036
Purchase accounting restructuring accrual	3,224			4,143
Accrued facility and other charges	4,497			—
Deferred rent	5,936			2,070
Other non-current liabilities	5,293			5,363
Stockholders' Equity:
Preferred stock, no par value, 15,000,000 shares authorized, none issued	—			—
Common stock, no par value, 150,000,000 shares authorized, 46,117,895 and 44,913,584 shares issued; 43,355,678 and 42,374,836 shares outstanding at September 30, 2005 and December 31, 2004, respectively	142,563			125,237
Retained earnings	148,927			127,501
Deferred compensation	(368		)	(123		)
Accumulated other comprehensive income	(639		)	1,239
Less treasury stock, at cost	(30,287		)	(26,265		)
Total stockholders' equity	260,196			227,589
	$	356,841		$	321,780

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

4

DENDRITE INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

	Nine Months Ended September 30,
	2005			2004
Operating activities:
Net income	$	21,426		$	20,745
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	18,026			15,958
Write-off of property and equipment	1,030			—
Amortization of deferred compensation, net of forfeitures	103			149
Deferred income taxes	(2,277		)	599
Other adjustments for non-cash items	—			901
Changes in assets and liabilities, net of effects from acquisitions:
(Increase) decrease in accounts receivable	(1,825		)	7,424
Decrease in prepaid expenses and other current assets	56			926
(Increase) decrease in other assets	(1,277		)	786
Increase (decrease) in accounts payable and accrued expenses	1,599			(3,671		)
Increase in accrued facility and other charges	6,618			—
Decrease in purchase accounting restructuring accrual	(2,180		)	(5,606		)
(Decrease) increase in income taxes payable	(1,621		)	3,308
Increase (decrease) in deferred revenue	221			(5,505		)
(Decrease) increase in other non-current liabilities	(70		)	860
Net cash provided by operating activities	39,829			36,874
Investing activities:
Proceeds from sale-leaseback of furniture and equipment	—			2,162
Acquisitions, net of cash acquired	(21,439		)	(7,312		)
Purchases of property and equipment	(22,633		)	(15,083		)
Additions to capitalized software development costs	(3,845		)	(4,087		)
Net cash used in investing activities	(47,917		)	(24,320		)
Financing activities:
Repayments of long-term debt	—			(1,773		)
Repayments of acquired loan	—			(624		)
Payments on capital lease obligations	(1,241		)	(829		)
Issuance of common stock	10,938			6,249
Net cash provided by financing activities	9,697			3,023
Effect of foreign exchange rate changes on cash	(1,011		)	152
Net increase in cash and cash equivalents	598			15,729
Cash and cash equivalents, beginning of year	64,020			30,405
Cash and cash equivalents, end of period	$	64,618		$	46,134

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

5

DENDRITE INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

($ IN THOUSANDS, EXCEPT PER SHARE DATA)

1.  Basis of Presentation

The consolidated financial statements of Dendrite International, Inc. and its subsidiaries (“Dendrite” or the “Company”) included in this Form 10-Q are unaudited and reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position as of September 30, 2005, operating results for the three and nine months ended September 30, 2005 and 2004 and cash flows for the nine months ended September 30, 2005 and 2004.  For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

Our interim operating results may not be indicative of operating results for the full year.

Reclassifications.Certain prior period balances have been reclassified to conform to current period presentation. The Company has also made immaterial adjustments to the prior year classification of current and non-current purchase accounting restructuring accruals and from accrued compensation and benefits to other non-current liabilities.

2. Supplemental Cash Flow Information

As of September 30, 2005, the Company acquired approximately $300 of property and equipment which was included in other accrued expenses on the accompanying consolidated balance sheet as of September 30, 2005 and is therefore excluded from the consolidated statement of cash flows for the nine months ended September 30, 2005.

  Pursuant to the terms of its replacement option program, the Company accepted 223,469 shares of its common stock from an executive, in lieu of cash for the exercise of approximately 223,469 stock options. The shares delivered were valued at approximately $4,022 on the date of exercise, which value was equal to the number of options exercised multiplied by the exercise price.

3. Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004) “Share-Based Payment” (“SFAS 123(R)”) as a replacement to SFAS 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). This statement supersedes Accounting Principles Board (“APB”) 25, “Accounting for Stock Issued to Employees,” which allowed companies to use the intrinsic method of valuing share-based payment transactions and amends SFAS No. 95, “Statement of Cash Flows.” SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the fair-value method as defined in SFAS 123. SFAS 123(R) provides two alternatives for adoption: (1) a “modified prospective” method in which compensation cost is recognized for all awards granted subsequent to the effective date of this statement as well as for the unvested portion of awards outstanding as of the effective date; or (2) a “modified retrospective” method which follows the approach of the “modified prospective” method, but also permits entities to restate prior periods to record compensation cost calculated under SFAS 123 for the pro forma disclosure. The Company plans to adopt SFAS 123(R) using the modified prospective method. In addition, SFAS 123(R) also requires that tax benefits received in excess of compensation cost be reclassified from operating cash flows to financing cash flows in the consolidated statement of cash flows. The adoption of FAS 123(R)’s fair value method is expected to have a significant impact on the Company’s consolidated results of operations, though it will have no impact on the Company’s overall assets, liabilities and stockholder’s equity. However, had the Company adopted SFAS 123(R) in prior periods, the impact of the standard would have approximated the impact of SFAS 123 as described in the disclosure of pro forma net income and net income per share in Note 4 to our consolidated financial statements.

In April 2005, the Securities and Exchange Commission issued Release No. 33-8568, Amendment to Rule 4-01(a) of Regulation S-X Regarding the Compliance Date for Statement of Financial Accounting Standards No. 123 (Revised 2004), “Share-Based Payment,” which allows companies to continue to follow SFAS 123 throughout 2005 and implement SFAS 123(R) beginning January 1, 2006, which the Company expects to follow.

6

DENDRITE INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

($ IN THOUSANDS, EXCEPT PER SHARE DATA)

4.  Stock Based Compensation

The Company has adopted the disclosure requirements of SFAS 123 as amended by SFAS 148, “Accounting for Stock-Based Compensation-Transition and Disclosure.” The Company applies APB 25 and related interpretations in accounting for stock options granted under the Company’s stock option plans (the “Plans”). Accordingly, compensation cost has been computed for the Plans based on the intrinsic value of the stock options at the date of grant, which represents the difference between the exercise price and the fair value of the Company’s stock. The exercise price of all stock options granted equaled the fair value of the Company’s stock at the date of option grant and accordingly, no compensation cost related to stock options has been recorded in the accompanying consolidated statements of operations. Had compensation cost for the Plans and the employee stock purchase plan been determined consistent with SFAS 123, the Company’s net income and net income per share would have been adjusted to the following pro forma amounts:

	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2005			2004			2005			2004
Net income as reported	$	10,778		$	7,795		$	21,426		$	20,745
Add: Deferred compensation amortization, net of forfeitures recognized in accordance with APB 25, net of related tax effects	42			21			63			92
Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects	(4,165		)	(7,836		)	(11,857		)	(15,484		)
Pro forma net income	$	6,655		$	(20	)	$	9,632		$	5,353
Basic income per share:
As reported	$	0.25		$	0.19		$	0.50		$	0.50
Pro forma	$	0.15		$	0.00		$	0.23		$	0.13
Diluted income per share:
As reported	$	0.24		$	0.18		$	0.49		$	0.48
Pro forma	$	0.15		$	0.00		$	0.22		$	0.12

The fair value for these options were estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions:

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2005		2004		2005		2004
Expected dividend yield	0.0	%	0.0	%	0.0	%	0.0	%
Weighted-average expected stock price volatility	50.0	%	70.0	%	50.0	%	70.0	%
Weighted-average risk-free interest rate	4.1	%	3.7	%	3.9	%	3.2	%
Expected life of the option (years)	5.25		5.25		5.25		5.25

The stock-based employee compensation expense determined under the fair value based methods for all awards, net of related tax effects, disclosed above is determined based upon the number and fair value of options granted and an estimate of forfeitures. The expense is recognized over the vesting period of the options. Under SFAS 123, compensation expense is not recognized for options that are forfeited due to the employee’s failure to fulfill service requirements. Therefore, while the fair value per option is not recalculated, the number of options vesting would change, thus requiring recalculation of the aggregate compensation expense.

5.  Net Income Per Share

The following table presents the computation of basic and diluted net income per share for the three and nine months ended September 30, 2005 and 2004:

7

DENDRITE INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

($ IN THOUSANDS, EXCEPT PER SHARE DATA)

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
Basic net income per share computation:
Net income	$	10,778	$	7,795	$	21,426	$	20,745
Weighted-average common shares outstanding	42,944		41,620		42,670		41,335
Basic net income per share	$	0.25	$	0.19	$	0.50	$	0.50
Diluted net income per share computation:
Net income	$	10,778	$	7,795	$	21,426	$	20,745
Diluted common shares outstanding:
Weighted-average common shares outstanding	42,944		41,620		42,670		41,335
Impact of dilutive stock options	1,387		1,319		1,233		1,607
Diluted common shares outstanding	44,331		42,939		43,903		42,942
Diluted net income per share	$	0.24	$	0.18	$	0.49	$	0.48

6.  Comprehensive Income

The components of comprehensive income for the three and nine months ended September 30, 2005 and 2004 consisted of the following:

	For the Three Months					For the Nine Months
	Ended September 30,					Ended September 30,
	2005			2004		2005			2004
Net income	$	10,778		$	7,795	$	21,426		$	20,745
Other comprehensive (loss) income:
Foreign currency translation adjustments	(916		)	236		(1,878		)	434
Comprehensive income	$	9,862		$	8,031	$	19,548		$	21,179

7. Acquisitions

Optas

On September 12, 2005, the Company completed the acquisition of Optas, Inc. (“Optas”).  Based in Boston, Massachusetts, Optas provides privacy-safe relationship marketing solutions for patients and physicians.  Optas’ results of operations have been included in the accompanying consolidated financial statements since the date of acquisition.

The aggregate purchase price for Optas was approximately $12,814, including $349 of legal and professional fees. Approximately $313 of the purchase price was included in other accrued expenses in the consolidated balance sheet as of September 30, 2005 and $1,800 of the purchase price was held in escrow as of September 30, 2005.  In accordance with the purchase agreement, the $1,800 held in escrow, less amounts claimed against escrow, if any, is payable as follows: approximately $600 within five  business days after September 12, 2006; and approximately $1,200 within five business days after March 12, 2007.  The Company is in the process of finalizing the valuation of certain intangible assets, including the review of a third-party valuation.  Therefore, the allocation of purchase price is preliminary and subject to adjustment.  The assets acquired and liabilities assumed in connection with the Optas acquisition and pro forma results of operations are not deemed material to the consolidated financial statements.

The preliminary allocation of purchase price, including the net assets acquired of approximately $422, to intangible assets and goodwill acquired in connection with the Optas acquisition is as follows:

8

DENDRITE INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

($ IN THOUSANDS, EXCEPT PER SHARE DATA)

	Weighted-Average
	Estimated Useful	Acquired Intangible
	Life (Years)	Asset Value
Intangible Assets Subject to Amortization:
Customer relationship asset	10	$	2,590
Acquired technology	5	1,390
Backlog	0.33	100
Trademarks	2	70
Total Intangible Assets Subject to Amortization		4,150
Intangible Assets Not Subject to Amortization:
Goodwill	N/A	8,242
Total Intangible Assets		$	12,392

The goodwill and intangible assets recorded for financial statement purposes are not deductible for tax purposes.

Buzzeo

On January 4, 2005, the Company completed the strategic acquisition of BuzzeoPDMA, Inc. (“Buzzeo”). Based in Richmond, Virginia, Buzzeo provides compliance, auditing, consulting and reconciliation outsourcing services to the pharmaceutical and life sciences industry. This acquisition further expands the Company’s sample and compliance management solution offerings. In connection with the acquisition, the Company restructured the combined operations by eliminating certain former Buzzeo positions. The Company accrued $200 at January 4, 2005 for liabilities associated with the cost of completing the restructuring plan (see Note 8). Buzzeo’s results of operations have been included in the accompanying consolidated financial statements since the date of acquisition.

The aggregate purchase price for Buzzeo was approximately $10,988, including $33 of legal and professional fees. Approximately $590 of the purchase price was included in other accrued expenses in the consolidated balance sheet as of September 30, 2005 and $1,025 of the purchase price was held in escrow as of September 30, 2005.  In accordance with the purchase agreement, the $1,025 held in escrow, less amounts claimed against escrow, if any, is payable on January 4, 2006. The Company is in the process of finalizing the valuation of certain intangible assets, including the review of a third-party valuation. Therefore, the allocation of purchase price is preliminary and subject to adjustment. The assets acquired and liabilities assumed in connection with the Buzzeo acquisition and pro forma results of operations are not deemed material to the consolidated financial statements.

The preliminary allocation of purchase price, including the net assets acquired of approximately $3,461, to intangible assets and goodwill acquired in connection with the Buzzeo acquisition is as follows:

	Weighted-Average
	Estimated Useful	Acquired Intangible
	Life (Years)	Asset Value
Intangible Assets Subject to Amortization:
Customer relationship asset	10	$	4,390
Trademark	7	290
Other	0.25	70
Total Intangible Assets Subject to Amortization		4,750
Intangible Assets Not Subject to Amortization:
Goodwill	N/A	2,777
Total Intangible Assets		$	7,527

The goodwill and intangible assets recorded for financial statement purposes are deductible for tax purposes.

8.  Purchase Accounting Restructuring Accrual

In connection with the June 2003 acquisition of Synavant Inc. (“Synavant”), the Company restructured the combined operations by exiting certain former Synavant facilities and eliminating certain former Synavant positions. The

9

DENDRITE INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

($ IN THOUSANDS, EXCEPT PER SHARE DATA)

Company anticipates that the remaining accrued restructuring balance related to the facility exit costs will be paid over the life of the facility leases, ending in February 2012. The liability accrued for expenses to be incurred in exiting certain Synavant facilities and includes assumptions related to sublease income, which offsets future lease obligations. The underlying subleases are not in place for all facilities and the future placement of subleases, including the timing and terms and conditions of subleases, could be different than the assumptions utilized.

In connection with the September 2002 acquisition of Software Associates International (“SAI”), the Company developed an exit plan to close the facility in Mt. Arlington, New Jersey, and relocate the operations to the Company’s other facilities in New Jersey. The Company accrued, as part of the acquisition costs, the costs to terminate certain leases amounting to $3,252. The Company closed the facility during the first quarter of 2003.

In connection with the July 2004 and January 2005 acquisitions of Schwarzeck-Verlag GmbH (“Schwarzeck”) and Buzzeo, the Company restructured the combined operations by eliminating certain former positions. The Company accrued approximately $300 and $200 to complete the Schwarzeck and Buzzeo restructuring plans, respectively.

The activity related to the purchase accounting restructuring accrual for the nine months ended September 30, 2005 is summarized in the table below:

											Purchase Accounting
	Purchase Accounting							Currency			Restructuring Accrual
	Restructuring Accrual				2005			Translation			as of September 30,
	as of December 31, 2004		2005 Accruals		Payments			Adjustments			2005
Synavant
Termination payments to employees	$	23	$	—	$	(23	)	$	—		$	—
Facility exit costs	5,926		—		(1,423		)	—			4,503
Total Synavant	5,949		—		(1,446		)	—			4,503
SAI
Lease termination costs	947		—		(497		)	—			450
Schwarzeck
Termination payments to employees	247		—		(235		)	(12		)	—
Buzzeo
Termination payments to employees	—		200		(4		)	—			196
Total	$	7,143	$	200	$	(2,182	)	$	(12	)	$	5,149

9.  Goodwill and Intangible Assets

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

10

DENDRITE INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

($ IN THOUSANDS, EXCEPT PER SHARE DATA)

	As of September 30, 2005							As of December 31, 2004
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Intangible Assets Subject To Amortization:
Purchased capitalized software	$	2,441	$	(1,843	)	$	598	$	2,441	$	(1,385	)	$	1,056
Capitalized software development costs	30,452		(20,113		)	10,339		26,607		(17,437		)	9,170
Customer relationship assets	16,471		(3,304		)	13,167		9,595		(2,222		)	7,373
Backlog	2,500		(2,394		)	106		2,400		(2,313		)	87
Non-compete covenants	3,729		(3,392		)	337		3,768		(2,678		)	1,090
Purchased database	5,168		(1,811		)	3,357		5,221		(979		)	4,242
Acquired technology	1,390		(15		)	1,375		—		—			—
Trademarks	505		(59		)	446		151		(15		)	136
Other intangibles	482		(317		)	165		413		(197		)	216
Total	63,138		(33,248		)	29,890		50,596		(27,226		)	23,370
Intangible Assets Not Subject to Amortization:
Goodwill	91,409		—			91,409		80,963		—			80,963
Trademarks	6,732		—			6,732		6,732		—			6,732
Total	98,141		—			98,141		87,695		—			87,695
Total Goodwill and Intangible Assets	$	161,279	$	(33,248	)	$	128,031	$	138,291	$	(27,226	)	$	111,065

The changes in the carrying amount of intangible assets not subject to amortization for the nine months ended September 30, 2005 is as follows:

			Acquisitions /
			Purchase		Currency
	Balance as of		Accounting		Translation			Balance as of
	December 31, 2004		Adjustments		Adjustments			September 30, 2005
Goodwill	$	80,963	$	10,694	$	(248	)	$	91,409
Trademarks	6,732		—		—			6,732
Total	$	87,695	$	10,694	$	(248	)	$	98,141

The Company conducts its annual impairment testing of goodwill as of October 1 each year. During the nine months ended September 30, 2005, there were no changes in events or circumstances that would indicate impairment.

The following table reconciles net intangible assets subject to amortization for the period from December 31, 2004 to September 30, 2005:

	Net Intangibles		2005 Year-to-Date Activity								Net Intangibles
	as of							Translation			as of
	December 31, 2004		Additions		Amortization			and Other			September 30, 2005
Purchased capitalized software	$	1,056	$	—	$	(458	)	$	—		$	598
Capitalized software development costs	9,170		3,845		(2,676		)	—			10,339
Customer relationship assets	7,373		6,980		(1,082		)	(104		)	13,167
Backlog	87		100		(81		)	—			106
Non-compete covenants	1,090		—		(714		)	(39		)	337
Purchased database	4,242		—		(832		)	(53		)	3,357
Acquired technology	—		1,390		(15		)	—			1,375
Trademarks	136		360		(44		)	(6		)	446
Other intangibles	216		70		(120		)	(1		)	165
Total	$	23,370	$	12,745	$	(6,022	)	$	(203	)	$	29,890

Amortization expense related to intangible assets, including internally developed capitalized software costs, for the three month periods ended September 30, 2005 and 2004 was $1,877 and $1,937, respectively. Amortization expense related to intangible assets, including internally developed capitalized software costs, for the nine month periods ended September 30, 2005 and 2004 was $6,022 and $5,739, respectively. Aggregate annual amortization expense of intangible assets (exclusive of future additions) is estimated to be:

11

DENDRITE INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

($ IN THOUSANDS, EXCEPT PER SHARE DATA)

Year Ending December 31,
2005	$	8,161
2006	8,303
2007	6,085
2008	3,440
2009	2,100
2010	1,810
Thereafter	6,013
	35,912
Less: 2005 year-to-date amortization expense	(6,022		)
Net intangible assets subject to amortization as of September 30, 2005	$	29,890

10. Accrued Facility and Other Charges

During the period ended March 31, 2005, the Company initiated and completed a plan to exit a facility in New Jersey for which it has an operating lease expiring in September 2011.  The accrued facility charge relates to vacating this New Jersey facility and for additional facilities vacated and accrued for in previous periods, for which the Company has operating leases expiring through February 2012, due to changes in current market conditions. The Company accrued for the present value of these costs, net of estimated future sublease income.  The Company also accrued for severance charges related to the elimination of certain senior and mid-level management positions. These charges are included within Accrued Facility and Other Charges on the consolidated balance sheet as of September 30, 2005, and within Facility and Other Charges on the consolidated statement of operations during the nine months ended September 30, 2005.

The activity related to Accrued Facility and Other Charges for the nine months ended September 30, 2005 is summarized in the table below:

	Accrued Facility and		2005 Facility					Currency			Accrued Facility and
	Other Charges as of		and Other		2005			Translation			Other Charges as of
	December 31, 2004		Charges		Payments			Adjustments			September 30, 2005
Facility exit costs	$	—	$	6,619	$	(759	)	$	—		$	5,860
Severance	—		1,723		(931		)	(52		)	740
	$	—	$	8,342	$	(1,690	)	$	(52	)	$	6,600

In connection with the plan initiated and completed during the three months ended March 31, 2005, the Company also wrote-off $1,030 of leasehold improvements included within Facility and Other Charges in the consolidated statement of operations for the nine months ended September 30, 2005.

11. Line-of-Credit

The June 16, 2003 line-of-credit agreement with JPMorgan Chase, amended September 24, 2004, expired on July 1, 2005.  On July 25, 2005, the Company entered into a replacement line-of-credit agreement (the “Agreement”), in the amount of $30,000 with JPMorgan Chase Bank that expires on June 30, 2008. The Agreement is available to finance working capital needs and possible future acquisitions. The Agreement contains customary affirmative and negative covenants and also contains certain financial covenants, including those related to (a) a maximum leverage ratio at the end of any fiscal quarter, (b) a minimum interest coverage ratio at the end of any fiscal quarter and (c) a minimum fixed charge coverage ratio at the end of any fiscal quarter. The Agreement also restricts the Company’s ability to create or assume liens, dispose of assets, consolidate or merge, extend credit, incur other indebtedness or pay cash dividends. As of September 30, 2005, the Company’s consolidated net worth was $260,196, the Company was in compliance with all covenants and did not have any amounts outstanding under the line-of-credit.

As of September 30, 2005, the Company had outstanding letters-of-credit of approximately $5,721.

12

DENDRITE INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

($ IN THOUSANDS, EXCEPT PER SHARE DATA)

12. Income Taxes

The Company’s effective income tax expense rate was 38.5% for the three and nine months ended September 30, 2005 and 2004.  

13. Common Stock

The following table rolls forward the balance of common stock for the nine months ended September 30, 2005.

		Issuance of	Tax Benefit
Balance as of		Common	of Stock Option		Balance as of
December 31, 2004		Stock (1)	Exercises	Other	September 30, 2005
$	125,237	14,960	2,018	348	$	142,563

(1)  Includes issuance of common stock through the employee stock purchase plan as well as stock option exercises.

14.  Enterprise-Wide Data

Information about Major Customers:

For the three month period ended September 30, 2005, the Company derived approximately 27% and 10% of its revenues from its two largest customers. For the three month period ended September 30, 2004, the Company derived approximately 27% of its revenues from its largest customer.  For the nine month periods ended September 30, 2005 and 2004, the Company derived approximately 26% and 27% of its revenues from its largest customer, respectively. As of September 30, 2005, approximately 13% and 11% of the Company’s accounts receivable balance was due from its two largest customers, respectively. As of December 31, 2004, approximately 18% of  the Company’s accounts receivable balance was due from its largest customer. Other than what has been presented above, no individual customer represented 10% or more of our total consolidated revenues or accounts receivable for or as of the periods presented.

Information about Products and Services:

Due to the growth in the Company’s strategic product and service offerings, largely built through recent acquisitions, the Company has expanded its revenue categories into sales solutions, marketing solutions and shipping. These categories are reflective of how service offerings are marketed to and viewed by customers. They are not reflective of the way the business is managed. Company operating costs are not broken out for these categories on a global basis, as they are not currently viewed as necessary to the management of the business globally. Based upon all of these factors, while these categories are useful in understanding the Company’s operating results, the Company has only one reportable segment for disclosure purposes under SFAS 131, “Disclosure About Segments of an Enterprise and Related Information.” The following is a summary of our revenue categories:

Sales solutions revenue includes product and sales support services which are used by, or provided to, the sales forces of our customers.

Marketing solutions revenue includes our product and service offerings that are not directly geared toward the client sales force and primarily consists of offerings acquired in our business combinations over the past few years. The primary components of marketing solutions revenue include interactive marketing, data, consulting and clinical.

Shipping revenues are disclosed separately as they are pass-through costs that bear little to no margin, and are required to be included in revenues and costs based upon Emerging Issues Task Force (“EITF”) 00-10, “Accounting for Shipping and Handling Fees and Costs.” These billable shipping transactions are primarily related to our interactive marketing activities.

The following table presents revenues by category for the three and nine month periods ended September 30, 2005 and 2004.

13

DENDRITE INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

($ IN THOUSANDS, EXCEPT PER SHARE DATA)

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
Services & Technology:
Sales solutions	$	86,314	$	71,629	$	239,527	$	214,673
Marketing solutions	24,052		23,834		75,757		67,847
Shipping	3,994		3,965		13,589		11,879
	$	114,360	$	99,428	$	328,873	$	294,399

Information about Geographic Areas:

The Company is organized by geographic location and has one reportable segment. All transfers between geographic areas have been eliminated from consolidated revenues. The following table presents revenues by geographic area for the three and nine months ended September 30, 2005 and 2004.

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
United States	$	76,169	$	60,992	$	209,296	$	185,197
Europe	24,171		25,168		79,510		69,991
All other	14,020		13,268		40,067		39,211
	$	114,360	$	99,428	$	328,873	$	294,399

The table above allocates license revenues on a legal basis. On a legal basis, license revenues have been allocated using the geographic location where the intellectual property is owned.

The following table presents long-lived assets by geographic area:

	As of		As of
	September 30,		December
	2005		31, 2004
United States	$	170,742	$	144,233
Europe	10,204		9,614
All other	11,350		10,423
	$	192,296	$	164,270

14

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

This Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21-E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by such acts. For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements, including the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our strategy, future operations, future expectations and future estimates, future financial position or results and future plans and objectives of management. Those statements in this Form 10-Q containing the words “believes,” “anticipates,” “plans,” “expects” and similar expressions constitute forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations, assumptions, estimates and projections about our Company and the pharmaceutical and consumer packaged goods industries. All such forward-looking statements involve significant risks and uncertainties, including those risks identified in this Form 10-Q under “Factors That May Affect Future Results,” many of which are beyond our control. Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate. Actual results may differ materially from those indicated by the forward-looking statements included in this Form 10-Q, as more fully described under “Factors That May Affect Future Results.” In light of the significant uncertainties inherent in the forward-looking statements included in this Form 10-Q, you should not consider the inclusion of such information as a representation by us or anyone else that we will achieve such results. Moreover, we assume no obligation to update these forward-looking statements to reflect actual results or changes in assumptions, expectations or projections. In addition, our financial and performance outlook concerning future revenues, margins, earnings, earnings per share and other operating or performance results does not include the impact of any future acquisitions, future acquisition-related expenses or accruals, or any future restructuring or other charges that may occur from time-to-time due to management decisions and changing business circumstances and conditions.

EXECUTIVE OVERVIEW

We provide a broad array of solutions worldwide that enable pharmaceutical and other life science companies to strategically optimize their sales and marketing channels and clinical resources. Our plan is to continue to diversify and expand our solutions portfolio, customer base and geographic reach by leveraging our extensive knowledge of the pharmaceutical and life sciences industries and capitalizing upon our deep relationships in these industries. Our strategy continues to rely on both internal growth and acquisitions to meet to our growth objectives.

We have expanded both our portfolio of solutions and customer base and believe that this combination presents significant opportunity for future growth.  In January 2005 and September 2005, we broadened and enhanced our service portfolio with our acquisitions of BuzzeoPDMA, Inc. (“Buzzeo”) and Optas, Inc. (“Optas”). The Buzzeo acquisition expands our sample and compliance management solution offerings. The Optas acquisition enhances our portfolio of marketing solutions services by expanding our privacy-safe relationship marketing solutions for patients and physicians.  We believe our recent acquisitions complement our existing business operations by enhancing our solutions portfolio, increasing our access to new customers and allowing deeper penetration into our current markets.  We have also committed to investing in key initiatives to help drive future growth. Our future growth is dependent on our ability to further penetrate the markets in which we operate and increase the adoption rate of our expanded portfolio of solutions.

We evaluate our performance based upon a number of operating metrics. Chief among these metrics are revenues, operating margins, diluted net income per share, operating cash flow and days sales outstanding. Our goal in 2005 is to execute our strategy to yield growth in revenues, operating margins and diluted net income per share. As part of our strategy to improve operating margins, we began shifting technical positions offshore in early 2004.  We currently partner with a third party to operate our offshore development centers.  As of September 30, 2005 we have 350 positions located in India.  We expect to continue moving additional technical and non-technical functions into low cost countries such as India as we further seek to expand our operating margins. We hope to maintain our level of days sales outstanding and generate strong positive operating cash flow as we continue to reduce the remaining liabilities associated with our acquisitions.

As a result of international growth through our recent acquisitions, certain lines of our business are now subject to a higher level of seasonal fluctuations than we have experienced in the past.  Specifically, our European business and interactive marketing business in the United States have historically experienced a seasonal slowdown during the summer months.

Due to the growth in our strategic product and service offerings, largely built through our recent acquisitions, we expanded our revenue categories into sales solutions, marketing solutions and shipping. These categories reflect how our service offerings are marketed to and viewed by our customers. They are not reflective of the way we manage our global business. Our operating costs are not broken out for these categories on a global basis, as they are not viewed as necessary in the management of our global business. Based upon all of these factors, while these categories are useful in understanding our operating results, we have only one reporting segment for disclosure purposes under Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosure About Segments of an Enterprise and Related Information.” The following is a summary of our revenue categories:

Sales solutions revenue includes product and sales support services which are used by, or provided to, the sales force of our customers.

Marketing solutions revenue includes our product and service offerings that are not directly geared toward the client sales force and primarily consists of offerings acquired in our business combinations over the past few years. The primary components of marketing solutions revenue include interactive marketing, data, consulting and clinical services.

Shipping revenues are disclosed separately as they are pass-through costs that bear little to no margin, and are required to be included in revenues and costs based upon Emerging Issues Task Force (“EITF”) 00-10, “Accounting for Shipping and Handling Fees and Costs.” These billable shipping transactions are primarily related to our interactive marketing activities.

15

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

CRITICAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

There have been no material changes to our critical accounting policies, judgments and estimates from the information provided in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2004.

MERGERS AND ACQUISITIONS

We regularly evaluate opportunities to acquire products or businesses that represent strategic enhancements to our operations. Such acquisition opportunities, if they arise, may involve the use of cash, equity or debt instruments.

Optas

On September 12, 2005, we completed the acquisition of Optas.  Based in Boston, Massachusetts, Optas provides privacy-safe relationship marketing solutions for patients and physicians.  Optas’ results of operations have been included in the accompanying consolidated financial statements since the date of acquisition.

The aggregate purchase price for Optas was approximately $12,814 including $349 of legal and professional fees. Approximately $313 of the purchase price was included in other accrued expenses in the consolidated balance sheet as of September 30, 2005 and $1,800 of the purchase price was held in escrow as of September 30, 2005.  In accordance with the purchase agreement, the $1,800 held in escrow, less amounts claimed against escrow, if any, is payable as follows: approximately $600 within five business days after September 12, 2006; and approximately $1,200 within five business days after March 12, 2007.  We are in the process of finalizing the valuation of certain intangible assets, including the review of a third-party valuation.  Therefore, the allocation of purchase price is preliminary and subject to adjustment.  The assets acquired and liabilities assumed in connection with the Optas acquisition and pro forma results of operations are not deemed material to the consolidated financial statements.

The preliminary allocation of purchase price, including the net assets acquired of approximately $422, to intangible assets and goodwill acquired in connection with the Optas acquisition are as follows: customer relationship asset of $2,590, amortizable over 10 years; acquired technology of $1,390, amortizable over 5 years; backlog of  $100, amortizable over 4 months; trademark of $70, amortizable over 2 years; and goodwill of $8,242.

Buzzeo

On January 4, 2005, we completed the strategic acquisition of Buzzeo. Based in Richmond, Virginia, Buzzeo provides compliance, auditing, consulting and reconciliation outsourcing services to the pharmaceutical and life sciences industry. This acquisition further expands our sample and compliance management solution offerings. In connection with the acquisition, we restructured the combined operations by eliminating certain former Buzzeo positions. We accrued $200 at January 4, 2005 for liabilities associated with the cost of completing the restructuring plan. Buzzeo’s results of operations have been included in the accompanying consolidated financial statements since the date of acquisition.

The aggregate purchase price for Buzzeo was approximately $10,988, including $33 of legal and professional fees.   Approximately $590 of the purchase price was included in other accrued expenses in the consolidated balance sheet as of September 30, 2005 and $1,025 of the purchase price was held in escrow as of  September 30, 2005. In accordance with the purchase agreement, the $1,025 held in escrow, less amounts claimed against escrow, if any, is payable on January 4, 2006. We are in the process of finalizing the valuation of certain intangible assets, including the review of a third-party valuation. Therefore, the allocation of purchase price is preliminary and subject to adjustment. The assets acquired and liabilities assumed in connection with the Buzzeo acquisition and pro forma results of operations are not deemed material to the consolidated financial statements.

The preliminary allocation of purchase price, including the net assets acquired of approximately $3,461, to intangible assets and goodwill acquired in connection with the Buzzeo acquisition are as follows: customer relationship asset of $4,390, amortizable over 10 years; trademark of $290, amortizable over 7 years; other intangibles of $70, fully amortized during the three months ended March 31, 2005; and goodwill of $2,777.

16

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)  

Schwarzeck

On July 20, 2004, we completed the strategic acquisition of the capital stock of Schwarzeck-Verlag GmbH (“Schwarzeck”). Schwarzeck was a provider of physician databases, direct marketing services and sample fulfillment services to pharmaceutical companies in Germany. This acquisition accelerated our expansion in Europe and increased our interactive marketing solutions and services to the German pharmaceutical industry. In connection with the acquisition, we restructured the combined operations by eliminating certain former Schwarzeck positions. We accrued approximately $300 at July 20, 2004 for liabilities associated with the cost of completing the restructuring plan. Schwarzeck’s results of operations have been included in the accompanying consolidated financial statements since the date of acquisition. The valuation of certain intangible assets was finalized during the third quarter of 2005. The assets acquired and liabilities assumed in connection with the Schwarzeck acquisition and pro forma results of operations are not deemed material to the consolidated financial statements.

MDM

On April 6, 2004, we completed the strategic acquisition of the capital stock of the Medical Data Management group of companies (“MDM”). Primarily based in Warsaw, Poland, MDM was a provider of physician databases, market research and sales force support services to pharmaceutical companies in Poland, Hungary, Russia and Ukraine. MDM’s results of operations have been included in the accompanying consolidated financial statements since the date of acquisition.

The aggregate purchase price for MDM was approximately $9,290 and consisted of approximately $5,700 in cash payments, approximately $3,320 in restricted stock and approximately $270 of legal and professional fees. The valuation of certain intangible assets was finalized during the fourth quarter of 2004. The assets acquired and liabilities assumed in connection with the MDM acquisition and pro forma results of operations are not deemed material to the consolidated financial statements.

Uto Brain

On January 5, 2004, we completed the strategic acquisition of the capital stock of Uto Brain Co. Ltd. (“Uto Brain”). Based in Osaka, Japan, Uto Brain provided more than thirty pharmaceutical companies with data, analytics, publishing and advisory services. The combining of resources of Uto Brain with our existing resources creates a comprehensive information, software and services company dedicated to the Japanese pharmaceutical industry and further enhances our ability to provide solutions to enhance the sales, marketing and clinical functions of pharmaceutical companies in the Japanese market. Uto Brain’s results of operations have been included in the accompanying consolidated financial statements since the date of acquisition.

The aggregate purchase price for Uto Brain was approximately $4,900 (498,270 Yen), including approximately $100 of legal and professional fees. As of September 30, 2005, the purchase price was paid. In addition, we assumed approximately $3,800 in bank debt and an acquired loan, all of which was repaid during the year ended December 31, 2004. The assets acquired and liabilities assumed in connection with the Uto Brain acquisition and pro forma results of operations are not deemed material to the consolidated financial statements.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

REVENUES

	THREEMONTHS ENDED						%		2005 %		2004 %
	SEPTEMBER 30,				$ Increase		Increase /		of Total		of Total
	2005		2004		/ (Decrease)		(Decrease)		Revenues		Revenues
Services & Technology:
Sales solutions	$	86,314	$	71,629	$	14,685	21	%	75	%	72	%
Marketing solutions	24,052		23,834		218		1	%	21	%	24	%
Shipping	3,994		3,965		29		1	%	3	%	4	%
Total Revenues	$	114,360	$	99,428	$	14,932	15	%	100	%	100	%

Total revenues of $114,360 increased by 15% for the three months ended September 30, 2005 compared with the three months ended September 30, 2004.   Our international revenues were $38,859, or approximately 34% of total revenues

17

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

in the quarter, and decreased by 4% from 2004 due to decease in license revenue.  License fees are, by nature, non-recurring items and fluctuate from period to period.  Total revenues in the United States increased by 28% from the three months ended September 30, 2004, and were $75,501, or approximately 66% of total revenues.  The increase in the United States was primarily due to help desk, asset management and implementation services associated with new system roll-outs by our customers, an increase in our interactive marketing business and the addition of revenues from our acquisitions.

Our current business is subject to a higher level of seasonal fluctuation than we have experienced in the past.  Specifically, our European business and our interactive marketing business in the United States have historically experienced a seasonal slowdown during the summer months.

Sales Solutions

Sales solutions accounted for approximately 75% of total revenues during the three months ended September 30, 2005, and increased by 21% compared with the three months ended September 30, 2004.  Sales solutions services in the United States increased by 35%, due to increases in help desk, asset management, and implementation services, which were primarily driven by a non-recurring project as well as field inventory and reconciliation services from our first quarter 2005 acquisition of Buzzeo.  Additionally, there was a significant decrease in international license revenue. During the third quarter 2004, there was a sale of third-party licenses to an international customer, which did not reoccur in 2005.  International sales solutions services increased by 2% versus the three months ended September 30, 2004.

Marketing Solutions

Marketing solutions accounted for approximately 21% of total revenues during the three months ended September 30, 2005, and were relatively flat as compared with the three months ended September 30, 2004.  In the United States, marketing solution revenues were relatively flat as compared with the three months ended September 30, 2004, but included growth in our interactive marketing services and consulting services from our acquisition of Buzzeo. These increases were offset by decreases in our clinical and data services.  Our international marketing solutions revenues were relatively flat as compared with the three months ended September 30, 2004, but included growth in our interactive marketing services which was offset by a decrease in our contract sales and data services.

Shipping

Shipping revenues accounted for approximately 3% of total revenues during the three months ended September 30, 2005, and were relatively flat as compared with the three months ended September 30, 2004.  Shipping revenues contribute little to no margin and relate to our interactive marketing business.

OPERATING COSTS & EXPENSES

	THREEMONTHS ENDED								%		2005 %		2004 %
	SEPTEMBER 30,					/$ Increase			Increase /		of Total		of Total
	2005		2004			/ (Decrease)			(Decrease)		Revenues		Revenues
Operating Costs & Expenses:
Operating costs (including shipping)	$	61,252	$	51,578		$	9,674		19	%	54	%	52	%
Selling, general and administrative	33,395		32,832			563			2	%	29	%	33	%
Research and development	1,343		1,673			(330		)	-20	%	1	%	2	%
Amortization of acquired intangible assets	960		1,214			(254		)	-21	%	1	%	1	%
Other operating (income)	—		(368		)	368			-100	%	0	%	0	%
Total operating costs & expenses	$	96,950	$	86,929		$	10,021		12	%	85	%	87	%

OPERATING COSTS (including shipping). Operating costs increased 19% for the three months ended September 30, 2005 compared with the three months ended September 30, 2004.  This increase was due to higher costs from our current year acquisitions, as well as our overall revenue growth and increased costs associated with our interactive marketing business in the United States.  As a percentage of revenues, operating costs during the three months ended September 30, 2005 were 54% versus 52% during the three months ended September 30, 2004.

18

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

SELLING, GENERAL AND ADMINISTRATIVE (SG&A). SG&A expenses were relatively flat for the three months ended September 30, 2005 compared with the three month ended September 30, 2004. SG&A cost increases due to higher costs associated with our current year acquisitions, and were offset by actions taken by management to contain costs during the first quarter of 2005.  As a percentage of revenues, SG&A decreased to 29% for the three months ended September 30, 2005, down from 33% for the three months ended September 30, 2004. We have and expect to continue to invest in sales and marketing initiatives in order to drive our top-line growth while continuing to focus on cost containment measures in other elements of SG&A.

RESEARCH AND DEVELOPMENT (R&D). R&D expenses decreased by 20% for the three months ended September 30, 2005 compared with the three months ended September 30, 2004.  As a percentage of revenues, R&D expenses decreased to 1% for the three months ended September 30, 2005, from 2% for the three months ended September 30, 2004, due to reduced R&D spending. Gross R&D spending (R&D expenses plus additions to capitalized software development costs) decreased 25% from $3,686 for the three months ended September 30, 2004 to $2,749 for the three months ended September 30, 2005. Gross R&D decreased due to the deployment of resources to revenue-generating projects and the savings related to our offshore initiative.

AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS. Amortization of acquired intangible assets decreased 21% from the comparable three months ended September 30, 2004. The decrease primarily reflects certain intangible assets related to the SAI and Synavant acquisitions which were fully amortized as of June 30, 2005, partially offset by additional amortization of intangibles related to the Schwarzeck, Buzzeo and Optas acquisitions.

OTHER OPERATING (INCOME). We received insurance proceeds related to the recovery of costs of certain previous losses in the three month period ended September 30, 2004.

PROVISION FOR INCOME TAXES. Our effective income tax expense rate remained flat at 38.5% for the three months ended September 30, 2005 and 2004. We expect our annualized effective income tax expense rate for the year ending December 31, 2005 to be approximately 38.5%.

NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

REVENUES

	NINEMONTHS ENDED				$ Increase		%		2005 %		2004 %
	SEPTEMBER 30,				/		Increase /		of Total		of Total
	2005		2004		(Decrease)		(Decrease)		Revenues		Revenues
Services & Technology:
Sales solutions	$	239,527	$	214,673	$	24,854	12	%	73	%	73	%
Marketing solutions	75,757		67,847		7,910		12	%	23	%	23	%
Shipping	13,589		11,879		1,710		14	%	4	%	4	%
Total revenues	$	328,873	$	294,399	$	34,474	12	%	100	%	100	%

Total revenues of $328,873 increased by 12% for the nine months ended September 30, 2005 compared with the nine months ended September 30, 2004.   Our international revenues were $122,082, or approximately 37% of total revenues for the period, and increased by 7% over 2004, due to our recent acquisitions and organic growth.  Total revenues in the United States increased by 14% from the nine months ended September 30, 2004, and were $206,791, or approximately 63% of total revenues.  The increase in the United States resulted from a non-recurring project, $4,000 of revenue associated with the early termination of a contract with Odyssey, which was a mid-tier domestic client that has ceased operating in the United States, and the addition of revenues from our current year acquisitions.

Our current business is subject to a higher level of seasonal fluctuation than we have experienced in the past.  Specifically, our European business and our interactive marketing business in the United States have historically experienced a seasonal slowdown during the summer months.

Sales Solutions

Sales solutions accounted for approximately 73% of total revenues during the nine months ended September 30,

19

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

2005, and increased by approximately 12% compared with the nine months ended September 30, 2004.  Sales solution services in the United States increased by 15%, which included $4,000 associated with the early termination of a contract with Odyssey, as well as an increase in help desk, asset management, and implementation services which were primarily driven by a non-recurring project and the addition of sales support services from our Buzzeo acquisition.  Our international sales solutions services were flat, with sales solutions services increasing by approximately 5% which was mostly offset by a decrease in license fees of our international business versus the nine months ended September 30, 2004.

Marketing Solutions

Marketing solutions accounted for approximately 23% of total revenues during the nine months ended September 30, 2005, and increased by approximately 12% compared with the nine months ended September 30, 2004.  The increase was mostly due to growth in our international marketing solutions business, which increased by 19% over the prior year, including from 32% growth in our international interactive marketing services.  The growth in international interactive marketing included the additional revenues from our 2004 acquisitions as well as organic growth.  In the United States, marketing solutions increased by approximately 4% compared with the nine months ended September 30, 2004, due to increases in interactive marketing and the inclusion of marketing services from our Buzzeo acquisition, which was partially offset by a decrease in our domestic clinical, data and consulting revenues.

Shipping

Shipping revenues accounted for approximately 4% of total revenues during the nine months ended September 30, 2005, and increased by approximately 14% compared with the nine months ended September 30, 2004.  Shipping revenues contribute little to no margin, and increased primarily as a result of higher pass-through shipping costs related to the growth in our interactive marketing business.

OPERATING COSTS & EXPENSES

	NINEMONTHS ENDED					$			%		2005 %		2004 %
	SEPTEMBER 30,					Increase /			Increase /		of Total		of Total
	2005		2004			(Decrease)			(Decrease)		Revenues		Revenues
Operating costs (including shipping)	$	173,732	$	151,807		$	21,925		14	%	53	%	52	%
Selling, general and administrative	103,258		98,923			4,335			4	%	31	%	34	%
Research and development	4,615		7,417			(2,802		)	-38	%	1	%	3	%
Facility and other charges	9,372		—			9,372			N/A		3	%	0	%
Amortization of acquired intangible assets	3,340		3,467			(127		)	-4	%	1	%	1	%
Other operating (income)	—		(707		)	707			-100	%	—		—
Total operating costs & expenses	$	294,317	$	260,907		33,410			13	%	89	%	89	%

OPERATING COSTS (including shipping). Operating costs increased 14% for the nine months ended September 30, 2005 compared with the nine months ended September 30, 2004.  This increase was due to higher costs from our current year acquisitions and a full nine months of costs related to our 2004 acquisitions of MDM and Schwarzeck, higher pass-through postage costs and our overall increase in revenues.  These increases were partially offset by the savings related to our offshore initiative. As a percentage of revenues, including the impact of the early termination of the contract with Odyssey, operating costs during the nine months ended September 30, 2005 were 53% versus 52% during the nine months ended September 30, 2004. We anticipate realizing additional savings in future periods as we continue to build our offshore presence.

SELLING, GENERAL AND ADMINISTRATIVE (SG&A). SG&A expenses increased 4% for the nine months ended September 30, 2005 compared with the nine month ended September 30, 2004. SG&A costs increased due to higher costs from our current year acquisitions and a full nine months of costs related to our 2004 acquisitions of MDM and Schwarzeck , as well as an increased expenses as a result of our efforts to comply with Sarbanes-Oxley section 404 review, testing and attestation requirements.  As a percentage of revenues, including the impact of the early termination of the contract with Odyssey, SG&A  decreased to 31% for the nine months ended September 30, 2005, down from 34% for the nine months ended September 30, 2005.  We have and expect to continue to invest in sales and marketing initiatives in order to drive our top-line growth while continuing to focus on cost containment measures in other elements of SG&A.

RESEARCH AND DEVELOPMENT (R&D). R&D expenses decreased 38% for the nine months ended September 30, 2005 compared with the nine months ended September 30, 2004.  As a percentage of revenues, R&D expenses decreased to 1% for

20

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

the nine months ended September 30, 2005 from 3% for the nine months ended September 30, 2004. The decrease was due to decreased R&D spending and a substantially higher capitalization rate during the nine months ended September 30, 2005. We capitalized more costs in the nine months ended September 30, 2005 due to the development of our release of the next generation CRM solutions. Gross R&D spending (R&D expenses plus additions to capitalized software development costs) decreased 26% from $11,504 for the nine months ended September 30, 2004, to $8,460 for the nine months ended September 30, 2005. Gross R&D decreased due to the deployment of resources to revenue-generating projects and the savings related to our offshore initiative.

FACILITY AND OTHER CHARGES. During the nine months ended September 30, 2005, we recorded $7,649 of facility-related charges and a severance charge of $1,723. The facility charges consist of $6,619 related to vacating a New Jersey facility and for additional facilities vacated in previous periods due to changes in current market conditions, as well as $1,030 related to the write-off of leasehold improvements associated with the exit of our New Jersey facility.  The $1,723 severance charge relates to the elimination of certain senior and mid-level management positions during the three months ended March 31, 2005.

AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS. Amortization of acquired intangible assets decreased 4% over the comparable nine months ended September 30, 2004. The increase reflects a full current period’s amortization of intangible assets acquired in connection with our acquisitions of MDM, Schwarzeck and Buzzeo, offset by certain intangible assets related to the SAI, Synavant and Uto Brain acquisitions being fully amortized during or prior to the nine months ended September 30, 2005.

OTHER OPERATING (INCOME). We received proceeds of $707 related to insurance claims during the nine months ended September 30, 2004.

PROVISION FOR INCOME TAXES.  Our effective income tax expense rate remained flat at 38.5% for the nine months ended September 30, 2005 and 2004. We expect our annualized effective income tax expense rate for the year ending December 31, 2005 to be approximately 38.5%.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2005, working capital was $79,011 compared to $68,058 as of December 31, 2004. Cash and cash equivalents were $64,618 as of September 30, 2005, compared to $64,020 as of December 31, 2004. These increases were primarily attributable to the cash generated by operating activities partially offset by payments made in connection with our 2005 and 2004 acquisitions as well as the previously communicated increase in capital expenditures during the nine months ended September 30, 2005.

We finance our business primarily through cash generated by operations. Net cash provided by operating activities was $39,829 and $36,874 for the nine month periods ended September 30, 2005 and 2004, respectively. During the nine months ended September 30, 2005, we generated operating cash from our net income adjusted for changes in assets and liabilities, net of effects from acquisitions. Our accrued facility and other charges resulted in lower net income for the nine months ended September 30, 2005, however, these charges only had an approximate $1,700 negative impact on our operating cash flows for the nine months ended September 30, 2005. Future payments of these accruals will continue to have a negative impact on future operating cash flows.  Impacting our operating cash flow were payments of income taxes and purchase accounting restructuring charges. During the three months ended September 30, 2005, our accounts receivable days sales outstanding decreased to 60, from 62 days for the three months ended December 31, 2004 due to improved cash collections.

During the nine months ended September 30, 2004, we generated operating cash from net income adjusted for changes in assets and liabilities, net of effects from acquisitions.  This increase in operating cash flow was partially offset by $5,606 of payments related to accrued purchase accounting restructuring charges incurred in connection the Synavant and SAI acquisitions as well as increased payments of accounts payable and accrued expenses. Our accounts receivable days sales outstanding decreased to 63 days for the three months ended September 30, 2004, from 68 days for the three months ended December 31, 2003.

Cash used in investing activities was $47,917 for the nine months ended September 30, 2005, and includes payments for the Optas, Buzzeo and Uto Brain acquisitions, as well as additions to capitalized software development costs and purchases of property and equipment. Additions of property and equipment primarily related to our new hardware facility in New Jersey, new corporate headquarters in New Jersey and new international facilities, as well as investing in our helpdesk automation process and interactive marketing machinery.  Cash used in investing activities was $24,320 for the nine months ended September 30, 2004, and was primarily attributable to purchases of property and equipment related to the relocation of

21

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

our corporate headquarters, as well as payments made related to the MDM and Uto Brain acquisitions.

As anticipated, purchases of property and equipment increased for the nine months ended September 30, 2005 versus the comparable prior year period. During 2005, we currently expect capital spending in the range of approximately $24,000 to $26,000 primarily to support our infrastructure expansion, as well as for the consolidation of our New Jersey based, U.S. hardware facility. We review our capital expenditure program periodically and adjust it as required to meet current needs.

Cash provided by financing activities was $9,697 for the nine months ended September 30, 2005, and includes proceeds from the issuance of common stock partially offset by payments related to capital lease obligations.  Cash provided by financing activities was $3,023 for the nine months ended September 30, 2004, and was primarily attributable to the issuance of common stock partially offset by the repayments of long-term debt and loans acquired in connection with the Uto Brain acquisition.

We regularly evaluate opportunities to acquire products or businesses complementary to our operations. Such acquisition opportunities, if they arise, may involve the use of cash, equity or debt instruments. We believe that available funds, anticipated cash flows from operations and the availability of our revolving line of credit will satisfy our current projected working capital and capital expenditure requirements, exclusive of cash required for possible future acquisitions of businesses, products and technologies, during the next twelve to eighteen months. There can be no assurance, however, that our business will continue to generate cash flow at current levels or that anticipated operational improvements will be achieved. Our ability to generate future cash flows depends on our future performance and financial results, which, to a certain extent, are subject to general conditions in or affecting the pharmaceutical and life sciences industry and to general economic, political, financial, competitive and regulatory factors beyond our control.

Contractual Obligations and Commitments

The June 16, 2003 line-of-credit agreement with JPMorgan Chase, amended September 24, 2004, expired on July 1, 2005.  On July 25, 2005, we entered into a replacement line-of-credit agreement (the “Agreement”), in the amount of $30,000 with JPMorgan Chase Bank that expires on June 30, 2008. The Agreement is available to finance working capital needs and possible future acquisitions. The Agreement contains customary affirmative and negative covenants and also contains certain financial covenants, including those related to (a) a maximum leverage ratio at the end of any fiscal quarter, (b) a minimum interest coverage ratio at the end of any fiscal quarter and (c) a minimum fixed charge coverage ratio at the end of any fiscal quarter. The Agreement also restricts our ability to create or assume liens, dispose of assets, consolidate or merge, extend credit, incur other indebtedness or pay cash dividends. As of September 30, 2005, our consolidated net worth was $260,196, we were in compliance with all covenants and did not have any amounts outstanding under the line-of-credit.

Our principal commitments at September 30, 2005 consisted primarily of obligations under operating and capital leases as well as future minimum guarantees to certain vendors. Future minimum payments on these obligations are as follows:

			Payments Due by Period
			October 1, 2005
			through
			December 31,
Contractual Obligations	Total		2005		2006		2007		2008		2009		Thereafter
Capital leases	$	3,741	$	402	$	1,738	$	1,547	$	54	$	—	$	—
Corporate headquarters	193		193		—		—		—		—		—
Minimum guarantees	2,832		2,195		355		282		—		—		—
Buzzeo purchase price	1,615		—		1,615		—		—		—		—
Operating leases (1)	100,967		5,764		17,965		15,485		12,333		11,352		38,068
Total	$	109,348	$	8,554	$	21,673	$	17,314	$	12,387	$	11,352	$	38,068

(1)Operating lease amounts disclosed above include $17,343 of future operating lease costs, excluding estimated future sublease income, accrued for in accrued facility charges and in the purchase accounting restructuring accruals related to the Synavant and SAI acquisitions.

As of September 30, 2005, letters of credit for approximately $5,721 were outstanding related to deposits on certain facilities.

22

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

We have an agreement with a venture capital fund with a commitment to contribute $1,000 to the fund, callable at the discretion of the general partner in $100 increments. As of September 30, 2005, $500 has been paid, with $500 of the commitment remaining. The agreement has a termination date of December 11, 2010, subject to extension with the consent of a majority in interest of the limited partners. This asset is recorded within other assets in the accompanying consolidated balance sheets.

FACTORS THAT MAY AFFECT FUTURE RESULTS

Set forth in this Form 10-Q are certain risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this Form 10-Q. You are strongly urged to carefully consider the cautionary language and risks set forth below.

WE DEPEND ON A FEW MAJOR CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR REVENUES

Historically, a limited number of our customers have contributed a significant percentage of our revenues. We anticipate that our operating results in any given period will continue to depend significantly upon revenues from a small number of customers. The loss of any of these customers (which could include loss through mergers and acquisitions) could have a materially adverse effect on our business, operating results or financial condition. We cannot make any assurances that we will retain our existing customers or attract new customers that would replace the revenue that could be lost if one or more of these customers failed to renew its
agreement(s) with us.

OUR BUSINESS IS HEAVILY DEPENDENT ON THE PHARMACEUTICAL INDUSTRY

Most of our solutions are currently used in connection with the marketing and sale of prescription-only drugs. This market is undergoing a number of significant changes. These changes include:

•the significant and continuing consolidation of the pharmaceutical industry which may reduce the number of our existing and potential customers;

•regulatory changes that permit the over-the-counter sale of formerly prescription-only drugs;

•U.S. and international governmental regulations mandating price controls;

•increasing Food and Drug Administration activism; and

•competitive pressure on the pharmaceutical industry resulting from the continuing shift to delivery of healthcare and pharmaceuticals through managed care organizations.

                We cannot assure you that we can respond effectively to any or all of these and other changes in the marketplace. Our failure to do so could have a material adverse effect on our business, operating results or financial condition, as our business depends, in large part, on the business conditions within this marketplace.

OUR CUSTOMERS MAY NOT SUCCESSFULLY IMPLEMENT OUR PRODUCTS

Our customers often implement our products in stages and our products are often utilized by a large number of our customers’ personnel. In the event that our customers have difficulties implementing our products and services or are not satisfied with the implementation or operation our products and services, our business, operating results and financial condition could be materially and adversely affected.

WE FACE RISKS ASSOCIATED WITH OUR ACQUISITIONS

Our business may be materially and adversely affected as a result of the significant risks associated with our acquisitions, including our recent acquisitions of Uto Brain, the MDM group of companies, Schwarzeck, Buzzeo and Optas. As part of our business strategy, we have acquired, and in the future may acquire, businesses that offer complementary products, services or technologies. These acquisitions are accompanied by substantial risks, including:

•unexpected problems, liabilities, risks or costs associated with the acquired business;

23

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

•the effect of the acquisitions on our financial and strategic position;

•our inability to successfully integrate the acquired business;

•the failure of an acquired business to further our strategies;

•our inability to achieve expected cost and business synergies;

•the significant strain on our operating systems;

•the diversion of our management’s attention from other business concerns;

•the impairment or loss of relationships with customers of the acquired business;

•the negative impact of the combination of different corporate cultures;

•the loss of key employees of the acquired company;

•undetected problems within the acquired organization; and

•the integration and maintenance of uniform, company-wide standards, procedures and policies.

Any of these factors could have a material adverse effect on our revenues and earnings. We expect that the consideration paid for future acquisitions, if any, could be in the form of cash, equity, debt or a combination of these. To the extent that we issue shares of stock or other rights to purchase stock in connection with any future acquisition, existing shareholders will experience dilution and potentially decreased earnings per share.

While to date we have had success integrating acquired entities into our operations, we cannot guarantee that we will successfully integrate these new businesses into our operations or achieve any expected cost synergies.

We may in the future acquire additional complementary companies, products or technologies. If we do so, we may face the same risks, uncertainties and disruptions discussed above. In addition, our profitability may suffer because of acquisition-related costs or amortization costs of acquired intangible assets.

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

Business and economic pressures on our major customers may result in budget constraints that directly impact their ability to purchase our new products and services offerings. We cannot assure you that any decrease in demand caused by these pressures will not have a material adverse effect on our business, operating results or financial condition.

OUR LENGTHY SALES AND IMPLEMENTATION CYCLES MAKE IT DIFFICULT TO PREDICT OUR QUARTERLY REVENUES

The selection of a CRM or SFA solution generally entails an extended decision-making process by our customers because of the strategic implications, substantial costs and significant commitment of resources associated with a customer’s license or implementation of the solution. Given the importance of the decision, senior levels of management of our customers are often involved in the process and, in some instances, their board of directors may also be involved. As a result, the decision-making process typically takes nine to eighteen months, and in certain cases longer. In addition, other factors, unrelated to our product and services, such as acquisitions, product delays, or other issues, may also significantly impact the timing and amounts of buying decisions. Accordingly, we cannot fully control or predict the timing of our execution of contracts with customers. Prior sales and implementation cycles cannot be relied upon as any indication of future cycles.

In addition, an implementation process of three to six or more months before the software is rolled out to a customer’s sales force is customary. However, if a customer were to delay or extend its implementation process, our quarterly revenues may decline below expected levels and could adversely affect our results of operations.

24

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE

Our total revenue and operating results may vary significantly from quarter-to-quarter. The main factors that could cause these fluctuations are:

•the discretionary nature of our customers’ purchase and budget cycles;

•potential delays in recognizing revenue from license and other transactions;

•seasonal variations in operating results, including the increased seasonality associated with our international growth; and

•variations in the fiscal or quarterly cycles of our customers.

In addition, we establish our expenditure levels for product development, sales and marketing and some of our other operating expenses based in large part on our expected future revenues and anticipated competitive conditions. In particular, we frequently add staff in advance of new business to permit adequate time for training. If the new business is subsequently delayed, canceled or not awarded, we will have incurred expenses without the associated revenues. We also may increase sales and marketing expenses if competitive pressures become greater than originally anticipated. Since only a small portion of our expenses varies directly with our actual revenues, our operating results and profitability are likely to be adversely and disproportionately affected if our revenues fall below our targeted goals or expectations.

As a result of these and other factors, revenues for any quarter may be subject to fluctuation. You should not rely on our period-to-period comparisons of our results of operations as indications of future performance. Our future quarterly results may from time to time not meet the expectations of market analysts or investors, which could have a materially adverse effect on the price of our common stock.

WE MAY BE UNABLE TO SUCCESSFULLY INTRODUCE NEW PRODUCTS OR RESPOND TO TECHNOLOGICAL CHANGE

The market for CRM and SFA products changes rapidly because of frequent improvements in computer hardware and software technology. Our future success will depend, in part, on our ability to:

•use available technologies and data sources to develop new products and services and to enhance our current products and services;

•introduce new solutions that keep pace with developments in our target markets; and

•address the changing and increasingly sophisticated needs of our customers.

We cannot assure you that we will successfully develop and market new products or product enhancements that respond to technological advances in the marketplace, or that we will do so in a timely fashion. We also cannot assure you that our products will adequately and competitively address the needs of the changing marketplace.

Competition for software products has been characterized by shortening product cycles. We may be materially and adversely affected by this trend if the product cycles for our products prove to be shorter than we anticipate. If that happens, our business, operating results or financial condition could be adversely affected.

To remain competitive, we also may have to spend more of our resources on product research and development than we have in the past. As a result, our results of operations could be materially and adversely affected.

25

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

SOFTWARE ERRORS OR DEFECTS COULD AFFECT OUR REVENUES

Our software products are technologically complex and may contain previously undetected errors or failures or errors when products are first introduced or when updated versions are released. We cannot assure you that, despite our testing, our new products will be free from significant errors. Software errors could cause delays in the commercial release of products until the errors have been corrected. Software errors may cause us to be in breach of our agreements with customers, which could result in termination of the agreements and monetary damages. Software errors may cause damage to our reputation and cause us to commit significant resources to their correction. Errors that result in termination of agreements, monetary damages, losses or delays could have a material adverse effect on our business, operating results or financial condition.

INCREASED COMPETITION MAY RESULT IN PRICE REDUCTIONS AND DECREASED DEMAND FOR OUR PRODUCTS AND SERVICES SOLUTIONS

There are a number of other companies that sell CRM and SFA products and related services that specifically target the pharmaceutical industry, including competitors that are actively selling CRM and SFA software products in more than one country and competitors that also offer CRM and SFA support services. Some of our competitors and potential competitors are part of large corporate groups and have significantly greater financial, sales, marketing, technology and other resources than we have.

While we believe that the CRM and SFA software products and/or services offered by most of our competitors do not address the variety of pharmaceutical customer needs that our solutions address, increased competition may require us to reduce the prices for our products and services. Increased competition may also result in decreased demand for our products and services.

We believe our ability to compete depends on many factors, some of which are beyond our control, including:

•the number and success of new market entrants supplying competing CRM and SFA products or support services;

•alliances among existing competitors;

•technological changes or changes in the our customers’ use of the Internet;

•expansion of product lines by, or consolidation among, our existing competitors; and

•development and/or operation of in-house CRM or SFA software products or services by our customers and potential customers.

Any one of these factors can lead to price reductions and/or decreased demand and we cannot assure you that we will be able to continue to compete successfully or that competition will not have a material adverse effect on our business, operating results or financial condition.

WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY IN THE INTERNET-RELATED PRODUCTS AND SERVICES MARKET NOR CAN WE PROVIDE ASSURANCES THAT THE DEMAND FOR INTERNET-RELATED PRODUCTS AND SERVICES WILL INCREASE

The success of parts of our business will depend, in part, on our ability to continue developing Internet-related products, modifying and improving our existing products and responding to technological advances and changing commercial uses of the Internet. We cannot assure you that our Internet-related products and services will adequately respond to such technological advances and changing uses. Nor can we assure you that the demand for our Internet-related products and services will increase.

Commercial use of the Internet raises potential problems with security, privacy, reliability, accessibility, quality of service and government regulation. These issues, if unresolved, may affect the use of our Internet-related products. If these potential problems arise, our business, financial condition or results of operations could be materially and adversely affected.

26

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

OUR INTERNATIONAL OPERATIONS HAVE RISKS THAT OUR DOMESTIC OPERATIONS DO NOT

We have recently significantly expanded and may in the future further expand our international operations and enter additional international markets. This expansion would require significant management attention and financial resources that could adversely affect operating margins and earnings. We may not be able to maintain or increase international market demand for our products and services. If we do not, our international sales will be limited and our business, financial condition or results of operations could be materially and adversely affected.

The sale of our products and services in foreign countries accounts for, and is expected in the future to account for, an increasing material part of our revenues. These sales are subject to substantial risks inherent in international business activities, including:

•adverse changes in the political stability and economic environments in these countries and regions;

•adverse changes in tax, tariff and trade and other regulations;

•the absence or significant lack of legal protection for intellectual property rights in certain of these countries; and

•difficulties in managing an organization spread on a global basis.

Each of the above risks could have a significant impact on our revenues, profitability and our ability to deliver products on a competitive and timely basis, which could materially and adversely affect our business, financial condition or operating results.

Since we have operations in a number of countries and our service agreements in such countries are denominated in foreign currencies, we face exposure to adverse movements in foreign currency exchange rates. As currency rates change, translation of the income statements of our international entities from local currencies to U.S. dollars affects period-over-period comparability of operating results. Historically, we have not hedged these translation risks because we generally reinvest our cash flows from international operations. However, we continue to evaluate foreign currency translation risk exposure. As we continue to grow our international business, the risks associated with foreign currency translation will also grow.

CATASTROPHIC EVENTS COULD NEGATIVELY AFFECT OUR INFORMATION TECHNOLOGY INFRASTRUCTURE

The efficient operation of our business, and ultimately our operating performance, depends on the uninterrupted use of our critical business and information technology systems. Many of these systems require the use of specialized hardware and other equipment that is not readily available in the marketplace. Although we maintain these systems at more than one location, a natural disaster, a fire or other catastrophic event at any of these locations could result in the destruction of these systems. In such an event, the replacement of these systems and restoration of archived data and normal operation of our business could take several days to several weeks, or more. During the intervening period when our critical business and information technology systems are fully or partially inoperable, our ability to conduct normal business operations could be significantly and adversely impacted and as a result our business, operating results and financial condition could be adversely affected.

27

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

OUR SUCCESS DEPENDS ON RETAINING OUR KEY SENIOR MANAGEMENT TEAM AND ON ATTRACTING AND RETAINING QUALIFIED PERSONNEL

Our future success depends, to a significant extent, upon the contributions of our executive officers and key sales, technical and customer service personnel.

Our future success also depends on our continuing ability to attract and retain highly qualified technical and managerial personnel. Due to competition for such personnel, we have at times experienced difficulties in recruiting and retaining qualified personnel and we may experience such difficulties in the future. Our ability to expand and increase revenue growth in the future will depend, in part, on our success in recruiting and training such qualified personnel. We may not always be able to expand our personnel in these areas as necessary to support our operations. Any recruiting or retention difficulties could adversely affect our business, operating results or financial condition.

IF OUR SECURITY MEASURES ARE BREACHED AND AN UNAUTHORIZED PARTY OBTAINS ACCESS TO A CUSTOMER’S DATA, CERTAIN OF OUR SOLUTIONS MAY BE PERCEIVED AS BEING INSECURE AND CUSTOMERS MAY CURTAIL OR STOP USING OUR SERVICE.

Certain of our solutions involve the storage and transmission of customers’ proprietary information, and security breaches could expose us to a risk of loss of this information, litigation and potential liability. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and we could lose existing customers and our ability to obtain new customers.

OUR BUSINESS DEPENDS ON PROPRIETARY RIGHTS THAT WE MAY NOT BE ABLE TO PROTECT COMPLETELY

We rely on a combination of trade secret, copyright and trademark laws, non-disclosure, license and other contractual agreements and technical measures to protect our proprietary rights. We cannot assure you that the steps we take will prevent misappropriation of these rights. Further, protective actions we have taken or will take in the future may not prevent competitors from developing products with features similar to our products. In addition, effective copyright and trade secret protection may be unavailable or limited in certain foreign countries. In response to customer requests, we have also on occasion entered into agreements which require us to place our source code in escrow to secure our service and maintenance obligations.

Further, while we believe that our products and trademarks do not infringe upon the proprietary rights of any third parties, third parties may assert infringement claims against us in the future that may result in costly litigation, diversion of management’s attention, the imposition of monetary damages or injunctive relief against us. In addition, any such claims may require us to enter into royalty arrangements. Any of these results could materially and adversely affect our business, operating results or financial condition.

IF OUR THIRD-PARTY VENDORS ARE UNABLE TO SUCCESSFULLY RESPOND TO TECHNOLOGICAL CHANGE OR IF WE DO NOT MAINTAIN OUR RELATIONSHIPS WITH THIRD-PARTY VENDORS, INTERRUPTIONS IN THE SUPPLY OF OUR PRODUCTS MAY RESULT

Some of our software is provided by third-party vendors. If our third-party vendors are unable to successfully respond to technological change or if our relationships with certain third-party vendors are terminated, we may experience difficulty in replacing the functionality provided by the third-party software currently offered with our products. Although we believe there are other sources for all of our third-party software, any significant interruption in the supply of these products could adversely impact our sales unless and until we can secure another source. The absence of or any significant delay in the replacement of functionality provided by third-party software in our products could materially and adversely affect our sales.

28

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

THE RESULTS DERIVED FROM CURRENT AND FUTURE STRATEGIC RELATIONSHIPS MAY PROVE TO BE LESS FAVORABLE THAN ANTICIPATED

We are involved in a number of strategic relationships with third parties and are frequently pursuing others. Should these relationships, or any of them, prove to be more costly than anticipated or fail to meet revenue expectations or other anticipated synergies, we cannot guarantee that such events will not have a material impact upon our business, operating results or financial condition.

OUR DATA SOLUTIONS ARE DEPENDENT UPON STRATEGIC RELATIONSHIPS WHICH, IF NOT MAINTAINED, COULD UNDERMINE THE CONTINUED VIABILITY OF THESE SOLUTIONS

Our data and analytics solutions are sourced, in part, from data provided through strategic relationships. Although we believe there are other sources for such data, the termination of any of these relationships could diminish the breadth or depth of our data. This termination or our failure to establish new strategic relationships in the future could negatively impact our business, operating results or financial condition.

FEDERAL AND STATE LAWS AND REGULATIONS COULD DEPRESS THE DEMAND FOR SOME OF OUR SOLUTIONS

While we believe our data and analytics solutions are not in violation of current federal or state laws and regulations pertaining to patient privacy or health information, including the Health Insurance Portability and Accountability Act of 1996 (HIPAA), we cannot guarantee that future laws or regulations or interpretations of existing laws and statutes will not impact negatively upon our ability to market these solutions or cause a decrease in demand for such solutions from customers that see an increased risk in any such new laws or regulations.

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

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

DIFFICULTIES IN SUBLEASING OR OTHERWISE DISPOSING OF CERTAIN OF OUR FACILITIES MAY NEGATIVELY IMPACT UPON OUR EARNINGS

We expect to sublease all or a portion of certain facilities, including facilities acquired as part of the Synavant acquisition. An inability to successfully dispose of or sublet, as applicable, any of these facilities or to obtain favorable pricing or sublease terms could negatively impact our earnings.

UNANTICIPATED CHANGES IN OUR ACCOUNTING POLICIES MAY BE REQUIRED BECAUSE OF MANDATES BY ACCOUNTING STANDARDS SETTING ORGANIZATIONS AND COULD HAVE A MATERIAL IMPACT ON OUR FINANCIAL STATEMENTS

In reporting our financial results we rely upon the accounting policies and standards then in effect at the time of our report. Future regulations, standards or interpretations may require us to adjust or restate financial results previously reported. A required restatement could have a material impact upon past financial results or current comparison to previous results.

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ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

($ IN THOUSANDS)

WE MAY FACE RISKS ASSOCIATED WITH EVENTS WHICH MAY AFFECT THE WORLD ECONOMY

World events such as terrorist attacks, the current U.S. military action in the Middle East and elsewhere, and hostilities in the Middle East, Asia and other geographical areas, have and may in the future weaken the U.S. and world economies. Any resultant weaknesses in these economies may adversely affect our business, financial condition or results of operations or the businesses of our customers.

WE FACE RISKS IN CONNECTION WITH IMPLEMENTING THE REQUIREMENTS OF SECTION 404 OF THE SARBANES OXLEY ACT

We continue to be involved in the process of evaluating our internal control over financial reporting in order to allow management to report on, and our registered independent public accounting firm to attest to, our internal controls, as required by Section 404 of the Sarbanes-Oxley Act. This is a continuing process and we cannot be certain as to the timing of completion of our future reviews, evaluation, testing and remediation actions or the impact of the same on our operations or the results of the required testing and required attestation report by us and also by our registered independent public accounting firm. If at any time we are unable to implement the requirements of Section 404 in a timely manner or with adequate compliance, we may be subject to sanctions or investigation by regulatory authorities, such as the Securities and Exchange Commission or NASDAQ. Any such actions could have a material adverse affect our financial results and the price of our common stock.

PROVISIONS OF OUR CHARTER DOCUMENTS AND NEW JERSEY LAW MAY DISCOURAGE AN ACQUISITION OF DENDRITE

Provisions of our Restated Certificate of Incorporation, as amended, our By-laws, as amended, and New Jersey law may make it more difficult for a third-party to acquire us. For example, the Board of Directors may, without the consent of the stockholders, issue preferred stock with rights senior to those of the common stock. In addition, we have a Shareholder Rights Plan which may limit the ability of a third-party to attempt a hostile acquisition of the Company.

OUR COMMON STOCK MAY BE SUBJECT TO PRICE FLUCTUATIONS

The market price of our common stock may be significantly affected by the following factors:

•the announcement or the introduction of new products and services by us or our competitors;

•quarter-to-quarter variations in our operating results or changes in revenue or earnings estimates or failure to meet or exceed revenue or earnings estimates;

•market conditions in the technology, healthcare and other growth sectors;

•general consolidation in the healthcare information industry which may result in the market perceiving us or other comparable companies as potential acquisition targets;

•the gain or loss of significant orders;

•changes in the domestic and international economic, political and business conditions; and

•future acquisitions.

Further, the stock market has experienced on occasion extreme price and volume fluctuations. The market prices of the equity securities of many technology companies have been especially volatile and often have been unrelated to the operating performance of such companies. These broad market fluctuations may have a material adverse effect on the market price of our common stock.

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ITEM 4.  Controls and Procedures

The Company’s Chief Executive Officer and Interim Chief Financial Officer, with the assistance of other members of the Company’s management, have evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934 as amended, as of the end of the period covered by this Form 10-Q.  Based on such evaluation, the Company’s Chief Executive Officer and Interim Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective.

The Company’s Chief Executive Officer and Interim Chief Financial Officer have also concluded that there have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2005 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

As of September 1, 2005, we transitioned our financial reporting consolidation system to a new platform.  Implementation of the new system necessarily involves changes to our procedures for control over financial reporting.  The new system was subjected to testing prior to and after September 1, 2005.  We have not experienced any significant difficulties to date in connection with the implementation or operation of the new system.

PART II.  OTHER INFORMATION

ITEM 5.  Other Information

The following is disclosed pursuant to the requirements of Form 8-K under Item 1.01 and Item 1.02 of Form 8-K and is in satisfaction of such requirements.

On November 4, 2005, the Company and Paul Zaffaroni entered into a Retirement Agreement and General Release, dated as of November 4, 2005 (the “Agreement”).  The Agreement supersedes Mr. Zaffaroni’s previously filed Employment Agreement, dated as of May 16, 2001 (the “Employment Agreement”).  Pursuant to the Agreement, unless his employment is terminated for Cause (as defined in the Employment Agreement), Mr. Zaffaroni will continue to serve as an employee of the Company through March 31, 2006 and will continue to receive his base salary and benefits.  Commencing April 1, 2006, unless terminated for Cause, Mr. Zaffaroni will continue to render services as the Company may reasonably request through March 31, 2007 and in return will be paid his base salary through such date.

Mr. Zaffaroni will be eligible to continue to participate in the Executive Incentive Plan until the end of calendar year 2005 at which time he will no longer be entitled to participate in the Executive Incentive Plan or any other bonus plan.  In addition, through the earlier of (i) March 31, 2007 and (ii) the date Mr. Zaffaroni may secure other full-time employment (the “Retirement Date”), Mr. Zaffaroni will be eligible for (i) continued stock option vesting for stock options which were previously granted to him, (ii) participation in the deferred compensation plan, and (iii) participation in the Company’s 401(k) plan and stock purchase plan.  Dendrite will also reimburse Mr. Zaffaroni for future, documented relocation costs up to $200,000 and for certain costs already incurred in the refinancing of his current residence.

Mr. Zaffaroni’s health coverage under the Company’s group health plan will terminate on the Retirement Date, at which time Mr. Zaffaroni will be provided an opportunity to continue health coverage for himself and qualifying dependents under the Company’s group health plan in accordance with the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). 

Mr. Zaffaroni will continue to be eligible for life insurance coverage under Dendrite’s policy through the Retirement Date.  As soon as practicable following the Retirement Date, the ownership of the insurance policy securing Mr. Zaffaroni’s account balance under Dendrite’s nonqualified deferred compensation plan shall be transferred from Dendrite to Mr. Zaffaroni.

A copy of the Agreement is attached as Exhibit 10.8.

ITEM 6. Exhibits

10.1Amendment dated July 1, 2005 to Credit Agreement, dated as of June 16, 2003, and as amended September 24, 2004 among Dendrite International, Inc., the Lenders party hereto, and JPMorgan Chase Bank, incorporated by reference to the Company’s Current Report on Form 8-K filed on July 7, 2005.

10.2Credit Agreement, dated July 25, 2005, among Dendrite International, Inc., the Lenders party thereto, and JP Morgan Chase Bank, N.A., as Administrative Agent, incorporated by reference to the Company’s Current Report on Form 8-K filed on July 29, 2005.

10.3The Dendrite International, Inc. New Hire Authorization, as amended, incorporated by reference to the Company’s Current Report on Form 8-K filed on September 21, 2005.

10.4New Hire Authorization - Form of Notice of Stock Option Award; Nonqualified Stock Option Agreement, incorporated by reference to the Company’s Current Report on Form 8-K filed on September 21, 2005.

10.5   New Hire Authorization - Forms of Restricted Stock [Units] Agreement, incorporated by reference to the Company’s Current Report on Form 8-K filed on September 21, 2005.

10.6   Letter Amendment between Dendrite International, Inc. and George T. Robson, dated September 27, 2005, incorporated by reference to the Company’s Current Report on Form 8-K filed on October 3, 2005.

10.7   Employment Agreement between the Company and Joseph A. Ripp dated October 5, 2005.

10.8   Retirement Agreement and General Release between the Company and Paul L. Zaffaroni dated November 4, 2005.

31.1Certification of John E. Bailye, Chairman of the Board and Chief Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2Certification of George T. Robson, Interim Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32 Certifications of John E. Bailye, Chairman of the Board and Chief Executive Officer of the Company, and George T. Robson, Interim Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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Signatures

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

Date: November 7, 2005

By:	/s/ John E. Bailye
	John E. Bailye,
	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)
By:	/s/ Brent J. Cosgrove
	Brent J. Cosgrove,
	Vice President and Corporate Controller (Principal Accounting Officer)

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EXHIBIT INDEX

10.1Amendment dated July 1, 2005 to Credit Agreement, dated as of June 16, 2003, and as amended September 24, 2004 among Dendrite International, Inc., the Lenders party hereto, and JPMorgan Chase Bank, incorporated by reference to the Company’s Current Report on Form 8-K filed on July 7, 2005.

10.2Credit Agreement, dated July 25, 2005, among Dendrite International, Inc., the Lenders party thereto, and JP Morgan Chase Bank, N.A., as Administrative Agent, incorporated by reference to the Company’s Current Report on Form 8-K filed on July 29, 2005.

10.3The Dendrite International, Inc. New Hire Authorization, as amended, incorporated by reference to the Company’s Current Report on Form 8-K filed on September 21, 2005.

10.4New Hire Authorization - Form of Notice of Stock Option Award; Nonqualified Stock Option Agreement, incorporated by reference to the Company’s Current Report on Form 8-K filed on September 21, 2005.

10.5   New Hire Authorization - Forms of Restricted Stock [Units] Agreement, incorporated by reference to the Company’s Current Report on Form 8-K filed on September 21, 2005.

10.6   Letter Amendment between Dendrite International, Inc. and George T. Robson, dated September 27, 2005, incorporated by reference to the Company’s Current Report on Form 8-K filed on October 3, 2005.

10.7   Employment Agreement between the Company and Joseph A. Ripp dated October 5, 2005.

10.8   Retirement Agreement and General Release between the Company and Paul L. Zaffaroni dated November 4, 2005.

31.1Certification of John E. Bailye, Chairman of the Board and Chief Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2Certification of George T. Robson, Interim Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32 Certifications of John E. Bailye, Chairman of the Board and Chief Executive Officer of the Company, and George T. Robson, Interim Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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EX-10.7

Exhibit 10.7

DENDRITE

1405/21425 ROUTE 206 SOUTH  BEDMINSTER, NJ 07921 USA

October 3, 2005

Joseph Ripp

[Address]

Dear Joe:

                We would like to confirm the terms and conditions of your employment with Dendrite International, Inc. (“Dendrite”) as set forth below in the Specific Terms and Conditions of Employment and the General Terms and Conditions of Employment (collectively the “Agreement”).

SPECIFIC TERMS & CONDITIONS OF EMPLOYMENT

1.                DUTIES/TERM. You will be employed as President and Chief Operating Officer reporting to the Chief Executive Officer (“CEO”). This employment is subject to Board ratification. If the Board ratifies your employment, you anticipate starting employment on November 1, 2005. You shall (i) perform those duties as may from time to time be assigned to you by the CEO, consistent with your senior position; (ii) devote your full-time attention and best efforts solely and exclusively to the duties assigned to you; and (iii) comply with all existing Dendrite rules, regulations, policies and directives and those which may be established from time to time. Your employment will be at-will and may be terminated at any time for any reason with or without cause by Dendrite. You agree to provide two (2) weeks notice to Dendrite before terminating your employment.

2.                COMPENSATION.

(a)                Base Salary. Dendrite shall pay you for your services a base salary at a rate of $800,000 per annum to be paid on a semi-monthly basis in accordance with Dendrite’s regular payroll practices. Dendrite may increase, but not decrease, your base salary during your employment. Any salary increases will be evaluated no less frequently than on the anniversary date of your employment.

DENDRITE INTERNATIONAL, INC

TEL 908.443.2000 FAX 908.443.4369 www.dendrite.com

(b)                Bonus. You will be eligible to receive an annual discretionary bonus (the “Bonus”) with an initial target of $600,000. Bonus eligibility shall be determined and paid in accordance with Dendrite’s applicable incentive compensation policy then in effect for senior executives. The payment of any Bonus is subject to: (i) Dendrite’s achievement of quarterly and annual financial goals as set forth in the Board approved annual business plan, (ii) such other objectives as may be determined by Dendrite from time to time and (iii) the terms and conditions of the applicable incentive compensation plan then in effect for senior executives. Your target for a discretionary bonus will be reviewed and determined on an annual basis by Dendrite. Your target bonus may be increased, but not decreased during your employment. Notwithstanding the forgoing, Dendrite will pay you a 2005 bonus calculated as follows: $600.000 times a fraction the numerator of which is the number of days you worked for Dendrite and the denominator of which is 365, subject to the provisions of section 4. In addition, Dendrite will pay you at least a $600,000 bonus for 2006, subject to the provisions of section 4. Bonuses shall be paid no later than March 31 of the following year.

(c)                Stock Options. Pursuant to Dendrite’s New Hire Stock Plan (the “Stock Plan”), upon the execution of this Agreement, you shall he eligible to receive non-qualified options to purchase 500,000 shares of the common stock of Dendrite. The price for such options shall be determined by the Compensation Committee of the Board, subject to the terms and conditions of the Stock Plan. Such options shall fully vest on December 31, 2005. In 2006 and any subsequent year of this Agreement, you will be eligible to receive non-qualified options to purchase stock in an amount in excess of the amount of any such options granted to any other senior executive of Dendrite with respect to such year (except for options granted to the CEO). In addition, your entitlement to such options shall he subject to (i) a three-year restriction on selling the underlying shares such that no more than 1/3 of such shares may be sold in each of the three (3) twelve-month periods ending on the first, second and third year anniversaries of the option grant date, (ii) approval by the Board, (iii) your execution of a definitive option agreement in form and substance reasonably satisfactory to Dendrite and (iv) in all instances subject to the terms and conditions of the Stock Plan.

(d)                Restricted Stock. Pursuant to the Stock Plan, upon the execution of this Agreement, you shall be eligible to receive 250,000 restricted units of the common stock of Dendrite. Your entitlement to such restricted stock units shall be subject to (i) a three-year vesting schedule (ii) approval by the Board, (iii) your execution of a definitive restricted stock agreement in form and substance reasonably satisfactory to Dendrite and (iv) in all instances subject to the terms and conditions of the Stock Plan.

3.                BENEFITS.

Dendrite shall provide you:

(a)                Vacation. 4 weeks vacation per annum in accordance with Dendrite policy in effect from time to time. Unused vacation is paid out, on a pro-rata basis, upon employment termination.

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(b)                Business Expenses. Reimbursement for reasonable travel, entertainment and other reasonable and necessary out-of-pocket expenses incurred by you in connection with the performance of your duties in accordance with Dendrite policy in effect from time to time.

(c)                Retirement Benefits. Retirement benefits to the same extent as may be provided to other similarly situated senior executives in accordance with Dendrite policy then in effect and subject to the terms and conditions of such benefit plans.

(d)                Indemnification. Throughout your employment with Dendrite, you will have indemnification rights in accordance with the indemnification provisions contained in the Company’s Directors & Officers insurance policy, Certificate of Incorporation, and By-laws, then in effect. In addition, you will have the indemnification rights as set forth in the Indemnification Agreement between you/Dendrite.

(e)                Life Insurance. Throughout your employment with Dendrite, you will he covered under Dendrite’s life insurance policy, subject to the terms and conditions of such policy as amended from time to time. To the extent that the life insurance benefits under such coverage is not at least equal to one times your base salary and target bonus (the “Life Insurance Benefit”), Dendrite will reimburse you the cost of your obtaining total coverage that provides the Life Insurance Benefit, as follows. You agree to obtain any necessary excess coverage through Dendrite’s life insurance policy, subject to any cap. If after reaching any such cap, you still do not have coverage that provides the Life Insurance Benefit, then you may obtain coverage from an outside source at a commercially reasonable price so that in total you have coverage that provides the Life Insurance Benefit. Provided you comply with the provisions set forth herein, Dendrite agrees to reimburse you for the cost of the excess insurance under its plan and coverage from an outside source to attain in total the Life Insurance Benefit. At Dendrite’s sole discretion, Dendrite may elect to provide you with any or all coverage under this Section 3(e) through any

insurance it obtains.

(f)                Disability Insurance. Throughout your employment with Dendrite, you will be covered under Dendrite’s long-term and short-term disability policies, subject to the terms and conditions of such policies as amended from time to time. To the extent that the long-term disability benefit properly payable under Dendrite’s long-term disability policy is not at least equal to one times your base salary and target bonus (the “LTD Benefit”), Dendrite will reimburse you the cost of your obtaining total coverage that provides the LTD Benefit as follows. You agree to obtain any necessary excess coverage through Dendrite’s Long-Term Disability Plan, subject to any cap. If after reaching any such cap, you still do not have total coverage that provides the LTD Benefit, then you may obtain coverage from an outside source at a commercially reasonable price so that in total you have coverage that provides the LTD Benefit. Provided you comply with the provisions set forth herein, Dendrite agrees to reimburse you for the cost of the excess insurance under its policies and coverage from an outside source to attain in total the LTD Benefit. At Dendrite’s sole discretion, Dendrite may elect to provide you with any or all coverage under this Section 3(f) through any insurance it obtains.

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(g)                Other. Other benefits to the same extent and with the same cost as may be provided to other senior executives in accordance with Dendrite policy then in effect and subject to the terms and conditions of such benefit plans. Such benefits may include, but are not limited to, Medical, Dental, Life and AD&D, Short Term Disability, Long-Term Disability, and Deferred Compensation.

4. TERMINATION; SEVERANCE

(a)                Upon your termination of employment by Dendrite for any reason other than termination by Dendrite for Cause (as defined in Exhibit A), Disability (as defined in Exhibit A) or upon your death, you shall solely be entitled to (subject to any applicable off-sets) applicable payments and benefits in Section 4(b), and your base salary through the date of your termination.

(b)                If your employment hereunder is terminated (i) by Dendrite for any reason other than death, Cause (as defined in Exhibit A), or Disability (as defined in Exhibit A), or (ii) voluntarily by you with Good Reason (as defined in Exhibit A), you shall be entitled to receive severance payments of your monthly base salary for 12 months following your employment termination (calculated at the rate of base salary then being paid to you as of the date of termination) and your annual target bonus as of the date of termination. The severance payments to be paid to you under this Section 4(b) shall be referred to herein as the “Severance Payment” and the 12-month period of Severance Payments shall be referred to as the “Severance Period.” Your severance shall commence on the next regularly scheduled monthly payday following the effective date of the termination of your employment. No interest shall accrue or be payable on or with respect to any Severance Payment. Your benefits coverage will continue under Dendrite’s group medical and dental plans for the Severance Period. At the conclusion of the Severance Period, you shall be provided the opportunity to continue your benefits coverage pursuant to “COBRA,” Sections 601 et seq. of ERISA. During the Severance Period your cost of health and dental benefits coverage shall be the same as the amount you paid as an active employee under Dendrite’s group health and dental plans. Notwithstanding the foregoing, in the event you become re-employed with another employer during the Severance Period, you will no longer be eligible for participation in Dendrite’s plans at employee rates, Dendrite will have no obligation to pay for the cost of any health and dental coverage. and you will immediately become eligible for COBRA coverage at COBRA (102% of premiums) rates. You agree to notify Dendrite of any full time employment that you begin during the Severance Period. If your employment is terminated by Dendrite as described in this Section 4(b), in addition to the Severance Payment, your bonus for the year in which employment is so terminated will be pro­rated to reflect the percentage of days of the year during which you performed services for Dendrite (“Pro-rata Bonus Payment”).

(c)                In the event of a Change of Control all stock options then granted to you by Dendrite will immediately vest and all sale restrictions will be lifted.

(d) The making of any Severance Payments and Pro-rata Bonus Payment and the provision of benefits under Sections 4(b) or 4(c) hereunder is conditioned upon the signing of a

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general release in form and substance satisfactory to Dendrite under which you release Dendrite and its affiliates together with their respective officers, directors, shareholders, employees, agents and successors and assigns from any and all claims you may have against them. You will not be required to release your rights under Dendrite’s benefit and retirement plans, stock plans, or any rights that you may have to coverage and indemnification pursuant to law or Dendrite policies. In the event you breach Section 2, 3, 5 and 6 of the General Terms and Conditions of Employment, in addition to any other remedies at law or in equity, Dendrite may cease making any Severance Payment or Pro-rata Bonus Payment otherwise due under Sections 4(b). Nothing herein shall affect any of your obligations or Dendrite’s rights under this Agreement.

                (e)                In the event you terminate your employment with Dendrite without “Good Reason” or Dendrite terminates your employment for “Cause” it is understood and agreed that Dendrite’s only obligation is to pay you your base salary through the date of your termination and to offer you COBRA coverage in accordance with applicable law. You will not be entitled to a Pro-rata BonusPayment if you terminate employment without Good Reason or are terminated for Cause.

                Please sign where indicated below to acknowledge your agreement to the Specific Terms and Conditions (“Special Terms”) set forth above and the General Terms and Conditions of Employment attached hereto (“General Terms”), both of which together shall form the terms and conditions of your employment (the “Agreement”).

		Sincerely
		/s/ John Bailye
		John Bailye
		Chairman, Chief Executive Officer
Accepted and agreed to:
/s/ Joseph Ripp
Joseph Ripp
Date:	10-5-05

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DENDRITE INTERNATIONAL, INC.

GENERAL TERMS & CONDITIONS OF EMPLOYMENT

(together with the Specific Terms and Conditions of Employment, the “Agreement”)

1.             INFORMATION AND BUSINESS OPPORTUNITY. During your employment with Dendrite, you may acquire knowledge of (i) information that is relevant to the business of Dendrite or its affiliates or (ii) knowledge of business opportunities pertaining to the business in which Dendrite or its affiliates are engaged. You shall promptly disclose to Dendrite that information or business opportunity but shall not disclose it to anyone else without Dendrite’s written consent.

2.             DENDRITE AND CLIENT CONFIDENTIAL INFORMATION. As a result of your employment with Dendrite, you will acquire information which is proprietary and confidential to Dendrite and its affiliates (“Confidential Information’’). This Confidential Information includes, but is not limited to, Dendrite’s proprietary software, technical and commercial information, instruction and product information, the design, “look and feel” and capabilities of Dendrite’s product, Dendrite’s proprietary training program methodology regarding the utilization of electronic territory management software and associated client support services. Dendrite’s methodology for promoting its products and services to its clients, Dendrite’s proprietary Graphic User Interface, the navigational paths through which Dendrite’s clients input and access information stored in the proprietary software, the particularized needs and demands of Dendrite’s clients and the customizations Dendrite makes to its proprietary software to meet those clients’ needs, financial arrangements, salary and compensation information, competitive status, pricing policies, knowledge of suppliers, technical capabilities, discoveries, algorithms, concepts, software in any stage of development, designs, drawings, specifications, techniques, models, data, technical manuals, training guides and manuals, research and development materials, processes, procedures, know-how and other business affairs relating to Dendrite. Confidential Information also includes any and all technical information involving Dendrite’s work. In addition, Dendrite may be furnished information and data which is proprietary and confidential to its clients, partners, suppliers and other third parties (“Third Parties”). You agree to use the Confidential Information of Dendrite and Third Parties solely during and in furtherance of your employment with Dendrite. You agree to keep all such Confidential Information confidential and agree not to reveal it at any time without the express written consent of Dendrite. This obligation is to continue in force after employment terminates for whatever reason.

Confidential Information shall not include information which the receiving party can demonstrate: (a) is or becomes available to the public through no breach of this Agreement; (b) was previously known by the receiving party without any obligation to hold it in confidence; (c) is received from a third party free to disclose such information without restriction; (d) is independently developed by the receiving party without the use of Confidential Information of the disclosing party; (e) is approved for release by written authorization of the disclosing party, but only to the extent of and subject to such conditions as may be imposed in such written authorization; (f) is required by law or regulation to be disclosed, but only to the extent and for

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the purposes of such required disclosure; or, (g) is disclosed in response to a valid order of a court and other governmental body of the United States or any political subdivision thereof, but only to the extent of and for the purposes of such order; provided, however, that the receiving party shall first notify the disclosing party of the order and permit the disclosing party to seek an appropriate protective order.

3.             RETURN OF PROPERTY. Upon termination of employment for any reason or upon the request of Dendrite, you shall fully account for and return to Dendrite all property which you received, prepared or helped prepare in connection with your employment including, but not limited to, all copies of any confidential information or records, data, materials, disks, notes, notebooks, blueprints, client lists or other papers or material in any tangible media or computer readable form belonging to Dendrite or to any of its clients, partners and suppliers. You will not retain any copies, duplicates, reproductions or excerpts thereof.

4.             INVENTIONS. All work performed by you and all materials, products, deliverables, inventions, software, ideas, disclosures and improvements, and copyrighted material made or conceived by you, solely or jointly, in whole or in part, during your employment with Dendrite (even if completed following the termination of your employment) that relate to any matters pertaining to the business of Dendrite shall be the property of Dendrite and shall be deemed to be a work made for hire. To the extent that title to any of the foregoing shall not, by operation of law, vest in Dendrite, all right, title and interest therein are hereby irrevocably assigned to Dendrite. You agree to give Dendrite or any person or entity designated by Dendrite reasonable assistance required to perfect its rights therein.

5.             RESTRICTION ON FUTURE EMPLOYMENT. You acknowledge (i) the highly competitive nature of the business and the industry in which Dendrite competes; (ii) that you will acquire and have access to confidential information as described in Section 2 of the General Terms; (iii) that, as a key employee of Dendrite, you will participate in the servicing of current clients and/or the solicitation of prospective clients, through which, among other things, you will obtain knowledge of the “know-how” and business practices of Dendrite, in which matters Dendrite has a substantial proprietary interest; and (iv) that your employment hereunder requires the performance of services which are special, unique, extraordinary and intellectual in character, and your position with Dendrite places you in a position of confidence and trust with the clients and employees of Dendrite. In the course of your employment with Dendrite, you will develop a personal relationship with the clients of Dendrite and a knowledge of those clients’ affairs and requirements, and that the relationship of Dendrite with their established clientele will therefore be placed in your hands in confidence and trust. You consequently agree that it is reasonable and necessary for the protection of the confidential information, goodwill and business of Dendrite that you make the covenants contained herein and that Dendrite would not have entered into this Agreement unless the covenants set forth in this Section 5 were contained in this Agreement. Accordingly, you agree that during the period that you are employed by Dendrite and for a period of eighteen (l8) months thereafter, you shall not, as an individual, employee, consultant, partner, shareholder, or in association with any other person, business or enterprise, except on behalf of

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Dendrite, directly or indirectly, and regardless of the reason for your ceasing to be employed by Dendrite:

(a)           perform services that compete with the business or business conducted by Dendrite or any of its affiliates or render services to any person or entity which competes with the business of businesses conducted by Dendrite or any of its affiliates (or which business Dendrite can at the time of your termination of employment establish it will likely conduct within one (1) year following the date of your termination);

(b)           attempt in any manner to solicit or accept from any client business of the type performed by Dendrite or to persuade any client to cease to do business or to reduce the amount of business which any such client has customarily done or is reasonably expected to do with Dendrite, whether or not the relationship between Dendrite and such client was originally established in whole or in part through your efforts;

(c)           employ, attempt to employ or assist anyone else in employing any employee or contractor of Dendrite or induce or attempt to induce any employee or contractor of Dendrite to terminate their employment or engagement with Dendrite; or

(d)           render to or for any client any services of the type rendered by Dendrite (unless such services are rendered directly to a client as an employee of such client, in which case this Section 5(d) shall not apply).

As used in this Section 5, the term “Dendrite” shall mean Dendrite and its affiliates, and the term “client” shall mean (1) anyone who is a client of Dendrite on the date of your termination or, if your employment shall not have terminated, at the time of the alleged prohibited conduct (any such applicable date being called the “Determination Date”), but only if you solicited, rendered services for, or were otherwise involved with any such client at any time during your employment with Dendrite; (2) anyone who was a client of Dendrite at any time during the one (1) year period immediately preceding the Determination Date; but only if you solicited, rendered services for, or were otherwise involved with any such client at any time during your employment with Dendrite; (3) any prospective client to whom Dendrite had made a new business presentation (or similar offering of services) at any time during the one (1) year period immediately preceding the Determination Date; but only if you actively participated in or supervised such new business presentation (or similar offering of services); and (4) any prospective client to whom Dendrite made a new business presentation (or similar offering of services) at any time within six (6) months after the date of your termination (but only if the initial discussions between Dendrite and such prospective client relating to the rendering of services occurred prior to the date of your termination: and only if you actively participated in or supervised such discussions). For purposes of this clause, it is agreed that a general mailing or an incidental contact shall not be deemed a “new business presentation or similar offering of services” or a “discussion”. In addition, if the client is part of a group of companies which conducts business through more than one entity, division or operating unit, whether or not separately incorporated (a “Client Group”), the term “client” as used herein shall also include each entity, division and operating unit of the Client Group where the same management group

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of the Client Group has the decision making authority or significant influence with respect to contracting for services of the type rendered by Dendrite.

For an eighteen (18) month period after the termination of your employment for any reason whatsoever, you agree to promptly notify Dendrite in writing the identity of all subsequent employers. You agree to provide such information as Dendrite may from time to time request to determine your compliance with the terms of this Agreement.

6.             NON-DISPARAGEMENT. You agree that you will not at any time make any statement, observation or opinion, or communicate any information (whether oral or written) that is likely to come to the attention of any client or employee of Dendrite or any member of the media, which statement is derogatory of or casts in a negative light Dendrite or its officers, directors and employees or otherwise engage in any activity which is inimical to the interests of the Company.

7.             OUTSIDE CONTRACTING. You shall not enter into any agreements during your employment by Dendrite to provide services to any company, person or organization outside of your employment by Dendrite (an “Outside Agreement”) without the prior written express consent from Dendrite. You must notify Dendrite of your intent to enter into an Outside Agreement specifying therein the other party to such Outside Agreement and the type of services to be provided by you. Dendrite shall not unreasonably withhold permission to you to enter into Outside Agreements unless such Outside Agreements (i) are with competitors or potential competitors of Dendrite, or (ii) as determined in Dendrite’s sole discretion, shall substantially hamper or prohibit you from satisfactorily carrying out all duties assigned to you by Dendrite. The parties agree that the Advisory Services Agreement between you and Time Warner Inc. dated January 1, 2001 (“the 2001 Advisory Services Agreement”) does not constitute a violation of this Agreement and may continue by its terms until it expires on November 30, 2006. The parties also agree that you may serve on one Board of Directors of a publicly traded company at any given time during the duration of this Agreement so long as that company is not in a business that directly competes with Dendrite and that you disclose this Board position to Dendrite prior to your acceptance of any such position.

8.             REMEDIES. The parties agree that in the event you breach or threaten to breach this Agreement, money damages may be an inadequate remedy for Dendrite and that Dendrite will not have an adequate remedy at law. It is understood, therefore, that in the event of a breach or threatened breach of this Agreement by you, Dendrite shall have the right to obtain from a court of competent jurisdiction restraints or injunctions prohibiting you from breaching or threatening to breach this Agreement. In that event, the parties agree that Dendrite will not be required to post bond or other security. It is also agreed that any restraints or injunctions issued against you shall be in addition to any other remedies which Dendrite may have available to it.

9.             ARBITRATION

                (a)           If any dispute arises between you and Dendrite that the parties cannot resolve themselves, including any dispute over the application, validity, construction, or interpretation of

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this Agreement, arbitration in accordance with the then-applicable employment law rules of the American Arbitration Association shall provide the exclusive remedy for resolving any such dispute, regardless of its nature; provided, however, that Dendrite may enforce your obligation to provide services under this Agreement and your obligations under Sections 1 through 7 hereof by an action for injunctive relief and damages in a court of competent jurisdiction at any time prior or subsequent to the commencement of an arbitration proceeding as herein provided. This Section 9 shall apply to any and all claims arising out of your employment and its termination, under state and federal statutes, local ordinances, and the common law including, without limitation Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Equal Pay Act, the Employee Retirement Income Security Act, as amended, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act, the New Jersey Family Leave Act, the New Jersey Conscientious Employee Protection Act, the New Jersey Civil Rights Act and the New Jersey Law Against Discrimination.

                (b)           You have read and understand this Section 9 which discusses arbitration. You understand that by signing this Agreement, you agree to submit any claims arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach or termination thereof, or your employment or the termination thereof, to binding arbitration, and that this arbitration provision constitutes a waiver of your right to a jury trial and relates to the resolution of all disputes relating to all aspects of the employer/employee relationship. You further understand that other options such as federal and state administrative remedies and judicial remedies exist and know that by signing this Agreement those remedies are forever precluded and that regardless of the nature of your complaint, you know that it can only be resolved by arbitration.

                (c)           Unless the parties agree otherwise, any arbitration shall be administered by and take place in the offices of the American Arbitration Association in Somerset, New Jersey. If that office is not available, the arbitration then the arbitrator shall determine the location of the arbitration within New Jersey.

10.          SEVERABILITY. If any provision of this Agreement shall be declared invalid or illegal for any reason whatsoever, then notwithstanding such invalidity or illegality, the remaining terms and provisions of this Agreement shall remain in frill force and effect in the same manner as if the invalid or illegal provision had not been contained herein. Moreover, if any one or more of the provisions contained in this Agreement is held to be excessively broad as to duration, scope, activity or subject, such provisions will be construed by limiting and reducing them so as to be enforceable to the maximum extent compatible with applicable law.

11.          NOTICES. In the event any notice is required to be given under the terms of this Agreement, it shall be delivered in the English language, in writing, as follows:

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If to you:	To the address set forth on the first page of this Agreement
If to Dendrite:	Attn: General Counsel
	Dendrite International. Inc.
	1405 Route 206 South
	Bedminster, NJ 07921

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of changes of address shall be effective only upon receipt.

12.          PRIOR EMPLOYMENT. You represent and warrant that you have not taken or otherwise misappropriated and do not have in your possession or control any confidential and proprietary information belonging to any of your prior employers or connected with or derived from your service to prior employers, except as may be necessary to provide services under the 2001 Advisory Services Agreement. You represent and warrant that you have returned to all prior employers any and all such confidential and proprietary information. You further acknowledge, represent and warrant that Dendrite has informed you that you are not to use or cause the use of such confidential or proprietary information in any manner whatsoever in connection with your employment by Dendrite. You agree, represent and warrant that you will not use such information in connection with your employment by Dendrite. You shall indemnify and hold harmless Dendrite from any and all claims arising from any breach of the representations and warranties in this Section.

13.               MISCELLANEOUS.

                (a)           This Agreement shall be governed by and construed in accordance with the laws of New Jersey, without regard to the conflicts of laws. Competent courts of jurisdiction in New Jersey shall have exclusive jurisdiction to entertain any legal or equitable action with respect to Sections l through 8 of the General Terms except that Dendrite may institute any such suit against you in any jurisdiction in which you may be at the time. In the event suit is instituted in New Jersey, it is agreed that service of summons or other appropriate legal process may be affected upon any party by delivering it to the last known address.

                (b)           Your rights or obligations under the terms of this Agreement or of any other agreement with Dendrite may not be assigned. Any attempted assignment will be void as to Dendrite. Dendrite may, however, assign its rights to any affiliated or successor entity.

                (c)           This Agreement sets forth the entire agreement between the parties hereto and fully supersedes any and all prior negotiations, discussions, agreements or understandings between the parties hereto pertaining to the subject matter hereof. No representations, oral or otherwise, with respect to the subject matter of this Agreement have been made by either party. This Agreement may not be modified or waived except by a writing signed by both parties. No waiver by either party of any breach by the other shall be considered a waiver of any subsequent breach of the Agreement.

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                (d)           This Agreement shall be binding upon and inure to the benefit of your heirs and personal representatives and to the successors and assigns of Dendrite.

     John Bailye

on behalf of Dendrite

Joseph A. Ripp.

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Exhibit A To Dendrite Specific Terms & Conditions Of Employment

                                (a)           “Cause” as used in this Agreement shall mean (i) any gross misconduct on the part of you while employed by Dendrite with respect to your duties under this Agreement, (ii) the engaging by you in an indictable offense while employed by Dendrite which relates to your duties under this Agreement or which is likely to have a material adverse effect on the business of Dendrite, (iii) the commission by you of any willful or intentional act while employed by Dendrite which injures in any material respect or could reasonably be expected to injure in any material respect the reputation, business or business relationships of Dendrite, including without limitation, a breach of Sections 1 through 7 of the General Terms and Conditions of Employment, or (iv) the engaging by you through gross negligence in conduct while employed by Dendrite which injures materially or could reasonably be expected to injure materially the business or reputation of Dendrite.

(b)           “Disability” as used in this Agreement shall have the same meaning as that term, or such substantially equivalent term, has in any group disability policy carried by Dendrite. If no such policy exists, the term “Disability” shall mean the occurrence of any physical or mental condition which materially interferes with the performance of your customary duties in your capacity as an employee where such disability has been in effect for a period of six (6) months (excluding permitted vacation time), which need not be consecutive, during any single twelve (12) month period.

                (c)           “Good Reason” as used in this Agreement shall mean, without your express written consent, the occurrence of any of the following events which is not corrected within ten (10) days following written notice of such event given by you to Dendrite:

                (i)            the assignment to you of any duties or responsibilities materially and adversely inconsistent with your position (including any material diminution of such duties or responsibilities) or (B) a material and adverse change in your reporting responsibilities, titles or offices with Dendrite;

(ii)           any material breach by Dendrite this Agreement with respect to the making of any compensation payments, including without limitation the failure to approve stock options set forth in the Agreement;

(iii)          any requirement of Dendrite that you be based anywhere other than in a thirty-five (35) mile radius of the Dendrite office you are based in

(iv)          the failure of Dendrite to continue in effect any employee benefit plan, compensation plan, welfare benefit plan or fringe benefit plan (such plans being referred to herein as “Welfare Plans”) in which you are participating as of the date of this Agreement (or as such benefits and compensation may be increased from time to time), or the taking of any action by Dendrite which would materially and adversely affect your participation in or materially reduce your benefits under such Welfare Plans (other than an

Initial here JB

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across-the-board reduction of such benefits affecting senior executives of Dendrite) unless (i) you are permitted to participate in other plans providing you with substantially comparable benefits (at substantially comparable cost with respect to the Welfare Plans), (ii) any such Welfare Plan does not provide material benefits to you (determined in relation to your compensation and benefits package), (iii) such failure or action is taken at the direction of you or with your consent, or (iv) such failure or action is required by law; or

(v)           the failure of Dendrite to obtain an agreement from a successor employer to assume Dendrite’s obligations under this Agreement in the event of a Change in Control.

You must notify Dendrite of any event constituting Good Reason within ninety (90) days following your knowledge of its existence or such event shall not constitute Good Reason.

                (d)           “Change in Control” as used in this Agreement shall mean the occurrence of any one of the following events:

                                (i) any “person” (as such term is defined in Section 3(a)(9) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Dendrite representing 33 1/3% or more of the combined voting power of Dendrite’s then outstanding securities eligible to vote for the election of the Board (the “Dendrite Voting Securities”); provided, however, that the event described in this subsection (i) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by Dendrite or any subsidiary, (B) by any employee benefit plan sponsored or maintained by Dendrite or any subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Non-Control Transaction (as defined in subsection (iii)), or (E) a transaction (other than one described in subsection (iii) below) in which Dendrite Voting Securities are acquired from Dendrite, if a majority of the Incumbent Board (as defined below) approves a resolution providing expressly that the acquisition pursuant to this clause (E) does not constitute a Change in Control under this subsection (i);

                                (ii)           individuals who, on the date of this Agreement, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to such date, whose election or nomination for election was approved by a vote of at least two-thirds of the directors comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of Dendrite in which such person is named as a nominee for director, without objection to such nomination) shall be considered a member of the Incumbent Board; provided, however, that no individual initially elected or nominated as a director of Dendrite as a result of an actual or threatened election contest with respect to directors

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or any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be a member of the Incumbent Board;

                                (iii)          the shareholders of Dendrite approve a merger, consolidation, share exchange or similar form of corporate reorganization of Dendrite or any such type of transaction involving Dendrite or any of its subsidiaries (whether for such transaction or the issuance of securities in the transaction or otherwise) (a “Business Combination”), unless immediately following such Business Combination: (A) more than 50% of the total voting power of the publicly traded corporation or effective control resulting from such Business Combination (including, without limitation, any corporation which directly or indirectly has beneficial ownership of 100% of Dendrite Voting Securities or all or substantially all of the assets of Dendrite and its subsidiaries) eligible to elect directors of such corporation would be represented by shares that were Dendrite Voting Securities immediately prior to such Business Combination (either by remaining outstanding or being converted), and such voting power would be in substantially the same proportion as the voting power of such Dendrite Voting Securities immediately prior to the Business Combination, and (B) no person (other than any publicly traded holding company resulting from such Business Combination, any employee benefit plan sponsored or maintained by Dendrite (or the corporation resulting from such Business Combination), or any person which beneficially owned, immediately prior to such Business Combination, directly or indirectly, 33-1/3% or more of Dendrite Voting Securities (a “Dendrite 33-1/3% Stockholder”)) would become the beneficial owner, directly or indirectly, of 33-1/3% or more of the total voting power of the outstanding voting securities eligible to elect directors of the corporation resulting from such Business Combination and no Dendrite 33-1/3% Stockholder would increase its percentage of such total voting power and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination would be members of the Incumbent Board at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (a “Non-Control Transaction”); or

                                (iv)          the shareholders of Dendrite approve a plan of complete liquidation or dissolution of Dendrite or the sale or disposition of all or substantially all of the Dendrite’s assets.

Notwithstanding the foregoing, a Change in Control of Dendrite shall not be deemed to occur solely because any person acquires beneficial ownership of more than 33 1/3% of Dendrite Voting Securities as a result of the acquisition of Dendrite Voting Securities by Dendrite which, by reducing the number of Dendrite Voting Securities outstanding, increases the percentage of shares beneficially owned by such person; provided, that if a Change in Control of Dendrite would occur as a result of such an acquisition by Dendrite (if not for the operation of this sentence), and after Dendrite’s acquisition such person becomes the beneficial owner of additional Dendrite Voting Securities that increases the percentage of outstanding Dendrite Voting Securities beneficially owned by such person, then a Change in Control of Dendrite shall occur.

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EX-10.8

Exhibit 10.8

RETIREMENT AGREEMENT AND GENERAL RELEASE

This Retirement Agreement and General Release (the “Agreement”) confirms the following understandings and agreements between DENDRITE INTERNATIONAL, INC. (“Employer” or “Dendrite”), and PAUL ZAFFARONI (“Employee”) concerning Employee’s employment and retirement therefrom.

                1.             Employment Status:

                                (a)           Unless Employee is sooner terminated for Cause as defined in the Employee’s Employment Agreement dated as of May 16, 2001 (the “Employment Agreement”)), he will continue to serve as an employee of Employer through March 31, 2006 and receive his base salary and benefits through such date.  Employee agrees to perform his duties in a competent and professional manner through such date, including but not limited to, devoting his best efforts, skill and ability to promote the Company’s interests and assisting in an orderly transition of his former responsibilities for Employer.

                                (b)           Commencing on April 1, 2006, Employee shall continue to render services as the Company may reasonably request.  Unless Employee’s employment is terminated for “Cause” (as defined in the Employment Agreement), Employee’s last date of employment with Employer will be the earlier of (i) March 31, 2007 and (ii) the date Employee secures full-time employment (the “Retirement Date”).  Employee agrees that from the date hereof through the Retirement Date, he will take all such actions as may be necessary to transition the management of client accounts in an orderly manner to such other employees of the Company as may be designated by the Chief Executive Officer with the view of maintaining the Company’s relationship with such clients after the Employee’s retirement.

                2.             Payments and Benefits.

                                (a)           After March 31, 2006, in the event (i) Employee is not terminated for Cause, (ii) he complies with his obligations hereunder and (iii) he re-executes the Agreement after March 31, 2006 as provided in paragraph 15(e) below, he will be paid his base salary of $475,000 in accordance with normal payroll practices through the Retirement Date.

                                (b)                In the event (i) the Retirement Date occurs prior to March 31, 2006, (ii) Employee is not terminated for Cause prior to March 31, 2007, (iii) he complies with his obligations hereunder, and (iv) after the Retirement Date he re-executes this Agreement as provided in paragraph 15(e) below, Employee will be paid the remaining unpaid portion of his base salary of $475,000 through March 31, 2007. Such payments will be made to Employee in accordance with normal payroll practices and will commence in the payroll period following the eighth day after Employee’s re-execution of this Agreement as provided in paragraph 15(e).

                                (c)           Employee will be eligible to continue to participate in the Executive Incentive Plan for the period through calendar year 2005, subject to the terms and conditions of such Plan.  Employee shall not be entitled to participate in the Executive Incentive Plan or any bonus plan in 2006 or thereafter.

                                (d)           Employee’s health coverage under the Employer’s group health plan will terminate on the Retirement Date.  Thereafter, Employee will be provided an opportunity to continue health coverage for himself and qualifying dependents under the Employer’s group health plan in accordance with the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).

                                (e)           Through the Retirement Date, Employee will be eligible to (i) continue vesting in options to purchase stock of Employer which were previously granted to him, subject to the terms of Dendrite’s stock option plans, (ii) continue to be eligible to participate in the deferred compensation plan, subject to the terms and conditions of the deferred compensation plan, and (iii) continue to be eligible to participate in the Employer’s 401(k) Plan and Stock Purchase Plan, subject to the terms and conditions of such plans.  For purposes of clarification, in the event of a “Change in Control” (as defined in the Employment Agreement), all of Employee’s options previously granted to him at the time of such event shall immediately vest and all sale restrictions shall be lifted.

                                (f)            Employee will continue to be eligible for life insurance coverage under Dendrite’s policy through the Retirement Date.  As soon as practicable following the Retirement Date, the ownership of the insurance policy securing the Employee’s account balance under Dendrite’s nonqualified deferred compensation plan shall be transferred from Dendrite to the Employee.  Such transfer is conditioned upon obtaining consent of the insurance company that issued or maintains such policy.  Upon such transfer, Dendrite shall have no further responsibilities with respect to such policy and the Employee shall be responsibility for maintaining the policy, including paying applicable premiums thereunder.

(g)           Dendrite will reimburse Employee for up to $30,000 for the costs already incurred in refinancing his residence in Pennsylvania (“Refinancing Costs”); provided that Employee provides Dendrite appropriate documentation and verification of such costs in accordance with Dendrite policy.

(h)                Dendrite will reimburse Employee for up to $200,000 for relocation costs if Employee relocates from Pennsylvania on or before December 31, 2006; subject to Dendrite’s relocation policy and provided that Employee provides Dendrite appropriate documentation and verification of such relocation costs in accordance with its policies and further provided that such costs are not eligible to be reimbursed by any future employer of Employee. If the relocation described in the preceding sentence does not occur prior to December 31, 2006, but occurs between January 1, 2007 and March 31, 2007, Dendrite will reimburse Employee for up to $170,000 for such relocation costs, subject to the provisions set forth above.

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(i)            In the event of Employee’s death, his estate shall receive the payments set forth in paragraph 2(b) on the same terms and conditions as set forth therein.  In the event that Employee dies before re-execution to Agreement as set forth in paragraphs 2(b) and 15(e), Employee’s estate must re-execute this Agreement on Employee’s behalf in order to receive the payments in paragraph 2(b).

(j)            Except as otherwise set forth in this Agreement, from and after March 31, 2006, Employee shall not be entitled to receive any further compensation or monies from Employer or to receive any benefits or participate in any benefit plan or program of Employer.

                3.             Full Release:  In consideration of the compensation and benefits provided in paragraph 2 herein, Employee, for himself, his heirs, executors, administrator, successors, and assigns (hereinafter referred to as the “Releasors”) hereby fully releases and discharges Employer, and its subsidiaries, parents, affiliates, successors or assigns together with their respective officers, directors, employees, agents, insurers, underwriters (all such persons, firms, corporations and entities being deemed beneficiaries hereof and are referred to herein as the “Releasees”), from any and all actions, causes of action, claims, obligations, costs, losses, liabilities, damages, attorneys’ fees, and demands of whatsoever character, whether or not known, suspected or claimed, which the Releasors have, or hereafter may have, against the Releasees by reason of any matter, fact or cause whatsoever from the beginning of time to the Effective Date of this Agreement, including, without limitation, all claims arising out of or in any way related to Employee’s employment or the termination of his employment.  Nothing in this paragraph 3 shall affect any of Employee’s rights to indemnification under the Indemnification Agreement dated October 1, 2001 (the “Indemnification Agreement”).

                                This Agreement of Employee shall be binding on the executors, heirs, administrators, successors and assigns of Employee and shall inure to the benefit of the respective executors, heirs, administrators, successors and assigns of the Releasees.

                4.             Confidentiality:  Employee agrees that the terms of this Agreement have been and shall be held strictly confidential by him and his attorneys and accountants, and that he shall not, and shall instruct his attorneys and accountants not to disclose any such information, orally or in writing, to anyone else, including without limitation, any past, present or future employee or agent of the Employer.  Employee recognizes that, in the event he or his attorneys disclose any information contrary to the confidentiality provisions of this Agreement, any such disclosure would be a material breach of the Agreement for which the Employer shall be entitled to cease making any payments or providing any benefits under paragraph 2, in addition to its other remedies in law, equity, and under this Agreement.  For the sake of clarity, it shall not be a breach of this paragraph in the event that a third party obtains the terms of this Agreement by virtue of Dendrite disclosing the terms of this Agreement in its public filings.

5.             Return of Property:  Upon termination of Employee’s employment or at any time upon the request of Employer, Employee agrees to return to Employer all property which Employee received, prepared or helped to prepare in connection with his employment including, but not limited to, all confidential information and all disks, notes, notebooks, blueprints,

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customer lists or other papers or material in any tangible media or computer readable form belonging to Employer or any of its customers, clients or suppliers, Employee agrees he will not retain any copies, duplicates or excerpts of any of the foregoing materials.  If Employee fails to comply with his obligations under this paragraph 5, Employer will have no obligation to provide payments or benefits pursuant to paragraph 2.

                6.             Non-Disparagement: Employee agrees that he will not at any time make any statements or communicate any information (whether oral or written) that disparages or reflects negatively on the Employer or any of the Releasees.

                7.             No Effect on Duties, Obligations or Restrictions Contained in Employment Agreement:  This Agreement does not amend, modify, waive or affect in any way Employee’s duties, obligations or restrictions under Sections 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 22, 24 and 25 of the Employment Agreement.  In further consideration of this Agreement, such Sections are hereby incorporated by reference and Employee agrees to abide by such provisions.  For purposes of clarification the two year post-employment restrictions set forth in Section 11 of the Employment Agreement shall commence two years from the Retirement Date.

                8.             Releasees’ Express Denial of Liability:  The payment by the Releasees of the amount specified herein above shall not be deemed an admission that any liability of the Releasees exists, and in making such payment Releasees do not admit, and expressly deny, any liability.

                9.             Waiver of Rights Under Other Statutes:  Employee understands that this Agreement includes the waiver of claims and rights Employee may have under other applicable statutes, including without limitation, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Employee Retirement Income Security Act; the Equal Pay Act; the Rehabilitation Act of 1973; the Americans with Disabilities Act; the Age Discrimination in Employment Act; the Family and Medical Leave Act; the New Jersey Family Leave Act; the New Jersey Law Against Discrimination; the Fair Labor Standards Act; the New Jersey Wage and Hour Act; and/or the New Jersey Conscientious Employee Protection Act, and any and all amendments to any of same.

                10.           Waiver of Rights Under the Age Discrimination Act:  Employee understands that this Agreement, and the release contained herein, waives claims and rights Employee might have under the Age Discrimination in Employment Act (“ADEA”).  The monies and other benefits offered to Employee in this Agreement are in addition to any sums or benefits that Employee would be entitled without signing this Agreement.  For a period of seven (7) days following execution of this Agreement, Employee may revoke the terms of this Agreement by a written document received by Employer on or before the end of the seven (7) day period (the “Effective Date”).  The Agreement will not be effective until said revocation period has expired.  Employee acknowledges that he has been given up to twenty-one (21) days to decide whether to sign this Agreement.  Employee has been advised to consult with an attorney prior to executing this Agreement.

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                11.           No Suit:  Employee represents that he has not filed or permitted to be filed against the Employer or any of the other Releasees, individually or collectively, any lawsuits, and he covenants and agrees that he will not do so at any time hereafter with respect to the subject matter of this Agreement and claims released pursuant to this Agreement, except as may be necessary to enforce this Agreement or to challenge the validity of the release of his rights under the ADEA.  Except as otherwise provided in the preceding sentence, Employee will not voluntarily participate in any judicial proceeding against any of the Releasees that in any way involve the allegations and facts that he could have raised against any of the Releasees in any forum as of the date hereof.  Employee agrees that he will not encourage or cooperate with any other current or former employee of Employer or any potential plaintiff to commence any legal action or make any claim against the Employer or against the Releasees in respect of such persons employment with the Employer or otherwise.

                12.           Remedies:  In the event Employee breaches any of the provisions of this Agreement (and in addition to any other legal or equitable remedy it may have), the Employer shall be entitled to cease making any payments or providing any benefits to Employee under paragraph 2 of this Agreement, recover any payments made to Employee or on his behalf under paragraph 2 (except two weeks’ pay).  In the event of an action to enforce this Agreement, in addition to any other legal or equitable remedies, the prevailing party in any such action shall be entitled to its attorney’s fees and costs incurred in any such action.    The remedies set forth in this paragraph 12 shall not apply to any challenge to the validity of the waiver and release of Employee’s rights under the ADEA.  In the event Employee challenges the validity of the waiver and release of his rights under the ADEA, then Employer’s right to attorney’s fees and costs shall be governed by the provisions of the ADEA, so that Employer may recover such fees and costs if the lawsuit is brought by Employee in bad faith.  Nothing herein shall affect in any way any of Employee’s obligations under this Agreement, including, but not limited to, his release of claims under paragraphs 3, 9 and 10.  Employee further agrees that nothing in this Agreement shall preclude Employer from recovering attorneys’ fees, costs or any other remedies specifically authorized under applicable law.

                13.           Cooperation.  Employee agrees to cooperate with Employer and its counsel in connection with any investigation, administrative proceeding or litigation relating to any matter in which he was involved or of which he has knowledge as a result of his employment with Employer.  Employer agrees to reimburse Employee for the reasonable and necessary out-of-pocket expenses incurred by him in connection with his obligations under this paragraph 13.

                14.           Entire Agreement:  This Agreement sets forth the entire agreement between the parties relating to the subject matter hereof and supersedes the Employment Agreement, except for any stock option agreements, the Indemnification Agreement, and as otherwise expressly set forth in this Agreement.  This Agreement may not be changed orally but changed only in a writing signed by both parties.

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                15.           Miscellaneous:

                                (a)           This Agreement shall be governed in all respects by laws of the State of New Jersey.

                                (b)           In the event that any one or more of the provisions of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.  Moreover, if any one or more of the provisions contained in this Agreement is held to be excessively broad as to duration, scope, activity or subject, such provisions will be construed by limiting and reducing them so as to be enforceable to the maximum extent compatible with the applicable law.

                                (c)           The paragraph headings used in this Agreement are included solely for convenience and shall not affect or be used in connection with the interpretation of this Agreement.

                                (d)           Employee represents that in executing this Agreement, he has not relied upon any representation or statement, whether oral or written, not set forth herein.

                                (e)           In order to be entitled to the payments and benefits set forth in paragraph 2 above, Employee must re-execute this Agreement on the earlier of the date he (i) obtains alternate full-time employment or (i) April 1, 2006.  If this General Release is not re-executed or subsequently revoked as provided herein, Employer will not be obligated to make the payments and benefits set forth in paragraph 2.  This in no way affects Employee’s prior release of claims under this Agreement.  Within seven (7) days of re-executing this Agreement, Employee will have the right to revoke such re-execution of this Agreement.  In the event Employee revokes his re-execution of this Agreement, Employer will have no obligation to provide the payments and benefits set forth in paragraph 2.  By Employee’s re-execution of this Agreement, the release set forth in paragraphs 3, 9 and 10 shall be deemed to cover any claims which he has, may have had, or thereafter may have existing or occurring at any time on or before the date which he re-executes this Agreement.

                                (f)            This Agreement shall be binding upon and inure to the benefit of Employee’s heirs and personal representatives and to the successors and assigns of Dendrite.

6

IN WITNESS THEREOF, Employer and Employee have executed this Retirement Agreement and General Release on this 4th day of November, 2005.

DENDRITE INTERNATIONAL, INC.
By:	CHRISTINE A. PELLIZZARI
Date:		November 4, 2005
PAUL ZAFFARONI
PAUL ZAFFARONI
Date:		November 2, 2005
Re-Executed:
Date:

7

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, John E. Bailye, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Dendrite International, Inc.;

2.Based on my knowledge, this 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 report;

3.Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2005

By:	/s/ John E. Bailye
Name:	John E. Bailye
Title:	Chairman and Chief
	Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, George T. Robson, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Dendrite International, Inc.;

2.Based on my knowledge, this 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 report;

3.Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2005

By:	/s/ George T. Robson
Name:	George T. Robson
Title:	Interim Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATIONS OF CEO AND CFO PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Dendrite International, Inc. (the “Company”) for the quarterly period ended September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John E. Bailye, as Chief Executive Officer of the Company, and George T. Robson, as Interim Chief Financial Officer, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John E. Bailye
Name:	John E. Bailye
Title:	Chairman of the Board and Chief Executive Officer
Date:	November 7, 2005
/s/ George T. Robson
Name:	George T. Robson
Title:	Interim Chief Financial Officer
Date:	November 7, 2005