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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 26, 2000
QUINTILES TRANSNATIONAL CORP.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 340-23520 56-1714315
(State or other (Commission File No.) I.R.S. Employer
jurisdiction Identification Number
of incorporation)
4709 CREEKSTONE DRIVE, RIVERBIRCH BUILDING, SUITE 200,
DURHAM, NORTH CAROLINA 27703-8411
(Address of principal executive offices)
(919) 998-2000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 26, 2000, Quintiles Transnational Corp. completed the
previously announced sale of its electronic data interchange unit, ENVOY
Corporation, to Healtheon/WebMD Corporation. Healtheon/WebMD acquired ENVOY from
Quintiles in exchange for 35 million shares of Healtheon/WebMD common stock and
$400 million cash. Quintiles issued Healtheon/WebMD a warrant to purchase up to
10 million shares of Quintiles common stock at $40 per share, exercisable for
four years.
A copy of the May 30, 2000 press release announcing the completion
of the transaction is attached hereto as Exhibit 99.01 and incorporated herein
by reference. The description contained in the press release of the agreement,
and the transactions contemplated thereby, does not purport to be complete and
is qualified in its entirety by reference to the agreement incorporated by
reference as an exhibit hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION.
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Quintiles Transnational Corp.
Unaudited Pro Forma Consolidated Condensed Financial Data
On May 26, 2000, Quintiles Transnational Corp. (the "Company") completed the
previously announced sale of its electronic data interchange unit, ENVOY
Corporation ("ENVOY") to Healtheon/WebMD Corporation ("Healtheon/WebMD").
Healtheon/WebMD acquired ENVOY from the Company in exchange for 35 million
shares of Healtheon/WebMD common stock and $400 million cash. The Company issued
Healtheon/WebMD a warrant to purchase up to 10 million shares of the Company's
Common Stock at $40 per share, exercisable for four years.
The following unaudited pro forma condensed consolidated balance sheet at March
31, 2000 gives effect to the disposition by the Company of its wholly owned
subsidiary, ENVOY, as if the disposition had occurred at March 31, 2000 and the
unaudited pro forma condensed consolidated statements of operations for the
three months ended March 31, 2000 and for the year ended December 31, 1999 give
effect to such disposition as if it had occurred on January 1 of each period.
ENVOY has been treated as a discontinued operation in the Company's historical
financial statements.
The unaudited pro forma financial information does not purport to be indicative
of either the results of future operations or the results of operations that
would have occurred had the disposition been consummated on the dates indicated.
The pro forma financial information is based upon currently available
information and certain assumptions that the Company believes are reasonable
under the circumstances. The unaudited pro forma financial statements should be
read in conjunction with the Company's historical consolidated financial
statements and notes thereto previously filed in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999, and the Company's Quarterly
Report on Form 10-Q for the three months ended March 31, 2000.
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Quintiles Transnational Corp.
Unaudited Pro Forma Consolidated Condensed Balance Sheet
As of March 31, 2000
(In thousands)
Pro forma
Adjustments
Historical DR/(CR) Pro forma
--------------- ------------- ------------
Assets
Current assets:
Cash and cash equivalents $ 139,487 400,000 (a) $ 395,740
(143,747)(g)
Trade accounts receivable and unbilled services,net 417,364 0 417,364
Investments in debt securities 32,801 0 32,801
Prepaid expenses 42,653 0 42,653
Other current assets and receivables 38,029 0 38,029
Net assets of discontinued operations 133,645 (133,645)(b) 0
--------------- ------------- ------------
Total current assets 803,979 122,608 926,587
Property and equipment 578,602 0 578,602
Less accumulated depreciation (186,991) 0 (186,991)
--------------- ------------- ------------
391,611 0 391,611
Intangibles and other assets:
Goodwill, net 200,984 0 200,984
Other intangibles, net 3,002 0 3,002
Investments in debt securities 78,009 0 78,009
Investments in marketable equity securities 61,050 447,353 (a) 508,403
Deferred income taxes 79,791 0 79,791
Deposits and other assets 42,758 0 42,758
--------------- ------------- ------------
465,594 447,353 912,947
--------------- ------------- ------------
Total assets $ 1,661,184 569,961 $ 2,231,145
=============== ============= ============
Pro forma
Adjustments
Historical DR/(CR) Pro forma
--------------- ------------- ------------
Liabilities and Shareholders' Equity
Current liabilities:
Lines of credit $ 430 0 $ 430
Accounts payable and accrued expenses 283,243 60,000 (c) 343,243
Credit arrangements, current 157,109 (143,747)(g) 13,362
Unearned income 178,174 0 178,174
Income taxes and other current liabilities 10,853 144,400 (d) 155,253
--------------- ------------- ------------
Total current liabilities 629,809 60,653 690,462
Long-term liabilities:
Credit arrangements, less current portion 8,598 0 8,598
Long-term liabilities 14,300 0 14,300
Deferred income taxes and other liabilities 41,994 40,022 (d) 82,016
--------------- ------------- ------------
64,892 40,022 104,914
--------------- ------------- ------------
Total liabilities 694,701 100,675 795,376
Shareholders' equity:
Preferred stock 0 0 0
Common stock and additional paid in capital 786,830 0 786,830
Retained earnings 177,496 436,286 (e) 613,782
Accumulated other comprehensive income 4,337 0 4,337
Other equity (2,180) 33,000 (f) 30,820
--------------- ------------- ------------
Total shareholders' equity 966,483 469,286 1,435,769
--------------- ------------- ------------
Total liabilities and shareholders' equity $ 1,661,184 569,961 $ 2,231,145
=============== ============= ============
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Quintiles Transnational Corp.
Unaudited Pro Forma Consolidated Condensed Statement of Operations
For the three months ended March 31, 2000
(In thousands, except per share data)
Pro forma
Historical Adjustments Pro forma
--------------- ------------ ------------
Net revenue $ 414,845 0 $ 414,845
Costs and expenses:
Direct 255,476 0 255,476
General and administrative 135,062 0 135,062
Depreciation and amortization 23,122 0 23,122
Restructuring charge 58,592 0 58,592
--------------- ------------ ------------
Total costs and expenses 472,252 0 472,252
Loss from continuing operations (57,407) 0 (57,407)
Total other income (expense), net 1,948 1,527 (g) 3,475
--------------- ------------ ------------
(Loss) income from continuing operations
before income taxes (55,459) 1,527 (53,932)
Income tax (benefit) expense (18,300) 504 (g) (17,796)
--------------- ------------ ------------
(Loss) income from continuing operations
before extraordinary gain $ (37,159) 1,023 $ (36,136)
=============== ============ ============
Basic and diluted loss from continuing operations
before extraordinary gain per share $ (0.32) $ (0.31)
Shares used in computing loss from continuing
operations before extraordinary gain per share: 115,392 115,392
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Quintiles Transnational Corp.
Unaudited Pro Forma Consolidated Condensed Statement of Operations
For the year ended December 31, 1999
(In thousands, except per share data)
Pro forma
Historical Adjustments Pro forma
--------------- ------------- ------------
Net revenue $ 1,607,087 0 $ 1,607,087
Costs and expenses:
Direct 883,274 0 883,274
General and administrative 505,166 0 505,166
Depreciation and amortization 82,292 0 82,292
--------------- ------------- ------------
Total costs and expenses 1,470,732 0 1,470,732
Income from continuing operations 136,355 0 136,355
Other income (expense):
Interest income 14,391 0 14,391
Interest expense (11,233) 6,109 (g) (5,124)
Transaction costs (26,322) 0 (26,322)
Other 2,719 0 2,719
--------------- ------------- ------------
Total other income (expense), net (20,445) 6,109 (14,336)
--------------- ------------- ------------
Income from continuing operations before income taxes 115,910 6,109 122,019
Income taxes 42,742 1,833 (g) 44,575
--------------- ------------- ------------
Income from continuing operations before extraordinary gain $ 73,168 4,276 $ 77,444
=============== ============= ============
Basic income from continuing operations before
extraordinary gain per share $ 0.64 $ 0.68
Diluted income from continuing operations before
extraordinary gain per share $ 0.63 $ 0.67
Shares used in computing income from continuing
operations before extraordinary gain per share:
Basic 113,525 113,525
Diluted 115,687 115,687
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Quintiles Transnational Corp.
Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements
(In thousands)
On May 26, 2000, the Company completed the previously announced sale of its
electronic data interchange unit, ENVOY, to Healtheon/WebMD. Healtheon/WebMD
acquired ENVOY from the Company in exchange for 35 million shares of
Healtheon/WebMD common stock and $400 million cash. The Company issued
Healtheon/WebMD a warrant to purchase up to 10 million shares of the Company's
Common Stock at $40 per share, exercisable for four years.
(a) To record receipt of consideration from Healtheon/WebMD
(b) To record the removal of net assets of discontinued operations
sold
(c) To record estimated transaction and employee termination costs
(d) To record estimated income taxes payable on estimated gain on
disposition
(e) To record estimated gain on disposition
(f) To record estimated fair value of warrant issued to
Healtheon/WebMD
(g) The company intends to use a portion of the proceeds to retire
its outstanding 4.25% Convertible Subordinated Notes due May
31, 2000. Interest expense and related tax effect have been
adjusted to reflect this retirement.
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(c) Exhibits.
Exhibit Number Description of Exhibit
- -------------- ----------------------
2.01 Agreement and Plan of Merger, dated as of January 22, 2000,
among Quintiles Transnational Corp., Healtheon/WebMD
Corporation, Pine Merger Corp, Envoy Corporation and QFinance,
Inc.*
99.01 Press Release, dated May 30, 2000, of Quintiles Transnational
Corp.
*Previously filed as Exhibit 2.01 to Quintiles' Current Report on Form 8-K dated
January 25, 2000 and incorporated by reference herein.
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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/ James L. Bierman
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Dated: June 9, 2000 James L. Bierman
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
2.01 Agreement and Plan of Merger, dated as of January 22,
2000, among Quintiles Transnational Corp.,
Healtheon/WebMD Corporation, Pine Merger Corp, ENVOY
Corporation and QFinance, Inc.*
99.01 Press Release, dated May 30, 2000, of Quintiles
Transnational Corp.
*Previously filed as Exhibit 2.01 to Quintiles' Current Report on Form 8-K dated
January 25, 2000 and incorporated by reference herein.