<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 22, 1996
QUINTILES TRANSNATIONAL CORP.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 340-23520 56-1714315
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification Number)
4709 CREEKSTONE DRIVE, RIVERBIRCH BUILDING, SUITE 300,
DURHAM, NORTH CAROLINA 27703-8411
(Address of principal executive offices)
(919) 941-2000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
<PAGE> 2
<TABLE>
<S> <C>
Item 7 is hereby replaced as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Innovex Limited
The financial statements of Innovex Limited as at March 31, 1995 and
1996, and for the periods ended March 31, 1994, 1995 and 1996, and the
Notes thereto, were previously filed, within the meaning of Rule 12b-2
promulgated under the Exchange Act, in the Company's Current Report on
Form 8-K, dated October 6, 1996, filed with the Commission.
Unaudited Interim Condensed Consolidated Financial Statements
Unaudited Condensed Consolidated Balance Sheet as of
September 30, 1996 4
Unaudited Condensed Consolidated Income Statements for
the six months ended September 30, 1995 and 1996 5
Unaudited Condensed Consolidated Statements of Cash Flows
for the six months ended September 30, 1995 and 1996 6
Notes to Unaudited Condensed Consolidated Financial
Statements 7
BRI International, Inc.
The financial statements of BRI International, Inc. as of and for the
periods ended May 31, 1996, November 30, 1993, 1994, and 1995, and the
Notes thereto, were previously filed, within the meaning of Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in the Company's Registration Statement on Form S-4 (File
No. 333-12573) as filed with the Commission on September 24, 1996 and
amended on October 15, 1996.
Unaudited Interim Condensed Consolidated Financial Statements
Unaudited Condensed Consolidated Balance Sheet as of August 31, 1996 9
Unaudited Condensed Consolidated Statement of Operations for the
three months ended August 31, 1995 and 1996 10
Unaudited Condensed Consolidated Statement of Cash Flows for the
three months ended August 31, 1995 and 1996 11
Notes to Unaudited Condensed Consolidated Financial Statements 12
(b) Unaudited Pro Forma Financial Information.
The unaudited pro forma combined condensed income statements of
Quintiles, Innovex Limited and BRI International, Inc. for the years ended
December 31, 1993, 1994 and 1995 were previously filed, within the meaning
of Rule 12b-2 promulgated under the Exchange Act, in the Company's Current
Report on Form 8-K, dated October 6, 1996, as filed with the Commission.
Unaudited Pro Forma Combined Condensed Financial Information of
Quintiles, Innovex Limited and BRI International, Inc.
Introduction to Unaudited Pro Forma Financial Information 13
Unaudited Pro Forma Combined Condensed Balance Sheet as of
September 30, 1996 14
Notes to Unaudited Pro Forma Combined Condensed Balance Sheet 15
Unaudited Pro Forma Combined Condensed Statement of Income for the
nine months ended September 30, 1996 16
Unaudited Pro Forma Combined Condensed Statement of Income for the
nine months ended September 30, 1995 17
</TABLE>
2
<PAGE> 3
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<S> <C>
2.01(1) Merger Agreement dated as of September 16, 1996 by and among Quintiles
Transnational Corp., BRI Acquisition Corp. and BRI International, Inc.
(the "Merger Agreement")
2.02* List of Exhibits and Schedules omitted from the Merger Agreement
2.03(2) Share Exchange Agreement dated as of October 4, 1996 among Innovex
Limited, Quintiles Transnational Corp. and the shareholders of Innovex
Limited (the "Share Exchange Agreement")
2.04* List of Exhibits and Schedules omitted from the Share Exchange Agreement
99.01* Registration Rights Agreement, dated as of November 29, 1996, by and
among Quintiles Transnational Corp. and the shareholders of Innovex
Limited listed therein
</TABLE>
- ----------------------
(1) Exhibit to the Company's Registration Statement on Form S-4 (Registration
No. 333-12573) initially filed with the Commission on September 24, 1996,
as amended, and incorporated herein by reference.
(2) Exhibit to the Company's current report on Form 8-K dated October 6, 1996
filed with the Commission and incorporated herein by reference.
* Previously filed.
3
<PAGE> 4
INNOVEX LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1996
(In thousands)
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash and cash equivalents $ 11,646
Accounts receivable 50,882
Finished goods and goods for resale 439
--------
Total current assets 62,967
Intangible assets 20,376
Property, plant and equipment, net 33,227
--------
Total assets $116,570
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short term borrowings and current portion of
long term obligations $ 14,368
Accounts payable and accrued expenses 30,180
Advanced payments received 27,686
Income taxes and other current liabilities 9,432
--------
Total current liabilities 81,666
Long term obligations 35,883
Provisions for liabilities and charges 3,415
Other provisions and deferred tax 4,986
--------
44,284
--------
Total liabilities 125,950
Shareholders' equity:
Ordinary shares 112
Preferred ordinary shares 66
Preference shares 171
--------
349
Premiums in excess of par value 17,010
Accumulated deficit (26,739)
--------
Total shareholders' equity (9,380)
--------
Total liabilities and shareholders' equity $116,570
========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
4
<PAGE> 5
INNOVEX LIMITED
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS
Six months ended September 30, 1995 and 1996
(In thousands)
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Net sales $ 51,684 $106,717
Costs and expenses
Cost of finished goods sold (1,524) (958)
Personnel costs (29,869) (66,620)
Depreciation and amortization (5,140) (8,940)
Other operating expenses (13,164) (22,070)
-------- --------
Operating income 1,987 8,129
Other income and (expenses) (1,508) (2,472)
-------- --------
Income before income taxes 479 5,657
Income taxes (165) (2,077)
-------- --------
Net income before non-equity interest dividends 314 3,580
Non-equity interest dividends - (637)
-------- --------
Net income $ 314 $ 2,943
======== ========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
5
<PAGE> 6
INNOVEX LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended September 30, 1995 and 1996
(In thousands)
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Operating activities $ 70,001 $130,844
Sales ledger receipts 82 534
Other miscellaneous payments (28,351) (62,008)
Less: Payroll (28,118) (54,216)
Trading payments (301) (609)
VAT (4,645) (7,753)
-------- --------
Net cash provided by operating activities(1) 8,668 6,792
Exceptional items (6) (2,422)
Capital expenditure
Purchase of assets (2,278) (3,760)
Vehicle leasing payments (3,102) (5,253)
Less: Sale of assets 1,273 786
-------- --------
Net capital outflow (4,107) (8,227)
Taxation paid (168) (2,432)
-------- --------
Net cash generated/(absorbed) by operations 4,387 (6,289)
Other payments
Deferred compensation (5,036) --
Investment in subsidiary -- (793)
Interest payments (482) --
-------- --------
Decrease in cash and cash equivalents (1,131) (7,082)
Exchange adjustments (135) 18
Cash and cash equivalents at beginning of period 5,779 18,710
-------- --------
Cash and cash equivalents at end of period $ 4,513 $ 11,646
======== ========
</TABLE>
- ------------
(1) The net cash provided by operating activities for the six months ended
September 30, 1996 include the special pension contribution of $2.3
million paid to the pension fund of Barrie S. Haigh and non-recurring costs
of $0.6 million relating to the April Reorganization (see Note 2 to
Unaudited Condensed Consolidated Financial Statements).
The accompanying notes are an integral part of
these consolidated financial statements.
6
<PAGE> 7
INNOVEX LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
September 30, 1996
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
present the financial position and results of operations of Innovex Limited,
(hereafter referred to as "Innovex") and have been prepared in accordance with
generally accepted accounting principles in the United Kingdom ("U.K. GAAP")
which differ in certain significant respects from those applicable in the United
States ("U.S. GAAP"). See Note 3 for a discussion of the principal differences
between U.K. GAAP and U.S. GAAP affecting Innovex.
The interim financial information included in these condensed consolidated
financial statements is unaudited but reflects all adjustments (consisting only
of normal recurring accruals) which are, in the opinion of management, necessary
for a fair presentation of the results for the interim periods presented.
Assets and liabilities recorded in foreign currencies on Innovex's books
are translated at the exchange rate on the balance sheet date. Gains and
losses on foreign currency transactions are included in other income and
expenses. Translation adjustments resulting from this process are charged or
credited to equity. Net sales, costs and expenses are translated at average
rates of exchange prevailing during the periods presented.
The provision for income taxes is based upon management's best estimate of
the effective tax rate to be applicable for the entire year and taking into
account the anticipated impact of foreign tax rates, available tax loss carry
forwards and other relevant tax issues in the jurisdictions in which Innovex
operates.
2. Reorganization
On April 3, 1996, Innovex PLC and the former holding company of the Innovex
group, Innovex Holdings Limited completed a series of transactions designed to
establish Innovex PLC as the holding company of the Innovex Group. The Company
and Innovex Holdings Limited entered into an Exchange Agreement, dated April 3,
1996, pursuant to which Innovex PLC, the entire outstanding share capital of
which consisted of two thousand ordinary shares owned by Mr. Haigh and
Dr. Knott, agreed to acquire the entire issued share capital of Innovex
Holdings Limited in exchange for 72,631,305 newly issued ordinary shares of
0.1p each, 14,285,720 cumulative participating preferred ordinary shares of
0.1p each (the "preferred shares"), pound sterling 16,980,000 of 6.03125%
vendor guaranteed loan notes, due on or about October 3, 1996, of Innovex PLC,
and pound sterling 1,620,000 of cash. Innovex PLC's performance of its
obligations under the loan notes was guaranteed by Lloyds Bank pursuant to a
Facilities Agreement, dated April 3, 1996, which provides for a pound sterling
15,000,000 secured guarantee and term-loan facility and a pound sterling
2,000,000 cash-backed guarantee facility. In connection with these
transactions, Innovex PLC also entered into a pound sterling 3,000,000
overdraft facility, dated April 3, 1996, with Lloyds Bank.
Pursuant to an Investment Agreement, dated April 3, 1996, Innovex PLC
issued 28,533,345 additional preferred shares and created and issued 11,000,000
7.5% cumulative redeemable preference shares of 1.0p each ("the preference
shares"), ranking senior to the preferred shares, and pound sterling 6,900,000
aggregate principal amount of 8.70% loan stock. The loan stock issued had a
nominal value of pound sterling 10,200,000 and an effective interest rate of
14.85%.
The preferred shares rank for a cumulative participating net dividend in
respect of the year ending March 31, 2000 and subsequent years. The amount of
the dividend will be equal to a percentage of profit after tax, where the
percentage equals one third of the number of preferred shares outstanding during
the relevant year as a percent of the total number of ordinary shares and
preferred shares outstanding during such years. The preference shares are
redeemable by Innovex PLC on or before March 31, 2004.
7
<PAGE> 8
INNOVEX LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
These transactions are considered as having no effect on the basis of
accounting for assets and liabilities and are viewed as having occurred among
members of a commonly controlled group in connection with a proposed
capital-raising transaction after which the controlling shareholder retained
control.
3. Summary of Differences Between U.K. GAAP and U.S. GAAP
Innovex's condensed consolidated financial statements are prepared in
accordance with U.K. GAAP, which differs in certain respects from U.S. GAAP.
The net differences between U.K. GAAP and U.S. GAAP are immaterial to net
income for the six months ended September 30, 1996 and 1995 and to
shareholders' equity as of September 30, 1996 except for the redeemable
preference shares which are included as a component of shareholders' equity
under U.K. GAAP on the September 30, 1996 unaudited condensed consolidated
balance sheet and would be reclassified from shareholders' equity and presented
as a separate classification between debt and shareholders' equity under U.S.
GAAP. Innovex must redeem all preference shares in issue by March 31,
2004. Under U.S. GAAP, redeemable preference shares whose redemption is outside
the control of the company, including mandatory redemption, are presented in a
separate classification between debt and shareholders' equity.
4. Non-Equity Dividends
Non-equity dividends in respect of preference share dividends are at the
rate of 7.5% on the paid up amount.
5. Long-Term Obligations
Long-term obligations less current portion at September 30, 1996 consisted
of the following (in thousands):
<TABLE>
<S> <C>
Loan stock................................................. $11,256
Loan facility.............................................. 21,106
Capital leases............................................. 3,521
-------
$35,883
=======
</TABLE>
6. Subsequent Events
On November 29, 1996, Quintiles Transnational Corp. acquired 100% of
Innovex's stock in exchange for approximately 9.2 million shares of Quintiles
common stock and options to purchase approximately 800,000 shares of Quintiles
common stock in a transaction accounted for as a pooling-of-interests. In
connection with the transaction approximately $60 million of Innovex's
existing obligations were retired by Quintiles.
8
<PAGE> 9
BRI INTERNATIONAL, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
August 31, 1996
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash $ 1,692,315
Accounts receivable 14,605,828
Note receivable - related party 250,000
Prepaid expenses 506,442
Deferred income taxes 363,726
-----------
Total current assets 17,418,311
Property and equipment:
Equipment, furniture and fixtures 7,165,408
Leasehold improvements 653,173
Less accumulated depreciation and amortization (4,408,043)
-----------
Net property and equipment 3,410,538
Other assets:
Excess of purchase price over net assets of acquired business 1,091,963
Non-compete agreements 489,213
Deferred income taxes 341,388
Other 1,005,027
-----------
Total other assets 2,927,591
-----------
Total assets $23,756,440
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit and current portion of debt $ 1,897,431
Accounts payable and accrued liabilities 5,108,398
Advance billings to clients 7,057,793
Client deposits 677,056
Income taxes payable 249,287
Liability under stock option plan 74,720
Liability under non-compete agreements, current portion 156,882
-----------
Total current liabilities 15,221,567
Long-term debt, less current portion 1,593,752
Liability under non-compete agreements, less current portion 156,597
Deferred rent 820,892
-----------
2,571,241
-----------
Total liabilities 17,792,808
Commitments and contingencies
Stockholders' equity:
Common stock, $.10 par value, 500,000 shares authorized,
374,994 shares issued and outstanding 37,499
Additional paid-in capital 2,217,093
Retained earnings 4,503,886
Cumulative foreign currency translation adjustment 22,237
Unearned shares of common stock held by ESOP (817,083)
-----------
Total stockholders' equity 5,963,632
-----------
Total liabilities and stockholders' equity $23,756,440
===========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
9
<PAGE> 10
BRI INTERNATIONAL, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended August 31, 1995 and 1996
<TABLE>
<CAPTION>
1995 1996
------------ ------------
<S> <C> <C>
Revenue:
Professional fees $ 11,349,686 $ 16,285,301
Less reimbursed costs (983,150) (1,945,428)
------------ ------------
Net revenue 10,366,536 14,339,873
Operating costs and expenses:
Direct costs 8,681,310 9,451,509
Selling, general and administrative expenses 1,015,355 3,423,326
Merger expenses - 37,473
------------ ------------
Income from operations 669,871 1,427,565
Other expense/(income):
Interest expense 94,433 104,815
Other (14,577) 97,342
------------ ------------
Income before provision for income taxes 590,015 1,225,408
Provision for income taxes 198,813 487,434
------------ ------------
Net income $ 391,202 $ 737,974
============ ============
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
10
<PAGE> 11
BRI INTERNATIONAL, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Three months ended August 31, 1995 and 1996
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Operating activities:
Net income $ 391,202 $ 737,974
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 206,216 415,617
Compensation expense under stock option plan 120,000 -
Allowance for doubtful accounts 51,811 30,000
Deferred income taxes (147,924) (1,382)
Increase (decrease) in cash due to changes in
operating assets and liabilities:
Accounts receivable 59,474 140,974
Note receivable - related party - (140,000)
Prepaid expenses (107,260) (132,173)
Other assets 42,053 (340,570)
Income taxes payable (66,539) 222,964
Accounts payable and accrued liabilities 355,412 (318,918)
Deferred rent 5,757 13,957
Advance billings to clients (376,589) 1,617,082
Client deposits (87,725) 219,276
---------- ----------
Net cash provided by operating activities 445,888 2,464,801
Investing activities:
Purchases of property and equipment (73,102) (633,373)
---------- ----------
Net cash used by investing activities (73,102) (633,373)
Financing activities:
Borrowings on line of credit, net 94,925 (520,198)
Cash overdraft - 384,725
Payments on notes payable (65) (219,399)
Payments under non-compete agreements (175,622) (68,356)
Proceeds from issuance of common stock - 10,737
Cash paid in settlement of stock options (80,916) -
---------- ----------
Net cash used by financing activities (161,678) (412,491)
Effect of exchange rate changes on cash 9,283 6,102
---------- ----------
Net increase in cash 220,391 1,425,039
Cash at beginning of period 820,044 267,276
---------- ----------
Cash at end of period $1,040,435 $1,692,315
========== ==========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
11
<PAGE> 12
BRI INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
August 31, 1996
1. The Company
BRI International, Inc., formerly known as Biometric Research Institute, Inc.
("BRI") is a full service contract research organization specializing, on a
global basis, in the design and evaluation of preclinical and clinical research
for the pharmaceutical, biotechnology and medical device industries.
2. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three
month period ended August 31, 1996 are not necessarily indicative of the
results that may be expected for the year ended November 30, 1996. For further
information, refer to the consolidated financial statements and notes thereto
included in the BRI audited financial statements for the six month period ended
May 31, 1996.
On February 28, 1996, BRI issued 49,400 shares of common stock in exchange for
all of the outstanding common stock of Medical Technology Consultants Europe
Limited ("MTCE"). The acquisition has been accounted for as a
pooling-of-interests, and as such, all condensed consolidated financial data
for periods subsequent to December 1, 1995 have been restated to include the
results of the pooled company. Due to the fact that the financial data of the
pooled company prior to December 1, 1995 would have no material impact on the
condensed consolidated financial data previously reported by BRI, the condensed
consolidated financial data presented for periods prior to December 1, 1995
have not been restated.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements. Actual results
could differ from these estimates.
3. Subsequent Events
On November 22, 1996, BRI merged with and into a wholly-owned subsidiary of
Quintiles Transnational Corp. in a transaction accounted for as a
pooling-of-interests. Quintiles issued approximately 1,615,000 shares of its
common stock in the transaction to the former shareholders of BRI and assumed
options exercisable for 338,693 shares of Quintiles' common stock.
12
<PAGE> 13
Item 7(b)
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION OF
QUINTILES, INNOVEX LIMITED AND BRI INTERNATIONAL, INC.
The following unaudited pro forma combined condensed financial information is
presented assuming the combinations of Quintiles and BRI and Quintiles and
Innovex had occurred at the beginning of each period presented on a pooling of
interests basis.
The unaudited pro forma combined condensed balance sheet reflects the combined
historical balance sheets of Quintiles and Innovex at September 30, 1996 and BRI
at August 31, 1996. The unaudited pro forma combined condensed statements of
operations for the nine months ended September 30, 1996 and 1995 reflect
historical operating results of Quintiles and Innovex for such periods combined
with historical operating results of BRI for the nine months ended August 31,
1996 and 1995, respectively.
For all applicable periods presented in the pro forma combined condensed
statements of operations, shares used in the computation of earnings per common
and common equivalent shares give effect to the appropriate exchange ratios.
The Innovex financial statements have been prepared on a basis of generally
accepted accounting principles (GAAP) in the U.K., except for the redeemable
preference shares which have been reclassified from shareholders' equity and are
presented as a separate classification between debt and shareholders' equity on
the September 30, 1996 unaudited pro forma combined condensed balance sheet. The
remaining net differences between U.K. and U.S. GAAP are immaterial to the pro
forma combined net income and shareholders' equity for all periods presented.
The pro forma financial information is not necessarily indicative of the results
that would have been obtained had the combinations occurred on the dates
indicated. The pro forma financial information should be read in conjunction
with the related historical financial statements and notes thereto of
Quintiles, BRI and Innovex previously reported or included herein.
13
<PAGE> 14
QUINTILES, BRI AND INNOVEX
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
September 30, 1996
(In thousands)
<TABLE>
<CAPTION>
HISTORICAL
------------------------ HISTORICAL
PRO FORMA PRO FORMA ---------- PRO FORMA
QUINTILES BRI(1) ADJUSTMENTS SUBTOTAL INNOVEX(2) ADJUSTMENT PRO FORMA
--------- ------ ----------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 60,289 $ 1,692 $ - $ 61,981 $ 11,646 $(67,432)(7) $ 6,195
Accounts receivable and unbilled services 95,810 14,856 - 110,666 50,882 - 161,548
Investments 59,986 - - 59,986 - - 59,986
Other current assets 7,324 870 - 8,194 439 - 8,633
-------- ------- ------- -------- -------- -------- --------
Total current assets 223,409 17,418 - 240,827 62,967 (67,432) 236,362
Property and equipment 95,318 7,819 - 103,137 50,256 - 153,393
Less accumulated depreciation 25,948 4,408 - 30,356 17,029 - 47,385
-------- ------- ------- -------- -------- -------- --------
69,370 3,411 - 72,781 33,227 - 106,008
Non-current assets:
Investments 55,205 - - 55,205 - - 55,205
Intangible and other assets 52,133 2,927 - 55,060 20,376 - 75,436
-------- ------- ------- -------- -------- -------- --------
Total non-current assets 107,338 2,927 - 110,265 20,376 - 130,641
-------- ------- ------- -------- -------- -------- --------
Total assets $400,117 $23,756 $ - $423,873 $116,570 $(67,432) $473,011
======== ======= ======= ======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 29,101 $ 5,108 $ 4,800 (3) $ 39,009 $ 30,180 $ 23,000 (5) $ 92,189
Line of credit and current portion
of debt 1,722 1,897 - 3,619 14,368 (14,368)(7) 3,619
Unearned income 23,971 7,058 - 31,029 27,686 - 58,715
Income taxes and other current liabilities 8,126 1,158 - 9,284 9,432 - 18,716
-------- ------- ------- -------- -------- -------- --------
Total current liabilities 62,920 15,221 4,800 82,941 81,666 8,632 173,239
Long-term liabilities:
Long-term debt, less current portion 140,634 1,594 - 142,228 35,883 (35,883)(7) 142,228
Long-term obligation 19,543 977 - 20,520 3,415 - 23,935
Deferred income taxes 2,628 - - 2,628 4,986 - 7,614
-------- ------- ------- -------- -------- -------- --------
162,805 2,571 - 165,376 44,284 (35,883) 173,777
-------- ------- ------- -------- -------- -------- --------
Total liabilities 225,725 17,792 4,800 248,317 125,950 (27,251) 347,016
Redeemable preference shares - - - - 171 (171)(7) -
Shareholders' equity:
Preferred Stock - - - - 66 (66)(6) -
Common Stock 218 38 (22)(4) 234 112 (19)(6) 327
Additional paid-in-capital and other
shareholders' equity 130,196 1,422 22 (4) 131,640 17,010 85 (6)
(17,010)(7) 131,725
Retained earnings (accumulated deficit) 43,978 4,504 (4,800)(3) 43,682 (26,739) (23,000)(5) (6,057)
-------- ------- ------- -------- -------- -------- --------
Total shareholders' equity 174,392 5,964 (4,800) 175,556 ( 9,551) (40,010) 125,995
-------- ------- ------- -------- -------- -------- --------
Total liabilities and shareholders' equity $400,117 $23,756 $ - $423,873 $116,570 $(67,432) $473,011
======== ======= ======= ======== ======== ======== ========
</TABLE>
See accompanying Notes
14
<PAGE> 15
Notes to Unaudited Pro Forma Combined Condensed Balance Sheet.
- ------------
(1) BRI's balance sheet is as of August 31, 1996.
(2) Innovex's financial statements have been prepared on a basis of generally
accepted accounting principles (GAAP) in the U.K., except for the
redeemable preference shares which have been reclassified from
shareholders' equity and are presented as a separate classification
between debt and shareholders' equity. The remaining net differences
between U.K. and U.S. GAAP are immaterial to the pro forma combined net
income and shareholders' equity for all periods presented.
(3) To reduce pro forma retained earnings for non-recurring costs (as
currently estimated by management) directly associated with the
acquisition of BRI, estimated at $2.5 million and the reorganization of
BRI, estimated at $2.3 million.
(4) To reflect the issuance of 1,614,915 shares of Quintiles common stock,
$0.01 par value, in exchange for the 375,448 shares of BRI common stock,
$0.10 par value, using the agreed upon exchange ratio of 4.3013.
(5) To reduce pro forma retained earnings for non-recurring costs (as
currently estimated by management) directly associated with the acquisition
of Innovex, estimated at $14.5 million and the reorganization of Innovex,
estimated at $8.5 million.
(6) To reflect the issuance of 9,214,253 shares of Quintiles common stock,
$0.01 par value, in exchange for the outstanding Innovex ordinary and
preferred ordinary shares.
(7) In connection with the transaction, Quintiles will satisfy in full and
retire approximately $60 million of Innovex's outstanding long-term credit
facility, which was approximately $50.3 million as of September 30, 1996.
The redeemable preference shares will also be redeemed in connection with
the transaction.
15
<PAGE> 16
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
Nine months ended September 30, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL
--------------------- PRO FORMA PRO FORMA ---------- PRO FORMA
QUINTILES BRI(1) ADJUSTMENTS SUBTOTAL INNOVEX(2) ADJUSTMENTS PRO FORMA
--------- -------- ----------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Professional fee income $234,711 $42,986 $ - $277,697 $150,350 $ - $428,047
Less reimbursed costs:
Investigator payments 31,860 4,680 - 36,540 - - 36,540
Travel and other 16,609 - - 16,609 - - 16,609
-------- ------- ----- -------- -------- -------- --------
Net revenue 186,242 38,306 - 224,548 150,350 - 374,898
Costs and expenses:
Direct costs 87,992 13,817 - 101,809 1,704 - 103,513
General and administrative expense 69,645 20,152 - 89,797 124,019 - 213,816
Depreciation and amortization 8,794 1,167 - 9,961 11,533 - 21,494
Non-recurring costs relating
to reorganization - - - - 2,334 - 2,334
Special pension contribution - - - - 2,291 - 2,291
-------- ------- ----- -------- -------- -------- --------
166,431 35,136 - 201,567 141,881 - 343,448
-------- ------- ----- -------- -------- -------- --------
Income from operations 19,811 3,170 - 22,981 8,469 - 31,450
Other income/(expense), net 1,566 (392) - 1,174 (3,130) - (1,956)
-------- ------- ----- -------- -------- -------- --------
Income before income taxes 21,377 2,778 - 24,155 5,339 - 29,494
Income taxes 6,735 1,069 - 7,804 2,133 - 9,937
-------- ------- ----- -------- -------- -------- --------
Net income 14,642 1,709 - 16,351 3,206 - 19,557
Redeemable preferred stock dividends
paid - - - - (633) - (633)
-------- ------- ----- -------- -------- -------- --------
Net income applicable to common
shareholders $ 14,642 $ 1,709 $ - $ 16,351 $ 2,573 $ - $ 18,924
======== ======= ===== ======== ======== ======== ========
Weighted average shares outstanding 22,279 24,006 33,220
======== ======== ========
Net income per common share $ 0.66 $ 0.68 $ 0.57(3)
======== ======== ========
</TABLE>
- ------------
(1) BRI's income statement is for the nine month period ended August 31, 1996.
(2) Innovex's financial statements have been prepared on a basis of generally
accepted accounting principles (GAAP) in the U.K. The net differences
between U.K. and U.S. GAAP are immaterial to the pro forma combined net
income for the nine months ended September 30, 1996.
(3) Pro forma net income per share would have been $0.68 per share for the nine
months ended September 30, 1996 if Innovex had not incurred the $2.3
million of non-recurring costs relating to its reorganization and the $2.3
million of special pension contributions.
16
<PAGE> 17
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
Nine months ended September 30, 1995
(In thousands, except per share data)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL
--------------------- PRO FORMA PRO FORMA ---------- PRO FORMA
QUINTILES BRI(1) ADJUSTMENTS SUBTOTAL INNOVEX(2) ADJUSTMENTS PRO FORMA
--------- -------- ----------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Professional fee income $164,287 $29,948 $ - $194,235 $76,269 $ - $270,504
Less reimbursed costs:
Investigator payments 38,577 1,546 - 40,123 - - 40,123
Travel and other 15,310 - - 15,310 - - 15,310
-------- ------- ----- -------- ------- -------- --------
Net revenue 110,400 28,402 - 138,802 76,269 - 215,071
Costs and expenses:
Direct costs 51,673 13,006 - 64,679 2,021 - 66,700
General and administrative expense 42,786 12,765 - 55,551 62,862 - 118,413
Depreciation and amortization 5,253 950 - 6,203 6,538 - 12,741
-------- ------- ----- -------- ------- -------- --------
99,712 26,721 - 126,433 71,421 - 197,854
-------- ------- ----- -------- ------- -------- --------
Income from operations 10,688 1,681 - 12,369 4,848 - 17,217
Other income/(expense), net 891 (274) - 617 (1,844) - (1,227)
-------- ------- ----- -------- ------- -------- --------
Income before income taxes 11,579 1,407 - 12,986 3,004 - 15,990
Income taxes 4,106 631 - 4,737 891 - 5,628
-------- ------- ----- -------- ------- -------- --------
Net income $ 7,473 $ 776 $ - $ 8,249 $ 2,113 $ - $ 10,362
======== ======= ===== ======== ======= ======== ========
Weighted average shares outstanding 19,316 20,793 29,976
======== ======== ========
Net income per common share $ 0.39 $ 0.40 $ 0.35
======== ======== ========
</TABLE>
- ------------
(1) BRI's income statement is for the nine month period ended August 31, 1995.
(2) Innovex's financial statements have been prepared on a basis of generally
accepted accounting principles (GAAP) in the U.K. The net differences
between U.K. and U.S. GAAP are immaterial to the pro forma combined net
income for the nine months ended September 30, 1995.
17
<PAGE> 18
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 hereunto duly authorized.
QUINTILES TRANSNATIONAL CORP.
By: /s/ Rachel R. Selisker
-----------------------------
Dated: January 16, 1997 Rachel R. Selisker
Chief Financial Officer
18
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ---------------------
<S> <C>
2.01(1) Merger Agreement dated as of September 16, 1996 by and among Quintiles
Transnational Corp., BRI Acquisition Corp. and BRI International, Inc.
the "Merger Agreement")
2.02* List of Exhibits and Schedules omitted from the Merger Agreement
2.03(2) Share Exchange Agreement dated as of October 4, 1996 among Innovex
Limited, Quintiles Transnational Corp. and the shareholders of Innovex
Limited (the "Share Exchange Agreement")
2.04* List of Exhibits and Schedules omitted from the Share Exchange Agreement
99.01* Registration Rights Agreement, dated as of November 29, 1996, by and
among Quintiles Transnational Corp. and the shareholders of Innovex
Limited listed therein
</TABLE>
- ----------------------
(1) Exhibit to the Company's Registration Statement on Form S-4 (Registration
No. 333-12573) initially filed with the Commission on September 24, 1996,
as amended, and incorporated herein by reference.
(2) Exhibit to the Company's current report on Form 8-K dated October 6, 1996
filed with the Commission and incorporated herein by reference.
* Previously filed.
19
