<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 June 30, 1997
Commission file number 340-23520
QUINTILES TRANSNATIONAL CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-1714315
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4709 Creekstone Dr., Suite 300
Durham, NC 27703-8411
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(919) 941-2000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(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. X Yes No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The number of shares of Common Stock, $.01 par value, outstanding as of August
1, 1997 was 36,071,380.
1
<PAGE> 2
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
Index
Page
----
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets -
June 30, 1997 and December 31, 1996 3
Condensed consolidated statements of income
- Three months ended June 30, 1997 and 1996;
six months ended June 30, 1997 and 1996 4
Condensed consolidated statements of
cash flows - Six months ended
June 30, 1997 and 1996 5
Notes to condensed consolidated financial
statements - June 30, 1997 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 13
Part II. Other Information 14
Signatures 16
Exhibit Index 17
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1997 1996
--------- ---------
(Unaudited) (Note 1)
(In thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 103,666 $ 66,729
Accounts receivable and unbilled services 204,618 180,886
Investments 29,297 37,623
Other 22,805 12,873
--------- ---------
Total current assets 360,386 298,111
Property and equipment 222,204 179,886
Less accumulated depreciation 69,147 55,127
--------- ---------
153,057 124,759
Non-current assets:
Investments 39,099 25,083
Intangibles 71,950 66,804
Deferred income taxes 62,460 --
Deposits and other 11,724 11,048
--------- ---------
Total non-current assets 185,233 102,935
--------- ---------
Total assets $ 698,676 $ 525,805
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 88,101 86,602
Credit arrangements, current 14,611 22,726
Unearned income 89,065 79,629
Income taxes and other 16,169 10,111
--------- ---------
Total current liabilities 207,946 199,068
Long-term liabilities:
Credit arrangements, less current portion 148,769 146,927
Long-term obligation 21,525 21,823
Deferred income taxes and other 4,670 10,754
--------- ---------
174,964 179,504
--------- ---------
Total liabilities 382,910 378,572
Shareholders' equity:
Common stock and additional paid-in capital,
35,721,729 and 33,715,659 shares
issued and outstanding at June 30, 1997 and
December 31, 1996, respectively 290,841 139,385
Retained earnings 31,269 8,562
Other equity (6,344) (714)
--------- ---------
Total shareholders' equity 315,766 147,233
--------- ---------
Total liabilities and shareholders' equity $ 698,676 $ 525,805
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1997 1996 1997 1996
--------- --------- --------- ---------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net revenue $ 190,545 $ 129,633 $ 367,657 $ 242,425
Costs and expenses:
Direct 98,941 64,088 189,631 121,889
General and administrative 62,800 47,693 122,947 85,004
Depreciation and amortization 8,712 5,789 16,690 11,186
Non-recurring:
Restructuring -- -- -- 2,373
Special pension contribution -- -- -- 2,329
--------- --------- --------- ---------
Total costs and expenses 170,453 117,570 329,268 222,781
--------- --------- --------- ---------
Income from operations 20,092 12,063 38,389 19,644
Other expense, net (323) (879) (1,010) (571)
--------- --------- --------- ---------
Income before income taxes 19,769 11,184 37,379 19,073
Income taxes 7,544 3,662 14,062 6,795
--------- --------- --------- ---------
Net income 12,225 7,522 23,317 12,278
Non-equity dividend -- (527) -- (738)
--------- --------- --------- ---------
Net income available for common
shareholders $ 12,225 $ 6,995 $ 23,317 $ 11,540
========= ========= ========= =========
Net income per share $ 0.34 $ 0.20 $ 0.65 $ 0.34
========= ========= ========= =========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
1997 1996
--------- ---------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 23,317 $ 12,278
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Depreciation and amortization 16,690 11,186
Change in operating assets and liabilities (15,308) (15,233)
Other (3,422) (51)
Change in fiscal year of pooled entity (894) (9,378)
--------- ---------
Net cash provided (used) by operating activities 20,383 (1,198)
INVESTING ACTIVITIES
Proceeds from disposition of property and equipment 598 34
Acquisition of businesses, net of cash acquired (3,789) (28,677)
Acquisition of property and equipment (38,408) (16,750)
Security investments, net (5,575) (46,132)
Payment of non-recurring transaction costs (5,648) --
Change in fiscal year of pooled entity (25) 2,606
--------- ---------
Net cash used in investing activities (52,847) (88,919)
FINANCING ACTIVITIES
Proceeds from borrowings and line of credit 5,938 141,137
Principal payments on credit arrangements (22,740) (4,729)
Issuance of debt for capitalization of pooled entity -- 45,197
Recapitalization of pooled entity -- (29,230)
Proceeds from issuance of common stock 93,304 1,374
Stock issuance costs (4,548) (78)
Non-equity dividend (1,458) --
Other -- (218)
Change in fiscal year of pooled entity (67) 1,398
--------- ---------
Net cash provided by financing activities 70,429 154,851
Effect of foreign currency exchange rate changes on cash (1,028) (409)
--------- ---------
Increase in cash and cash equivalents 36,937 64,325
Cash and cash equivalents at beginning of period 66,729 84,762
--------- ---------
Cash and cash equivalents at end of period $ 103,666 $ 149,087
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 30, 1997
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. 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 and six month periods ended June
30, 1997 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1997. For further information, refer to the
consolidated financial statements and notes thereto included in the Annual
Report on Form 10-K for the year ended December 31, 1996 of Quintiles
Transnational Corp. (the "Company").
The balance sheet at December 31, 1996 has been derived from the audited
financial statements of the Company and Medical Actions Communications Limited
("MAC"), a 1997 pooling of interests transaction, at that date (see Note 2).
The balance sheet does not include all of the information and notes required by
generally accepted accounting principles for complete financial statements.
Net income per share is based on the weighted average number of shares of common
stock outstanding during each period. Weighted average shares outstanding for
the three and six month periods ended June 30 were as follows:
Weighted Average Shares Outstanding
1997 1996
---- ----
Three months ended June 30 36,410,652 34,499,128
Six months ended June 30 35,865,734 34,441,277
2. Mergers
On June 11, 1997, the Company acquired MAC, a leading international strategic
medical communications consultancy. The Company acquired all of the stock of
MAC for approximately 566,000 shares of the Company's Common Stock.
Approximately 91,000 of these exchange shares were attributable to cash
reserves held by MAC and its affiliates. The Company also granted stock options
for approximately 63,000 shares of the Company's Common Stock. The acquisition
has been accounted for as a pooling of interests, and as such, all historical
financial data have been restated to include the historical financial data of
MAC.
6
<PAGE> 7
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited) -- Continued
On June 2, 1997, the Company acquired Butler Communications Inc. ("Butler") and
its affiliated companies, including Butler Clinical Recruitment, Inc., which
specialize in communication programs to accelerate the recruitment of patients
for clinical trials. The Company acquired the Butler businesses in exchange for
approximately 214,000 shares of the Company's Common Stock. In addition, the
Company assumed approximately $2.8 million in existing Butler debt. The
acquisition has been accounted for as a pooling of interests, and as such, all
condensed consolidated financial data for periods subsequent to January 1, 1997
have been restated to include the results of Butler. Since the financial data
of Butler prior to January 1, 1997 have no material impact on the condensed
consolidated financial data previously reported by the Company, the condensed
consolidated financial data presented for periods prior to January 1, 1997 have
not been restated to include the historical financial data of Butler.
Reconciliation of results of operations previously reported by the separate
entities prior to the merger and as restated for the combined company follows
(in thousands, except per share data):
<TABLE>
<CAPTION>
Company MAC Butler Consolidated
------- --- ------ ------------
<S> <C> <C> <C> <C>
For the six months ended June 30, 1997:
Net revenue $352,581 $7,151 $7,925 $367,657
Net income available to
common shareholders 21,385* 1,294 638 23,317
Net income per share $ 0.61* $ 0.65
* Includes approximately $800,000 of acquisition costs which are not deductible for tax purposes.
Excluding these costs, net income per share would have been $0.63.
<CAPTION>
Company MAC Consolidated
------- --- ------------
<S> <C> <C> <C> <C>
For the three months ended June 30, 1996:
Net revenue $127,416 $2,217 $129,633
Net income available to
common shareholders 6,884 111 6,995
Net income per share $ 0.20 $ 0.20
For the six months ended June 30, 1996:
Net revenue $238,008 $4,417 $242,425
Net income available to
common shareholders 11,320 220 11,540
Net income per share $ 0.33 $ 0.34
</TABLE>
7
<PAGE> 8
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited) -- Continued
3. Significant Customer
No customer accounted for greater than 10% of consolidated net revenue
for the three and six months ended June 30, 1997. One customer accounted
for 12.1% and 12.3% of consolidated net revenue for the three and six
months ended June 30, 1996, respectively.
4. Shareholders' Equity
On March 12, 1997, the Company closed a public offering of 5,520,000
shares of Common Stock at a price to the public of $62.875 per share. Of
the 5,520,000 shares sold, 1,415,000 shares were sold by the Company. Net
proceeds to the Company, which exclude underwriting discounts and
offering expenses, amounted to approximately $84.6 million.
5. Income Taxes
In the first quarter of 1997, the Company recorded an estimate of the
deferred tax asset related to tax basis goodwill created by the Innovex
acquisition, which is amortizable for U.S. tax purposes starting January
1, 1997. The gross amount of this deferred tax asset is estimated to be
$99.5 million, for which a valuation allowance of $36.8 million was
recorded to reflect possible limitations in the use of these tax
benefits. A corresponding $62.7 million increase in additional paid in
capital was recorded in accordance with generally accepted accounting
principles.
6. Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share" ("FASB 128"), which is required
to be adopted in December 1997. Upon adoption, the Company will be
required to change its method of computing, presenting and disclosing
earnings per share information, as well as, restating all prior periods
presented. Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options will be excluded. The
impact is expected to result in an increase in primary
8
<PAGE> 9
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited) -- Continued
earnings per share for the three and six months ended June 30, 1997 and
1996. Under FASB 128, the primary earnings per share would have been
$0.34 and $0.21 for the three months ended June 30, 1997 and 1996,
respectively and $0.67 and $0.35 for the six months ended June 30, 1997
and 1996, respectively. The impact of FASB 128 on the calculation of
fully diluted earnings per share for these periods is not expected to be
material.
7. Subsequent Event
On July 2, 1997, the Company acquired CerebroVascular Advances, Inc.
("CVA"), a clinical research company, based in San Antonio, TX that is a
leader in stroke clinical trials. The Company exchanged approximately
234,000 shares of its Common Stock for all of CVA's outstanding shares of
capital stock and exchanged options exerciseable for approximately 17,000
shares of the Company's Common Stock. The transaction will be accounted
for as a pooling of interests.
9
<PAGE> 10
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Three Months Ended June 30, 1997 and 1996
Net revenue increased 47.0% to $190.5 million for the second quarter of 1997, as
compared to $129.6 million for the second quarter of 1996. In general, growth
occurred across each of the Company's three geographic regions. Factors
contributing to this growth include the provision of increased services rendered
under existing contracts and the initiation of services under contracts awarded
subsequent to the second quarter of 1996.
Direct costs, which include compensation and related fringe benefits for
billable employees and any other expenses directly related to contracts,
increased 54.4% to $98.9 million for the quarter ended June 30, 1997 from $64.1
million for the quarter ended June 30, 1996. Direct costs, as a percentage of
net revenue, were 51.9% for the second quarter of 1997 versus 49.4% for the
second quarter of 1996. The increase is primarily due to direct costs for sales
and marketing services as a percentage of net revenue being higher than direct
costs for the contract research services as a percentage of net revenue. The
sales and marketing services represent a larger proportion of the total net
revenues for the three months ended June 30, 1997 as compared to the three
months ended June 30, 1996.
General and administrative expense, which includes compensation and fringe
benefits for administrative employees, non-billable travel, professional
services, advertising, computer and facility expenses, increased 31.7% to $62.8
million from $47.7 million for the quarters ended June 30, 1997 and 1996,
respectively. General and administrative expense, as a percentage of net revenue
was 33.0% for the second quarter of 1997 versus 36.8% for the second quarter of
1996. The decrease is primarily due to a proportionately greater increase in
sales and marketing services during the second quarter of 1997 as compared to
the second quarter of 1996. Generally, lower overheads are associated with sales
and marketing services.
Depreciation and amortization increased to $8.7 million for the second quarter
of 1997 from $5.8 million for the second quarter of 1996.
Income from operations was $20.1 million or 10.5% of net revenue for the second
quarter of 1997 versus $12.1 million or 9.3% of net revenue for the second
quarter of 1996.
Other expense decreased 63.3% to $323,000 for the second quarter of 1997 from
$879,000 for the second quarter of 1996. Net interest expense decreased
approximately $1.1 million due to a decrease in interest expense of
approximately $539,000 and an increase in interest income of approximately
$562,000. Offsetting these amounts were approximately $800,000 in acquisition
costs in the second quarter of 1997 which are non-deductible for tax purposes.
10
<PAGE> 11
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
Income taxes, as a percentage of income before income taxes, increased to 38.2%
for the second quarter of 1997 versus 32.7% for the second quarter of 1996.
This increase is primarily due to an increase in profits in locations with
higher tax rates and the non-deductible acquisition costs that were incurred
during the second quarter of 1997.
Net income available to common shareholders increased to $12.2 million for the
second quarter of 1997 from $7.0 million for the second quarter of 1996.
Six Months Ended June 30, 1997 and 1996
Net revenue increased 51.7% to $367.7 million for the six months of 1997, as
compared to $242.4 million for the first six months of 1996. In general, growth
occurred across each of the Company's three geographic regions. Factors
contributing to this growth include the provision of increased services rendered
under existing contracts and the initiation of services under contracts awarded
subsequent to the first six months of 1996.
Direct costs, which include compensation and related fringe benefits for
billable employees and any other expenses directly related to contracts,
increased 55.6% to $189.6 million for the six months ended June 30, 1997 from
$121.9 million for the six months ended June 30, 1996. Direct costs, as a
percentage of net revenue, were 51.6% for the first six months of 1997 versus
50.3% for the six months of 1996. This increase is primarily due to direct costs
for sales and marketing services as a percentage of net revenue being higher
than direct costs for contract research services as a percentage of net revenue.
The sales and marketing services represent a larger proportion of the total net
revenues for the six months ended June 30, 1997 as compared to the six months
ended June 30, 1996.
General and administrative expense, which includes compensation and fringe
benefits for administrative employees, non-billable travel, professional
services, advertising, computer and facility expenses, increased 44.6% to $122.9
million from $85.0 million for the six months ended June 30, 1997 and 1996,
respectively. General and administrative expense, as a percentage of net
revenue, decreased to 33.4% for the first six months of 1997 from 35.1% for the
first six months of 1996. The decrease is primarily due to a proportionately
greater increase in sales and marketing services during the first six months of
1997 as compared to the first six months of 1996. Generally, lower overheads are
associated with sales and marketing services.
Depreciation and amortization increased to $16.7 million for the first six
months of 1997 from $11.2 million for the first six months of 1996.
Income from operations was $38.4 million or 10.4% of net revenue for the first
six months of 1997 versus $19.6 million or 8.1% of net revenue for the second
quarter of 1996. Excluding non-recurring costs, income from operations was $24.3
million or 10.0% of net revenue for the first six months of 1996. During the
first six months of 1996, two non-recurring charges were recognized: a $2.4
million expense for an Innovex Limited internal reorganization and a related
$2.3 million special pension contribution.
11
<PAGE> 12
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
Other expense was $1.0 million for the first six months of 1997 as compared to
$571,000 for the first six months of 1996. The net increase is primarily due to
$800,000 of acquisition costs incurred in the first six months of 1997 as
compared to $30,000 in the first six months of 1996 both of which are
non-deductible for tax purposes. Offsetting these amounts is an increase of
approximately $137,000 of net interest income.
Income taxes, as a percentage of income before income taxes, increased to 37.6%
for the first six months of 1997 versus 35.6% for the first six months of 1996.
This increase is primarily due to an increase in profits in locations with
higher tax rates and the non-deductible acquisition costs that were incurred
during the second quarter of 1997.
Net income available to common shareholders increased to $23.3 million for the
first six months of 1997 from $11.5 million for the first six months of 1996.
Excluding non-recurring costs, net income available to common shareholders was
$15.1 million for the first six months of 1996.
Liquidity and Capital Resources
Cash inflows from operations were $21.1 million for the six months ended June
30, 1997 versus cash outflows of $1.2 million for the comparable period of 1996.
Investing activities, for the six months ended June 30, 1997, consisted
primarily of capital asset purchases, acquisitions, investment security
purchases and maturities and payment of non-recurring transaction costs accrued
in 1996. These investing activities required an outlay of cash of $52.8 million
for the first six months of 1997 compared to an outlay of $88.9 million for
investing activities during the same period in 1996.
As of June 30, 1997, total working capital was $152.4 million versus $99.0
million as of December 31, 1996. Net receivables from clients (accounts
receivable and unbilled services net of unearned income) increased to $115.6
million at June 30, 1997 as compared to $101.3 million at the end of 1996.
On March 12, 1997, the Company closed a public offering of 5,520,000 shares of
its Common Stock at a price to the public of $62.875 per share. Of the 5,520,000
shares sold, 1,415,000 shares were sold by the Company and 4,105,000 shares were
sold by selling shareholders. Net proceeds to the Company amounted to
approximately $84.6 million.
12
<PAGE> 13
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
The Company has a (pound)15.0 million (approximately $25.0 million) unsecured
line of credit with a U.K. bank and a (pound)5.0 million (approximately $8.3
million) secured overdraft facility with a second U.K. bank. At June 30, 1997,
the Company had (pound)18.5 million (approximately $30.8 million) available
under these arrangements. A $4.0 million secured line of credit with a U.S. bank
and a $15.0 million unsecured line of credit with a second U.S. bank expired in
accordance with their terms during the six months ended June 30, 1997.
The Company's primary cash needs on both a short-term basis and a long-term
basis are for working capital, geographic expansion, addition of new services,
potential acquisitions, general corporate purposes and capital expenditures.
Based on its current operating plan, the Company believes that its available
cash and cash equivalents as of June 30, 1997, together with cash flow from
operations and borrowings under its line of credit agreements, will be
sufficient to meet its foreseeable cash needs.
Currently, the Company is evaluating a number of acquisition and expansion
possibilities. The Company may from time to time seek to obtain debt or equity
financing to facilitate possible acquisitions or expansion.
Cautionary Statement for Forward-Looking Information
Information set forth in this Form 10-Q including Management's Discussion and
Analysis of Financial Condition and Results of Operations contain various
"forward looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Act of 1934, which statements
represent the Company's actual operating results and financial position to
differ materially. Such forward looking statements can be identified by the use
of forward looking terminology such as "may," "will," "expect," "anticipate,"
"estimate," "believe," or "continue," or the negative thereof or other
variations thereof or comparable terminology.
The Company cautions that any such forward looking statements are further
qualified by important factors that could cause the Company's actual operating
results to differ materially from those in the forward looking statements,
including without limitation, the Company's dependence on certain industries and
clients, management of its growth, risks associated with acquisitions, risks
relating to contract sales services, competition within the industry, the loss
or delay of large contracts, dependence on personnel and government regulation
and other Risk Factors described in Exhibit 99.01 filed with this report (and in
incorporated herein by reference).
Item 3. Quantitative and Qualitative Disclosure About Market Risk -- Not
Applicable
13
<PAGE> 14
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
PART II. Other Information
Item 1. Legal Proceedings -- Not applicable
Item 2. Changes in Securities
On June 11, 1997 the Company issued approximately 556,000 shares of its
Common Stock to the shareholders of MAC in exchange for all of
MAC's outstanding shares of capital stock in reliance upon a claim of
exemption pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act") based upon representations made by the
MAC shareholders in the Share Acquisition Agreement re: Action
International Marketing Services Limited dated June 11, 1997 by and
among Stephen Bullock and Others, the Company and the warrantors.
On June 2, 1997 the Company issued approximately 214,000 shares of its
Common Stock to the shareholders of Butler in exchange for all
of the outstanding shares of capital stock of the Butler companies in
reliance upon a claim of exemption pursuant to Section 4(2) of the
Securities Act based upon representations made by the Butler
shareholders in the Merger Agreement dated as of June 2, 1997 by and
among the Company, BCA Corp., the shareholders of Butler and affiliated
companies owned by the shareholders of Butler.
Item 3. Defaults upon Senior Securities -- Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
On April 30, 1997, the Company held its Annual Meeting of
Shareholders during which the shareholders:
(1) Elected four nominees to serve as Class III directors
with the terms continuing until the Annual Meeting of
Shareholders in 2000. The votes were cast as follows:
Broker
For Withhold Non-vote
--- -------- --------
Dennis B. Gillings, Ph.D. 23,656,405 81,086
Chester W. Douglass, Ph.D. 23,670,266 67,225
Richard H. Thompson 23,666,932 70,559
Barrie S. Haigh 23,655,065 82,426
(2) Elected two nominees to serve as Class II directors
with terms continuing until the Annual Meeting of
Shareholders in 1999. The votes were cast as follows:
Broker
For Withhold Non-vote
--- -------- --------
Lawrence S. Lewin 23,653,923 83,568
Vaughn D. Bryson 23,663,042 74,449
(3) Elected one nominee to serve as a Class I director
with a term continuing until the Annual Meeting of
Shareholders in 1998. The votes were cast as follows:
Broker
For Withhold Non-vote
--- -------- --------
Paul Knott, Ph.D 23,649,448 88,043
14
<PAGE> 15
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
(4) Approved the Company's Employee Stock Purchase Plan.
The votes were cast as follows:
Broker
For Against Abstain Non-vote
--- ------- ------- --------
Approval of the Company's 23,671,113 55,829 10,549
Employee Stock Purchase Plan
(5) Ratified the appointment of Ernst & Young LLP as
independent auditors for the Company and its
subsidiaries for the fiscal year ending December 31,
1997. The votes were cast as follows:
Broker
For Against Abstain Non-vote
--- ------- ------- --------
Ratification of
Ernst & Young LLP 23,718,402 9,735 9,354
Item 5. Other Information - Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Description
------- -----------
27.01 Financial Data Schedule
27.02 Financial Data Schedule
99.01* Risk Factors
- ----------
* Exhibit 99.01 to the Company's Annual Report on Form 10-K as filed with
the Securities and Exchange Commission on March 25, 1997 and
incorporated herein by reference.
(b) The Company did not file any reports on Form 8-K during the
three months ended June 30, 1997.
15
<PAGE> 16
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
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.
Quintiles Transnational Corp.
----------------------------------------------
Registrant
Date August 14, 1997 /s/ Dennis B. Gillings
------------------- ----------------------------------------------
Dennis B. Gillings, Chief Executive Officer
Date August 14, 1997 /s/ Rachel R. Selisker
------------------- ----------------------------------------------
Rachel R. Selisker, Chief Financial Officer
16
<PAGE> 17
QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Description
------- -----------
27.01 Financial Data Schedule
27.02 Financial Data Schedule
99.01* Risk Factors
- ----------
* Exhibit 99.01 to the Company's Annual Report on Form 10-K as filed with
the Securities and Exchange Commission on March 25, 1997 and
incorporated herein by reference.
17
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 242,425
<CGS> 0
<TOTAL-COSTS> 222,781
<OTHER-EXPENSES> (2,252)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,824
<INCOME-PRETAX> 19,073
<INCOME-TAX> 6,795
<INCOME-CONTINUING> 12,278
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,278
<EPS-PRIMARY> .34
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 103,666
<SECURITIES> 29,297
<RECEIVABLES> 205,851
<ALLOWANCES> 1,233
<INVENTORY> 0
<CURRENT-ASSETS> 360,386
<PP&E> 222,204
<DEPRECIATION> 69,147
<TOTAL-ASSETS> 698,676
<CURRENT-LIABILITIES> 207,946
<BONDS> 170,294
0
0
<COMMON> 357
<OTHER-SE> 315,409
<TOTAL-LIABILITY-AND-EQUITY> 698,676
<SALES> 0
<TOTAL-REVENUES> 367,657
<CGS> 0
<TOTAL-COSTS> 329,268
<OTHER-EXPENSES> (3,190)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,201
<INCOME-PRETAX> 37,379
<INCOME-TAX> 14,062
<INCOME-CONTINUING> 23,317
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,317
<EPS-PRIMARY> .65
<EPS-DILUTED> 0
</TABLE>
