TABLE 1
DENDRITE INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP

(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

	Three Months Ended June 30,
	2006			%		2005			%		Change

Revenues:

Services & Technology:
Sales solutions	$	69,214		65.1	%	$	80,257		69.7	%	-14	%
Marketing solutions	30,784			28.9	%	28,467			24.7	%	8	%
Emerging solutions	6,383			6.0	%	6,342			5.5	%	1	%
Total revenues	106,381			100.0	%	115,066			100.0	%	-8	%

Operating Costs & Expenses:
Operating costs (including shipping)	59,398			55.8	%	58,829			51.1	%	1	%
Selling, general and administrative	42,095		(1)	39.6	%	34,075		(2)	29.6	%	24	%
Research and development	1,494			1.4	%	1,454			1.3	%	3	%
Restructuring and other charges	2,578		(3)	2.4	%	—			0.0	%	NM
Amortization of acquired intangible assets	1,035			1.0	%	1,130			1.0	%	-8	%
Total operating costs & expenses	106,600			100.2	%	95,488			83.0	%	12	%

Operating (loss) income	(219		)	-0.2	%	19,578			17.0	%	101	%

Interest income, net	(504		)	-0.5	%	(24		)	0.0	%	NM
Other expense, net	71			0.1	%	20			0.0	%	NM

Income before income tax expense	214			0.2	%	19,582			17.0	%	99	%

Income tax expense	927		(4)	0.9	%	7,539			6.6	%	88	%

Net (loss) income	$	(713	)	-0.7	%	$	12,043		10.5	%	106	%

Net (loss) income per share:
Basic	$	(0.02	)			$	0.28				NM
Diluted	$	(0.02	)			$	0.28				NM

Shares used in computing net (loss) income per share:
Basic	43,650					42,592
Diluted	43,650					43,630

(1) Includes $1,226 out of $1,300 total stock-based compensation expense from the adoption of SFAS 123(R) and $833 out of $845 total restricted stock expense, respectively.

(2) Includes $20 of restricted stock expense.

(3) $2,027 of severance expense and $536 of other expense.

(4) The large income tax expense compared to income before income tax expense primarily driven by the inability to benefit from losses in certain foreign jurisdictions, the impact of FAS 123 (R), and increased permanent non-deductible items.

NM - Not meaningful.

TABLE 2
DENDRITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP

(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

	Six Months Ended June 30,
	2006			%		2005			%		Change

Revenues:

Services & Technology:
Sales solutions	$	135,554		64.7	%	$	147,998		69.0	%	-8	%
Marketing solutions	61,579			29.4	%	53,781			25.1	%	14	%
Emerging solutions	12,377			5.9	%	12,734			5.9	%	-3	%
Total revenues	209,510			100.0	%	214,513			100.0	%	-2	%

Operating Costs & Expenses:
Operating costs (including shipping)	119,149			56.9	%	112,480			52.4	%	6	%
Selling, general and administrative	81,891		(1)	39.1	%	69,863		(2)	32.6	%	17	%
Research and development	3,228			1.5	%	3,272			1.5	%	-1	%
Restructuring and other charges	2,578		(3)	1.2	%	9,372		(4)	4.4	%	-72	%
Amortization of acquired intangible assets	2,057			1.0	%	2,380			1.1	%	-14	%
Total operating costs & expenses	208,903			99.7	%	197,367			92.0	%	6	%

Operating income	607			0.3	%	17,146			8.0	%	96	%

Interest income, net	(958		)	-0.5	%	(165		)	-0.1	%	NM
Other expense (income), net	46			0.0	%	(3		)	0.0	%	NM

Income before income tax expense	1,519		(5)	0.7	%	17,314			8.1	%	91	%

Income tax expense	1,524			0.7	%	6,666			3.1	%	77	%

Net (loss) income	$	(5	)	0.0	%	$	10,648		5.0	%	100	%

Net (loss) income per share:
Basic	$	—				$	0.25				100	%
Diluted	$	—				$	0.24				100	%

Shares used in computing net (loss) income per share:
Basic	43,599					42,531
Diluted	43,599					43,687

(1) Includes $2,561 out of $2,728 total stock-based compensation expense from the adoption of SFAS 123(R) and $1,327 out of $1,339 total restricted stock expense, respectively.

(2) Includes $34 of restricted stock expense.

(3) $2,027 of severance expense and $536 of other expense.

(4) $7,649 of facility related charges and $1,723 of severance expense.

(5) The large income tax expense compared to income before income tax expense is primarily driven by the inability to benefit from losses in certain foreign jurisdictions, the impact of FAS 123 (R), and increased permanent non-deductible items.

NM-Not Meaningful.

TABLE 3
DENDRITE INTERNATIONAL, INC.

SUPPLEMENTAL FINANCIAL INFORMATION (SEE NOTES)

(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

	Three Months Ended June 30,							Six Months Ended June 30,
	2006			2005		% Change		2006		2005		% Change

Total revenue - GAAP	$	106,381		$	115,066	-8	%	$	209,510	$	214,513	-2	%

Impact of foreign exchange rates (1)	(259		)	—				2,711		—

Total revenue - Adjusted	$	106,122		$	115,066	-8	%	$	212,221	$	214,513	-1	%

	Three Months Ended June 30,					Six Months Ended June 30,
	2006			2005		2006			2005
Operating (loss) income - GAAP	$	(219	)	$	19,578	$	607		$	17,146

Stock option expense (2)	1,300			—		2,727			—
Surplus facility charges (3)	—			—		—			7,649		(3)
Severance charges	2,042		(5)	—		2,042		(5)	1,723		(4)
Other restructuring charges	536		(6)	—		536		(6)	—

Operating income - Adjusted	$	3,659		$	19,578	$	5,912		$	26,518

	Three Months Ended June 30,					Six Months Ended June 30,
	2006			2005		2006			2005
Net income per share:
Diluted - GAAP	$	(0.02	)	$	0.28	$	—		$	0.24

Stock option expense (2)	0.02		(7)	—		0.04		(7)	—
Surplus facility charges (3)	—			—		—			0.10		(10)
Severance charges	0.03		(8)	—		0.03		(8)	0.03		(11)
Other restructuring charges	0.01		(9)	—		0.01		(9)	—

Diluted - Adjusted	$	0.05		$	0.28	$	0.09		$	0.37

Note: 2006 EPS does not foot down due to the mathematical rounding of the individual calculations.

(1)		The impact of exchange rates are calculated by taking 2006 local currency revenue and applying the 2005 exchange rates for comparison purposes.

(2)		Prior to January 1, 2006, the Company accounted for stock-based compensation under Accounting Principles Board, Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). In accordance with APB 25, the Company historically used the intrinsic value method to account for stock-based compensation expense. Under APB 25, stock options and shares issued under the Company’s employee stock purchase plan were not an expense for accounting purposes and, as a result, no compensation expense is included in the 2005 reporting period related to these items. As of January 1, 2006, the Company accounts for stock-based compensation expense, including expense related to stock options and shares issued under the employee stock purchase program, under the fair value method of Statement of Financial Accounting No. 123(R), “Shared-Based Payment” (“FAS 123(R)”). As the Company adopted the modified prospective method, results for prior periods have not been restated under the fair value method for GAAP purposes.

(3)		The surplus facility charges relates to vacating a New Jersey facility and for additional facilities vacated in previous periods due to changes in market conditions, as well as the write-off of leasehold improvements associated with the exit of our New Jersey facility.

(4)		The 2005 severance charges relates to the elimination of certain senior and mid-level management positions.

(5)		The 2006 severance charges relates to the elimination of certain positions relating to our Operational Effectiveness initiative (“OE”).

(6)		The 2006 other restructuring charges primarily relates to the refocusing of our Japanese business.

(7)		The tax effect using the marginal tax rate is $430 and $896 for the three and six months ended June 30, 2006, respectively.

(8)		The tax effect using the marginal tax rate is $694 for the three and six months ended June 30, 2006.

(9)		The tax effect using the marginal tax rate is $223 for the three and six months ended June 30, 2006.

(10)		The tax effect using the marginal tax rate is $3,075 for the six months ended June 30, 2005.

(11)		The tax effect using the marginal tax rate is $487 for the six months ended June 30, 2005.

TABLE 4
DENDRITE INTERNATIONAL, INC.

SEGMENT REVENUE, OPERATING INCOME (LOSS) AND RESTRUCTURING AND OTHER CHARGES

(IN THOUSANDS)
(UNAUDITED)

	For the Three Months Ended June 30, 2006
	Sales Solutions		Marketing Solutions			Emerging Solutions			Corporate			Total
Revenue	$	69,214	$	30,784		$	6,383		$	—		$106,381
Operating income (loss)	$	12,133	$	(2,493	)	$	(345	)	$	(9,514	)	$	(219	)
Restructuring charges	$	759	$	954		$	4		$	861		$	2,578

	For the Three Months Ended June 30, 2005
	Sales Solutions		Marketing Solutions		Emerging Solutions		Corporate			Total
Revenue	$	80,258	$	28,467	$	6,342	$	—		$	115,067
Operating income (loss)	$	21,675	$	750	$	770	$	(3,617	)	$	19,578
Restructuring charges	$	—	$	—	$	—	$	—		$	—

	For the Six Months Ended June 30, 2006
	Sales Solutions		Marketing Solutions			Emerging Solutions			Corporate			Total
Revenue	$	135,555	$	61,578		$	12,377		$	—		$	209,510
Operating income (loss)	$	22,052	$	(3,776	)	$	(552	)	$	(17,117	)	$	607
Restructuring charges	$	759	$	954		$	4		$	861		$	2,578

	For the Six Months Ended June 30, 2005
	Sales solutions		Marketing solutions			Emerging solutions		Corporate			Total
Revenue	$	147,998	$	53,781		$	12,734	$	—		$	214,513
Operating income (loss)	$	33,346	$	(422	)	$	979	$	(16,757	)	$	17,146
Restructuring charges	$	—	$	—		$	—	$	9,372		$	9,372

TABLE 5
DENDRITE INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)

	June 30, 2006			December 31, 2005
Assets

Current Assets:
Cash and cash equivalents	$	80,395		$	66,145
Accounts receivable, net	68,744			80,167
Prepaid expenses and other current assets	10,021			8,544
Deferred income taxes	9,088			8,848
Total current assets	168,248			163,704

Property and equipment, net	52,825			52,592
Other assets	9,378			8,856
Goodwill	90,257			90,440
Intangible assets, net	22,942			25,083
Capitalized software development costs, net	10,591			10,341
Deferred income taxes	13,008			11,991
	$	367,249		$	363,007

Liabilities and Stockholders’ Equity

Current Liabilities:
Accounts payable	$	8,262		$	7,677
Income taxes payable	10,785			9,518
Capital lease obligations	1,390			1,383
Accrued compensation and benefits	19,219			17,950
Accrued professional and consulting fees	5,904			5,690
Accrued restructuring and other charges	1,373			1,490
Other accrued expenses	16,010			17,468
Purchase accounting restructuring accrual	1,130			1,601
Deferred revenues	15,855			18,680
Total current liabilities	79,928			81,457

Capital lease obligations	816			1,648
Purchase accounting restructuring accrual	2,428			3,009
Accrued restructuring and other charges	3,800			4,143
Deferred rent	5,526			5,740
Other non-current liabilities	5,590			5,595

Stockholders’ Equity:
Preferred stock, no par value, 15,000,000 shares authorized, none issued	—			—
Common stock, no par value, 150,000,000 shares authorized, 46,528,807 and 46,353,252 shares issued; 43,667,504 and 43,491,949 shares outstanding at June 30, 2006 and December 31, 2005, respectively	151,539			149,947
Retained earnings	148,943			148,948
Deferred compensation	—			(4,419		)
Accumulated other comprehensive income (loss)	416			(1,324		)
Less treasury stock, at cost	(31,737		)	(31,737		)

Total stockholders’ equity	269,161			261,415

	$	367,249		$	363,007

TABLE 6
DENDRITE INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)
(UNAUDITED)

	Six Months Ended June 30,
	2006			2005
Operating activities:
Net (loss) income	$	(5	)	$	10,648
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	12,573			11,135
Write-off of property and equipment	—			1,030
Stock-based compensation	4,059			34
Deferred income taxes	(931		)	(2,905		)
Excess tax benefits from stock-based awards	(348		)	—
Changes in assets and liabilities, net of effects from acquisitions:
Decrease (increase) in accounts receivable	12,799			(7,247		)
(Increase) decrease in prepaid expenses and other current assets	(1,330		)	1,027
Increase in other assets	(387		)	(804		)
Decrease in accounts payable and accrued expenses	(871		)	(212		)
(Decrease) increase in accrued restructuring and other charges	(460		)	7,339
Decrease in purchase accounting restructuring accrual	(789		)	(1,630		)
Increase in income taxes payable	1,480			2,045
(Decrease) increase in deferred revenue	(3,154		)	716
Decrease in other non-current liabilities	(26		)	(182		)
Net cash provided by operating activities	22,610			20,994

Investing activities:
Acquisitions, net of cash acquired	—			(10,172		)
Purchases of property and equipment	(7,709		)	(17,753		)
Additions to capitalized software development costs	(2,689		)	(2,439		)
Net cash used in investing activities	(10,398		)	(30,364		)

Financing activities:
Payments on capital lease obligations	(825		)	(890		)
Excess tax benefits from stock-based awards	348			—
Issuance of common stock	1,723			2,527
Net cash provided by financing activities	1,246			1,637
Effect of foreign exchange rate changes on cash	792			(149		)
Net increase (decrease) in cash and cash equivalents	14,250			(7,882		)
Cash and cash equivalents, beginning of year	66,145			64,020
Cash and cash equivalents, end of period	$	80,395		$	56,138

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