SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
to
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): August 5, 1998
PHARMACEUTICAL MARKETING SERVICES INC.
(Exact name of registrant as specified in its charter)
Delaware 0-9723 51-0335521
(State of other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
45 Rockefeller Plaza, New York, New York 10111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 841-0610
This Amendment No. 1 to Form 8-K/A of Pharmaceutical Marketing
Services Inc. ("PMSI" or the "Company") amends the Company's Form 8-K/A filed on
September 29, 1998 (the "Original 8-K/A") that amended the Company's Form 8-K
filed on August 18, 1998 in connection with the sale (the "Transaction") by the
Company to IMS Health Incorporated ("IMS") of the non-US operating assets of the
Company and its subsidiaries in return for which the Company and its
subsidiaries received an aggregate 1,197,963 shares of Common Stock, $.01 par
value, of IMS. PMSI retained its non-operating assets. The Transaction was
consummated on August 5, 1998 pursuant to the Purchase Agreement, dated as of
August 3, 1998 (the "Purchase Agreement"), among IMS, PMSI, PMSI Holdings
Limited and Source Informatics European Holdings LLC. This Amendment amends pro
forma financial information that was included in the Original 8-K/A pursuant to
Item 7 to restate certain certain costs of the transaction.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Businesses Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
The following unaudited proforma condensed consolidated financial
statements give effect to the sale of the non-US operating assets, pursuant to
the Purchase Agreement. The unaudited proforma condensed consolidated balance
sheet reflects the Transaction as if it had occurred on June 30, 1998. The
unaudited proforma condensed consolidated statement of operations shows the
historical results of operations of PMSI, and the effect of the sale of the
non-US operating assets, for the year ended June 30, 1998, as if the Transaction
had occurred on June 30, 1998.
The unaudited proforma condensed consolidated financial statements do
not purport to be indicative of the operating results or financial position that
would have been achieved had the Transaction been affected for the periods
indicated or of the results or financial position which may be obtained in the
future.
The unaudited proforma condensed consolidated financial statements are
based on and should be read in conjunction with the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1998, as filed with the Securities
and Exchange Commission.
The following pro forma financial information is provided:
1. Unaudited Pro forma Condensed Consolidated Balance Sheet at June 30, 1998.
2. Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
Fiscal Year ended June 30, 1998.
3. Notes to the Pro Forma Condensed Consolidated Financial Statements.
PHARMACEUTICAL MARKETING SERVICES INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
as of June 30, 1998
(in thousands)
(Unaudited)
Sale of
PMSI as Non-US Consolidated
Reported Operations Adjustments Proforma
Assets
Current assets
Cash and cash equivalents $ 42,315 $ (1,314) $ 41,001
Marketable securities 50, 097 - 50,097
Accounts receivable 21,332 (15,043) 6,289
Work in progress 1,489 (765) 724
Prepaid expenses and other
current assets 9,866 (7,174) 2,692
---------- ---------- -------- ---------
Total current assets 125,099 (24,296) 100,803
Marketable securities 19,444 - $ 71,279 90,723
Property and equipment, net 9,548 (8,013) - 1,535
Goodwill, net 22,063 (12,672) - 9,391
Other assets, net 10,204 (3,395) - 6,809
---------- ---------- -------- ---------
Total assets $ 186,358 $ (48,376) $ 71,279 $ 209,261
Liabilities and Stockholders' Equity
(Deficit)
Current liabilities
Current maturities of long-term debt $ 61 $ (41) - $ 20
Accounts payable 5,730 (4,632) - 1,098
Accrued liabilities 23,499 (9,256) $ 2,500 16,743
Accrued income taxes on sale of
Non-US operating assets - - 1,500 1,500
Unearned income 22,087 (12,068) - 10,019
---------- ---------- -------- ---------
Total current liabilities 51,377 (25,997) 4,000 29,380
Long-term debt 69,114 (94) - 69,020
Other liabilities 7,761 (7,711) - 50
---------- ---------- -------- ---------
Total liabilities 128,252 (33,802) 4,000 98,450
Total stockholders' equity (deficit) 58,106 (14,574) 67,279 110,811
---------- ---------- -------- ---------
Total liabilities and stockholders' $ 186,358 $ (48,376) $ 71,279 $ 209,261
equity (deficit) ========== ========== ======== =========
The accompanying notes are an integral part of these proforma
condensed consolidated financial statements.
PHARMACEUTICAL MARKETING SERVICES INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the year ended June 30, 1998
(in thousands, except per share data)
(Unaudited)
Sale of
PMSI as Non-US Consolidated
Reported Operations Adjustments Proforma
Revenue $ 77,966 $ (40,915) $ 37,051
Operating expenses (77,906) 43,725 (34,181)
In-process research and development (12,046) - (12,046)
Amortization of intangible assets (1,596) 888 (708)
Income from assets held for sale (281) - (281)
Impairment of assets held for sale (14,735) - (14,735)
Transaction costs (1,151) - $ 1,151 -
--------- ---------- --------- ----------
Operating income (loss) (29,749) 3,698 1,151 (24,900)
Gain on sale of operations, net of loss 34,106 - - 34,106
Interest and other income 5,677 (241) - 5,436
Interest expense (4,632) - - (4,632)
--------- ---------- --------- ----------
Income from continuing operations
before income taxes 5,402 3,457 1,151 10,010
Income tax provision (5,705) 3,902 (472) (2,275)
Minority interest - - - -
--------- ---------- --------- ----------
Net income (loss) from continuing
operations $ (303) $ 7,359 $ 679 $ 7,735
========= ========== ========= ==========
Basic and diluted earnings (loss) per share:
Basic $ (0.02) $ 0.61
========= ==========
Diluted $ (0.02) $ 0.59
--------- ----------
The accompanying notes are an integral part of these proforma
condensed consolidated financial statements.
Notes to Proforma Condensed
Consolidated Financial Statements
(Unaudited)
1. PROFORMA BASIS OF PRESENTATION AND ADJUSTMENTS
The unaudited proforma condensed consolidated financial statements
present the Company's sale to IMS of all of the Company's non-US operating
assets for aggregate proceeds 1,197,963 unregistered shares of IMS Common Stock.
The Company retained its non-operating assets.
The unaudited proforma condensed consolidated balance sheet at June
30, 1998 reflects the sale of the Company's non-US operating assets as if the
Transaction had occurred on June 30, 1998.
The unaudited proforma condensed consolidated statements of operations
for the year ended June 30, 1998 reflect the sale of the Company's non-US
operating assets as if the Transaction had occurred on June 30, 1998.
The unaudited proforma condensed consolidated financial statements are
intended for information purposes and are not necessarily indicative of the
future consolidated financial position or future results of operations, nor do
they purport to be indicative of the operating results or financial position
that would have been achieved had the transaction referred to above been
effective from the periods indicated. These proforma condensed consolidated
financial statements should be read in conjunction with the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1998, as filed with the
Securities and Exchange Commission.
2. UNAUDITED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
The adjustments reflect the proceeds and estimated transaction costs
of the divestiture of the non- US operating assets as follows:
(i) 1,197,963 shares of IMS Common Stock with a total value of $71.3
million based on an August 5, 1998 market value of $59.50 per share;
(ii) $2.5 million related to estimated transaction costs, including
investment banking fees, legal fees, accountants' fees and related
out-of-pocket expenses; and
(iii) $1.5 million estimated tax payable on the gain on sale of the
non-US operating assets, representing tax at 35% on the excess of
proceeds over the aggregate tax basis of the businesses sold of
approximately $67 million.
The proforma condensed consolidated balance sheet includes an
estimated non-recurring after-tax gain of $52.7 million on the divestiture. The
estimated after-tax gain has been intentionally omitted from the proforma
condensed consolidated statements of operations and is subject to finalization.
3. UNAUDITED PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
YEAR ENDED JUNE 30, 1998
The adjustments to the proforma condensed consolidated statement of
operations represent transaction costs of $1.15 million, which represent
non-recurring costs incurred directly related to the Transaction and the
associated tax effect at a rate of 41%.
The consolidated proforma effective tax rate of 23% is due to the
non-recurring tax benefits recorded in the year ended June 30, 1998 relating to
the loss on sale of assets held for sale. The expected on-going effective rate
is approximately 41%.
The anticipated post-tax gain on the sale of the Company's non-US
operating assets is not reflected in the proforma condensed consolidated
statement of operations. Similarly, anticipated income relating to the
investment of the sale proceeds is excluded.
There has been no apportionment of corporate overhead to the results
of PMSI's non-US operating assets. Such an allocation would have increased the
reported operating loss of the businesses disposed.
(c) Exhibits.
Exhibit 2 Purchase Agreement, dated as of August 3, 1998 among IMS
Health Incorporated, Pharmaceutical Marketing Services Inc.,
PMSI Holdings Limited and Source Informatics European
Holdings LLC (filed with original Form 8-K on August 18, 1998).
SIGNATURE
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.
PHARMACEUTICAL MARKETING SERVICES INC.
Dated: November 13, 1998 By:/s/ Warren J. Hauser
--------------------
Name: Warren J. Hauser
Title: Vice President and Secretary
EXHIBIT INDEX
Exhibit No.
2 Purchase Agreement, dated as of August 3, 1998 among IMS
Health Incorporated, Pharmaceutical Marketing Services Inc.,
PMSI Holdings Limited and Source Informatics European Holdings
LLC (filed with original Form 8-K on August 18, 1998).