<PAGE> 1
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 01-9723
PHARMACEUTICAL MARKETING SERVICES INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 51-0335521
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
Suite 912, 45 Rockefeller Plaza, NY10111
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (212) 841 0610
---------------------------------------------
(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 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 X No
As of January 31, 1998, there were outstanding 12,349,971 shares of Common Stock
of Pharmaceutical Marketing Services Inc.
1
<PAGE> 2
PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
PAGE NO.
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............11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security-Holders............................................16
Item 6. Exhibits and Reports on Form 8-K............................16
Signatures..................................................17
Index to Exhibits...........................................18
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------ ------------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue $ 21,573 $ 26,552 $ 41,666 $ 48,474
Production costs (11,141) (14,109) (21,980) (26,796)
Selling, general and administrative expenses (7,809) (9,709) (16,091) (18,017)
In-process research and development write off (12,046) -- (12,046) --
Amortization of intangible assets (342) (397) (684) (851)
Impairment of assets held for sale (14,735) -- (14,735) --
Income (loss) from assets held for sale 410 -- (188) --
-------- -------- -------- --------
Operating (loss) income (24,090) 2,337 (24,058) 2,810
Gain on sale of operations 33,608 -- 36,239 --
Interest and other income 1,091 740 1,962 1,412
Interest expense (1,164) (797) (2,330) (1,537)
-------- -------- -------- --------
Income before income taxes 9,445 2,280 11,813 2,685
Income tax provision (9,254) (798) (9,149) (956)
Minority interest -- (25) -- (46)
-------- -------- -------- --------
Income from continuing operations 191 1,457 2,664 1,683
Loss from discontinued operations -- (9,914) -- (9,914)
-------- -------- -------- --------
Net income (loss) $ 191 $ (8,457) $ 2,664 $ (8,231)
======== ======== ======== ========
Basic and diluted earnings per share:
Continuing operations $ 0.01 $ 0.11 $ 0.20 $ 0.13
Discontinued operations -- (0.75) -- (0.75)
-------- -------- -------- --------
Net income (loss) per share $ 0.01 $ (0.64) $ 0.20 $ (0.62)
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE> 4
PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, 1997 JUNE 30, 1997
----------------- -------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 52,778 $ 32,414
Marketable securities 61,213 24,738
Accounts receivable, principally trade 24,530 27,442
Work in process 1,355 3,798
Prepaid expenses and other current assets 4,604 4,905
Net current assets held for sale 611 4,236
--------- ---------
Total current assets 145,091 97,533
Marketable securities 9,491 7,384
Property and equipment, net 9,082 11,761
Goodwill, net 22,641 25,303
Other assets, net 7,005 6,424
Net assets held for sale 11,286 18,797
--------- ---------
Total assets $ 204,596 $ 167,202
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 54 $ 407
Accounts payable 7,444 5,036
Accrued liabilities 37,548 10,507
Unearned income 24,725 17,373
--------- ---------
Total current liabilities 69,771 33,323
Long-term debt 69,030 69,552
Unearned income 7,061 --
Other liabilities 460 583
--------- ---------
Total liabilities 146,322 103,458
--------- ---------
Stockholders' equity
Common stock, $0.01 par value, 25,000,000
shares authorized, and 12,349,971 and 13,199,475
shares issued and outstanding, respectively 123 132
Paid-in capital 79,209 87,179
Accumulated deficit (17,365) (20,029)
Cumulative translation adjustment (5,874) (3,534)
Unrealized gain (loss) on investments, net of
income tax charge (benefits) of $1,455 and $(3), respectively 2,181 (4)
--------- ---------
Total stockholders' equity 58,274 63,744
--------- ---------
Total liabilities and stockholders' equity $ 204,596 $ 167,202
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE> 5
PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
1997 1996
-------- --------
<S> <C> <C>
Net cash provided by operating activities $ 5,753 $ 6,001
-------- --------
Cash flows provided by (used in) investing activities:
Capital expenditures (1,031) (2,896)
Proceeds from businesses disposed, net of associated
selling expenses 12,546 2,807
Cash acquired in Source Europe 9,942 --
Cash consideration advanced to Source Europe under a line of credit (6,433) --
Sale (purchase) of marketable securities, net (1,075) 188
Acquisition and contingent purchase price payments (2,159) --
-------- --------
Net cash provided by investing activities 11,790 99
-------- --------
Cash flows provided by (used in) financing activities:
Net proceeds from options exercised 515 181
Repayments of long-term debt and capital lease
obligations (210) (126)
-------- --------
Net cash provided by financing activities 305 55
-------- --------
Effect of discontinued operations -- 2,194
Effect of assets held for sale 3,385 --
Effect of exchange rate movements (869) 183
-------- --------
Net increase in cash and cash equivalents 20,364 8,532
Cash and cash equivalents at beginning of period 32,414 12,669
-------- --------
Cash and cash equivalents at end of period $ 52,778 $ 21,201
======== ========
Supplemental disclosure of non-cash investing and financing activities:
Fair value of assets acquired $ 19,104
PMSI shares received 8,494
In-process research and development 12,046
Completed technology acquired 1,438
--------
Liabilities assumed $ 41,082
========
Cancellation of amounts due from Source Europe under a line of credit $ 6,433
========
National Data Corporation shares received $ 35,328
========
</TABLE>
The accompanying notes are an integral part of these financial statements
5
<PAGE> 6
PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. INTERIM UNAUDITED FINANCIAL INFORMATION
The accompanying statements of operations for the three and
six months ended December 31, 1997 and 1996, the statements of cash
flows for the six months ended December 31, 1997 and 1996, the balance
sheet as of December 31, 1997 and the related information of
Pharmaceutical Marketing Services Inc. (the "Company" or "PMSI")
included in these notes to the financial statements are unaudited.
These financial statements, where applicable, have been restated for
discontinued operations. In the opinion of management, the interim
financial information reflects all adjustments (consisting only of
items of a normal recurring nature, except for discontinued operations,
the effects of acquisitions and disposals, impairment of assets held
for sale and reserve for tax audit assessments) necessary for the fair
presentation of the financial position, results of operations and cash
flows for the periods presented. The results of operations for the
three and six months ended December 31, 1997 are not necessarily
indicative of the results to be expected for the entire fiscal 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 Annual Report for the
year ended June 30, 1997.
6
<PAGE> 7
2. INCOME PER SHARE
The Company has adopted the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 128,
"Earnings per Share" (SFAS 128). 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, (using the treasury stock method) from stock
options and convertible debt. All historical periods presented have
been restated applying SFAS 128.
For all periods presented amounts used in both basic earnings
per share and diluted earnings per share are the amounts 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 summarized below:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average common shares outstanding
Shares used in computing basic earnings per share 13,106,463 13,183,840 13,163,206 13,176,535
Assumed exercise of in the money
stock options 1,196,900 1,310,700 1,196,900 698,850
Less assumed buy-back under the treasury
stock method (1,010,169) (1,129,371) (965,075) (569,123)
------------ ------------ ------------ ------------
Shares used in computing diluted earnings per
share if the result is dilutive 13,293,194 13,365,169 13,395,031 13,306,262
------------ ------------ ------------ ------------
Income from continuing operations (in thousands) $ 191 $ 1,457 $ 2,664 $ 1,683
Loss from discontinued operations (in thousands) -- (9,914) -- (9,914)
------------ ------------ ------------ ------------
Net income (loss) (in thousands) $ 191 $ (8,457) $ 2,664 $ (8,231)
------------ ------------ ------------ ------------
</TABLE>
7
<PAGE> 8
Options to purchase 563,050 and 832,800 shares of common stock
at prices ranging from $13.50 to $22.00 were outstanding at December
31, 1997 and 1996, respectively but were not included in the
computation of diluted earnings per share for the three and six months
ended December 31, 1997 because the options exercise price was greater
than the average market price of the common shares.
The convertible debentures have not been assumed converted for
the diluted earnings per share as the effect would be anti-dilutive.
Had the convertible debentures been included, the number of shares
would have increased by 3,450,000 for the three and six months ended
December 31, 1997 and 1996. As a result of reduced interest expense
following the conversion, the increase to net income would have been
$647,000 for the three months and $1,294,000 for the six months ended
December 31, 1997 and 1996.These adjustments would have resulted in a
diluted income (loss) per share of $0.05 and $(0.46) for the three
months ended December 31, 1997 and 1996 respectively and of $0.24 and
$(0.41) respectively for the six months then ended.
3. INCOME TAXES
The effective income tax rate for fiscal 1998 was negatively
impacted by the non-deductible charge for the write-off of in-process
research and development costs. The projected 1998 fiscal year
effective income tax rate for operations, based on the Company's
projected mix of country profits including actual results for the six
months ended December 31, 1997, but excluding the impact of the
in-process research and development write off, is 50%.
In addition to the provision for taxes on profits in the year,
the Company has taken the precaution, in consultation with its
advisors, to set up a reserve of $1.5 million to meet liabilities
arising from European tax audits in progress and to recognize a tax
benefit of $7.3 million to be generated on the anticipated sale of IMR.
The gain on sale of the Source joint venture and OTC businesses during
the quarter has an associated tax charge of 41%.
4. GOODWILL
The Company assesses the recovery of its goodwill on a
subsidiary-by-subsidiary basis by determining whether amortization of
goodwill can be recovered through expected net future cash flows
(undiscounted and without interest charges). Impairment is measured
based on the present value of estimated expected future net cash flows
using a discount rate reflecting the Company's cost of funds.
8
<PAGE> 9
5. ACQUISITIONS AND DIVESTITURES
On December 15, 1997 the Company acquired Source Informatics
European Holdings L.L.C. and its subsidiaries ("Source Europe") from
Source Informatics Inc. for cash consideration of $6.4 million
representing the cancellation of amounts advanced under a line of
credit.
Source Europe is a development stage business involved in
building databases of information from prescriptions dispensed in the
UK, Germany, France, Belgium and Italy and in developing the software
technology to support, access and generate information from such
databases. This information enables pharmaceutical companies to measure
and analyze product performance at a detailed geographical level,
namely small groups of physicians or at the individual physician level
and thereby improve salesforce productivity. Currently, the businesses
are at various stages of development, but some initial products have
recently begun to be delivered to pharmaceutical companies in some of
the markets in which Source Europe is operating.
The value of acquired in-process research and development with
no alternative use was assessed to be $27.0 million, while completed
technology was valued at $3.0 million. Therefore, the excess of the
purchase price over the fair value of the net assets acquired of $13.4
million has been pro-rated in proportion to the relative total values
of in-process research and development and completed technology as
follows:
<TABLE>
<S> <C>
In-Process Research & Development (90%) $12.0 m
Completed Technology (10%) $ 1.4 m
--------
$13.4 m
</TABLE>
The completed technology is expected to have an economic life
of between 2 and 3 years and will be amortized on a straight-line basis
over its economic life. The in-process research and development costs
have been written off immediately.
Included in the assets acquired in Source Europe were 918,254
shares of common stock in the Company with a value of $8.5 million,
which were formally retired during the quarter.
On December 15, 1997, the Company sold its interest in the
joint operating venture with Source America and its OTC Physician
Database business in the US to National Data Corporation ("NDC"). The
Company received 1,084,950 registered shares in NDC with a market value
on December 15, 1997 of $35.3 million plus $6.5 million in cash. This
resulted in a pre-tax gain of $33.6 million and net gain of $19.8
million, after deducting selling and other transaction related expenses
of $4.5 million and taxation of 41%.
9
<PAGE> 10
Presented below are summarized unaudited pro forma results as
if the acquisition of Source Europe had occurred on July 1, 1996 and
July 1, 1997. The pro forma adjustments relate principally to
amortization and inter-company trading.
<TABLE>
<CAPTION>
Unaudited Unaudited
Six Months Six Months
Ended Ended
----- -----
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Revenue $ 43,202 $ 41,882
Net income $(11,184) $(17,814)
Net income per share $ (0.91) $ (1.44)
</TABLE>
6. ASSETS HELD FOR SALE/ DISCONTINUED OPERATIONS
The Company decided to divest its non-database segment during
the third quarter of fiscal 1996. At the end of the measurement period,
the only business from this segment that still remained to be sold was
the French point of sale marketing business.
Discussions with a potential purchaser are now at an advanced
stage. It is anticipated that this sale will be completed by March 31,
1998. The expected net loss to be incurred on sale is $7.4 million
comprising $14.7 million impairment of assets held for sale less $7.3
million in tax benefit arising from the loss on sale.
The operating results of this business have been included
within operating income as "income (loss) from assets held for sale".
Its net assets, together with the accrual for the net loss to be
generated on disposition, are recorded in the balance sheet as "net
current assets held for sale" and "net assets held for sale".
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
REVENUE
Revenue for the Company's second quarter of fiscal 1998 was $21.6
million compared to $26.6 million for the corresponding quarter of 1997, a
reduction of 19%. This reduction resulted from the divestitures of the
international publishing business, Bugamor, in the first quarter and the sale of
the Source Joint Venture towards the end of the second quarter. Currency
exchange rate movements, principally in Japan, negatively impacted the quarter's
revenues by $0.8 million, or 4%.
Excluding the effects of Bugamor, the Source Joint Venture, other
businesses divested during fiscal 1997 and currency, revenue from the Company's
ongoing operations increased by $1.0 million or 6%. The revenue growth in the
quarter was mainly from the expansion of market research services at the
Company's Scott Levin subsidiary in the US and information services in Japan.
Overall growth was negatively impacted by timing differences in the Japanese
convention business compared with fiscal 1997.
PRODUCTION COSTS
Production costs decreased to $11.1 million (52% of revenue) from $14.1
million (53% of revenue) in the comparable quarter of fiscal 1997. Excluding the
effects of Bugamor, the Source Joint Venture and other businesses divested
during fiscal 1997, production costs decreased by 3% mainly due to lower
expenses in Japan resulting from timing differences on Convention revenue.
SELLING, GENERAL AND ADMINISTRATIVE COSTS
Selling, general and administrative costs were $7.8 million (36% of
revenue) compared with $9.7 million (37% of revenue) for the same quarter in
fiscal 1997. Excluding the effects of Bugamor, the Source Joint Venture and
other businesses divested during fiscal 1997, selling general and administration
costs were $7.0 million, an increase of 4% on the second quarter of fiscal 1997.
This increase is due to additional selling costs required to accelerate the
growth of the Company's market research businesses in the US and Japan.
11
<PAGE> 12
IN-PROCESS RESEARCH & DEVELOPMENT
The acquisition of Source Europe during the quarter ended December 31,
1997 resulted in a one time charge of $12.0 million for the write-off of
in-process research and development.
IMPAIRMENT OF ASSETS HELD FOR SALE
Discussions with potential purchasers of the Company's French point of
sale marketing business are now at an advanced stage and it is anticipated a
sale will be completed by March 31, 1998. The expected loss before taxes is
estimated to be $14.7 million. This loss will be partially offset by a tax
benefit of $7.3 million.
GAIN ON SALE OF OPERATIONS
The sale of the Company's Source Joint Venture and OTC businesses in
the US was completed during the quarter and the resulting pre-tax gain of $33.6
million has been recorded in the financial statements for the quarter ended
December 31, 1997.
NET INTEREST EXPENSE
Net interest expense for the quarter ended December 31, 1997 was $0.1
million, the same as the expense for the second quarter in fiscal 1997. In the
second quarter of fiscal 1997 $0.4 million of debenture interest expense was
charged to discontinued operations. In the same quarter this year the entire
debenture interest was charged to continuing operations. This increase in the
year on year expense of $0.4 million was offset by increased interest income
from improved returns on increased funds invested.
12
<PAGE> 13
INCOME TAXES
The Company recorded an income tax charge of $9.3 million for the three
months ended December 31, 1997. The gain on disposal of the Company's interest
in the Source US operating venture and the OTC business generated a tax charge
of $13.8 million, while the balance of the charge represents an effective tax
rate on income from ongoing operations of 50%, a $1.5 million reserve with
respect to European tax audits in progress and a tax benefit arising from the
loss on sale of IMR of $7.3 million.
The fiscal 1997 effective tax rate was 39% on pre-tax operating profit of $0.4
million. The rate differential reflects the tax effects of a number of one time
items, changes in the anticipated mix of country profits and reduced potential
to use net operating loss carry forwards in the year ending June 30, 1998.
SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
REVENUE
Revenue for the first half of fiscal 1998 was $41.7 million compared to
$48.5 million for the corresponding period of 1997, a decrease of 14%. This
reduction was due to the divestiture of the Bugamor international publishing
business during the first quarter and the Source joint venture during the second
quarter. Currency exchange rate movements, principally in Japan, Germany and
France, negatively impacted the six months revenues by $1.9 million, or 4%.
Excluding the effects of Bugamor, the Source joint venture and other
businesses divested during fiscal 1997, revenue from the Company's ongoing
operations increased by $1.6m or 5%. This increase in revenue reflects the
continued growth of market research services from the Company's Scott Levin
subsidiary and information services in Japan partially offset by lower revenues
in the other Japanese businesses.
PRODUCTION COSTS
Production costs decreased to $22.0 million (52% of revenue) from $26.8
million (55% of revenue) for the comparable six months of fiscal 1997. Excluding
the effects of Bugamor, the Source joint venture and other businesses divested
during fiscal 1997, normal production costs decreased by 2%. This is mainly
attributable to the change in product mix in Japan, where information services
have become more significant than the communications and convention business,
and attract a substantially higher gross margin.
13
<PAGE> 14
SELLING, GENERAL AND ADMINISTRATIVE COSTS
Selling, general and administrative costs decreased to $16.1 million
(38% of revenue) from $18.0 million (37% of revenue) for the comparable six
months of fiscal 1997. Excluding the effects of Bugamor, the Source joint
venture and other businesses divested during fiscal 1997, selling general and
administration costs increased by 6%, due to increased investment in selling
resources associated with development plans for the Company's market research
businesses in the US and Japan.
NET INTEREST EXPENSE
Net interest expense for the first half of fiscal 1998 was $0.4
million, an increase of $0.3m compared with the equivalent period in fiscal
1997. This increase in expense arises from a lower interest expense allocation
to continuing operations in the first half of fiscal 1997 due to the allocation
of almost $0.8 million of debenture interest to discontinued operations.
INCOME TAXES
The Company recorded an income tax provision of $9.1 million for the
six months ended December 31, 1997 compared with a provision of $1.0 million for
the comparable period in fiscal 1997.
The gain on disposal of the Company's interest in the Source US
operating venture and the OTC business generated a tax charge of $13.8 million,
while the balance of the charge represents an effective tax rate on income from
ongoing operations of 50%, a $1.5 million reserve with respect to European tax
audits in progress and a tax benefit arising from the loss on sale of IMR of
$7.3 million.
The fiscal 1997 effective tax rate was 39% on pre-tax operating profit
of $0.4 million. The rate differential reflects the tax effects of a number of
one time items, changes in the anticipated mix of country profits and reduced
potential to use net operating loss carry forwards in the year ending June 30,
1998.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company's cash, cash equivalents and
marketable securities totalled $123.5 million, an increase of $59.0 million from
the $64.5 million balance at June 30, 1997. The increase is due to proceeds from
the sale of the Company's international publishing business, its interest in the
Source joint venture and OTC businesses in the US, the net cash acquired with
Source Europe and movements in working capital. The current ratio at December
31, 1997
14
<PAGE> 15
decreased to 2.1 from 2.9 at June 30, 1997 due to the current liabilities
acquired with Source Europe.
The Company anticipates, in fiscal year 1998 and in subsequent years,
its capital expenditures and working capital requirements will be funded from
cash, cash equivalents and marketable securities and internally generated funds.
The timing and magnitude of future acquisitions will continue to be the single
most important factor in determining the Company's long-term capital needs.
ACQUISITIONS AND DIVESTITURES
On July 1, 1997 the Company sold its Dutch and US-based international
publishing and communications operations to Excerpta Medica, the medical
communications division of Elsevier Science for approximately $9.0 million,
resulting in a net gain on sale of $2.6 million.
The Company had acquired on July 1, 1994 80% of the Common Stock of
Mediphase Limited, a specialist company serving retail pharmacies in the United
Kingdom. In accordance with the terms of the original agreement, on July 1, 1997
the Company acquired the remaining 20% of the Common Stock in Mediphase Limited
for $1.9 million.
On December 15, 1997 the Company acquired the Source Europe business
and divested its minority operating interest in the Source Informatics venture
in the United States together with its OTC Physician Survey business in a three
way transaction with National Data Corporation and Source Informatics Inc. This
transaction is described more fully in Note 5 of this Report, the Company's
Proxy Statement dated November 14, 1997 and in the Company's Form 8-K Report
filed on December 29, 1997.
15
<PAGE> 16
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
Acquisition of Source Europe and divestment of the Company's minority
interest in the Source Informatics venture in the United States and its
OTC Physician Survey business was approved by Stockholders of the
Company at a Special Meeting on December 15, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
27 Financial Data Schedule
REPORTS ON FORM 8-K
Disposition of Bugamor International Publishing Business (incorporated
by reference to report on Form 8-K dated August 19, 1997)
Acquisition of Source Europe and divestment of the Company's minority
interest in the Source Informatics venture in the United States
together with its OTC Physician Survey business (incorporated by
reference to report on Form 8-K dated December 29, 1997)
16
<PAGE> 17
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 Pharmaceutical Marketing Services Inc.
--------------------------------------
By/s/ Raymund M. Davies
Raymund Davies
Chief Financial Officer
On behalf of the registrant and as
principal financial officer.
17
<PAGE> 18
INDEX TO EXHIBITS
Exhibit Description Page Number
27 Financial Data Schedule 19
18
<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> 52,718
<SECURITIES> 61,213
<RECEIVABLES> 24,951
<ALLOWANCES> 421
<INVENTORY> 1,355
<CURRENT-ASSETS> 145,091
<PP&E> 12,505
<DEPRECIATION> 3,424
<TOTAL-ASSETS> 204,596
<CURRENT-LIABILITIES> 69,771
<BONDS> 69,000
0
0
<COMMON> 123
<OTHER-SE> 58,151
<TOTAL-LIABILITY-AND-EQUITY> 204,596
<SALES> 41,666
<TOTAL-REVENUES> 41,666
<CGS> 21,980
<TOTAL-COSTS> 38,071
<OTHER-EXPENSES> 12,730
<LOSS-PROVISION> 14,735
<INTEREST-EXPENSE> 2,330
<INCOME-PRETAX> 11,813
<INCOME-TAX> 9,149
<INCOME-CONTINUING> 2,664
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,664
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
