SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 December 31, 1997
Commission File number: 0-28202
WALSH INTERNATIONAL INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 51-0309207
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
105 Terry Drive, Suite 118, Newtown, Pennsylvania 18940
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 215-860-4949
----------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 to 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 x No
As of January 23, 1998 there were outstanding 10,595,099
shares of Common Stock of Walsh International Inc.
<PAGE>
WALSH INTERNATIONAL INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
Page Number
PART I FINANCIAL INFORMATION
Item 1. Financial statements
Consolidated Statements of Operations (unaudited) for the
Three and Six Months Ended December 31, 1997 and 1996...........3
Consolidated Balance Sheets (unaudited) as of December 31,
1997 and June 30, 1997..........................................4
Consolidated Statements of Cash Flows (unaudited) for the Six
Months Ended December 31, 1997 and 1996.........................5
Notes to Consolidated Financial Statements......................6
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition........................................10
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders............13
Item 6. Exhibits and Reports on Form 8-K...............................13
Signatures.....................................................14
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WALSH INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Dollars in thousands, except per share amounts, unaudited
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
December 31, December 31, December 31, December 31,
----------------- ----------------- ------------------ ----------------
1997 1996 1997 1996
----------------- ----------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Revenue $ 15,400 $ 13,353 $ 29,274 $ 26,111
----------------- ----------------- ------------------ ----------------
Costs and expenses:
Production costs 5,801 4,921 11,000 9,774
Selling, general and
administrative expenses 6,433 6,117 12,647 12,195
Research and development costs 966 957 1,729 1,919
In process research and
development write-off - - 2,000 -
Amortization of intangible assets 49 36 118 72
----------------- ----------------- ------------------ ----------------
Total costs and expenses 13,249 12,031 27,494 23,960
----------------- ----------------- ------------------ ----------------
Operating profit 2,151 1,322 1,780 2,151
Interest income 119 229 268 419
Income expense (97) (79) (138) (133)
Minority Interest (36) 39 (45) 112
----------------- ----------------- ------------------ ----------------
Income before income taxes 2,137 1,511 1,865 2,549
Income tax provision (577) (388) (1,044) (624)
----------------- ----------------- ------------------ ----------------
Net income $ 1,560 $ 1,123 $ 821 $ 1,925,
================= ================= ================== ================
Basic earnings per share $ 0.15 $ 0.11 $ 0.08 $ 0.18
================= ================= ================== ================
Diluted earnings per share $ 0.14 $ 0.11 $ 0.08 $ 0.18
================= ================= ================== ================
Shares used in computing basic 10,579,095 10,486,848 10,563,309 10,482,041
earnings per share
================= ================= ================== ================
Shares used in computing diluted 10,793,074 10,648,329 10,787,931 10,651,030
earnings per share
================= ================= ================== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
WALSH INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Dollars in thousands, unaudited
<TABLE>
<CAPTION>
-------------------- --- --------------------
DECEMBER 31 JUNE 30
1997 1997
-------------------- --------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,712 $ 5,784
Marketable securities 5,653 6,803
Accounts receivable, principally trade 15,086 14,227
Prepaid expenses and other current assets 632 702
-------------------- --------------------
Total current assets 26,083 27,516
Property and equipment, net 3,911 4,169
Goodwill, net 5,138 3,439
Marketable securities 3,214 1,437
Other assets, net 4,514 3,727
==================== ====================
Total assets $ 42,860 $ 40,288
==================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 159 $ 17
Current portion of capital lease obligations 470 509
Accounts payable 6,713 6,896
Accrued liabilities 10,032 11,166
Unearned income 4,447 4,103
-------------------- --------------------
Total current liabilities 21,821 22,691
-------------------- --------------------
Long-term debt 4,059 1,260
Capital lease obligations 1,475 1,407
Other liabilities 4,327 5,145
Minority interest 173 128
Commitments
Stockholders' equity:
Common stock, $0.01 par value, 20,000,000
shares authorized and 10,584,324 and 10,533,960
shares issued, respectively 105 105
Paid-in capital 119,786 119,475
Accumulated deficit (109,337) (110,158)
Cumulative translation adjustment 870 657
Unrealized gain on "available for sale" securities, net of tax 38 35
Treasury stock, at cost, 20,750 shares (457) (457)
-------------------- --------------------
Total stockholders' equity 11,005 9,657
==================== ====================
Total liabilities and stockholders' equity $ 42,860 $ 40,288
==================== ====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
WALSH INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in thousands, unaudited
<TABLE>
<CAPTION>
--------------------
SIX MONTHS ENDED
DECEMBER 31
--------------------
1997 1996
------- -------
<S> <C> <C>
Net cash flows provided by (used in) operating activities $ 1,501 $ (396)
------- -------
Cash flows used in investing activities:
Purchases of marketable securities (468) (366)
Acquisition of PMS Pty Ltd (3,970) --
Capital expenditures (331) (496)
Capitalized software (484) (482)
------- -------
Net cash used in investing activities (5,253) (1,344)
------- -------
Cash flows provided by (used in) financing activities:
Common stock issuance costs -- (951)
Proceeds from issuance of bank loan 3,337 --
Options exercised 311 204
Repayment of long-term debt/capital leases (196) (135)
Other 142 --
------- -------
------- -------
Net cash provided by (used in) financing activities 3,594 (882)
------- -------
Effect of exchange rate movements (914) 3
Net decrease in cash and cash equivalents (1,072) (2,619)
Cash and cash equivalents at beginning of period 5,784 8,629
======= =======
Cash and cash equivalents at end of period $ 4,712 $ 6,010
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
WALSH INTERNATIONAL INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. INTERIM UNAUDITED FINANCIAL INFORMATION
The consolidated financial statements include the accounts of Walsh
International Inc. (the "Company") and all of its majority-owned
subsidiaries.
The accompanying consolidated statements of operations for the three
and six months ended December 31, 1997 and 1996, the consolidated
statements of cash flows for the six months, the consolidated balance
sheet as of December 31, 1997 and the related information of Walsh
International Inc. included in these notes to the consolidated
financial statements are unaudited. In the opinion of management, the
interim financial information reflects all adjustments (consisting only
of items of a normal recurring nature) necessary for the fair
presentation of the financial position, results of operations and cash
flows for the periods presented. Results of operations for the three
months and six months ended December 31, 1997 are not necessarily
indicative of the results to be expected for the entire year.
The June 30, 1997 balance sheet was derived from the Company's June 30,
1997 audited consolidated financial statements, but does not include
all disclosures required by generally accepted accounting principles.
These interim financial statements should be read in conjunction with
the audited consolidated financial statements and related notes thereto
included in the Company's Form 10-K for the year ended June 30, 1997.
2. EARNINGS PER SHARE
The Company has adopted the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standard ("SFAS") No.
128 "Earnings Per Share". Basic earnings per share is computed using
the weighted average number of shares of Common Stock outstanding.
Diluted earnings per share includes common equivalent shares, where
dilutive, from stock options and warrants (using the treasury stock
method). All historical periods presented have been restated applying
SFAS 128.
For all periods presented income used in both basic earnings per share
and the diluted earnings per share calculations is net income as stated
in the consolidated statement of operations. The only common equivalent
shares in the diluted calculations are stock options calculated using
the treasury stock method. These calculations are summarised below:
6
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------- --------------------------------------
Three Months Ended Six Months Ended
December 31, December 31, December 31, December 31,
----------------- ----------------- ---------------- -----------------
1997 1996 1997 1996
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Weighted average common shares outstanding (basic) 10,579,095 10,486,848 10,563,309 10,482,041
Assumed exercise of in the money stock
options 740,675 645,501 752,019 661,689
Less assumed buy-back under the treasury stock
method (526,696) (484,110) (527,397) (492,700)
----------- ----------- ----------- -----------
Shares used in diluted earnings per share 10,793,074 10,648,239 10,787,931 10,651,030
----------- ----------- ----------- -----------
</TABLE>
Options to purchase 425,675 and 341,475 shares of common stock at
prices ranging from $10.25 to $12.00 were outstanding at December 31,
1997 but were not included in the computation of diluted earnings per
share for the three and six months ended December 31, 1997,
respectively, because the options' exercise price was greater than the
average market price of the common shares.
3. INCOME TAXES
For the three and six months ended December 31, 1997 the effective tax
rates were 27% and 56% respectively compared to 26% and 25%
respectively for the equivalent periods of fiscal 1996. For the six
months to December 31, 1997, the effective income tax rate was
negatively impacted by the non-deductible charge for the write-off of
in process research and development costs offset, in part, by a
reduction of taxes provided in prior years. For 1996 the effective
income tax rate was impacted by a reduction of taxes provided for in
prior years.
4. ACQUISITION OF PHARMACEUTICAL MARKETING SOLUTIONS PTY LTD
In July 1997 the Company acquired 100% of the equity of Pharmaceutical
Marketing Solutions Pty Ltd (PMS) a privately held Australian company
for $3.8 million in cash and $0.6 million of associated acquisition
costs. PMS uses a salesforce automation system based on Lotus Notes and
an analysis system which operates as an integration product between a
data warehouse and proprietary salesforce automation system. The
acquisition has been accounted for by the purchase method and the
results of operations of PMS have been included in the income statement
from the acquisition date.
7
<PAGE>
The total purchase price of $4.4 million has been allocated as:
In Process Research and Development $2.0
Completed Technology $0.6
Goodwill $1.8
-----
$4.4
-----
The goodwill is expected to have an economic life of 20 years and the
completed technology a life of between 3 and 5 years. Goodwill and
completed technologies are being amortised on a straight line basis
over their economic lives. The in process research and development
costs have been written off immediately.
Pro-forma results from operations of the Company as if the acquisition
of PMS had occurred on July 1, 1996 for the three and six months ended
December 31, 1996 are:
Three Months Ended Six Months Ended
December 31, 1996 December 31, 1996
Revenue $14,218 $27,467
Net Income $ 1,176 $ 1,925
Basic Earnings per Share $ 0.11 $ 0.18
For the six months ended December 31, 1997 the difference between the
pro-forma operating results of the acquisition of PMS on the Company's
actual operating results, had the acquisition occurred on July 1, 1997,
was not material.
On October 14, 1997 the Company obtained an Australian dollar variable
rate commercial loan facility of $3.3 million (Australian $ 4.5
million). The term of this facility is 5 years with annual principle
repayments of approximately $660,000 commencing in year 2. Interest
accrues at a variable rate (5.25% during the quarter). $3.2 million of
the total marketable securities were pledged as collateral for this
loan. In January 1998 the Company repaid the loan in full.
5. STOCKHOLDER RIGHTS PLAN.
On October 14, 1997 the Board of Directors adopted a stockholder rights
plan and declared a dividend of one right (a "Right") for each share of
common stock of the Company. The Rights were payable to holders of
record of the common stock of the Company at the close of business on
October 27, 1997. The Rights will automatically trade with the
Company's common stock. Additional rights are issuable upon subsequent
issuances of common stock by the Company so long as the Rights Plan is
in effect.
The Rights are not currently exercisable but become exercisable upon
the earlier of i) ten days after the first public announcement that a
person or group, which did not beneficially own 5% of the common stock
as of September 22, 1997, has acquired beneficial ownership of 15
percent or more of the Company's common stock or ii) ten business days
after a person or group announces an offer the consummation of which
8
<PAGE>
would result in such person or group beneficially owning 15 percent or
more of the Company's common stock.
Once exercisable the holder will be entitled to buy from the Company
one one-hundredth of a share of new series B of junior participating
preferred stock, of which 250,000 shares have been authorised, for
$55.00 per Right or in certain circumstances to buy at the Rights
exercise price a number of shares of the Company's common stock having
a market value of twice the exercise price of each Right or, if the
Company is acquired in a merger or a business combination, to buy at
the Rights exercise price a number of shares of common stock of an
acquiring Company having a market value of twice the exercise price of
each Right. At the Company's option the Rights are redeemable prior to
becoming exercisable for $0.001 per Right. The Rights expire on October
14, 2007.
Preferred shares purchasable upon exercise of the Rights will not be
subject to redemption by the Company. Each preferred share will be
entitled to a minimum preferential quarterly dividend payment of $0.01
per share but will be entitled to an aggregate dividend of 100
multiplied by the dividend declared per common share. Each holder of
preferred stock will be entitled to 100 votes per share on each matter
on which holders of the common stock are entitled to vote.
6. EMPLOYEE STOCK PURCHASE PLAN
An Employee Stock Purchase Plan (the "ESPP") has been adopted by the
Company and the ESPP was approved on October 23, 1997 at the Company's
Annual Meeting of Stockholders.
Under the ESPP which is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code, options
to purchase shares of Common Stock will be granted to eligible
employees of the Company and its subsidiaries at an exercise price of
85% of the fair market value of the shares of Common Stock subject to
such option on the date of grant, based upon the closing price of the
Common Stock on the NASDAQ National Market.
An aggregate of 100,000 shares of Common Stock have been reserved for
issuance pursuant to the ESPP. To date there have been no grants under
the ESPP.
7. SUBSEQUENT EVENT
In January 1998, the Company repaid the Australian A$4.5m variable
rate commerical loan facility in full.
9
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
WALSH INTERNATIONAL INC. AND SUBSIDIARIES
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
Revenue for the Company's second quarter of fiscal year ended June 30, 1998 was
$15.4 million, growth of 26% excluding the adverse impact of currency movements.
The increase was due to the growth in the Company's technology product
(PREMIERE, Precise and Pharbase) revenues and to a lesser degree direct mail
marketing revenues. Growth was most notable in the European and Pacific markets.
Production costs for the quarter were $5.8 million (37.7% of revenue) compared
to $4.9 million (36.9% of revenues) in the comparable quarter of fiscal year
1997. The increase in production costs for the quarter as a percentage of
revenues reflects the inclusion of some low margin third party software revenues
as well as an increase in lower margin direct mail marketing revenues as a
percentage of revenue following the acquisition of Pharmaceutical Marketing
Solutions Pty Ltd (PMS), a privately owned Australian company, in July 1997. The
$0.9 million increase in production costs has arisen for the above reasons plus
continued investment in technical staff for roll-out and support of PREMIERE
installations.
Selling, general and administrative expenses in the second quarter of the year
were $6.4 million (41.8% of revenues) versus $6.1 million (45.8% of revenues)
for the same quarter of the prior year. This increase is primarily due to a
number of new account executives for the higher number of PREMIERE clients. The
decrease in SG&A expenses in the quarter as a percentage of revenues reflects
the Company's operating leverage, whereby such costs do not increase directly in
proportion to the revenues. During the quarter, some one time charges of
$235,000 were incurred relating to the relocation of operations in Phoenix,
Arizona to Newtown, Pennsylvania in order to improve efficiencies. The closure
costs were offset by the reassessment of a previously established accrual no
longer required.
Research and development costs were $1.0 million, the same level as the three
months ended December 31, 1996.
Net interest income for the quarter ended December 31, 1997 was $22,000 verses
$150,000 in the comparable quarter of fiscal 1997 which is due primarily to
increased debt totalling A$4.5 million which was taken out at the beginning of
the quarter to fund the acquisition of PMS.
SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
Revenue for the first half of fiscal year ended June 30, 1998 was $29.3 million,
an increase of 21%, excluding the impact of currency, which comes primarily from
the increase in the Company's technology products. The largest increase was in
the Pacific markets which comprises a mixture of organic growth and the
acquisition of PMS.
10
<PAGE>
Production costs for the six months were $11.0 million (37.6% of revenues)
versus $9.8 million (37.4% of revenues) for the comparable period of fiscal
1997. The increase in production costs reflects the continuing investment in
technical staff for the roll-out and support for PREMIERE and increased lower
margin direct mail revenues resulting from the acquisition of PMS. The increase
as a percentage of revenue reflects the sale of some low margin third party
software plus increased lower margin direct mail revenues as a result of
acquiring PMS.
Selling, general and administrative expenses were $12.6 million (43.2% of
revenues) versus $12.2 million (46.7% of revenues) for the first six months of
1997. This reflects the Company's continued investment in sales resources and
client service personnel to meet the growing demand for PREMIERE.
Research and development costs for the six months ended December 31, 1997 were
$1.7 million (5.9% of revenues) versus $1.9 million (7.3% of revenues) for the
comparable quarter of fiscal 1997. The decline is due to foreign exchange
differences and the reassignment of some research staff working on support for
the delivered product.
An in process research and development write-off totalling $2.0 million has
arisen as a result of the acquisition of PMS. The $2.0 million is the value
attributable to acquired technology products which are to be integrated within
the Company's own salesforce management information system, PREMIERE.
Net interest income for the half year to December 31, 1997 is $0.1m versus $0.3m
in the six months to December 31, 1996. This primarily reflects the acquisition
of PMS in July 1997 funded initially by cash and subsequently by debt.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company's cash and cash equivalents totalled $4.7
million, a decrease of $1.1 million from the $5.8 million balance at June 30,
1997. The Company generated $1.5 million of cash from operating activities in
the six months ended December 1997 due to improved profitability and working
capital management. Total cash has fallen since June 30, 1997 due primarily to
the acquisition of PMS together with adverse exchange movements.
The Company additionally holds $8.9 million in a professionally managed
portfolio of marketable securities. $3.2 million of these securities are
classified as non-current assets as they provide collateral against the
Australian dollar debt. Subsequent to quarter ended December 31, 1997 this debt
was repaid in full.
The Company believes that the anticipated cash flow from operations and existing
cash balances will satisfy the Company's projected working capital and capital
expenditure requirements through at least the end of fiscal 1999.
11
<PAGE>
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income"
which is effective for financial statements issued for fiscal years commencing
on or after December 15, 1997. Comprehensive income represents the change in net
assets of a company as a result of non-owner transactions. The Company is
currently evaluating the new standard and does not believe that it will have a
significant impact.
In October 1997, the AICPA issued Statement of Position 97-2, "Software Revenue
Recognition" which is effective for transactions entered into by the Company
commencing July 1, 1998. The Company is currently evaluating the new standard
and does not believe that it will have a significant impact on the Company's
current revenue recognition policy.
12
<PAGE>
PART II OTHER INFORMATION
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's 1997 Annual Meeting of Stockholders, held on October
23, 1997, an aggregate of 8,419,405 shares of Common Stock were present
in person or by proxy. Votes cast for and against, and abstentions for
the matters submitted to a vote of security-holders were as follows:
(i) Election of Directors:
AUTHORITY TO
NOMINEE VOTES FOR VOTE WITHHELD
Michael A. Hauck 8,397,255 22,150
Leonard M. Lodish 8,396,655 22,750
(ii) Approval of Employee Stock Purchase Plan
VOTES FOR VOTES AGAINST ABSTENTIONS
7,544,815 864,290 10,300
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
Exhibit
Number
3.1 Restated Certificate of incorporation of Walsh International Inc.,
incorporated by reference to Exhibit 3.1 to the Registration Statement
on Form S-1 of the Company (file no. 333-316).
3.2 By-laws of Walsh International Inc., as amended, incorporated by
reference to Exhibit 3.2 to the Registration Statement on Form S-1 of
the Company (file no. 333-316).
10.1 Letter Agreement dated as of October 27th, 1997 between Walsh
International Inc. and Dennis M.J. Turner.
11 Computation of Earnings (Loss) per Share
27 Financial Data Schedule
b) Reports on Form 8-K
13
<PAGE>
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: FEBRUARY 13, 1998 WALSH INTERNATIONAL INC.
BY /s/ Martyn D. Williams
--------------------------------
MARTYN D. WILLIAMS
CHIEF FINANCIAL OFFICER
ON BEHALF OF THE REGISTRANT AND AS
PRINCIPAL FINANCIAL OFFICER
14
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
3.1 Restated Certificate of Incorporation of Walsh International Inc.,
incorporated by reference to Exhibit 3.1 to the Registration Statement
on Form S-1 of the Company (file no. 333-316).
3.2 By-laws of Walsh International Inc., as amended, incorporated by
reference to Exhibit 3.2 to the Registration statement on Form S-1 of
the Company (file no. 333-316).
10.1 Letter Agreement dated as of October 27th, 1997 between Walsh
International Inc. and Dennis M.J. Turner.
11 Computation of Earnings per Share
27 Financial Data Schedule
15
WALSH INTERNATIONAL INC.
105 TERRY DRIVE, SUITE 118
NEWTOWN, PA 18940
TEL: (215) 860-4949 FAX: (215) 860-6658
October 27, 1997
Mr. Dennis M.J. Turner
34 Chester Terrace
Lond NW1 4ND
Dear Mr. Turner:
Reference is made to the arrangement pursuant to which you receive an
annual fee of $100,000 (the "Current Fee") in respect of your services as
Chairman of the Board of Directors of Walsh International Inc., a Delaware
corporation (the "Company"). This will confirm that, for good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the
Company and you have agreed as follows:
1. Except as provided in paragraph 2 below, if (i) you are removed, with or
without cause, from the Board of Directors of the Company and are not re-elected
within three months of such removal or (ii) you are not nominated for
re-election to the Board of Directors of the Company within three months
following the expiration of your term of office, then the Company shall pay or
cause to be paid to you, within 30 days after the expiration of such three-month
period, a lump-sum cash amount equal to the greater of the Current Fee or the
annual fee which you are receiving in respect of your service on the Board at
the time of such removal or expiration.
2. If, in anticipation of or within two years after a Change in Control (as
defined below), (i) you are removed, with or without cause, from the Board of
Directors of the Company or the board of directors or similar governing body of
the surviving entity or successor to the Company in such Change in Control (the
"Board") and are not re-elected to the Board within three months of such remove
or (iii) are not nominated for election or re-election to the Board within three
months following the expiration of your term of office or (iii) you resign from
the Board and are not re-elected to the Board within three months following such
resignation, then the Company shall pay or cause to be paid to you, within 30
days after the expiration of such three-month period, a lump-sum cash amount
equal to three times the greater of the Current Fee or the annual fee which you
are receiving in respect of your service on the Board at the time of such
removal, expiration or resignation.
3. While you serve on the Board, your annual fee in respect of such
services may not be reduced below the Current Fee without your written consent.
<PAGE>
Mr. Dennis M.J. Turner
October 27, 1997
Page Two
4. For the purposes hereof, a "Change in Control" means the occurrence of
any of the following:
(i) any event pursuant to which any "Person" becomes an "Acquiring
Person" (as such terms are defined in that certain Agreement dated as of
October 14, 1997 between the Company and Harris Trust Company of New York
as Rights Agent, as such Agreement initially entered into effects as of
such date):
(ii) a merger, consolidation, exchange, combination or other
transaction involving the company and another entity (or the securities of
the Company and such other entity) as a result of which the holders of all
of the shares of Common Stock of the Company outstanding prior to such
transaction do not hold, directly or indirectly, shares of the outstanding
voting securities of, or other voting ownership interests in, the
surviving, resulting or successor entity in such transaction in
substantially the same proportions as those in which they held the
outstanding shares of Common Stock of the Company immediately prior to such
transaction;
(iii) the sale, transfer, assignment or other disposition by the
Company and/or one or more Associated Companies, in one transaction or a
series of transactions within any period of 18 consecutive calendar months
(including, without limitation, by means of the sale of capital stock of
any subsidiary or subsidiaries of the Company) of assets which account for
an aggregate of 50% or more of the consolidated revenues of the Company and
its subsidiaries, as determined in accordance with U.S. generally accepted
accounting principles, for the fiscal year most recently ended prior to the
date of such transaction (or, in the case of a series of transactions as
described above, the first such transaction); provided, however, that no
such transaction shall be taken into account if substantially all the
proceeds thereof (whether in cash or in kind) are used after such
transaction in the ongoing conduct by the Company and/or its subsidiaries
prior to such transaction;
(iv) the Company is dissolved; or
(v) a majority of the directors of the Company are persons who were
not members of the Board as of the date (the "Reference Date") which is the
more recent of the date hereof and the date which is two years prior to the
date on which such determination is made, unless the first election or
appointment (or the first nomination for election by the Company's
shareholders) of each director who was not a member of the Board on the
Reference Date was approved by a vote of at least two-thirds of the Board
in office prior to the time of such first election, appointment or
nomination.
<PAGE>
Mr. Dennis M.J. Turner
October 27, 1997
Page Three
5. The terms of paragraphs 1, 2 and 3 hereof shall be binding upon the
Company and its successors and assigns and shall inure to your benefit and the
benefit of your spouse, executors, legal representatives, heirs, devisees and
assigns.
6. If the foregoing accurately sets forth the terms of the understanding
that has been reached between the Company and you with respect to the above
subject matter, kindly sign and return the enclosed copy hereof to the Company
at the address in the letterhead hereof (attention, General Counsel and
Secretary), whereupon this letter shall become a binding agreement between the
Company and you, effective as of the date hereof, which shall be governed by and
construed in accordance with the laws of the State of Delaware.
Very truly yours,
WALSH INTERNATIONAL, INC.
By: /s/ Michael A. Hauck
-------------------------------
Michael A. Hauck
Chief Executive Officer
ACCEPTED AND AGREED:
/s/ Dennis M.J. Turner
- ----------------------------------
Dennis M.J. Turner
Date: 15 November 1997
-----------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Jun-30-1998
<PERIOD-START> Jul-01-1997
<PERIOD-END> Dec-31-1997
<EXCHANGE-RATE> 1
<CASH> 4,712
<SECURITIES> 5,653
<RECEIVABLES> 15,762
<ALLOWANCES> 676
<INVENTORY> 54
<CURRENT-ASSETS> 26,083
<PP&E> 13,818
<DEPRECIATION> 9,907
<TOTAL-ASSETS> 42,860
<CURRENT-LIABILITIES> 21,821
<BONDS> 0
0
0
<COMMON> 105
<OTHER-SE> 10,900
<TOTAL-LIABILITY-AND-EQUITY> 42,860
<SALES> 29,274
<TOTAL-REVENUES> 29,274
<CGS> 11,000
<TOTAL-COSTS> 25,494
<OTHER-EXPENSES> 2,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 138
<INCOME-PRETAX> 1,865
<INCOME-TAX> 1,044
<INCOME-CONTINUING> 821
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 821
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
