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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-30822

SYNAVANT Inc.
(Exact name of Registrant as specified in its Charter)

3445 Peachtree Road, Suite 1400
Atlanta, Georgia 30326
(Address of principal office, including zip code)

(404) 841-4000
(Registrant's telephone number, including area code)

Securities Registered pursuant to Section 12(b) of the Act: None

Securities Registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01

        Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES ý    NO o

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

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    YES o    NO ý

        The aggregate market value of the voting stock and non-voting common equity held by nonaffiliates of the Registrant at February 28, 2003, was approximately $15,205,078, based on $1.00 per share, the closing price of the common stock as quoted on the Nasdaq National Market.

        The number of shares of the Registrant's common stock outstanding at February 28, 2003, was 15,205,078 shares.

DOCUMENT INCORPORATED BY REFERENCE

        Portions of the Proxy Statement for the 2003 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of the Registrant's 2002 fiscal year end are incorporated by reference into Part III of this report.

TABLE OF CONTENTS

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PART I

ITEM 1. BUSINESS

        SYNAVANT Inc. (referred to hereafter as "SYNAVANT" or the "Company") serves the biopharmaceutical and healthcare industries through its two core business categories: implementing and supporting pharmaceutical-specific customer relationship management ("CRM") solutions and developing interactive marketing programs, medical professional databases and offering strategic consulting services that support sales and marketing decision-making and program implementation. SYNAVANT is composed of the automated sales and marketing support businesses which were formerly part of IMS HEALTH INCORPORATED ("IMS HEALTH") which operated under the name IMS HEALTH Strategic Technologies, Inc. ("ST"); certain other former foreign subsidiaries of IMS HEALTH; substantially all of IMS HEALTH's former interactive and direct marketing businesses, including the business of Clark-O'Neill, Inc. ("Clark O'Neill"), formerly a wholly owned subsidiary of IMS HEALTH; and a 51% interest in Permail Pty., Ltd. ("Permail"). Shares of SYNAVANT's common stock were distributed to stockholders of IMS HEALTH following the conveyance of assets and stock of entities comprising SYNAVANT's businesses into SYNAVANT.

SYNAVANT's SOLUTIONS

        SYNAVANT's services are comprised of strategic technology services, strategic consulting, and interactive marketing and database services. The Company reports strategic technology services as Software Services and interactive marketing, database services and strategic consulting as Interactive Marketing on its Consolidated Statement of Operations.

        Strategic technology services include a set of services that provide value to customers in three general areas: software, system implementation and system support.

        SYNAVANT offers several proprietary software products to enable sales force automation ("SFA"). Cornerstone™ is a legacy product used in the United States by certain pharmaceutical companies to support their sales forces. Première^SM is another SYNAVANT SFA tool used by many European, Canadian, and Latin American pharmaceutical companies. Lastly, SYNAVANT created a proprietary analytical tool, Analyzer^SM, which helps pharmaceutical sales representatives, managers and head office staff manage, view and analyze market data and information that is generated from these systems.

        System implementation is a core competency and service offered by SYNAVANT to support large-scale software implementations for the healthcare marketplace. SYNAVANT can implement its proprietary systems or other software systems such as integrated CRM solutions (e.g., the Siebel Systems' eBusiness suite for the life sciences market, including ePharma, eClinical, eMedical and Employee Relationship Management applications). During 2002, the Company also has expanded its system implementation capabilities to include Customer Relationship Effectiveness ("CRE") solutions (e.g., update software A.G.'s pharmaceutical-specific technology suite, premiere.update, for laptop, PDA and Web deployment) that provide a lower cost solution for pharmaceutical companies wishing to implement CRM capabilities within their sales and marketing functions, without undergoing fundamental structural change or business process re-engineering across their organization.

        Post implementation system support services combine several key areas of customer value: help desk and other web-based customer support, hardware maintenance, asset management, training, and facilities management.

        SYNAVANT's global interactive marketing services comprise offerings developed to help pharmaceutical brand managers promote their products to targeted physicians effectively. Sampling services range from targeted sample solicitation to doctors to custom sample fulfillment programs. Medical Dialogue™is a service that influences doctor prescribing in a peer-to-peer environment using skilled healthcare professionals. Doctor call centers, circulation management for medical publishers,

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custom physician list generation, and direct marketing programs complete the competencies harnessed in this business category.

        SYNAVANT's major database service offering is Pharbase^SM. Pharbase^SM is a repository of comprehensive physician and other healthcare professional profile information for several major markets around the world. In many countries it is recognized as one of the most accurate reference databases due to its usage by government agencies for regulatory communications to physicians. Pharmaceutical companies rely on Pharbase^SM to accurately manage customer level information. Pharbase^SM is not available in the United States.

        SYNAVANT's strategic consulting group, Global Strategic Solutions (GSS), was created at the end of 2001 to leverage SYNAVANT's historical experience in technology implementation and pharmaceutical promotion with the consulting skills of the new team. This team is focused on helping pharmaceutical companies become more customer focused to realize the potential from their technology, sales and marketing investments within the context of the overall vision and direction of their business. The GSS group provides services such as helping pharmaceutical companies identify the informal prescribing influence networks within the physician community, which enables more precise and cost-effective targeting of sales activity. GSS also helps clients by driving new value streams and maximizing the effectiveness of their brand promotion and customer relationships.

PARTNERSHIPS AND ALLIANCES

        An important element of SYNAVANT's business model involves working with key partners. It is essential to have the right alliance agreements in place to enable both parties to maximize the value of their complementary skills and services.

        During 2002, the Company launched its CRE solution premiere.update^SM developed in conjunction with update software A.G. to address the opportunity to provide a lower cost solution to pharmaceutical companies wishing to implement CRM capabilities within their sales and marketing functions, without undergoing fundamental structural change or business process re-engineering across their organization.

        SYNAVANT continues to form alliances with appropriate partners to deliver new and essential services to target customers. Of paramount importance is the value the alliance brings customers and therefore SYNAVANT's choice of partner may vary from customer to customer. By combining SYNAVANT's intellectual property and ongoing, long-term service capabilities with complementary back-end technology implementation and change management expertise from other consulting organizations, SYNAVANT is able to deliver a total solution to the customer.

SUBSEQUENT EVENTS

        On March 16, 2003, the Company announced a definitive agreement to sell its Global Interactive Marketing Business to Cegedim for $43.5 million in cash. Further, the definitive agreement and other transaction related documents were filed through a Form 8-K on March 17, 2003. The transaction is subject to approval by SYNAVANT stockholders, regulatory approvals and other customary closing conditions. The Company expects the transaction to close in the second or third quarter of 2003. However, the Company can not make any assurances that the transaction will be consummated.

        On March 31, 2003, the Company signed a $15.0 million Revolving Credit and Security Agreement with CapitalSource Finance LLC (the "CapitalSource Facility"). The new agreement replaces the credit facility with Foothill Capital Corporation, a wholly owned subsidiary of Wells Fargo & Company (the "Foothill Facility") (See Item 7 Liquidity and Capital Resources). A cancellation fee of $0.8 million was triggered by the termination of the Foothill Facility. The CapitalSource Facility is expected to increase the Company's available capital compared with the Foothill Facility.

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        On March 21, 2003, the Company reached an agreement to sell its 51% interest in Permail Pty. Ltd. to its minority partner for approximately $1.8 million. The transaction is expected to close in the next 30-60 days.

SIEBEL ALLIANCE

        On July 14, 2000, SYNAVANT entered into a strategic alliance with Siebel Systems Inc. ("Siebel"), a leading provider of eBusiness application software. This alliance agreement was updated and amended (the "Alliance") on December 31, 2001. The Alliance results in the following:

•

SYNAVANT is designated as a "Strategic Consulting Partner";



•

SYNAVANT is able to support a product set including Siebel ePharma, eMedical, eClinical as well as Employee Relationship Management ("ERM");



•

SYNAVANT has no restrictions on its product development, including Cornerstone™ and Premiere^SM; and



•

SYNAVANT is able to support other software platforms in addition to its support of Siebel software.

RESEARCH AND DEVELOPMENT

        Research and development expenses totaled $6.5 million, $8.6 million and $12.6 million for the years ended December 31, 2002, 2001 and 2000, respectively. While historical development efforts have focused on legacy and next generation core proprietary SFA applications, current and future efforts will be focused on the development of a broader set of proprietary applications that are compatible with Siebel's ePharma technology platform and with the technology platforms of other alliance partners. These CRM applications are expected to expand the focus of the Company's traditional SFA efforts (sales and marketing) into other areas including call centers, web sites, and clinical trials, as well as CRM solutions for medical device companies.

FOREIGN OPERATIONS

        SYNAVANT and its subsidiaries engage in a significant portion of their business outside of the United States. SYNAVANT's foreign operations are subject to the usual risks inherent in carrying on business outside of the United States, including fluctuations in relative currency values, possible nationalization, expropriation, price controls and other restrictive government actions. SYNAVANT believes that the risk of nationalization or expropriation is reduced because its products are software, services and information, rather than products that require manufacturing facilities or the use of natural resources.

INTELLECTUAL PROPERTY

        SYNAVANT owns and controls a number of trade secrets, confidential information, trademarks, trade names, copyrights, and other intellectual property rights which, in the aggregate, are of material importance to its business. SYNAVANT is licensed to use certain technology and other intellectual property rights owned and controlled by others, and similarly, other companies are licensed to use certain technology and other intellectual property rights owned and controlled by SYNAVANT. The names of SYNAVANT's and its subsidiaries' products and services referred to herein are trademarks, service marks, registered trademarks or registered service marks owned by or licensed to SYNAVANT or one of its subsidiaries.

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CUSTOMERS

        Sales to the pharmaceutical industry accounted for substantially all of SYNAVANT's revenue in 2002. Substantially all major pharmaceutical companies are customers of SYNAVANT, and many of the companies use SYNAVANT's products and subscribe to its services in several countries. SYNAVANT's customer base is broad in scope and enables it to avoid dependence on any single customer. None of SYNAVANT's customers accounted for more than 10% of its gross revenues in 2002, 2001 or 2000.

COMPETITION

        SYNAVANT competes with other automated sales, marketing and clinical research support technology companies that offer sales force automation and customer relationship management solutions and enterprise-wide solutions, as well as competition from the in-house capabilities of its customers. SYNAVANT also faces competition from many vendors that market and sell SFA solutions in the consumer packaged goods industry. In addition, SYNAVANT competes with various companies that provide support and interactive marketing services similar to its own services. Generally, competition has arisen on a country or regional basis. For example, in the United States, certain SYNAVANT solutions and services, including its Cornerstone™ application and Siebel eBusiness solutions, compete with the products and services of Dendrite International Inc. ("Dendrite"), and in Europe certain SYNAVANT solutions and services, including its Pharbase^SM database, Premiere^SM application and Siebel eBusiness solutions, compete with the products and services of Cegedim SA ("Cegedim") and Binleys (part of the Wilmington Group plc), as well as Dendrite. Quality, breadth of solutions, integration of services and speed of delivery of information services and products are the principal methods of competition in SYNAVANT's market.

EMPLOYEES

        As of December 31, 2002, SYNAVANT had approximately 1,250 employees in 21 countries. Of these, approximately 500 are located in the United States, and none of these are represented by labor unions. In Germany, SYNAVANT has a European Workers' Council, which is a legal requirement in that country. SYNAVANT believes that, generally, relations with its employees are good and have been maintained in a normal and customary manner.

Factors That May Affect Future Performance

        In addition to other information in this Annual Report on Form 10-K, the following risk factors should be carefully considered in evaluating the Company and its business because such factors currently may have a significant impact on its business, operating results and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements.

COMPETITION FROM OTHER PROVIDERS OF CUSTOMER RELATIONSHIP MANAGEMENT SOLUTIONS MAY REDUCE DEMAND FOR SYNAVANT'S PRODUCTS AND SERVICES OR CAUSE IT TO REDUCE THE PRICE OF PRODUCTS AND SERVICES.

        SYNAVANT competes with other companies that sell sales force software products and services and interactive marketing services that specifically target the pharmaceutical industry. The Company also faces competition from many vendors that market and sell CRM solutions in the consumer packaged goods industry. In addition, the Company competes with various companies that provide support services and interactive marketing services similar to SYNAVANT's services.

        The Company may not compete effectively in the market. Competitive pressure may result in reducing the price of products and services, which would negatively affect revenues and operating margins. If the Company is unable to compete effectively in its markets, its business, results of operations and financial condition would be materially and adversely affected.

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        Increased competition is anticipated based on the growing strategic focus on CRM and the success of Siebel's eBusiness solutions. Large established companies, such as Oracle, SAP and Microsoft, that are well established providers of enterprise resource planning ("ERP") software solutions either offer or are expected to offer new CRM solutions that may compete with SYNAVANT solutions based on Siebel technology.

        The Company typically contracts with customers for a three year license and support agreement for software products. At the end of the contract, the customer may renew its agreement, normally for a one to two year period. Past experience has indicated that the Company's customers typically reassess these contracts every three to five years. As customers reassess their requirements, the Company may not be able to renew the agreements, and may not be selected to provide implementation and/or support services even if a Siebel solution is selected by the customer.

        Some of the Company's competitors and potential competitors are part of large corporate groups and have longer operating histories and significantly greater financial, sales and marketing, technology and other resources than SYNAVANT. In the event that the Company is unable to compete successfully with these companies, it could have a material adverse effect on its business, operating results or financial condition.

THE REVISED ALLIANCE WITH SIEBEL IS CRITICAL TO SUCCESS IN GENERATING CRM SERVICES REVENUE.

        You should note the following risk factors relating to the alliance with Siebel:

•

Customers may choose to purchase software services directly from Siebel or another provider and not as part of an integrated solutions offering from SYNAVANT;



•

The Company may not be able to implement successfully the changes to its business model necessitated by the Siebel alliance;



•

The Company may not successfully develop and differentiate our value added services and products together with Siebel software products; and



•

Other Siebel partners and/or providers of CRM services may effectively compete to sell portions of a total solution offering such as integration services, help desk support or data services to potential customers of SYNAVANT.

THE COMPANY MAY NEED ADDITIONAL FINANCING TO MEET OUR FUTURE CAPITAL REQUIREMENTS.

        We invest in research and development as well as in capital projects to enhance existing products and services and develop new products and services in response to technological and marketplace changes. As of December 31, 2002, the Company had cash and cash equivalents of $7.0 million and availability under the Foothill Facility (See Item 7—Liquidity and Capital Resources Section). In March 2003, the Company signed the CapitalSource Facility (See Note 15) to replace the Foothill Facility and increase available capital. To the extent that we need additional funding in the future to finance our operations and capital expenditures, we may not be able to access the capital markets or otherwise obtain necessary financing, or to obtain such financing in a timely manner or on commercially favorable terms. In the event that we satisfy our financing needs through the issuance of additional equity securities, such issuance would be dilutive to existing stockholders.

        The Company currently estimates that cash and working capital needs for the next twelve months can be met by cash on hand, amounts available under the credit facility, and cash flow from operations. However, certain U.S. based customers have notified the Company that they have selected alternative suppliers for their software services and, as a result, the financial impact of these transitions will vary

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throughout 2003. The Company estimates that in the U.S., approximately $20 million to $23 million of 2002 software services revenue associated with these customers will not recur in 2003. Although the Company is expected to partially offset these revenue reductions with new opportunities, further cost containment actions are being considered. If the Company incurs the liability of $9.0 million associated with IMS HEALTH's spin-off of the Company to its stockholders (the "Distribution"), pursuant to the agreement with IMS HEALTH, the Company's cash flows may need to be over and above its projected income in order to meet its financial obligations. If management's expectations are not met, or change due to market conditions, strategic opportunities or otherwise, capital requirements may vary materially from those currently anticipated.

THE COMPANY HAS EXPERIENCED LOSSES, AND EXPECTS TO INCUR LOSSES IN THE NEAR TERM.

        The Company experienced a net loss of $11.1 million, or 7% of its total revenue, in the year ended December 31, 2002, and a net loss of $31.2 million, or 17% of its total revenue, in the year ended December 31, 2001. It also incurred a net loss of $138.6 million, or 76% of its total revenue, in the year ended December 31, 2000, of which $129.0 million of the loss was prior to the Distribution. At December 31, 2002, the Company had an accumulated deficit of $51.4 million. The Company anticipates that potential restructuring and planned expenditures on sales, marketing, and product development will result in additional losses in the near term. Future expenditures on sales, marketing, and product development will be driven primarily by the Company's ability to achieve our targeted revenue goals.

THE LOW PRICE OF THE COMPANY'S COMMON STOCK COULD RESULT IN THE DELISTING OF ITS COMMON STOCK FROM THE NASDAQ NATIONAL MARKET.

        The Company's common stock is currently quoted on the Nasdaq National Market. The Company must satisfy Nasdaq's minimum listing maintenance requirements to maintain its listing on the Nasdaq National Market. Nasdaq listing maintenance requirements include a series of financial tests relating to net tangible assets, public float, number of market makers and shareholders, market capitalization and maintaining a minimum bid price of $1.00 for shares of our common stock. The minimum bid price of the Company's common stock dropped under $1.00 per share and remained below $1.00 for 30 consecutive trading days during 2002. As a result, its common stock could be delisted from the Nasdaq National Market. The Company has until May 5, 2003 to maintain a closing bid price of $1.00 or more for a minimum of 10 consecutive trading days to regain compliance. If the Company's common stock is delisted from the Nasdaq National Market, the common stock would trade on either the Nasdaq SmallCap Market or on the Over-the-Counter Bulletin Board, both of which are viewed by most investors as less desirable and less liquid marketplaces. Thus, delisting from the Nasdaq National Market could make trading the Company's shares more difficult for investors, leading to further declines in share price. It would also make it more difficult to raise additional capital. In addition, the Company would incur additional costs under state blue sky laws to sell equity if its common stock is delisted from the Nasdaq National Market.

THE LOSS OF KEY PERSONNEL COULD NEGATIVELY IMPACT THE BUSINESS AND RESULTS OF OPERATIONS.

        The Company's success depends on its continuing ability to attract, hire, train and retain a substantial number of highly skilled managerial, technical, sales, marketing and customer support personnel. In particular, SYNAVANT's Chairman and Chief Executive Officer, Wayne P. Yetter, is integral to the Company's future success and is not currently bound by an employment agreement. Competition for qualified personnel is intense, and the Company may fail to retain key employees or to attract or retain other highly qualified personnel. Even if it is able to attract qualified personnel, new

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hires frequently require extensive training before they achieve desired levels of productivity. If it is unable to hire or fails to retain competent personnel, the business, results of operations and financial condition could be materially and adversely affected.

FAILURE TO INTRODUCE NEW OR ENHANCED PRODUCTS IN A TIMELY MANNER COULD RENDER THE COMPANY'S PRODUCTS OBSOLETE AND UNMARKETABLE.

        SYNAVANT competes in businesses that develop and market sophisticated information systems, software and other technology. It is expected that these systems, software and other technology will be subject to refinements as such systems and underlying technologies are upgraded and advanced. As various systems and technologies become outdated, the Company may not be able to enhance or replace them, to enhance or replace them as quickly as the competition, or to develop and market new or enhanced products and services in the future on schedule and on a cost-effective basis. Failure to develop and market new or enhanced products and services that compete with other available offerings could materially and adversely affect the business, results of operations and financial condition.

        Success will depend in part upon our ability to:

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continue to provide best-in-class enterprise solutions;



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enter new markets; and



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develop and/or provide new solutions that satisfy increasingly sophisticated customer requirements, that keep pace with technological developments expected by the market (including, in particular, developments related to the Internet).

DEFECTS IN THE COMPANY'S PRODUCTS COULD DELAY MARKET ADOPTION OF THE SOFTWARE OR CAUSE THE COMPANY TO COMMIT SIGNIFICANT RESOURCES TO REMEDIAL EFFORTS.

        Software products frequently contain errors or failures, especially when first introduced or when new versions or enhancements are released. The Company could be forced to delay the commercial release of products until software problems have been corrected. SYNAVANT could lose revenues as a result of software errors or defects. These products are intended for use in sales and marketing applications that may be critical to a customer's business. As a result, it is expected that customers and potential customers will have a greater sensitivity to product defects than the market for software products generally. Testing errors may also be found in new products, enhancements or releases after commencement of commercial shipments, resulting in loss of revenue or delay in market acceptance, damage to our reputation, or increased service and warranty costs, any of which could have a material adverse effect on the business, operating results or financial condition. The foregoing would also be applicable to Siebel and other alliance partner's products around which future services would be based. With respect to such products, the Company would also depend on Siebel and other alliance partners for the correction of errors and the delivery of any required modifications relating to such products.

SUCCESS DEPENDS ON THE STRENGTH OF THE PHARMACEUTICAL INDUSTRY.

        The Company's products and services are primarily used in connection with the marketing and sale of prescription-only drugs, particularly to support the launch and adoption of new pharmaceutical products. The market for prescription-only drugs is undergoing a number of significant changes, including:

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consolidations and mergers, which may reduce the number of existing customers and the size of their combined sales forces, and could also alter implementation and purchase cycles;



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reclassification of formerly prescription-only drugs to permit over-the-counter sales;

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competitive pressures on our pharmaceutical customers resulting from the continuing shift to delivery of healthcare through managed care organizations;



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changes in law, such as government-mandated price reductions for prescription-only drugs, that affect the healthcare systems in the countries where our customers and potential customers are located; and



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slower growth of pharmaceutical sales forces and fewer new product approvals by the FDA.

        Failure to respond effectively to any or all of these and other changes in the marketplace for prescription-only drugs could have a material and adverse effect on the business, operating results and financial condition.

SIGNIFICANT FLUCTUATIONS IN THE COMPANY'S QUARTERLY AND ANNUAL OPERATING RESULTS MAY ADVERSELY AFFECT THE MARKET PRICE OF ITS COMMON STOCK.

        The Company's quarterly and annual operating results could fluctuate significantly in the future, and results of operations could fall below the expectations of securities analysts and investors. If this occurs or if market analysts perceive that it will occur, market value could decrease substantially. The selection of a CRM software product and service partners often entails an extended decision-making process because of the strategic implications and substantial costs associated with a customer's license of the software and project implementation. As a result, the decision-making process typically takes nine to eighteen months, although in some cases it may take even longer. Accordingly, the Company cannot control or predict the timing of execution of contracts with customers. In addition, an implementation process of three to nine months is customary before the software is rolled out to a customer's sales force. Other factors may cause significant fluctuations in our quarterly and annual operating results, including:

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changes in the demand for products;



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the timing, composition and size of orders from customers;



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customer spending patterns and budgetary resources;



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lower margins associated with a significant reduction in license fee revenue;



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success in obtaining new customers;



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the timing of introductions of or enhancements to products;



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changes in pricing policies or those of competitors;



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the ability to anticipate and adapt effectively to developing markets and rapidly changing technologies;



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the ability to attract, retain and motivate qualified personnel, particularly within sales and marketing and research and development organizations;



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the publication of opinions or reports about the Company and its products, or competitors and their products;



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changes in general economic conditions;



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actions taken by competitors, including new product introductions and enhancements; and



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the ability to control costs.

        The Company establishes expenditure levels for product development, sales and marketing and other operating expenses based in large part on expected future revenues and anticipated competitive conditions. In particular, staff may be added in advance of new business to permit adequate time for

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training. If the new business is delayed or cancelled, the Company will incur expenses without the associated revenues. In addition, sales and marketing expenses may be increased if competitive pressures become greater than currently anticipated. Because only a small portion of expenses varies directly with actual revenues in the near term, operating results and profitability are likely to be adversely and disproportionately affected if revenues fall below expectations.

DUE TO THE COMPANY'S INTERNATIONAL SALES AND MARKETING ACTIVITIES, THE BUSINESS WILL BE SUSCEPTIBLE TO NUMEROUS RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS.

        SYNAVANT operates globally, deriving 44.6%, 43.7% and 45.2% of its revenues in 2002, 2001 and 2000, respectively, from foreign operations. As a result, fluctuations in the value of foreign currencies relative to the U.S. dollar may increase the volatility of the operating results. The business is subject to a number of risks associated with international business activities. These risks generally include:

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currency exchange rate fluctuations;



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seasonal fluctuations in purchasing patterns;



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the effects of terrorist acts, the war on terrorism, the war with Iraq, potential conflict or crisis with North Korea and other global developments;



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unexpected changes in regulatory requirements;



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tariffs, export controls and other trade barriers;



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longer accounts receivable payment cycles and difficulties in collecting accounts receivable;



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difficulties in managing and staffing international operations;



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potentially adverse tax consequences, including restrictions on the repatriation of earnings;



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the burdens of complying with a wide variety of foreign laws, including data privacy laws; and



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political instability.

EXPOSURE TO CERTAIN DISTRIBUTION LIABILITIES MAY MATERIALLY AND ADVERSELY AFFECT THE COMPANY.

        SYNAVANT is subject to certain material liabilities associated with certain matters relating to activities prior to the Distribution (See Note 10 to the Consolidated Financial Statements). As a condition to the Distribution, the Company is required to undertake to be jointly and severally liable to certain corporate predecessors of IMS HEALTH for IMS HEALTH's obligations under certain agreements with such entities, including potential liability relating to a complaint filed against such entities alleging violations of federal antitrust laws and seeking $350 million in damages. Pursuant to the agreement with IMS HEALTH, IMS HEALTH will indemnify the Company for any liability incurred in connection with such Distribution liabilities in excess of $9.0 million, which has been recorded in the consolidated financial statements. Any failure of IMS HEALTH to fulfill its indemnification obligations that resulted in the obligation to fund a substantial portion of such excess liabilities could have a material adverse effect on the business, operating results and financial condition.

        Pursuant to a letter of agreement signed with IMS HEALTH and Cegedim in March 2003, SYNAVANT has agreed to settle these Distribution liabilities with proceeds from the sale of its Global Interactive Marketing Division. The settlement accelerates payments from January 2005 upon consummation of the sale (See Note 15). $2.0 million of the $9.0 million has already been incurred by IMS HEALTH but not yet reimbursed by the Company. Applying a discount rate of 6.5% on the remaining $7.0 million not yet incurred is expected to result in a total payment to IMS HEALTH of approximately $8.4 million to settle the remaining Distribution liability.

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THE COMPANY MAY BE UNABLE TO GENERATE SUFFICIENT CASH FLOWS TO ADEQUATELY FUND CERTAIN DISTRIBUTION LIABILITIES.

        If the Company incurs the Distribution liability of up to $9.0 million, pursuant to the agreement with IMS HEALTH, in connection with the alleged violations of federal antitrust laws by our corporate predecessors, the Company's cash flows may need to be over and above the projected income in order to meet the Company's financial obligations. There is no assurance that there will be a sufficient amount of pre-tax income to meet the financial obligations in respect to such Distribution liabilities, which could have a material and adverse effect on the business, operating results and financial condition.

        Pursuant to a letter of agreement signed with IMS HEALTH and Cegedim in March 2003, SYNAVANT has agreed to settle these Distribution liabilities with proceeds from the sale of its Global Interactive Marketing Division. The settlement accelerates payments from January 2005 upon consummation of the sale (See Note 15). $2.0 million of the $9.0 million has already been incurred by IMS HEALTH but not yet reimbursed by the Company. Applying a discount rate of 6.5% on the remaining $7.0 million not yet incurred is expected to result in a total payment to IMS HEALTH of approximately $8.4 million to settle the remaining Distribution liability.

SYNAVANT MAY BE SUBJECT TO TAXATION IF THE SPIN-OFF DOES NOT QUALIFY AS A TAX FREE TRANSACTION

        If the distribution of SYNAVANT shares of common stock to IMS HEALTH shareholders, pursuant to the spin-off, were not to qualify under Section 355 of the Internal Revenue Code, the aggregate corporate tax liability could be approximately $100 million and SYNAVANT could be severally liable for such tax. In the event that SYNAVANT were obligated to fund a substantial portion of such liability, it would have a material adverse effect on SYNAVANT'S financial condition. Moreover, each IMS HEALTH stockholder that received shares of SYNAVANT common stock in the spin-off would be treated as if such stockholder had received a taxable distribution in an amount equal to the fair market value of the SYNAVANT common stock received.

GOVERNMENTAL REGULATION MAY MATERIALLY AND ADVERSELY AFFECT THE COMPANY'S ABILITY TO DISTRIBUTE CONTROLLED SUBSTANCES THROUGH THE MAIL.

        SYNAVANT currently distributes 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 the Company's ability to provide these types of services. If any such legislation is enacted, it could have a material and adverse effect on the business, operating results and financial condition.

THE COMPANY RELIES ON THE ABILITY TO PROTECT ITS INTELLECTUAL PROPERTY.

        SYNAVANT relies on a combination of trade secret, copyright and trademark laws, non-disclosure and other contractual agreements, and technical measures to protect its proprietary technology. The steps taken or that will be taken in the future may not prevent misappropriation of the Company's technology. Further, protective actions taken in the future may not prevent competitors from developing products with features similar to the Company's products. In addition, effective copyright and trade secret protection may be unavailable or limited in certain foreign countries. Despite efforts to protect the products' proprietary rights, unauthorized parties may attempt to copy aspects of the Company's products or to obtain and use information that is regarded as proprietary. Litigation may be necessary to enforce intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity.

12

Such litigation could result in substantial costs and diversion of resources and could harm the business, operating results and financial condition.

CLAIMS AGAINST THE COMPANY REGARDING PROPRIETARY TECHNOLOGY COULD REQUIRE THE COMPANY TO PAY LICENSING OR ROYALTY FEES OR TO MODIFY OR DISCONTINUE CERTAIN PRODUCTS.

        Any claim that the Company's products infringe on the intellectual property rights of others could materially and adversely affect the business, results of operations and financial condition. Because knowledge of a third party's patent rights is not required for a determination of patent infringement and because the United States Patent and Trademark Office issues new patents on an ongoing basis, infringement claims against SYNAVANT are a continuing risk.

        Infringement claims against the Company could cause product release delays, require redesign of the Company's products, or require royalty or license agreements. These agreements may be unavailable on terms acceptable to the Company. Litigation, regardless of the outcome, could result in substantial cost, divert management attention and delay or reduce customer purchases. Claims of infringement are becoming increasingly common as the software industry matures and as courts apply expanded legal protections to software products. Third parties may assert infringement claims against the Company regarding our proprietary technology and intellectual property licensed from others. Generally, third-party software licensors indemnify the Company from claims of infringement. However, licensors may be unable to indemnify the Company fully for such claims, if at all.

        If a court determines that one of the Company's products violates a third party's patent or other intellectual property rights, there is a material risk that the revenue from the sale of the infringing product will be significantly reduced or eliminated, as the Company may have to:

•

pay licensing fees or royalties to continue selling the product;



•

incur substantial expense to modify the product so that the third party's patent or other intellectual property rights no longer apply to the product; or



•

stop selling the product.

        In addition, if a court finds that one of the products infringes a third party's patent or other intellectual property rights, then SYNAVANT may be liable to that third party for actual damages and attorneys' fees. If a court finds that the Company has willfully infringed on a third party's patent, the third party may be able to recover treble damages, plus attorneys' fees and costs.

SYNAVANT'S CERTIFICATE OF INCORPORATION, BYLAWS AND AGREEMENT WITH IMS HEALTH CONTAIN PROVISIONS THAT MAY DISCOURAGE A TAKEOVER.

        SYNAVANT's Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws contain provisions that may have the effect of discouraging an acquisition of control of the Company not approved by the Company's Board of Directors. Such provisions may also have the effect of discouraging third parties from making proposals involving an acquisition or change of control of the Company, although such proposals, if made, might be considered desirable by a majority of the stockholders. Such provisions could further have the effect of making it more difficult for third parties to cause the replacement of the Company's Board of Directors. These provisions include:

•

the availability of capital stock for issuance from time to time at the discretion of the Board of Directors;



•

prohibitions against stockholders calling a special meeting of stockholders or acting by written consent in lieu of a meeting;

13

•

requirements for advance notice for raising business or making nominations at stockholders' meetings;



•

the ability of our Board of Directors to increase the size of the Board and to appoint directors to newly created directorships;



•

a classified Board of Directors; and



•

higher than majority requirements to make certain amendments to our By-Laws and Certificate of Incorporation.

        These provisions have been designed to enable the Company to develop the businesses and foster the long-term growth without disruptions caused by the threat of a takeover not deemed by the Board of Directors to be in the best interests of the Company and its stockholders.

        The Company has a stockholder rights plan that is designed to protect the stockholders in the event of an unsolicited offer and other takeover tactics that, in the opinion of the Company's Board of Directors, could impair the Board's ability to represent stockholder interests. The provisions of the stockholder rights plan may render an unsolicited takeover of the Company more difficult or less likely to occur or might prevent such a takeover.

        Pursuant to the Distribution Agreement with IMS HEALTH, we are each subject to certain non-competition arrangements that restrict our respective business activities for a specified period after the distribution. Pursuant to the terms of the Distribution Agreement, the restrictions would generally be binding on an entity that acquires SYNAVANT or is the survivor in a business combination with the Company. Such restrictions may have the effect of discouraging third parties from making proposals involving an acquisition or change in control of the Company. SYNAVANT is also subject to the provisions of Delaware corporate law, which may restrict certain business combination transactions.

        Pursuant to a letter of agreement signed with IMS HEALTH and Cegedim in March of 2003, IMS HEALTH has agreed to eliminate the non-compete restrictions contained in Section 2.16 of the Distribution Agreement contingent on the sale of the Global Interactive Marketing Business (See Note 15).

Where You Can Find More Information

        At your request, the Company will provide you, without charge, a copy of any exhibits to this Annual Report on Form 10-K. If you want an exhibit or more information, call, write or e-mail the Company at:

SYNAVANT Inc.
Attn: Investor Relations
3445 Peachtree Road NE, Suite 1400
Atlanta, Georgia 30326
Telephone: (404) 841-4000
website: www.SYNAVANT.com

        The Company's fiscal year ends on December 31. The Company files annual, quarterly, and special reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any reports, statements, or other information filed at the SEC's public reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. The Company's SEC filings are also available to the public from commercial document retrieval services and at the Web site maintained by the SEC at http://www.sec.gov.

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ITEM 2. PROPERTIES

        SYNAVANT's real property is geographically distributed to meet sales and operating requirements worldwide. Most of SYNAVANT's properties are leased from third parties. SYNAVANT owns only one parcel of real property, which represents less than 2% of the aggregate space utilized by SYNAVANT. SYNAVANT's properties are generally considered to be both suitable and adequate to meet current operating requirements and virtually all space is being utilized. Set forth below is a summary of the properties that SYNAVANT leases from third parties:

ITEM 3. LEGAL PROCEEDINGS

        SYNAVANT has from time to time been involved in legal proceedings and litigation arising in the ordinary course of business. In the opinion of management, the outcome of all current proceedings, claims and litigation will not materially affect SYNAVANT's consolidated financial position.

        In addition, as discussed below, SYNAVANT is subject to certain other contingencies of which it is jointly and severally liable with IMS HEALTH. However, IMS HEALTH and SYNAVANT have agreed that SYNAVANT's share of such liabilities will not exceed $9.0 million, and IMS HEALTH has agreed to indemnify SYNAVANT for any liability it incurs in connection with such contingent liabilities in excess of such amount. In the event that IMS HEALTH does not fulfill such indemnification obligations, SYNAVANT could be liable for an amount in excess of $9.0 million in connection with such contingent liabilities. While it is highly unlikely, in the event that SYNAVANT were obligated to fund a substantial portion of such liabilities, it would have a material adverse effect on SYNAVANT's financial condition and results of operations. As of December 31, 2002, the Company has determined

15

that approximately $2.0 million of the $9.0 million described above is now certain. The $2.0 million relates solely to the legal fees associated with these matters, as all matters are still unresolved as of December 31, 2002. In addition, SYNAVANT and IMS HEALTH have agreed that SYNAVANT will not be required to make any payment in connection with this commitment until at least January 1, 2005. While these matters are ongoing, as of December 31, 2002, IMS HEALTH has made payments in excess of $200 million in anticipation of final resolution of certain of these matters in order to avoid incurring additional penalties and interest.

        Pursuant to a letter of agreement signed with IMS HEALTH and Cegedim in March 2003, SYNAVANT has agreed to settle these Distribution liabilities with proceeds from the sale of its Global Interactive Marketing Division. The settlement accelerates payments from January 2005 upon consummation of the sale (See Note 15). $2.0 million of the $9.0 million has already been incurred by IMS HEALTH but not yet reimbursed by the Company. Applying a discount rate of 6.5% on the remaining $7.0 million not yet incurred is expected to result in a total payment to IMS HEALTH of approximately $8.4 million to settle the remaining Distribution liability.

        Under the terms of the distribution agreements relating to the 1996 spin-off of IMS HEALTH's predecessor, Cognizant Corporation ("Cognizant"), from The Dun & Bradstreet Corporation ("D&B") and relating to the 1998 spin-off of IMS HEALTH from Cognizant, as a condition to the distribution, IMS HEALTH and any company that it spins off, including SYNAVANT, are required to undertake to be jointly and severally liable to D&B, A.C. Nielsen Company and Cognizant for IMS HEALTH's obligations under the 1996 Distribution Agreement and the 1998 Distribution Agreement. Such obligations include potential tax liabilities relating to the aforementioned spin-offs and relating to certain global tax planning initiatives entered into by Cognizant, D&B and IMS HEALTH, and potential liabilities relating to the litigation described below.

        On July 29, 1996, Information Resources, Inc. ("IRI") filed a complaint in the U.S. District Court for the Southern District of New York, naming as defendants D&B, A.C. Nielsen Company and I.M.S. International Inc. (a predecessor of IMS HEALTH) (the "IRI Action"). The complaint alleges various violations of the U.S. antitrust laws, including alleged violations of Sections 1 and 2 of the Sherman Act. The complaint also alleges a claim of tortious interference with a contract and a claim of tortious interference with a prospective business relationship. These latter claims relate to the acquisition by defendants of Survey Research Group Limited ("SRG"). IRI alleges that SRG violated an alleged agreement with IRI when it agreed to be acquired by defendants and that the defendants induced SRG to breach that agreement. IRI's complaint alleges damages in excess of $350 million, which amount IRI has asked to be trebled under the antitrust laws. IRI also seeks punitive damages in an unspecified amount. On October 15, 1996, defendants moved for an order dismissing all claims in the complaint. On May 6, 1997, the U.S. District Court for the Southern District of New York issued a decision dismissing IRI's claim of attempted monopolization in the United States, with leave to replead within sixty days. The court denied defendants' motion with respect to the remaining claims in the complaint. On June 3, 1997, defendants filed an answer denying the material allegations in IRI's complaint, and A.C. Nielsen Company filed a counterclaim alleging that IRI has made false and misleading statements about its services and commercial activities. On July 7, 1997, IRI filed an amended and restated complaint repleading its alleged claim of attempted monopolization in the United States and realleging its other claims. On August 18, 1997, defendants moved for an order dismissing the amended claims. On December 1, 1997, the court denied the motion and, on December 16, 1997, defendants filed a supplemental answer denying the remaining material allegations of the amended complaint. On December 22, 1999, defendants filed a motion for partial summary judgment seeking to dismiss IRI's non-U.S. antitrust claims. On July 12, 2000, the court granted the motion dismissing claims of injury suffered from activities in foreign markets where IRI operated through subsidiaries or companies owned by joint ventures or "relationships" with local companies. This ruling is currently on appeal. Discovery is continuing in this matter.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        The Company's Nasdaq National Market symbol is "SNVT." The following table sets forth, for the indicated periods, the high and low closing sales prices for the Company's common stock as reported by the Nasdaq National Market.

Stockholders

        As of March 19, 2003, there were 4,079 holders of record of our common stock.

Dividends

        As announced on March 16, 2003, the Company has signed a definitive agreement for the sale of its Global Interactive Marketing Business. As part of the announcement, the Company disclosed that a portion of the proceeds from this sale, in excess of liquidity requirements, is expected to be distributed to stockholders, but no decision has been made as to the amount, timing, or form of such distribution. However, it should be noted that the CapitalSource Facility prohibits the payment of dividends without prior lender approval.

Equity Compensation Plans

        The following table provides information as of December 31, 2002, with respect to our compensation plans under which our equity securities are authorized for issuance:

(1)

Consists of 571,164 shares subject to awards granted under our 2000 Stock Incentive Plan and 7,400,565 shares subject to awards under our 2000 Replacement Plan for IMS Health Incorporated Equity Awards (the "Replacement Plan"). All of the awards granted under the Replacement Plan consist of stock options. Of the awards granted under our 2000 Stock Incentive Plan, 305,028 shares are issuable upon the exercise of stock options, 234,065 shares consist of restricted stock units and 32,071 shares consist of deferred stock units issued to our non-employee Directors.

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ITEM 6. SELECTED FINANCIAL DATA

        The following data are qualified in their entirety by the audited financial statements of SYNAVANT and other information contained elsewhere in this report. The financial data as of December 31, 2002, 2001, 2000 and 1999 and November 1998, and for the years ended December 31, 2002, 2001, 2000 and 1999 and November 30, 1998 and for the one month period ended December 31, 1998, have been derived from the audited financial statements of SYNAVANT. The historical financial information of SYNAVANT contained in this report is presented as if SYNAVANT were a separate entity for all periods presented. The following financial data should also be read in conjunction with, and is qualified in its entirety by, the information set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and SYNAVANT's Consolidated Financial Statements and Notes thereto appearing elsewhere in this report.

(1)

Effective in 1999, the operating units of SYNAVANT that had previously reported on a fiscal year ended November 30, revised their reporting period to conform with IMS HEALTH's (former parent company) fiscal year end of December 31. This revision of year-end was made to reflect the results of operations and financial position of operating units on a more timely basis, consistent with business performance, and to increase operating efficiency for consolidations and overall IMS HEALTH management purposes. The Company improved its internal financial systems and work processes so that it could more rapidly collect, consolidate and report worldwide information.

(2)

On June 24, 1998, Cognizant Corporation, the accounting predecessor of IMS HEALTH, acquired Walsh International, Inc. ("Walsh"). The acquisition was accounted for using the purchase method of accounting and, accordingly, operating results for Walsh are included in the combined financial statements of SYNAVANT from the date of acquisition.

(3)

Basic earnings per share are calculated by dividing net income (loss) by the weighted average common shares of SYNAVANT. Diluted earnings per share are calculated by dividing net income by dilutive potential common shares and weighted average common shares of SYNAVANT. Dilutive potential common shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all SYNAVANT employee options are used to repurchase SYNAVANT common stock at market value. The amount of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the options. For periods in which the Company has recorded a loss, potentially dilutive common shares are not included in the calculation of dilutive loss per share as to do so would be anti-dilutive.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following "Management's Discussion and Analysis of Financial Condition and Results of Operations" includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact made in this Form 10-K are forward-looking, which can be identified by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," "estimate," "believe," "continue" or other similar words. Such forward-looking statements are based on management's current plans and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: risks associated with competition from other providers of customer relationship management solutions; success with the Siebel Alliance; the ability to obtain additional financing on satisfactory terms to meet future capital requirements; the ability to maintain a listing for its common stock on the Nasdaq National Market; loss of key personnel; failure to introduce new or enhanced products in a timely manner; defects in our products and delays related to market adoption of our software; strength of the pharmaceutical industry; fluctuations in quarterly and/or annual operating results that may adversely affect the market price of its common stock; operating on a global basis; exposure to certain Distribution liabilities and the ability to fund them; governmental regulation of the ability to distribute controlled substances through the mail; the ability to protect its intellectual property; product infringement claims; the ability to identify, consummate and integrate acquisitions, alliances and ventures on satisfactory terms; the ability to develop new or advanced technologies, systems or products; and regulatory, legislative and enforcement initiatives. These risks and uncertainties are not intended to be exhaustive and should be read in conjunction with other cautionary statements made herein including, but not limited to, the risk factors set forth herein under the heading "Factors That May Affect Future Performance." The Company assumes no obligation to update any such forward-looking statements.

OVERVIEW

        On August 31, 2000, SYNAVANT was spun off from IMS HEALTH, a provider of information solutions to the biopharmaceutical and healthcare industries. Pursuant to the spin-off, shares of SYNAVANT common stock were distributed to the shareholders of IMS HEALTH. This transaction was structured as a tax-free dividend to the stockholders of IMS HEALTH, who received one share of SYNAVANT common stock (together with the associated preferred share purchase right) for every 20 shares of IMS HEALTH common stock held as of the record date for the Distribution.

        This discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and related notes.

SUBSEQUENT EVENTS

        On March 16, 2003, the Company announced a definitive agreement to sell its Global Interactive Marketing Business to Cegedim for $43.5 million in cash. Further, the definitive agreement and other transaction related documents were filed through a Form 8-K on March 17, 2003. The transaction is subject to approval by SYNAVANT stockholders, regulatory approvals and other customary closing conditions, and would be considered a change-in-control event by the Company. The Company expects the transaction to close in the second or third quarter of 2003. However, the Company can not make any assurances that the transaction will be consummated.

        On March 31, 2003, the Company signed the CapitalSource Facility, a $15.0 million Revolving Credit and Security Agreement with CapitalSource Finance LLC. The new agreement replaces the Foothill Facility (See Item 7 Liquidity and Capital Resources). A cancellation fee of $0.8 million was

19

triggered by the termination of the Foothill Facility. The CapitalSource Facility is expected to increase the Company's available capital compared with the Foothill Facility.

        On March 21, 2003, the Company reached an agreement to sell its 51% interest in Permail Pty. Ltd. to its minority partner for approximately $1.8 million. The transaction is expected to close in the next 30-60 days.

SIEBEL ALLIANCE

        On July 14, 2000, SYNAVANT entered into a strategic alliance with Siebel, a leading provider of eBusiness application software. This alliance agreement was updated and amended (the "Alliance") on December 31, 2001. The Alliance results in the following:

•

SYNAVANT is designated as a "Strategic Consulting Partner";



•

SYNAVANT is able to support a product set including Siebel eMedical, eClinical as well as Employee Relationship Management ("ERM");



•

SYNAVANT has no restrictions on its product development, including Cornerstone and Premiere; and



•

SYNAVANT is not required to exclusively support Siebel software.

ASSET IMPAIRMENT—2000

        In connection with the original agreement with Siebel, SYNAVANT significantly modified its development priorities and discontinued the one remaining Walsh project. As a result of the original Siebel alliance in 2000 and the Distribution, the Company assessed the value of computer software assets during the third quarter of 2000 and as a result, accelerated amortization of $14.6 million was recorded in the period ended September 30, 2000. The remaining value of computer software assets is being amortized over 3 years. In addition, SYNAVANT assessed the value of goodwill (which included the goodwill from the Walsh Acquisition) during the third quarter of 2000. Based on this assessment, an impairment charge of $100.9 million was recorded in the period ended September 30, 2000. See Note 2 of the Consolidated Financial Statements for further discussion. The Company reduced the remaining period of amortization of goodwill to its revised estimated useful life of 5 years, which corresponded to the remaining term of the agreement with Siebel. However, in connection with SFAS 142 (See Note 1 of the Consolidated Financial Statements) the Company no longer amortizes goodwill, but tests the goodwill balance for impairment on each balance sheet date and consequently would take an impairment charge to reduce the goodwill balance if appropriate.

CRITICAL ACCOUNTING POLICIES

        "Management's Discussion and Analysis of Financial Condition and Results of Operations" are based upon the Company's consolidated financial statements and the notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States ("US GAAP"). The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. On an on-going basis, management evaluates its estimates and judgments, most significantly those related to revenue recognition, allowance for uncollectible accounts, goodwill and other intangible assets, income taxes, restructuring costs, and litigation.

        Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis

20

for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates.

        The Company has identified the significant estimates and judgments below as critical to our business operations and the understanding of our results of operations. For a detailed discussion on the application of these significant estimates and judgments and our accounting policies, also see Note 1 of the Consolidated Financial Statements.

        Revenue recognition.    The Company recognizes revenues when persuasive evidence of an arrangement exists, services have been rendered, the price to the buyer is fixed or determinable, and collectibility is reasonably assured. Revenues consist of software license fees, related maintenance and software service fees, database and information services, and interactive marketing programs. Deferred revenue consists of maintenance billings due in advance of service periods, and other software and project billings for which services have not yet been completed. The Company's revenue recognition policies are consistent with the guidance in Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements", as amended by SAB No. 101A and 101B, and AICPA Statement of Position ("SOP") No. 97-2 "Software Revenue Recognition", as amended by SOP Nos. 98-4 and 98-9, as well as Technical Practice Aids issued from time to time by the American Institute of Certified Public A