10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2009
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from      to

Commission File Number: 001-14049

IMS Health Incorporated

(Exact Name of Registrant as Specified in its Charter)

Delaware	06-1506026
(State of Incorporation)	(I.R.S. Employer Identification No.)

901 Main Avenue, Norwalk, CT 06851

(Address of principal executive offices)(Zip Code)

(203) 845-5200

(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 the filing requirements for the past 90 days.

x Yes   o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

o Yes   o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer x	Accelerated Filer o
Non-Accelerated Filer o	Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o Yes   x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.  At March 31, 2009, there were 181,763,123 shares of IMS Health Incorporated Common Stock, $0.01 par value, outstanding.

IMS HEALTH INCORPORATED

INDEX TO FORM 10-Q

	PAGE(S)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Financial Position As of March 31, 2009 and December 31, 2008	3
Condensed Consolidated Statements of Income Three Months Ended March 31, 2009 and 2008	4
Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, 2009 and 2008	5
Condensed Consolidated Statements of Shareholders’ Deficit Three Months Ended March 31, 2009 and Twelve Months Ended December 31, 2008	6
Notes to Condensed Consolidated Financial Statements	7-27
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	28 – 46
Item 3. Quantitative and Qualitative Disclosures About Market Risk	47
Item 4. Controls and Procedures	47
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	48
Item 1A. Risk Factors	48 – 49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 5. Other Information	49
Item 6. Exhibits	50
SIGNATURES	51
EXHIBITS	52

2

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (Unaudited)

IMS HEALTH INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)

(Dollars and shares in thousands, except per share data)

	As of March 31, 2009			As of December 31, 2008
Assets:
Current Assets:
Cash and cash equivalents	$	174,591		$	215,682
Accounts receivable, net of allowances of $6,587 and $5,960 in 2009 and 2008, respectively	398,358			382,776
Other current assets	174,960			174,099
Total Current Assets	747,909			772,557
Securities and other investments	8,119			7,121
Property, plant and equipment, net of accumulated depreciation of $210,922 and $208,340 in 2009 and 2008, respectively	177,403			183,055
Computer software	254,356			253,583
Goodwill (Note 6)	656,714			663,532
Other assets	182,278			207,289
Total Assets	$	2,026,779		$	2,087,137
Liabilities, Redeemable Noncontrolling Interest and Shareholders’ Deficit:
Current Liabilities:
Accounts payable	$	97,478		$	119,798
Accrued and other current liabilities	231,578			275,764
Accrued income taxes	5,634			47,735
Short-term deferred tax liability	1,835			9,444
Deferred revenues	82,386			88,484
Total Current Liabilities	418,911			541,225
Postretirement and postemployment benefits	107,830			109,516
Long-term debt (Note 9)	1,329,209			1,404,199
Other liabilities	165,927			185,677
Total Liabilities	$	2,021,877		$	2,240,617
Commitments and Contingencies (Note 7)
Redeemable Noncontrolling Interest (Note 13)	$	100,000		$	100,000
Shareholders’ Deficit:
Common Stock, par value $.01, authorized 800,000 shares; issued 335,045 shares in 2009 and 2008, respectively	$	3,350		$	3,350
Capital in excess of par	543,037			546,478
Retained earnings	3,187,950			3,060,345
Treasury stock, at cost, 153,282 and 153,564 shares in 2009 and 2008, respectively	(3,569,915		)	(3,576,446		)
Cumulative translation adjustment	(146,179		)	(171,990		)
Unamortized postretirement and postemployment balances (SFAS No. 158)	(115,062		)	(117,111		)
Total IMS Health Shareholders’ Deficit	$	(96,819	)	$	(255,374	)
Noncontrolling Interests (Note 13)	$	1,721		$	1,894
Total Shareholders’ Deficit	$	(95,098	)	$	(253,480	)
Total Liabilities, Redeemable Noncontrolling Interest and Shareholders’ Deficit	$	2,026,779		$	2,087,137

See accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).

3

IMS HEALTH INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollars and shares in thousands, except per share data)

	Three Months Ended March 31,
	2009			2008
Information and analytics revenue	$	420,076		$	456,187
Consulting and services revenue	106,868			117,993
Operating Revenue	526,944			574,180
Operating costs of information and analytics	170,839			192,766
Direct and incremental costs of consulting and services	61,145			68,505
External-use software amortization	10,524			12,714
Selling and administrative expenses	160,406			162,769
Depreciation and other amortization	23,165			21,044
Operating Income	100,865			116,382
Interest income	1,007			2,592
Interest expense	(9,476		)	(11,263		)
Other income (expense), net	4,895			(18,622		)
Non-Operating Loss, Net	(3,574		)	(27,293		)
Income before benefit (provision) for income taxes	97,291			89,089
Benefit (provision) for income taxes (Note 11)	37,165			(28,279		)
Net Income	134,456			60,810
Less: Net Income Attributable to noncontrolling interests (Note 13)	1,124			1,635
Net Income Attributable to IMS Health	$	133,332		$	59,175
Basic Earnings Per Share of Common Stock	$	0.73		$	0.32
Diluted Earnings Per Share of Common Stock	$	0.73		$	0.32
Weighted average number of shares outstanding — Basic	181,843			185,036
Dilutive effect of shares issuable as of period-end under Stock-based compensation plans and other	223			1,259
Adjustment of shares outstanding applicable to exercised and cancelled stock options during the period	—			9
Weighted Average Number of Shares Outstanding — Diluted	182,066			186,304

See accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).

4

IMS HEALTH INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)

	Three Months Ended March 31,
	2009			2008
Cash Flows from Operating Activities:
Net income	$	134,456		$	60,810
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	33,689			33,758
Bad debt expense	626			803
Deferred income taxes	2,389			1,304
Gains from investments, net	(38		)	—
Non-cash stock-based compensation charges	6,845			7,391
Net tax (benefit) expense on stock-based compensation	(1,691		)	44
Excess tax benefits from stock-based compensation	—			(41		)
Change in assets and liabilities, excluding effects from acquisitions and dispositions:
Net increase in accounts receivable	(17,238		)	(76,355		)
Net decrease (increase) in work-in-process inventory	4,442			(4,780		)
Net increase in prepaid expenses and other current assets	(14,647		)	(22,544		)
Net (decrease) increase in accounts payable	(23,738		)	4,468
Net decrease in accrued and other current liabilities	(30,997		)	(6,012		)
Net decrease in accrued severance, impairment and other charges	(11,260		)	(13,665		)
Net decrease in deferred revenues	(6,486		)	(5,362		)
Net (decrease) increase in accrued income taxes	(59,119		)	22,305
Net decrease in pension assets (net of liabilities)	67			1,312
Net increase in other long-term assets (net of long-term liabilities)	(836		)	(4,171		)
Net Cash Provided by (Used in) Operating Activities	16,464			(735		)
Cash Flows Used in Investing Activities:
Capital expenditures	(5,128		)	(6,414		)
Additions to computer software	(17,147		)	(17,132		)
Proceeds from sale of assets, net	38			1,392
Payments for acquisitions of businesses, net of cash acquired	(2,423		)	(6,156		)
Funding of venture capital investments	(1,000		)	(600		)
Other investing activities, net	162			(1,030		)
Net Cash Used in Investing Activities	(25,498		)	(29,940		)
Cash Flows (Used in) Provided by Financing Activities:
Net (decrease) increase revolving credit facility and other	(13,670		)	164,117
Proceeds from private placement notes	—			240,000
Repayment of private placement notes	—			(150,000		)
Payments for purchase of treasury stock	—			(229,340		)
Proceeds from exercise of stock options	—			1,069
Excess tax benefits from stock-based compensation	—			41
Dividends paid	(5,727		)	(5,507		)
Proceeds from employee stock purchase plan and other	—			(25		)
(Decrease) increase in cash overdrafts	(5,059		)	1,648
Payments to noncontrolling interests and other financing activities	(1,691		)	(1,690		)
Net Cash (Used in) Provided by Financing Activities	(26,147		)	20,313
Effect of Exchange Rate Changes on Cash and Cash Equivalents	(5,910		)	7,908
Decrease in Cash and Cash Equivalents	(41,091		)	(2,454		)
Cash and Cash Equivalents, Beginning of Period	215,682			218,249
Cash and Cash Equivalents, End of Period	$	174,591		$	215,795

See accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).

5

IMS HEALTH INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT (Unaudited)

(Dollars and shares in thousands, except per share data)

															Accumulated Other Comprehensive Income (Loss)
																		Post Retirement						Total
	Shares					Capital									Cumulative			Post Employ			Other			IMS Health
	Common	Treasury		Common		in Excess			Retained			Treasury			Translation			Adjust			Comprehensive			Shareholders’			Noncontrolling			Total
	Stock	Stock		Stock		of Par			Earnings			Stock			Adjustment			SFAS 158			Income			(Deficit) Equity			Interest			(Deficit) Equity
Balance, December 31, 2007	335,045	143,818		$	3,350	$	535,500		$	2,771,278		$	(3,355,790	)	$	61,931		$	(56,584	)				$	(40,315	)	$	1,444		$	(38,871	)
Net Income									311,250												$	311,250		311,250			940			312,190
Cash Dividends ($0.12 per share)									(22,183		)													(22,183		)				(22,183		)
Stock-Based Compensation Expense						28,036																		28,036						28,036
Net Tax Benefit on Stock-Based Compensation						(499		)																(499		)				(499		)
Treasury Shares Acquired Under Purchases		10,495										(238,046		)										(238,046		)				(238,046		)
Treasury Shares Reissued Under:
Exercise of Stock Options		(277	)			(920		)				6,441												5,521						5,521
Vesting of Restricted Stock		(473	)			(15,642		)				10,977												(4,665		)				(4,665		)
Employee Stock Purchase Plan		1				3						(28		)										(25		)				(25		)
Cumulative Translation Adjustment															(233,921		)				(233,921		)	(233,921		)	(490		)	(234,411		)
SFAS 158 Adjustments																		(60,527		)	(60,527		)	(60,527		)				(60,527		)
Total Comprehensive Income																					$	16,802					450
Balance, December 31, 2008	335,045	153,564		$	3,350	$	546,478		$	3,060,345		$	(3,576,446	)	$	(171,990	)	$	(117,111	)				$	(255,374	)	$	1,894		$	(253,480	)
Net Income									133,332												$	133,332		133,332			38			133,370
Cash Dividends ($0.12 per share)									(5,727		)													(5,727		)				(5,727		)
Stock-Based Compensation Expense						6,845																		6,845						6,845
Net Tax Benefit on Stock-Based Compensation						(1,691		)																(1,691		)				(1,691		)
Treasury Shares Reissued Under:
Vesting of Restricted Stock		(282	)			(8,595		)				6,531												(2,064		)				(2,064		)
Cumulative Translation Adjustment															25,811						25,811			25,811			(211		)	25,600
SFAS 158 Adjustments																		2,049			2,049			2,049						2,049
Total Comprehensive Income																					$	161,192					(173		)
Balance, March 31, 2009	335,045	153,282		$	3,350	$	543,037		$	3,187,950		$	(3,569,915	)	$	(146,179	)	$	(115,062	)				$	(96,819	)	$	1,721		$	(95,098	)

See accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).

6

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

Note 1.  Interim Condensed Consolidated Financial Statements (Unaudited)

The accompanying Condensed Consolidated Financial Statements (Unaudited) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and Article 10 of Regulation S-X under the Securities and Exchange Act of 1934, as amended.  The Condensed Consolidated Financial Statements (Unaudited) do not include all the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.  In the opinion of management, all adjustments, all of which are of a normal recurring nature, considered necessary for a fair presentation of the statements of financial position, income and cash flows for the periods presented have been included.  The results of operations for interim periods are not necessarily indicative of the results expected for the full year.  The December 31, 2008 balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.  The Condensed Consolidated Financial Statements (Unaudited) and related notes should be read in conjunction with the Consolidated Financial Statements and related notes of IMS Health Incorporated (the “Company” or “IMS”) included in its 2008 Annual Report on Form 10-K.  Certain prior year amounts have been reclassified to conform to the 2009 presentation.  Amounts presented in the Condensed Consolidated Financial Statements (Unaudited) may not add due to rounding.

Note 2.  Basis of Presentation

IMS Health Incorporated is the leading global provider of market intelligence to the pharmaceutical and healthcare industries. The Company offers leading-edge market intelligence products and services that are integral to its clients’ day-to-day operations, including product and portfolio management capabilities; commercial effectiveness innovations; managed care and consumer health offerings; and consulting and services solutions that improve productivity and the delivery of quality healthcare worldwide. The Company’s information products are developed to meet client needs by using data secured from a worldwide network of suppliers in more than 100 countries. The Company’s business lines are:

·Commercial Effectiveness to increase clients’ productivity across end-to-end sales, marketing, promotional and performance management processes;

·Product and Portfolio Management to provide clients with insights into market measurement so they can optimize their product portfolio and strategies; and

·New Business Areas that support pharmaceutical client business initiatives in managed markets, consumer health, and pricing and market access, and that also serve payer and government audiences.

Within these business lines, the Company provides consulting and services that use in-house capabilities and methodologies to assist clients in analyzing and evaluating market trends, strategies and tactics, and to help in the development and implementation of customized software applications and data warehouse tools.

7

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

The Company operates in more than 100 countries.

The Company is managed on a global business model with global leaders for the majority of its critical business processes and accordingly has one reportable segment (see Note 16).

Note 3.  Summary of Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements.” This statement defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosures about fair value measurements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.  The adoption of SFAS No. 157, effective January 1, 2008, did not have a material impact on the Company’s financial position, results of operations or cash flows.  In February 2008, the FASB issued Staff Positions No. FAS 157-1 and No. FAS 157-2 which delayed the effective date of SFAS No. 157 for one year for certain non-financial assets and liabilities and removed certain leasing transactions from its scope.  The adoption of Staff Positions No. FAS 157-1 and No. 157-2, effective January 1, 2009, did not have a material impact on the Company’s financial position, results of operations or cash flows.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.”  The statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (“GAAP”) in the United States.  This statement was effective 60 days following the U.S. SEC’s approval of the Public Company Accounting Oversight Board (“PCAOB”) amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.”  The adoption of this statement did not have an impact on the Company’s financial position, results of operations or cash flows.

In December 2008, the FASB issued FASB Staff Position (“FSP”) FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”), which amends SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan.  FSP FAS 132(R)-1 is effective for fiscal years ending after December 15, 2009, with earlier application permitted. Upon initial application, the provisions of FSP FAS 132(R)-1 are not required for earlier periods that are presented for comparative purposes.  The Company is currently evaluating the new disclosure requirements under FSP FAS 132(R)-1.

In April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”), which provides guidance on determining fair values when there is no active market or where the price inputs being used represent distressed sales.  It also reaffirms what SFAS No. 157 states is the objective of fair value measurement—to reflect how much an asset would be sold for in an orderly transaction

8

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

(as opposed to a distressed or forced transaction) at the date of the financial statements under current market conditions.  FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009.  The adoption of FSP FAS 157-4 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

Note 4.  Summary of Significant Accounting Policies

Operating Costs of Information and Analytics

Operating costs of information and analytics (“I&A”) include costs of data, data collection and processing and costs attributable to personnel involved in production, data management and delivery of the Company’s I&A offerings.

One of the Company’s major expenditures is the cost for the data it receives from suppliers.  After receipt of the raw data and prior to the data being available for use in any part of its business, the Company is required to transform the raw data into useful information through a series of comprehensive processes. These processes involve significant employee costs and data processing costs.

Costs associated with the Company’s data purchases are deferred within work-in-process inventory and recognized as expense as the corresponding data product revenue is recognized by the Company, generally over a thirty to sixty day period.

Direct and Incremental Costs of Consulting and Services

Direct and incremental costs of consulting and services (“C&S”) include the costs of the Company’s consulting staff directly involved with delivering revenue generating engagements, related accommodations and the costs of primary market research data purchased specifically for certain individual C&S engagements.  Although the Company’s data is used in multiple customer solutions across different offerings within both I&A and C&S, the Company does not have a meaningful way to allocate the direct cost of the data between I&A and C&S revenues.  As such, the direct and incremental costs of C&S do not reflect the total costs incurred to deliver the Company’s C&S revenues.

Costs associated with the Company’s time and material and fixed-price C&S contracts are recognized as incurred.

Note 5.  Acquisitions

The Company makes acquisitions in order to expand its products, services and geographic reach.  On January 1, 2009, the Company adopted SFAS No. 141R, “Business Combinations” (“SFAS 141R”), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired.  The impact of the adoption of SFAS 141R on the Company’s financial position, results of operations and cash flows will be dependent on the terms and conditions of acquisitions consummated on or after the adoption date.

9

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

During the three months ended March 31, 2009, the Company did not complete any acquisitions.

During the three months ended March 31, 2008, the Company completed one acquisition of Robinson and James Research Pty Limited (Australia) at a cost of approximately $4,700 which was accounted for under the purchase method of accounting. As such, the aggregate purchase price was allocated on a preliminary basis to the assets acquired based on estimated fair values as of the closing date. The purchase price allocations were finalized during 2008.  The Condensed Consolidated Financial Statements (Unaudited) include the results of this acquired company subsequent to the closing of the acquisition.  Had this acquisition occurred as of January 1, 2008 or 2007, the impact on the Company’s results of operations would not have been significant. Goodwill of approximately $3,000 was recorded in connection with this acquisition, none of which was deductible for tax purposes.

Note 6.  Goodwill and Intangible Assets

Goodwill and intangible assets that have indefinite useful lives are not amortized and are tested at least annually (or based on any triggering event) for impairment.  Intangible assets that have finite useful lives are amortized. During the three months ended March 31, 2009, the Company’s goodwill decreased by $6,818 due to foreign currency translation adjustments. During the three months ended March 31, 2008, the Company’s goodwill increased by $32,399 due to foreign currency translation adjustments and the preliminary allocation of purchase price for the acquisition completed during the three months ended March 31, 2008 (see Note 5).

All of the Company’s other acquired intangibles are subject to amortization.  Intangible asset amortization expense was $4,586 and $4,721 during the three months ended March 31, 2009 and 2008, respectively.  At March 31, 2009, intangible assets were primarily composed of customer relationships, databases and trade names (principally included in other assets) and computer software.  The gross carrying amounts and related accumulated amortization of these intangibles were $186,717 and $103,322, respectively, at March 31, 2009 and $189,383 and $98,736, respectively, at December 31, 2008.  These intangibles are amortized over periods ranging from two to twenty years.  As of March 31, 2009, the weighted average amortization periods of the acquired intangibles by asset class are listed in the following table:

Intangible Asset Type	Weighted Average Amortization Period (Years)
Customer Relationships	9.9
Computer Software and Algorithms	7.0
Databases	4.7
Trade Names	4.3
Other	3.8
Weighted average	8.8

Based on current estimated useful lives, amortization expense associated with intangible assets at March 31, 2009 is estimated to be approximately $4,281 for each of the remaining three quarters in 2009.  Thereafter, annual amortization expense associated with intangible

10

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

assets is estimated to be as follows:

Year Ended December 31,	Amortization Expense
2010	$	13,443
2011	12,107
2012	10,168
2013	9,612
2014	7,911
Thereafter	$	17,312

Note 7.  Contingencies

The Company and its subsidiaries are involved in legal and tax proceedings, claims and litigation arising in the ordinary course of business. Management periodically assesses the Company’s liabilities and contingencies in connection with these matters based upon the latest information available. For those matters where management currently believes it is probable that the Company will incur a loss and that the probable loss or range of loss can be reasonably estimated, the Company has recorded reserves in the Condensed Consolidated Financial Statements (Unaudited) based on its best estimates of such loss. In other instances, because of the uncertainties related to either the probable outcome or the amount or range of loss, management is unable to make a reasonable estimate of a liability, if any. However, even in many instances where the Company has recorded a reserve, the Company is unable to predict with certainty the final outcome of the matter or whether resolution of the matter will materially affect the Company’s results of operations, financial position or cash flows. As additional information becomes available, the Company adjusts its assessment and estimates of such liabilities accordingly.

The Company routinely enters into agreements with its suppliers to acquire data and with its customers to sell data, all in the normal course of business. In these agreements, the Company sometimes agrees to indemnify and hold harmless the other party for any damages such other party may suffer as a result of potential intellectual property infringement and other claims related to the use of the data. These indemnities typically have terms of approximately two years. The Company has not accrued a liability with respect to these matters, as the exposure is considered remote.

In connection with the agreements governing the relationship among the Company and two of its subsidiaries and two third-party investors with respect to IMS Health Licensing Associates, L.L.C. (the “LLC Agreements”), the Company also entered into a guaranty agreement. Under the terms of this guaranty agreement, the Company guarantees in favor of the third-party investors the performance of the Company’s subsidiaries under the LLC Agreements and agrees to indemnify and hold harmless the third-party investors against damages, including specified delay damages, the third-party investors may suffer as a result of failures to perform under the LLC Agreements by the Company and its subsidiaries.

The third-party investors have the right to take steps that would result in the liquidation of their LLC interests on June 30, 2009.  If the third-party investors decide to liquidate their

11

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

ownership interests in the LLC, the Company will attempt to replace the third-party investors, or if unsuccessful, purchase these ownership interests. The Company has adequate liquidity and credit capacity to purchase these ownership interests.  See Note 13.

Based on its review of the latest information available, in the opinion of management, the ultimate liability of the Company in connection with pending tax and legal proceedings, claims and litigation will not have a material effect on the Company’s results of operations, cash flows or financial position, with the possible exception of the matters described below.

D&B Legacy and Related Tax Matters

Sharing Disputes.  In 1996, the company then known as The Dun & Bradstreet Corporation (“D&B”) and now known as R.H. Donnelley Corporation (“Donnelley”) separated into three public companies by spinning off ACNielsen Corporation (“ACNielsen”) and the company then known as Cognizant Corporation (“Cognizant”) (the “1996 Spin-Off”).  Cognizant is now known as Nielsen Media Research, Inc., a subsidiary of The Nielsen Company, formerly known as VNU N.V. (“NMR”).  The agreements effecting the 1996 Spin-Off allocated tax-related liability with respect to certain prior business transactions between D&B and Cognizant.  The D&B portion of such liability is now shared among Donnelley and certain of its former affiliates (the “Donnelley Parties”), and the Cognizant portion of such liability is shared between NMR and the Company pursuant to the agreements effecting Cognizant’s spin-off of the Company in 1998 (the “1998 Spin-Off”).

The underlying tax controversies with the Internal Revenue Service (“IRS”) have substantially all been resolved and the Company paid to the IRS the amounts that it believed were due and owing.  In the first quarter of 2006, Donnelley indicated that it disputed the amounts contributed by the Company toward the resolution of these matters based on the Donnelley Parties’ interpretation of the allocation of liability under the 1996 Spin-Off agreements.  The Donnelley Parties on the one hand, and NMR and the Company, on the other hand, have attempted to resolve these disputes through negotiation.  The 1996 Spin-Off agreements provide that if the parties cannot reach agreement through negotiation they must arbitrate the disputes.  The Company intends to vigorously defend itself with respect to any such disputes.  As of March 31, 2009, the Company had a reserve of approximately $18,000 (liability and interest, net of tax benefit) for these matters.

In August 2006, the Donnelley Parties commenced arbitration regarding one of these disputes (referred to herein as the “Dutch Partnership Dispute”).  The Dutch Partnership Dispute was finally resolved during the third quarter of 2008 when the parties consented to the entry of a consent award by the arbitration panel.  Pursuant to the terms of the consent award, the Company made a payment of $4,600 ($3,100 net of tax benefit) and an additional interest and cost payment of $2,600 ($1,700 net of tax benefit) to the Donnelley Parties.

The Partnership (Tax Year 1997). During the fourth quarter of 2008, the Company entered into a final agreement with the IRS in which the IRS disallowed certain items of partnership expense for tax year 1997 with respect to a partnership now substantially owned by the Company (the “Partnership”).  During 1997, the Partnership was substantially owned by Cognizant, but liability for this matter was allocated to the Company pursuant to the

12

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

agreements effecting the 1998 Spin-Off.  As a result of the settlement, the Company’s liability (tax and interest, net of tax benefit) with respect to tax year 1997 is estimated to be approximately $20,500, which amount the Company has reserved in current accrued income taxes payable at March 31, 2009.

In addition to these matters, the Company and its predecessors have entered, and the Company continues to enter, into global tax planning initiatives in the normal course of their businesses.  These activities are subject to review by applicable tax authorities.  As a result of the review process, uncertainties exist and it is possible that some of these matters could be resolved adversely to the Company.

IMS Health Government Solutions Voluntary Disclosure Program Participation

The Company’s wholly-owned subsidiary, IMS Government Solutions Inc., is primarily engaged in providing services and products under contracts with the U.S. government.  U.S. government contracts are subject to extensive legal and regulatory requirements and, from time to time, agencies of the U.S. government have the ability to investigate whether contractors’ operations are being conducted in accordance with such requirements.  U.S. government investigations, whether relating to these contracts or conducted for other reasons, could result in administrative, civil or criminal liabilities, including repayments, fines or penalties being imposed on us, or could lead to suspension or debarment from future U.S. government contracting.  U.S. government investigations often take years to complete and may result in no adverse action against the Company.

IMS Government Solutions discovered potential noncompliance with various contract clauses and requirements under its General Services Administration Contract which was awarded in 2002 to its predecessor company, Synchronous Knowledge Inc. (Synchronous Knowledge Inc. was acquired by IMS in May 2005).  Upon discovery of the potential noncompliance, the Company began remediation efforts, promptly disclosed the potential noncompliance to the U.S. government, and was accepted into the Department of Defense Voluntary Disclosure Program.  The Company filed its Voluntary Disclosure Program Report (“Disclosure Report”) on August 29, 2008.  Based on the Company’s findings as disclosed in the Disclosure Report, the Company recorded a reserve of approximately $3,700 for this matter in the third quarter of 2008.  The Company is currently unable to determine the outcome of this matter pending the resolution of the Voluntary Disclosure Program process and its ultimate liability arising from this matter could exceed its current reserve.

Other Contingencies

Contingent Consideration.  Under the terms of certain purchase agreements related to acquisitions consummated in 2008 and prior, the Company may be required to pay additional amounts as contingent consideration based on the achievement of certain performance related targets during 2009. These additional payments will be recorded as goodwill in accordance with Emerging Issues Task Force (“EITF”) No. 95-8, “Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination.” The Company paid approximately $1,900 under these contingencies during the three months ended March 31, 2009. Based on current estimates, the Company expects that

13

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

additional contingent consideration under these agreements may total approximately $3,200. It is expected that these contingencies will be resolved within a specified time period after the end of calendar year 2009.

Note 8.  Stock-Based Compensation

The following table summarizes activity of stock options for the periods indicated:

			Weighted
			Average
			Exercise
			Price Per
	Shares		Share
Options Outstanding, December 31, 2006	21,396		$	23.43
Granted	—		—
Exercised	(6,299	)	$	22.72
Forfeited	(200	)	$	24.14
Cancelled	(371	)	$	27.61
Options Outstanding, December 31, 2007	14,526		$	23.62
Granted	1,159		$	22.58
Exercised	(277	)	$	19.91
Forfeited	(88	)	$	23.86
Cancelled	(2,141	)	$	25.51
Options Outstanding, December 31, 2008	13,179		$	23.29
Granted	—		—
Exercised	—		—
Forfeited	(22	)	$	22.58
Cancelled	(2,361	)	$	29.65
Options Outstanding, March 31, 2009	10,796		$	21.90
Options Vested or Expected to Vest, March 31, 2009	10,700		$	21.90
Exercisable, March 31, 2009	9,690		$	21.83

14

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

The following table summarizes activity of restricted stock units (“RSUs”) with service conditions:

			Weighted
			Average
			Grant Date
	Shares		Fair Value
Unvested, December 31, 2006	1,558		$	25.04
Granted	1,219		$	29.64
Vested	(296	)	$	26.06
Forfeited	(148	)	$	28.09
Unvested, December 31, 2007	2,333		$	27.16
Granted	1,356		$	22.24
Vested	(569	)	$	27.45
Forfeited	(348	)	$	26.74
Unvested, December 31, 2008	2,772		$	24.75
Granted	12		$	14.64
Vested	(168	)	$	25.05
Forfeited	(65	)	$	26.39
Unvested, March 31, 2009	2,551		$	24.64
Vested or Expected to Vest, March 31, 2009	2,316		$	24.62

The following table summarizes activity of RSUs with performance conditions:

			Weighted
			Average
			Grant Date
	Shares		Fair Value
Unvested, December 31, 2006	613		$	24.20
Granted	402		$	14.72
Vested	(84	)	$	18.65
Forfeited	(6	)	$	27.00
Unvested, December 31, 2007	925		$	20.56
Granted	357		$	12.97
Vested	(109	)	$	23.86
Forfeited	(12	)	$	27.26
Unvested, December 31, 2008	1,161		$	17.84
Granted	164		$	12.46
Vested	(254	)	$	26.00
Forfeited	(2	)	$	24.35
Unvested, March 31, 2009	1,069		$	15.07
Vested or Expected to Vest, March 31, 2009	1,017		$	15.13

15

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

The following table summarizes activity of non-employee director deferred stock granted in lieu of board meeting fees:

		Weighted
		Average
		Grant Date
	Shares	Fair Value
Outstanding, December 31, 2006	33	$	22.49
Granted	5	$	29.50
Outstanding, December 31, 2007	38	$	23.37
Granted	6	$	19.71
Outstanding, December 31, 2008	44	$	22.81
Granted	2	$	14.54
Outstanding, March 31, 2009	46	$	22.43

The following table summarizes the components and classification of stock-based compensation expense for the periods indicated:

For the Three Months Ended March 31,	2009		2008
Stock Options	$	365	$	2,018
RSUs	6,480		5,375
Employee Stock Purchase Plan	—		(2		)
Total Stock-Based Compensation Expense	$	6,845	$	7,391
Operating Costs of I&A	$	488	$	776
Direct and Incremental Costs of C&S	919		708
Selling and Administrative Expenses	5,438		5,907
Total Stock-Based Compensation Expense	$	6,845	$	7,391
Tax Benefit on Stock-Based Compensation Expense	$	2,235	$	2,400
Capitalized Stock-Based Compensation Expense	$	38	$	41

For a complete description of the Company’s Stock Incentive Plans and its accounting policies regarding stock-based compensation, refer to Notes 2 and 11 of the Company’s 2008 Annual Report on Form 10-K as filed with the SEC.

Note 9.  Financial Instruments

On January 1, 2009, the Company adopted SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133” (“SFAS 161”), which requires enhanced disclosures about an entity’s derivative and hedging activities as provided below.  As this statement requires only additional disclosures, the adoption of SFAS 161 did not have an impact on the Company’s financial position, results of operations or cash flows.

16

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

Foreign Exchange Risk Management

The Company transacts business in more than 100 countries and is subject to risks associated with changing foreign exchange rates. The Company’s objective is to reduce earnings and cash flow volatility associated with foreign exchange rate changes. Accordingly, the Company enters into foreign currency forward contracts to minimize the impact of foreign exchange movements on net income, non-U.S. Dollar anticipated royalties, and on the value of non-functional currency assets and liabilities.

It is the Company’s policy to enter into foreign currency transactions only to the extent necessary to meet its objectives as stated above. The Company does not enter into foreign currency transactions for investment or speculative purposes. The principal currencies hedged are the Euro, the Japanese Yen, the British Pound, the Swiss Franc and the Canadian Dollar.

The impact of foreign exchange risk management activities on pre-tax income for the three months ended March 31, 2009 and 2008 was a net gain of $4,884 and net loss of $18,598 respectively.

At March 31, 2009, the Company had assets of approximately $663,168 and liabilities of approximately $657,459 in foreign exchange forward contracts outstanding with various expiration dates through February 2010 relating to non-U.S. Dollar anticipated royalties and non-functional currency assets and liabilities (see below). Foreign exchange forward contracts are recorded at estimated fair value. The estimated fair values of the forward contracts are based on quoted market prices.

Unrealized and realized gains and losses on the contracts hedging net income and non-functional currency assets and liabilities do not qualify for hedge accounting, and therefore are not deferred and are included in the Consolidated Statements of Income in Other income (expense), net.

Unrealized gains and losses on the contracts hedging non-U.S. Dollar anticipated royalties qualify for hedge accounting, and are therefore deferred and included in OCI “Other Comprehensive Income.”

	Fair Value of Derivative Instruments (1)
	Asset Derivatives				Liability Derivatives
	As of March 31, 2009		As of December 31, 2008		As of March 31, 2009		As of December 31, 2008
Derivatives designated as hedging instruments under SFAS 133
Foreign Exchange Contracts	$	173,106	$	172,113	$	170,252	$	179,110
Derivatives not designated as hedging instruments under SFAS 133
Foreign Exchange Contracts	490,062		236,977		487,207		238,023
Total Derivatives	$	663,168	$	409,090	$	657,459	$	417,133

(1) The net amounts of these derivatives are included in Current Assets and Current Liabilities in the Condensed Consolidated Statements of Financial Position (Unaudited).

17

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

Effect of Derivatives on Financial Performance for the Three Months Ended March 31,
Derivatives in SFAS 133 Cash Flow Hedging Relationships	Amount of Gain/(Loss) Recognized in OCI on Derivatives					Location of Gain/(Loss) Reclassified from OCI into Income	Amount of Gain/(Loss) from OCI into Income
	2009		2008				2009			2008
Foreign Exchange Contracts	$	9,100	$	(13,400	)	Other Income (Expense), Net	$	(800	)	$	(2,200	)

Fair Value Disclosures

At March 31, 2009, the Company’s financial instruments included cash, cash equivalents, and receivables, accounts payable and long-term debt. At March 31, 2009, the fair values of cash, cash equivalents, receivables and accounts payable approximated carrying values due to the short-term nature of these instruments. At March 31, 2009, the fair value of long-term debt approximated carrying value.

Effective January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements,” (see Note 3).  SFAS No. 157 establishes a three-level hierarchy for disclosure of fair value measurements as follows:

Level 1 —	Quoted prices in active markets for identical assets or liabilities.
Level 2 —	Quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets; and model-derived valuations in which all significant inputs are observable in active markets.
Level 3 —	Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

The following table summarizes assets and liabilities measured at fair value on a recurring basis at March 31, 2009:

	Basis of Fair Value Measurements
	Level 1	Level 2		Level 3	Total
Assets
Derivatives (1)	—	$	663,168	—	$	663,168
Liabilities
Derivatives (1)	—	$	657,459	—	$	657,459

(1)  Derivatives consist of foreign exchange contracts based on observable market inputs of spot and forward rates.

18

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

Credit Concentrations

The Company continually monitors its positions with, and the credit quality of, the financial institutions which are counterparties to its financial instruments and does not anticipate non-performance by the counterparties. The Company would not realize a material loss as of March 31, 2009 in the event of non-performance by any one counterparty.  In general, the Company enters into transactions only with financial institution counterparties that have a credit rating of A or better. In addition, the Company limits the amount of credit exposure with any one institution.

The Company maintains accounts receivable balances ($398,358 and $382,776, net of allowances, at March 31, 2009 and December 31, 2008, respectively), principally from customers in the pharmaceutical industry. The Company’s trade receivables do not represent significant concentrations of credit risk at March 31, 2009 due to the credit worthiness of its customers and their dispersion across many geographic areas.

Lines of Credit

The following table summarizes the Company’s long-term debt at March 31, 2009 and December 31, 2008:

	2009		2008
5.58% Private Placement Notes, principal payment of $105,000 due January 2015	$	105,000	$	105,000
5.99% Private Placement Notes, principal payment of $135,000 due January 2018	135,000		135,000
5.55% Private Placement Notes, principal payment of $150,000 due April 2016	150,000		150,000
1.70% Private Placement Notes, principal payment of 34,395,000 Japanese Yen due January 2013	349,921		381,304
Revolving Credit Facility:
Japanese Yen denominated borrowings at average floating rates of approximately 1.09%	333,788		435,895
U.S. Dollar denominated borrowings at average floating rates of approximately 0.99%	205,500		147,000
Bank Term Loan, principal payment of $50,000 due June 2010 at average floating rate of approximately 0.82%	50,000		50,000
Total Long-Term Debt	$	1,329,209	$	1,404,199

In February 2008, the Company closed a private placement transaction pursuant to which it issued $105,000 of seven-year debt at a fixed rate of 5.58%, and $135,000 of ten-year debt at a fixed rate of 5.99% to several highly rated insurance companies.  The Company used the proceeds for share repurchases (see Note 12) and to refinance existing debt.

In July 2006, the Company entered into a $1,000,000 revolving credit facility with a syndicate of 12 banks (“Revolving Credit Facility”) replacing its existing $700,000 facility.  The terms of the Revolving Credit Facility extended the maturity of the facility in its entirety to a term of five years, maturing July 2011, reduced the borrowing margins, and increased subsidiary borrowing limits.  Total borrowings under the Revolving Credit Facility were $539,288 and $582,895 at March 31, 2009 and December 31, 2008, respectively, all of which were classified as long-term.  The Company defines long-term lines as those where the lines are non-cancellable for more than 365 days from the balance sheet date by the financial institutions except for specified, objectively measurable violations of the provisions of the agreement.  In general, rates

19

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

for borrowing under the Revolving Credit Facility are LIBOR plus 40 basis points and can vary based on the Company’s Debt to EBITDA ratio.  The weighted average interest rates for the Company’s lines were 1.05% and 1.36% at March 31, 2009 and December 31, 2008, respectively.  In addition, the Company is required to pay a commitment fee on any unused portion of the facilities of 0.01%.  At March 31, 2009, the Company had approximately $460,712 available under existing bank credit facilities.

In June 2006, the Company closed a $50,000 three-year term loan with a bank.  The term loan allows the Company to borrow at a floating rate with a lower borrowing margin than the Company’s revolving credit facility.  The term loan also provides the Company with two one-year options to extend the term at the Company’s discretion.  In August 2008, the Company exercised the first one-year option to extend the term through June 2010. The Company used the proceeds to refinance existing debt borrowed under the revolving credit facility.

In April 2006, the Company closed a private placement transaction pursuant to which it issued $150,000 of ten-year notes to two highly rated insurance companies at a fixed rate of 5.55%.  The Company used the proceeds to refinance existing debt of $150,000 drawn under a short term credit agreement with a bank in January 2006.

In January 2006, the Company closed a private placement transaction pursuant to which its Japanese subsidiary issued 34,395,000 Japanese Yen seven-year debt (equal to $300,000 at date of issuance) to several highly rated insurance companies at a fixed rate of 1.70%. The Company used the proceeds to refinance existing debt in Japan.

The Company’s financing arrangements provide for certain covenants and events of default customary for similar instruments, including in the case of its main bank arrangements, the private placement transactions, and the term loan, covenants to maintain specific ratios of consolidated total indebtedness to EBITDA and of EBITDA to certain fixed charges.  At March 31, 2009, the Company was in compliance with these financial debt covenants.

Note 10.  Pension and Postretirement Benefits

The following table provides the Company’s expense associated with pension benefits that are accounted for under SFAS No. 87, “Employers’ Accounting for Pensions,” and postretirement benefits that are accounted for under SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions.”  For a complete description of the Company’s pension and postretirement benefits, refer to Note 10 of the Company’s 2008 Annual Report on Form 10-K as filed with the SEC.

20

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

Components of Net Periodic Benefit Cost for the	Pension Benefits						Other Benefits
Three Months Ended March 31,	2009			2008			2009			2008
Service cost	$	3,351		$	4,305		$	—		$	—
Interest cost	4,649			5,100			180			192
Expected return on plan assets	(5,869		)	(7,932		)	—			—
Amortization of prior service cost (credit)	(30		)	6			(41		)	(3		)
Amortization of transition obligation (asset)	—			1			—			—
Amortization of net loss	2,351			632			143			145
Net periodic benefit cost	$	4,452		$	2,112		$	282		$	334

Note 11.  Income Taxes

The Company operates in more than 100 countries around the world and its earnings are taxed at the applicable income tax rate in each of these countries.

For the three months ended March 31, 2009, the Company’s effective tax rate was reduced primarily as a result of the reorganization of certain subsidiaries which resulted in a foreign exchange loss recognized for tax purposes (tax benefit of approximately $63,200), the repayment of a certain intercompany loan which resulted in a foreign exchange loss recognized for tax purposes (tax benefit of approximately $6,100) and the expiration of certain statutes of limitation (tax benefits of approximately $4,000).  For the three months ended March 31, 2008, the Company’s effective tax rate was reduced primarily as a result of the filing of an advance pricing agreement (“APA”) between two taxing jurisdictions (tax benefit of approximately $4,900).  The APA ensures conformity between the jurisdictions’ taxing authorities regarding the treatment of certain intercompany transactions, thereby allowing the Company to record a corresponding tax benefit.

For the three months ended March 31, 2009, the Company recorded approximately $3,800 of tax expense related to unrecognized tax benefits that if recognized, would favorably affect the effective tax rate.  Included in this amount is approximately $1,700 of interest and penalties. For the three months ended March 31, 2008, the Company recorded approximately $4,800 of tax expense related to unrecognized tax benefits including approximately $2,700 of interest and penalties.

The Company files numerous consolidated and separate income tax returns in U.S. (federal and state) and non-U.S. jurisdictions.  The Company is no longer subject to U.S. federal income tax examination by tax authorities for years before 2004. The Company is no longer subject to state and local income tax examination by tax authorities for years before 1997.  Further, with few exceptions, the Company is no longer subject to examination by tax authorities in its material non-U.S. jurisdictions prior to 2004.  It is reasonably possible that within the next twelve months the Company could realize approximately $28,300 of unrecognized tax benefits as a result of the expiration of certain statutes of limitation.

21

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

Note 12.  IMS Health Capital Stock

The Company’s share repurchase program has been developed to buy opportunistically, when the Company believes that its share price provides it with an attractive use of its cash flow and debt capacity.

On December 18, 2007, the Board of Directors authorized a stock repurchase program to buy up to 20,000 shares. As of March 31, 2009, 9,505 shares remained available for repurchase under the December 2007 program.

During the three months ended March 31, 2009, the Company did not repurchase any shares of outstanding Common Stock under this program.

During the three months ended March 31, 2008, the Company repurchased 10,000 shares of outstanding Common Stock under this program at a total cost of $229,336.

These share repurchases positively impacted the Company’s diluted earnings per share by less than $0.01 for the three months ended March 31, 2008.

Shares acquired through the Company’s repurchase programs described above are open-market purchases or privately negotiated transactions in compliance with SEC Rule 10b-18.

Under the Company’s Restated Certificate of Incorporation as amended, the Company has authority to issue 820,000 shares with a par value of $.01 per share of which 800,000 represent shares of Common Stock, 10,000 represent shares of preferred stock and 10,000 represent shares of Series Common Stock.  The preferred stock and Series Common Stock can be issued with varying terms, as determined by the Board of Directors.

Note 13.  Noncontrolling Interests

On January 1, 2009, the Company adopted SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements-an Amendment of ARB No. 51” (“SFAS 160”), which established accounting and reporting standards pertaining to ownership interests in subsidiaries held by parties other than the parent, the amount of net income attributable to the parent and to the noncontrolling interests, changes in a parent’s ownership interests, and the valuation of any retained noncontrolling equity investment when a subsidiary is deconsolidated.  This statement also established disclosure requirements that identify and distinguish between the interests of the parent and the interests of the noncontrolling owners.  The adoption of SFAS 160 resulted in the reclassification of amounts previously referred to as minority interests and currently referred to as noncontrolling interests, from mezzanine equity (between Total Liabilities and Shareholders’ Deficit) to a separate component of Shareholders’ Deficit in the Company’s Condensed Consolidated Statements of Financial Position (Unaudited).  Additionally, net income attributable to noncontrolling interests, which previously was included in Other expense, net on a pretax basis, is shown separately from net income attributable to the Company in the Company’s Condensed Consolidated Statements of Income (Unaudited).  The

22

IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

adoption of SFAS 160 did not have a material impact on the Company’s financial position, results of operations or cash flows.

The following table reconciles noncontrolling interests included as a separate component of Shareholders’ Deficit.  Prior year amounts have been reclassified to conform to the current year presentation as required by SFAS 160.

	Three Months Ended March 31,
	2009			2008
Noncontrolling interests, January 1	$	1,894		$	1,444
Net income attributable to noncontrolling interests	38			536
Translation adjustments attributable to noncontrolling interests	(211		)	360
Noncontrolling interests, March 31	$	1,721		$	2,340

In July 2006, the Company, together with two of its wholly-owned subsidiaries, entered into an Amended and Restated Agreement of Limited Liability Company of IMS Health Licensing Associates, L.L.C. (the “Amended LLC Agreement”).  The Amended LLC Agreement governs the relationship between the Company, its subsidiaries and two third-party investors with respect to their interests in IMS Health Licensing Associates, L.L.C. (the “LLC”).  The Company is the sole managing member of the LLC.  Since 1997, the Company and/or its subsidiaries, or their predecessors, have contributed assets to, and have held a controlling (currently approximately 93%) interest in, the LLC, and the third-party investors have contributed $100,000 to, and have held a noncontrolling (currently approximately 7%) interest in, the LLC.  The LLC is a separate and distinct legal entity that is in the business of licensing database assets and computer software.  Under the terms of the Amended LLC Agreement, the third-party investors have the right to take steps that would result in the liquidation of their membership interest in the LLC on June 30, 2009.  This right may be accelerated if certain events occur as set forth in the Amended LLC Agreement.  If the third-party investors decide to liquidate their ownership interests in the LLC, the Company will attempt to replace the third-party investors, or if unsuccessful, purchase these ownership interests. The Company has adequate liquidity and credit capacity to purchase these ownership interests.   Under the revisions to EITF Topic No. D-98, “Classification and Measurement of Redeemable Securities” (“D-98”), these third-party investor contributions qualify as redeemable noncontrolling interests as their redemption is not solely within the control of the Company.  As such, these redeemable noncontrolling interests are presented in mezzanine equity in the Company’s Condensed Consolidated Statements of Financial Position (Unaudited).  Net income related to these redeemable noncontrolling interests amounted to $1,086 and $1,099 for the three months ended March 31, 2009 and 2008, respectively, and is included in net income attributable to noncontrolling interests in the Company’s Condensed Consolidated Statements of Income (Unaudited).

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IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

Note 14.  Comprehensive Income

The following table sets forth the components of comprehensive income:

	Three Months Ended March 31,
	2009			2008
Net income	$	134,456		$	60,810
Other comprehensive income, net of tax:
Foreign currency translation	25,600			(55,844		)
Amortization of SFAS 158 service cost	2,049			530
Total other comprehensive income, net of tax	27,649			(55,314		)
Comprehensive income	162,105			5,496
Less Comprehensive income attributable to:
Noncontrolling interests in permanent equity	(173		)	896
Redeemable noncontrolling interests in mezzanine equity	1,086			1,099
Comprehensive income attributable to IMS Health	$	161,192		$	3,501

Note 15.  Severance, Impairment and Other Charges

During the fourth quarter of 2008, the Company recorded $9,408 of non-cash impairment charges as a component of operating income related to the write-off of certain capitalized software assets in its EMEA and Asia Pacific regions.  This was the result of the discontinuation of certain IMS products at the end of 2008.

In response to healthcare marketplace dynamics, during the fourth quarter of 2007, the Company committed to a restructuring plan designed to eliminate approximately 1,070 positions worldwide in production and development, sales, marketing, consulting and services and administration.  The plan also included the write-down of two impaired computer software assets and related contract payments to be incurred with no future economic benefit based on the Company’s decision to abandon certain products in its EMEA region.  As a result, the Company recorded $88,690 of Severance, impairment and other charges as a component of operating income in the fourth quarter of 2007.  The severance benefits were calculated pursuant to the terms of established employee protection plans, in accordance with local statutory minimum requirements or individual employee contracts, as applicable.

These charges were designed to strengthen client-facing operations worldwide, increase the Company’s operating efficiencies and streamline its cost structure.  Some of the initiatives included in this plan are designed to better align the Company’s resources to help clients manage for change in a challenging climate.

The severance and contract payments portion of the fourth quarter 2007 charge was approximately $75,043 and will all be settled in cash. Termination actions under the plan were substantially completed by the end of March 31, 2009.

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IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

	Severance			Contract			Asset			Currency
	related			related			write-			Translation
	reserves			reserves			downs			adjustments			Total
Charge at December 31, 2007	$	71,583		$	3,460		$	13,647		$	—		$	88,690
2007 utilization	—			—			(13,647		)	—			(13,647		)
2008 utilization	(48,645		)	(2,150		)	—			—			(50,795		)
2009 utilization	(10,943		)	(251		)	—			—			(11,194		)
Currency translation adjustments	—			—			—			(2,242		)	(2,242		)
Balance at March 31, 2009	$	11,995		$	1,059		$	—		$	(2,242	)	$	10,812

The Company currently expects that cash outlays will be applied against the $10,812 balance remaining in the 2007 fourth quarter charge at March 31, 2009 as follows:

Year Ended December 31,	Outlays
2009	$	9,627
2010	1,008
2011	177
Total	$	10,812

During the fourth quarter of 2001, the Company completed the assessment of its Competitive Fitness Program. This program was designed to streamline operations, increase productivity and improve client service. In connection with this program, the Company recorded $94,616 of Severance, impairment and other charges during the fourth quarter of 2001 as a component of operating income.  As of March 31, 2009, approximately $1,039 remains to be utilized from 2009 to 2013 related to severance payments.

In the first quarter of 2007, the Company reversed $640 of contract-related reserves from the fourth quarter 2001 charge due primarily to the termination and settlement of exit related costs for an impaired lease. These amounts were reversed against Selling and administrative expenses in the Condensed Consolidated Statements of Income (Unaudited).

	Severance			Contract			Asset
	Related			Related			write-
	Reserves			Reserves			downs			Total
Charge at December 31, 2001	$	39,652		$	26,324		$	28,640		$	94,616
2001 – 2006 utilization	(37,334		)	(24,202		)	(29,602		)	(91,138		)
2007 utilization	(263		)	(1,208		)	—			(1,471		)
2007 reversals	—			(640		)	—			(640		)
2008 utilization	(262		)	—			—			(262		)
2009 utilization	(66		)	—			—			(66		)
Adjustments	(688		)	(274		)	962			—
Balance at March 31, 2009	$	1,039		$	—		$	—		$	1,039

The Company currently expects that the $1,039 balance remaining in the 2001 fourth quarter charge will be utilized as follows:

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IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

Year Ended December 31,	Outlays
2009	$	196
2010	262
2011	262
2012	262
2013	57
Total	$	1,039

Note 16.  Operations by Business Segment

Operating segments are defined as components of an enterprise about which financial information is available that is evaluated on a regular basis by the chief operating decision-maker, or decision-making groups, in deciding how to allocate resources to an individual segment and in assessing performance of the segment. The Company operates a globally consistent business model, offering pharmaceutical business information and related services to its customers in more than 100 countries.  See Note 2.

The Company maintains regional geographic management to facilitate local execution of its global strategies.  However, the Company maintains global leaders for the majority of its critical business processes; and the most significant performance evaluations and resource allocations made by the Company’s chief operating decision makers are made on a global basis.  As such, the Company has concluded that it maintains one operating and reportable segment.

Geographic Financial Information:

The following represents selected geographic information for the regions in which the Company operates as of and for the three months ended March 31, 2009 and 2008.

	Americas (1)		EMEA (2)		Asia Pacific (3)		Corporate & Other			Total
Three months ended March 31, 2009:
Operating Revenue (4)	$	236,593	$	206,256	$	84,095	—			$	526,944
Operating Income (Loss) (5)	$	67,842	$	20,495	$	31,288	$	(18,760	)	$	100,865
Three months ended March 31, 2008:
Operating Revenue (4)	$	252,431	$	240,870	$	80,879	—			$	574,180
Operating Income (Loss) (5)	$	79,255	$	17,222	$	30,563	$	(10,658	)	$	116,382

Notes to Geographic Financial Information:

(1)	Americas includes the United States, Canada and Latin America.
(2)	EMEA includes countries in Europe, the Middle East and Africa.
(3)	Asia Pacific includes Japan, Australia and other countries in the Asia Pacific region.
(4)	Operating Revenue relates to external customers and is primarily based on the location of the customer. The Operating Revenue for the geographic regions includes the impact of foreign exchange in converting results into U.S. dollars.
(5)	Operating Income for the three geographic regions does not reflect the allocation of certain expenses that are maintained in Corporate and Other and as such, is not a true measure of the respective regions’ profitability. The Operating Income amounts for the geographic segments include the impact of foreign exchange in converting results into U.S. dollars.

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IMS HEALTH INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars and shares in thousands, except per share data)

A summary of the Company’s operating revenue by product line for the three months ended March 31, 2009 and 2008 is presented below:

	Three Months Ended March 31,
	2009		2008
Commercial Effectiveness	$	259,640	$	286,048
Product & Portfolio Management	171,689		183,091
New Business Areas	95,615		105,041
Operating Revenue	$	526,944	$	574,180

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Dollars and shares in thousands, except per share data)

This discussion and analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements (Unaudited) and related notes.

Executive Summary

Our Business

IMS Health Incorporated (“IMS,” “we,” “us” or “our”) is the leading global provider of market intelligence to the pharmaceutical and healthcare industries. We offer leading-edge market intelligence products and services that are integral to our clients’ day-to-day operations, including product and portfolio management capabilities; commercial effectiveness innovations; managed care and consumer health offerings; and consulting and services solutions that improve productivity and the delivery of quality healthcare worldwide. Our  information products are developed to meet client needs by using data secured from a worldwide network of suppliers in more than 100 countries. Our business lines are:

·Commercial Effectiveness to increase clients’ productivity across end-to-end sales, marketing, promotional and performance management processes;

·Product and Portfolio Management to provide clients with insights into market measurement so they can optimize their product portfolio and strategies; and

·New Business Areas that support pharmaceutical client business initiatives in managed markets, consumer health, and pricing and market access, and that also serve payer and government audiences.

Within these business lines, we provide consulting and services that use in-house capabilities and methodologies to assist clients in analyzing and evaluating market trends, strategies and tactics, and to help in the development and implementation of customized software applications and data warehouse tools.

We operate in more than 100 countries.

We manage on a global business model with global leaders for the majority of our critical business processes and accordingly have one reportable segment.

We believe that important measures of our financial condition and results of operations include operating revenue, constant dollar revenue growth, operating income, constant dollar operating income growth, operating margin and cash flows.

Performance Overview

Our operating revenue declined 8.2% to $526,944 in the first quarter of 2009 as compared to $574,180 in the first quarter of 2008.  The operating revenue decrease was a result of a decline in all three of our business lines.  Our operating income declined 13.3% to $100,865 in the first quarter of 2009 as compared to $116,382 in the first quarter of 2008.  The operating income decline was a result of decreased operating revenues, partially offset by decreases in operating

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costs and selling and administrative expenses, as discussed below. Our net income attributable to IMS was $133,332 for the first quarter of 2009, an increase of $74,157 as compared to $59,175 for the first quarter of 2008, due to the Non-Operating Loss, net items discussed below and certain tax items as discussed in Note 11 of the Condensed Consolidated Financial Statements (Unaudited).  Our diluted earnings per share of Common Stock increased to $0.73 for the first quarter of 2009 as compared to $0.32 for the first quarter of 2008.

Results of Operations

Reclassifications. Certain prior-year amounts have been reclassified to conform to the 2009 presentation.

References to constant dollar results and results excluding the effect of foreign currency translations.  We report results in U.S. dollars, but we do business on a global basis.  Exchange rate fluctuations affect the rate at which we translate foreign revenues and expenses into U.S. dollars and may have significant effects on our results.  In order to illustrate these effects, the discussion of our business in this report sometimes describes the magnitude of changes in constant dollar terms or results excluding the effect of foreign currency translations.  We believe this information facilitates a comparative view of our business.  In the first three months of 2009, the U.S. dollar was generally stronger against other currencies as compared to the first three months of 2008.  The revenue decline at actual currency rates was greater than the decline at constant dollar exchange rates.  See “How Exchange Rates Affect Our Results” below and the discussion of “Market Risk” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our annual report on Form 10-K for the year ended December 31, 2008 for a more complete discussion regarding the impact of foreign currency translation on our business.

Summary of Operating Results

					% Variance
	Three Months Ended March 31,				2009
	2009		2008		vs 2008
Information and analytics revenue (I&A)	$	420,076	$	456,187	(7.9	)%
Consulting and services revenue (C&S)	106,868		117,993		(9.4	)%
Operating Revenue	526,944		574,180		(8.2	)%
Operating costs of I&A	170,839		192,766		11.4	%
Direct and incremental costs of C&S	61,145		68,505		10.7	%
External-use software amortization	10,524		12,714		17.2	%
Selling and administrative expenses	160,406		162,769		1.5	%
Depreciation and other amortization	23,165		21,044		(10.1	)%
Operating Income	$	100,865	$	116,382	(13.3	)%

Operating Income

Our operating income for the first quarter of 2009 declined 13.3% to $100,865 from $116,382 in the first quarter of 2008.  This was due to the decrease in our operating revenue, partially offset by decreases in our operating costs and selling and administrative expenses driven

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by decreased cost of data and tight controls on hiring.  Our operating income decreased 20.5% in constant dollar terms.

Operating Revenue

Our operating revenue for the first quarter of 2009 declined 8.2% to $526,944 from $574,180 in the first quarter of 2008. On a constant dollar basis, operating revenue declined 2.8%.  On a constant dollar basis, acquisitions completed within the prior twelve months contributed approximately 1 percentage point revenue growth, partially offsetting our operating revenue decline for the first quarter of 2009.  The decrease in our operating revenue resulted from revenue declines in all three of our business lines, together with the effect of approximately $32,000 of currency translation for the first quarter of 2009 as compared to the first quarter of 2008.

Summary of Operating Revenue

					% Variance
					2009 vs 2008
	Three Months Ended March 31,				Reported		Constant
	2009		2008		Rates		Dollar
Commercial Effectiveness	$	259,640	$	286,048	(9.2	)%	(4.4	)%
Product & Portfolio Management	171,689		183,091		(6.2	)%	(0.8	)%
New Business Areas	95,615		105,041		(9.0	)%	(1.9	)%
Operating Revenue	$	526,944	$	574,180	(8.2	)%	(2.8	)%

·Commercial Effectiveness: EMEA contributed approximately three-quarters and the Americas contributed more than one-quarter to the constant dollar revenue decline for the first quarter of 2009, partially offset by revenue growth in Asia Pacific.

·Product & Portfolio Management: The Americas was the primary contributor to the constant dollar revenue decline for the first quarter of 2009, partially offset by revenue growth in EMEA and Asia Pacific.

·New Business Areas: The Americas was the primary contributor to the constant dollar revenue decline for the first quarter of 2009, partially offset by revenue growth in EMEA and Asia Pacific.

Consulting and services (“C&S”) revenue, as included in the business lines above, was $106,868 in the first quarter of 2009, down 9.4% from $117,993 in the first quarter of 2008 (down 3.5% on a constant dollar basis).

Operating Costs of Information and Analytics

Operating costs of information and analytics (“I&A”) include costs of data, data processing and collection and costs attributable to personnel involved in production, data management and delivery of the Company’s I&A offerings.

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Our operating costs of I&A declined 11.4% to $170,839 in the first quarter of 2009 from $192,766 in the first quarter of 2008.

·Foreign Currency Translation: The effect of foreign currency translation decreased our operating costs of I&A by approximately $14,000 for the first quarter of 2009 as compared to the first quarter of 2008.

Excluding the effect of foreign currency translation, our operating costs of I&A declined 4.1% in the first quarter of 2009 as compared to the first quarter of 2008.

·Data: Data costs decreased by approximately $6,000 in the first quarter of 2009 as compared to the first quarter of 2008.

·Production, Client Services and Other: Production, client services and other costs decreased by approximately $1,000 in the first quarter of 2009 as compared to the first quarter of 2008.

Direct and Incremental Costs of Consulting and Services

Direct and incremental costs of C&S include the costs of consulting staff directly involved with delivering revenue-generating engagements, related accommodations and the costs of primary market research data purchased specifically for certain individual C&S engagements.  Direct and incremental costs of C&S do not include an allocation of direct costs of data that are included within I&A.

Our direct and incremental costs of C&S declined 10.7% to $61,145 in the first quarter of 2009 from $68,505 in the first quarter of 2008.

·Foreign Currency Translation: The effect of foreign currency translation decreased our direct and incremental costs of C&S by approximately $5,000 for the first quarter of 2009 as compared to the first quarter of 2008.

Excluding the effect of foreign currency translation, our direct and incremental costs of C&S declined 2.9% in the first quarter of 2009 as compared to the first quarter of 2008.

·C&S costs decreased by approximately $2,000 in the first quarter of 2009 as compared to the first quarter of 2008, due to decreased labor and primary market research data expense, all directly related to the C&S revenue decline.

External-Use Software Amortization

Our external-use software amortization charges represent the amortization associated with software we capitalized under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed.” Our external-use software amortization charges declined 17.2% to $10,524 in the first quarter of 2009 from $12,714 in the first quarter of 2008. This was due to decreased software amortization associated with assets that were fully amortized prior to Q1 2009.

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Selling and Administrative Expenses

Our selling and administrative expenses consist primarily of the expenses attributable to sales, marketing, and administration, including human resources, legal, management and finance.  Our selling and administrative expenses declined 1.5% to $160,406 in the first quarter of 2009 from $162,769 in the first quarter of 2008.

·Foreign Currency Translation: The effect of foreign currency translation decreased our selling and administrative expenses by approximately $17,000 for the first quarter of 2009 as compared to the first quarter of 2008.

Excluding the effect of foreign currency translation, our selling and administrative expenses grew 9.8% in the first quarter of 2009 as compared to the first quarter of 2008.

·Sales and Marketing: Sales and marketing expenses decreased by approximately $3,000 in the first quarter of 2009 as compared to the first quarter of 2008.

·Consulting and Services:  C&S expenses increased by approximately $5,000 in the first quarter of 2009 as compared to the first quarter of 2008.

·Administrative and Other:  Other expenses increased by approximately $13,000 in the first quarter of 2009 as compared to the first quarter of 2008.

Depreciation and Other Amortization

Our depreciation and other amortization charges increased 10.1% to $23,165 in the first quarter of 2009 from $21,044 in the first quarter of 2008 due to increased depreciation related to new facilities and technology to upgrade our financial systems and increased amortization related to internal-use software additions.

Trends in our Operations

Our operating margin for the first quarter of 2009 was 19.1% as compared to 20.3% in the first quarter of 2008.  Margins in the first quarter of 2009 were negatively impacted by revenue declines partially offset by decreased costs of panel and decreased sales and marketing costs.

We have several offerings in the U.S. that utilize prescriber-identifiable information.  Over the past several years, there have been a number of state legislative initiatives seeking to impose restrictions on the commercial use of such information.  To date, three states, New Hampshire, Vermont and Maine, have passed laws placing certain restrictions on the license, use or transfer of prescriber-identifiable information for commercial purposes.  Collectively, these three states represent approximately one percent of prescription activity in the U.S. and therefore the impact of these laws on our business, financial condition and results of operations is not expected to be material.  However, as of April 24, 2009, sixteen states were considering similar legislation.  For additional information regarding the status of the laws passed in the three states noted above and related developments in these other states, see Part II. Item 1A. Risk Factors.

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Non-Operating Loss, net

Our non-operating loss, net, decreased to a loss of $3,574 in the first quarter of 2009 from a loss of $27,293 in the first quarter of 2008.  This was due to the following factors:

·Interest Expense, net: Net interest expense was $8,469 for the first quarter of 2009 as compared to $8,671 for the first quarter of 2008.  This improvement was due to lower debt levels in the first quarter of 2009 as compared to the first quarter of 2008.

·Other Income (Expense), net:Other income (expense), net, grew by $23,517 in the first quarter of 2009 as compared to the first quarter of 2008.  This was a result of net foreign exchange gains of $4,884 in the first quarter of 2009 as compared to net foreign exchange losses of $18,598 in the first quarter of 2008.

Taxes

We operate in more than 100 countries around the world and our earnings are taxed at the applicable income tax rate in each of these countries.

For the three months ended March 31, 2009, our effective tax rate was reduced primarily as a result of the reorganization of certain subsidiaries which resulted in a foreign exchange loss recognized for tax purposes (tax benefit of approximately $63,200), the repayment of a certain intercompany loan which resulted in a foreign exchange loss recognized for tax purposes (tax benefit of approximately $6,100) and the expiration of certain statutes of limitation (tax benefits of approximately $4,000).  For the three months ended March 31, 2008, our effective tax rate was reduced primarily as a result of the filing of an advance pricing agreement (“APA”) between two taxing jurisdictions (tax benefit of approximately $4,900).  The APA ensures conformity between the jurisdictions’ taxing authorities regarding the treatment of certain intercompany transactions, thereby allowing us to record a corresponding tax benefit.

For the three months ended March 31, 2009, we recorded approximately $3,800 of tax expense related to unrecognized tax benefits that if recognized, would favorably affect the effective tax rate.  Included in this amount is approximately $1,700 of interest and penalties. For the three months ended March 31, 2008, we recorded approximately $4,800 of tax expense related to unrecognized tax benefits including approximately $2,700 of interest and penalties.

We file numerous consolidated and separate income tax returns in U.S. (federal and state) and non-U.S. jurisdictions.  We are no longer subject to U.S. federal income tax examinations by tax authorities for  years before 2004. We are no longer subject to state and local income tax examination by tax authorities for years before 1997.  Further, with few exceptions, we are no longer subject to examination by tax authorities in our material non-U.S. jurisdictions prior to 2004.  It is reasonably possible that within the next twelve months we could realize approximately $28,300 of unrecognized tax benefits as a result of the expiration of certain statutes of limitation.

While we intend to continue to seek global tax planning initiatives, there can be no assurance that we will be able to successfully identify and implement such initiatives to reduce or maintain our overall tax rate and therefore rates may go up in the future.

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Net Income Attributable to Noncontrolling Interests

On January 1, 2009, we adopted SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements-an Amendment of ARB No. 51” (“SFAS 160”), which established accounting and reporting standards pertaining to ownership interests in subsidiaries held by parties other than the parent, the amount of net income attributable to the parent and to the noncontrolling interests, changes in a parent’s ownership interests, and the valuation of any retained noncontrolling equity investment when a subsidiary is deconsolidated.  As a result of the adoption of SFAS 160, net income attributable to noncontrolling interests, which previously was included in Other expense, net on a pretax basis, is shown separately from net income attributable to the Company in our Condensed Consolidated Statements of Income (Unaudited).  Net Income Attributable to Noncontrolling Interests decreased to $1,124 in the first quarter of 2009 from $1,635 in the first quarter of 2008.  See Note 13 to our Condensed Consolidated Financials Statements (Unaudited).

Operating Results by Geographic Region

The following represents selected geographic information for the regions in which we operate for the three months ended March 31, 2009 and 2008:

	Americas (1)		EMEA (2)		Asia Pacific  (3)		Corporate & Other			Total IMS
Three months ended March 31, 2009:
Operating Revenue (4)	$	236,593	$	206,256	$	84,095	—			$	526,944
Operating Income (Loss) (5)	$	67,842	$	20,495	$	31,288	$	(18,760	)	$	100,865
Three months ended March 31, 2008:
Operating Revenue (4)	$	252,431	$	240,870	$	80,879	—			$	574,180
Operating Income (Loss) (5)	$	79,255	$	17,222	$	30,563	$	(10,658	)	$	116,382

Notes to Geographic Financial Information:

(1)Americas includes the United States, Canada and Latin America.

(2)EMEA includes countries in Europe, the Middle East and Africa.

(3)Asia Pacific includes Japan, Australia and other countries in the Asia Pacific region.

(4)Operating Revenue relates to external customers and is primarily based on the location of the customer. The Operating Revenue for the geographic regions includes the impact of foreign exchange in converting results into U.S. dollars.

(5)Operating Income for the three geographic regions does not reflect the allocation of certain expenses that are maintained in Corporate and Other and as such, is not a true measure of the respective regions’ profitability. The Operating Income amounts for the geographic segments include the impact of foreign exchange in converting results into U.S. dollars.

Americas Region

Operating revenue declined 6.3% in the Americas region in the first quarter of 2009 as compared to the first quarter of 2008.  Excluding the effect of foreign currency translations, operating revenue declined 3.7% in the first quarter of 2009 as compared to the first quarter of 2008.  This was driven equally by all of our business lines due to a decline in demand for our I&A and C&S offerings.

Operating income in the Americas region declined 14.4% in the first quarter of 2009 as

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compared to the first quarter of 2008.  The operating income decline reflected revenue declines in the regions which were partially offset by decreases in operating expenses of $4,000 in the first quarter of 2009.  Excluding the effect of foreign currency translations, operating income decreased 12.3% in the first quarter of 2009 as compared to the first quarter of 2008.

EMEA Region

Operating revenue decreased in the EMEA region by 14.4% in the first quarter of 2009 as compared to the first quarter of 2008.  Excluding the effect of foreign currency translations, operating revenue declined 3.2% in the first quarter of 2009 as compared to the first quarter of 2008.  The revenue decline in the first quarter of 2009 was driven by Commercial Effectiveness, partially offset by revenue growth in Product & Portfolio Management and New Business Areas business lines.

Operating income in the EMEA region grew 19.0% in the first quarter of 2009 as compared to the first quarter of 2008.  The operating income growth reflected revenue declines in the region more than offset by decreases in operating expenses of $38,000 in the first quarter of 2009.  Excluding the effect of foreign currency translations, operating income decreased 20.1% in the first quarter of 2009 as compared to the first quarter of 2008.

Asia Pacific Region

Operating revenue in the Asia Pacific region increased 4.0% in the first quarter of 2009 as compared to the first quarter of 2008.  Excluding the effect of foreign currency translations, operating revenue grew 1.8% in the first quarter of 2009 as compared to the first quarter of 2008.  The revenue growth in the first quarter of 2009 was driven more than one-half by Commercial Effectiveness and one-third by the Product & Portfolio Management business line.

Operating income in the Asia Pacific region increased by 2.4% in the first quarter of 2009 as compared to the first quarter of 2008.  The operating income growth reflected revenue growth in the region offset by increases in operating expenses of $2,000 in the first quarter of 2009, respectively.  Excluding the effect of foreign currency translations, operating income decreased by 2.1% in the first quarter of 2009 as compared to the first quarter of 2008.

How Exchange Rates Affect Our Results

We operate globally, deriving a significant portion of our operating income from non-U.S. operations.  As a result, fluctuations in the value of foreign currencies relative to the U.S. dollar may increase the volatility of U.S. dollar operating results.  We enter into foreign currency forward contracts to partially offset the effect of currency fluctuations. Foreign currency translation increased the U.S. dollar revenue decline by approximately 5.4 percentage points while the impact on the operating income decline was an approximate decrease of 7.2 percentage points in the first quarter of 2009. In the first quarter of 2008, foreign currency translation increased U.S. dollar revenue growth by approximately 6.8 percentage points, while the impact on operating income growth was an approximate increase of 7.7 percentage points.

Non-U.S. monetary assets are maintained in currencies other than the U.S. dollar,

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principally the Euro, the Japanese Yen and the Swiss Franc.  Where monetary assets are held in the functional currency of the local entity, changes in the value of these currencies relative to the U.S. dollar are reflected in Cumulative translation adjustment in the Condensed Consolidated Statements of Financial Position (Unaudited).  The effect of exchange rate changes during the first three months of 2009 decreased the U.S. dollar amount of Cash and cash equivalents by $5,910. The effect of exchange rate changes during the first three months of 2008 increased the US dollar amount of cash and cash equivalents by $7,908.

Liquidity and Capital Resources

Our cash and cash equivalents decreased $41,091 during the first quarter of 2009 to $174,591 at March 31, 2009 compared to $215,682 at December 31, 2008.  The decrease reflects cash used in investing and financing activities of $25,498 and $26,147, respectively, and a decrease of $5,910 due to the effect of exchange rate changes, partially offset by cash provided by operating activities of $16,464.

We currently expect that we will use our Cash and cash equivalents primarily to fund:

· development of software to be used in our new products and capital expenditures to expand and upgrade our information technology capabilities and to build or acquire facilities to house our business (we currently expect to spend approximately $110,000 to $135,000 during 2009 for software development and capital expenditures);

· acquisitions (see Note 5 to our Condensed Consolidated Financial Statements (Unaudited));

· dividends to our shareholders (we expect 2009 dividends will be $0.12 per share or approximately $22,000);

· payments of approximately $10,800 related to our fourth quarter 2007 restructuring charge (see Note 15 to our Condensed Consolidated Financial Statements (Unaudited));

· payments for tax-related matters, including the D&B Legacy Tax Matters discussed further in Note 7 to our Condensed Consolidated Financial Statements (Unaudited). Payments for certain of the D&B Legacy Tax Matters could be up to approximately $35,800 in 2009;

· pension and other postretirement benefit plan contributions (we currently expect contributions to U.S. and non-U.S. pension and other postretirement benefit plans to total approximately $8,700 in 2009) (see Note 10 to our Condensed Consolidated Financial Statements (Unaudited) for pension and postretirement benefit plan expense); and

· share repurchases (see Note 12 to our Condensed Consolidated Financial Statements (Unaudited)).

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Net cash provided by operating activities amounted to $16,464 for the three months ended March 31, 2009, which represented an increase of $17,199 compared to cash used in operating activities during the comparable period in 2008.  The increase relates to higher net income and lower accounts receivable balances, partially offset by the higher funding of accounts payable and accrued expenses and other current liabilities during the three months ended March 31, 2009.  The decrease in accounts receivable was driven by a decrease in DSO (days sales outstanding), which was nine days lower in the three months ended March 31, 2009 as compared to the prior year comparable quarter, as a result of improved collections and receivables management.

Net cash used in investing activities amounted to $25,498 for the three months ended March 31, 2009, a decrease in cash used of $4,442 over the comparable period in 2008.  The decrease relates to lower payments for acquisitions and lower capital expenditures, partially offset by lower proceeds from the sale of capital assets during the three months ended March 31, 2009 as compared to the prior year comparable quarter.

Net cash used in financing activities amounted to $26,147 for the three months ended March 31, 2009, an increase of $46,460 compared to cash provided by financing activities during the comparable period in 2008.  This increase was due to lower net borrowings of debt and a decrease in cash overdrafts, partially offset by lower purchases of treasury stock during the three months ended March 31, 2009 as compared to the prior year comparable quarter.

Our financing activities include cash dividends we paid of $0.03 per share quarterly, which amounted to $5,727 and $5,507 during the three months ended March 31, 2009 and 2008, respectively.  The payments and level of cash dividends made by us are subject to the discretion of our Board of Directors.  Any future dividends, other than the $0.03 per share dividend for the second quarter of 2009, which was declared by our Board of Directors in April 2009, will be based on, and affected by, a number of factors, including our operating results and financial requirements.

IMS, together with two of our wholly-owned subsidiaries and two third-party investors, entered into an agreement (the ‘‘LLC Agreement’’) whereby such third-party investors have contributed $100,000 to, and have held a noncontrolling interest in, IMS Health Licensing Associates, L.L.C. (‘‘the LLC’’).  Under the terms of the LLC Agreement, the third-party investors have the right to take steps that would result in the liquidation of their membership interests in the LLC on June 30, 2009.  This right may be accelerated if certain events occur as set forth in the LLC Agreement.  If the third-party investors decide to liquidate their ownership interests in the LLC, we will attempt to replace the third-party investors, or if unsuccessful, purchase these ownership interests. We have adequate liquidity and credit capacity to purchase these ownership interests. See Note 13 to our Condensed Consolidated Financial Statements (Unaudited).

Capital and Credit Markets

As the capital and credit markets have worsened, we have performed additional assessments to determine the impact, if any, on our financial statements of recent market developments, including the bankruptcy, restructuring or merging of certain financial

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companies. Our additional assessments included a review of access to liquidity in the capital and credit markets and financial institution counterparty creditworthiness.  Based on our assessment, we currently believe we have sufficient liquidity and access to credit despite the current disruption of the capital and credit markets.  However, the recent unprecedented volatility in capital and credit markets may create additional risks in the upcoming years.

Liquidity in the Capital and Credit Markets

We believe we have sufficient liquidity despite the current disruption of the capital and credit markets. We fund our liquidity needs for capital investment, working capital, and other financial commitments through cash flow from continuing operations and our diversified credit facility ($460,712 in aggregate commitment available as of March 31, 2009). While not significant to us to date, disruptions in capital and credit markets may result in increased borrowing costs in the future.

Credit Concentrations

We continually monitor our positions with, and the credit quality of, the financial institutions which are counterparties to our financial instruments and do not anticipate non-performance by the counterparties.  We would not have realized a material loss during the quarter ended March 31, 2009 in the event of non-performance by any one counterparty.  In general, we enter into transactions only with financial institution counterparties that have a credit rating of A or better.  In addition, we limit the amount of credit exposure with any one institution.  Particularly in light of the current credit environment, management will continue to monitor the status of these counterparties and will take action, as appropriate, to further manage its counterparty credit risk.

We maintain accounts receivable balances ($398,358 and $382,776, net of allowances, at March 31, 2009 and December 31, 2008, respectively), principally from customers in the pharmaceutical industry.  Our trade receivables do not represent significant concentrations of credit risk at March 31, 2009 due to the credit worthiness of our customers and their dispersion across many geographic areas.

Tax and Other Contingencies

We are exposed to certain known tax and other contingencies that are material to our investors.  The facts and circumstances surrounding these contingencies and a discussion of their effect on us are included in Notes 7 and 11 to our Condensed Consolidated Financial Statements (Unaudited) for the period ended March 31, 2009.

These contingencies may have a material effect on our liquidity, capital resources or results of operations.  Although we have established reserves for D&B Legacy Tax Matters in accordance with SFAS No. 5, “Accounting for Contingencies,” the actual liability may exceed the amount of the reserve.  In addition, even where our reserves are adequate, the incurrence of any of these liabilities may have a material effect on our liquidity and the amount of cash available to us for other purposes.

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Management believes that we have made appropriate arrangements in respect of the future effect on us of these known tax and other contingencies.  Management also believes that the amount of cash available to us from our operations, together with cash from financing, will be sufficient for us to pay any known tax and other contingencies as they become due without materially affecting our ability to conduct our operations and invest in the growth of our business.

Stock Repurchase Programs

Our share repurchase program has been developed to buy opportunistically, when we believe that our share price provides us with an attractive use of our cash flow and debt capacity.

On December 18, 2007, the Board of Directors authorized a stock repurchase program to buy up to 20,000 shares. As of March 31, 2009, 9,505 shares remained available for repurchase under the December 2007 program.

During the three months ended March 31, 2009, we did not repurchase any shares of outstanding Common Stock under this program.

During the three months ended March 31, 2008, the Company repurchased 10,000 shares of outstanding Common Stock under this program at a total cost of $229,336.

These share repurchases positively impacted our diluted earnings per share by less than $0.01 for the three months ended March 31, 2008.

Shares acquired through our repurchase programs described above are open-market purchases or privately negotiated transactions in compliance with SEC Rule 10b-18.

Under our Restated Certificate of Incorporation as amended, we have the authority to issue 820,000 shares with a par value of $.01 per share of which 800,000 represent shares of Common Stock, 10,000 represent shares of preferred stock and 10,000 represent shares of Series Common Stock.  The preferred stock and Series Common Stock can be issued with varying terms, as determined by the Board of Directors.

Borrowings

In recent years, we have increased debt levels to balance appropriately the objective of generating an attractive cost of capital with providing us a reasonable amount of financial flexibility.  At March 31, 2009, our debt totaled $1,329,209, and management does not believe that this level of debt poses a material risk to us due to the following factors:

·in each of the last three years, we have generated strong net cash provided by operating activities in excess of $350,000;

·at March 31, 2009, we had $174,591 in worldwide cash and cash equivalents;

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·at March 31, 2009, we had $460,712 of unused debt capacity under our existing bank credit facilities; and

·we believe that we have the ability to obtain additional debt capacity outside of our existing debt arrangements.

The following table summarizes our long-term debt at March 31, 2009 and December 31, 2008:

	2009		2008
5.58% Private Placement Notes, principal payment of $105,000 due January 2015	$	105,000	$	105,000
5.99% Private Placement Notes, principal payment of $135,000 due January 2018	135,000		135,000
5.55% Private Placement Notes, principal payment of $150,000 due April 2016	150,000		150,000
1.70% Private Placement Note, principal payment of 34,395,000 Japanese Yen due January 2013	349,921		381,304
Revolving Credit Facility:
Japanese Yen denominated borrowings at average floating rates of approximately 1.09%	333,788		435,895
U.S. Dollar denominated borrowings at average floating rates of approximately 0.99%	205,500		147,000
Bank Term Loan, principal payment of $50,000 due June 2010 at average floating rate of approximately 0.82%	50,000		50,000
Total Long-Term Debt	$	1,329,209	$	1,404,199

In February 2008, we closed a private placement transaction pursuant to which we issued $105,000 of seven-year debt at a fixed rate of 5.58%, and $135,000 of ten-year debt at a fixed rate of 5.99% to several highly rated insurance companies. We used the proceeds for share repurchases (see Note 12 to our Condensed Consolidated Financial Statements (Unaudited)) and to refinance existing debt.

In July 2006, we entered into a $1,000,000 revolving credit facility with a syndicate of 12 banks (“Revolving Credit Facility”) replacing our existing $700,000 facility.  The terms of the Revolving Credit Facility extended the maturity of the facility in its entirety to a term of five years, maturing July 2011, reduced the borrowing margins, and increased subsidiary borrowing limits.  Total borrowings under the Revolving Credit Facility were $539,288 and $582,895 at March 31, 2009 and December 31, 2008, respectively, all of which were classified as long-term.  We define long-term lines as those where the lines are non-cancellable for more than 365 days from the balance sheet date by the financial institutions except for specified, objectively measurable violations of the provisions of the agreement.  In general, rates for borrowing under the Revolving Credit Facility are LIBOR plus 40 basis points and can vary based on the our Debt to EBITDA ratio. The weighted average interest rates for the Company’s lines were 1.05% and 1.36% at March 31, 2009 and December 31, 2008, respectively.  In addition, we are required to pay a commitment fee on any unused portion of the facilities of 0.01%.  At March 31, 2009, we had approximately $460,712 available under existing bank credit facilities.

In June 2006, we closed a $50,000 three-year term loan with a bank.  The term loan allows us to borrow at a floating rate with a lower borrowing margin than our revolving credit facility.  The term loan also provides us with two one-year options to extend the term at our discretion.  In

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August 2008, we exercised the first one-year option to extend the term through June 2010. We used the proceeds to refinance existing debt borrowed under the revolving credit facility.

In April 2006, we closed a private placement transaction pursuant to which we issued $150,000 of ten-year notes to two highly rated insurance companies at a fixed rate of 5.55%.  We used the proceeds to refinance existing debt of $150,000 drawn under a short term credit agreement with a bank in January 2006.

In January 2006, we closed a private placement transaction pursuant to which our Japanese subsidiary issued 34,395,000 Japanese Yen seven-year debt (equal to $300,000 at date of issuance) to several highly rated insurance companies at a fixed rate of 1.70%.  We used the proceeds to refinance existing debt in Japan.

Our financing arrangements provide for certain covenants and events of default customary for similar instruments, including in the case of our main bank arrangements, the private placement transactions, and the term loan, covenants to maintain specific ratios of consolidated total indebtedness to EBITDA and of EBITDA to certain fixed charges.  At March 31, 2009, we were in compliance with these financial debt covenants.

Severance, Impairment and Other Charges

During the fourth quarter of 2008, we recorded $9,408 of non-cash impairment charges as a component of operating income related to the write-off of certain capitalized software assets in our EMEA and Asia Pacific regions.  This was the result of the discontinuation of certain IMS products at the end of 2008.

In response to healthcare marketplace dynamics, during the fourth quarter of 2007, we committed to a restructuring plan designed to eliminate approximately 1,070 positions worldwide in production and development, sales, marketing, consulting and services and administration.  The plan also included the write-down of two impaired computer software assets and related contract payments to be incurred with no future economic benefit based on our decision to abandon certain products in our EMEA region.  As a result, we recorded $88,690 of Severance, impairment and other charges as a component of operating income in the fourth quarter of 2007.  The severance benefits were calculated pursuant to the terms of established employee protection plans, in accordance with local statutory minimum requirements or individual employee contracts, as applicable.

These charges were designed to strengthen client-facing operations worldwide, increase our operating efficiencies and streamline our cost structure.  Some of the initiatives included in this plan are designed to better align our resources to help clients manage for change in a challenging climate.

The severance and contract payments portion of the charge was approximately $75,043 and will all be settled in cash. Termination actions under the plan were substantially completed by March 31, 2009.

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	Severance			Contract			Asset			Currency
	related			Related			write-			translation
	reserves			Reserves			Downs			adjustments			Total
Charge at December 31, 2007	$	71,583		$	3,460		$	13,647		$	—		$	88,690
2007 utilization	—			—			(13,647		)	—			(13,647		)
2008 utilization	(48,645		)	(2,150		)	—			—			(50,795		)
2009 utilization	(10,943		)	(251		)	—			—			(11,194		)
Currency translation adjustments	—			—			—			(2,242		)	(2,242		)
Balance at March 31, 2009	$	11,995		$	1,059		$	—		$	(2,242	)	$	10,812

 We currently expect that cash outlays will be applied against the $10,812 balance remaining in the 2007 fourth quarter charge at March 31, 2009 as follows:

Year Ended December 31,	Outlays
2009	$	9,627
2010	1,008
2011	177
Total	$	10,812

During the fourth quarter of 2001, we completed the assessment of our Competitive Fitness Program. This program was designed to streamline operations, increase productivity and improve client service. In connection with this program, we recorded $94,616 of Severance, impairment and other charges during the fourth quarter of 2001 as a component of operating income.  As of March 31, 2009, approximately $1,039 remains to be utilized from 2009 to 2013 related to severance payments.

In the first quarter of 2007, we reversed $640 of contract-related reserves from the fourth quarter 2001 charge due primarily to the termination and settlement of exit related costs for an impaired lease.  These amounts were reversed against Selling and administrative expenses in the Condensed Consolidated Statements of Income (Unaudited).

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	Severance			Contract			Asset
	related			related			write-
	reserves			reserves			downs			Total
Charge at December 31, 2001	$	39,652		$	26,324		$	28,640		$	94,616
2001 — 2006 utilization	(37,334		)	(24,202		)	(29,602		)	(91,138		)
2007 utilization	(263		)	(1,208		)	—			(1,471		)
2007 reversals	—			(640		)	—			(640		)
2008 utilization	(262		)	—			—			(262		)
2009 utilization	(66		)	—			—			(66		)
Adjustments	(688		)	(274		)	962			—
Balance at March 31, 2009	$	1,039		$	—		$	—		$	1,039

We currently expect that the $1,039 balance remaining in the 2001 fourth quarter charge will be utilized as follows:

Year Ended December 31,	Outlays
2009	196
2010	262
2011	262
2012	262
2013	57
Total	$	1,039

Recently Issued Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements.” This statement defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosures about fair value measurements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.  The adoption of SFAS No. 157, effective January 1, 2008, did not have a material impact on our financial position, results of operations or cash flows.  In February 2008, the FASB issued Staff Positions No. FAS 157-1 and No. FAS 157-2 which delayed the effective date of SFAS No. 157 for one year for certain non-financial assets and liabilities and removed certain leasing transactions from its scope.  The adoption of Staff Positions No. FAS 157-1 and No. 157-2, effective January 1, 2009, did not have a material impact on our financial position, results of operations or cash flows.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.”  The statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (“GAAP”) in the United States.  This statement was effective 60 days following the U.S. SEC’s approval of the Public Company Accounting Oversight Board (“PCAOB”)

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amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.”  The adoption of this statement did not have an impact on our financial position, results of operations or cash flows.

In December 2008, the FASB issued FASB Staff Position (“FSP”) FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”), which amends SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan.  FSP FAS 132(R)-1 is effective for fiscal years ending after December 15, 2009, with earlier application permitted. Upon initial application, the provisions of FSP FAS 132(R)-1 are not required for earlier periods that are presented for comparative purposes.  We are currently evaluating the new disclosure requirements under FSP FAS 132(R)-1.

In April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”), which provides guidance on determining fair values when there is no active market or where the price inputs being used represent distressed sales.  It also reaffirms what SFAS No. 157 states is the objective of fair value measurement—to reflect how much an asset would be sold for in an orderly transaction (as opposed to a distressed or forced transaction) at the date of the financial statements under current market conditions.  FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009.  The adoption of FSP FAS 157-4 is not expected to have a material impact on our financial position, results of operations or cash flows.

Forward-Looking Statements and Risk Factors

This Quarterly Report on Form 10-Q, as well as information included in oral statements or other written statements made or to be made by us, contain statements that, in our opinion, may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  The words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “project,” “estimate,” “will,” “may,” “should,” “future,” “predicts,” “potential,” “continue” and similar expressions identify these forward-looking statements, which appear in a number of places in this Quarterly Report on Form 10-Q and include, but are not limited to, all statements relating to plans for future growth and other business development activities as well as capital expenditures, financing sources, dividends and the effects of regulation and competition, foreign currency conversion and all other statements regarding our intent, plans, beliefs or expectations or those of our directors or officers.  Investors are cautioned that such forward-looking statements are not assurances for future performance or events and involve risks and uncertainties that could cause actual results and developments to differ materially from those covered in such forward-looking statements.  These risks and uncertainties include, but are not limited to:

·risks associated with operating on a global basis, including fluctuations in the value of foreign currencies relative to the U.S. dollar, and the ability to successfully hedge such risks—we derived approximately 64% of our operating revenue in 2008 from non-U.S. operations;

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·deterioration in economic conditions, particularly in the pharmaceutical, healthcare or other industries in which our customers operate;

·regulatory, legislative and enforcement initiatives to which we are or may become subject relating particularly to tax and to medical privacy and the collection and dissemination of data and, specifically, non-patient identifiable information, e.g., prescriber identifiable information, or to the process of anonymizing data;

·the imposition of additional restrictions on our use of or access to data, or the refusal by data suppliers to provide data to us;

·conditions in the securities markets that may affect the value or liquidity of portfolio investments; and management’s estimates of lives of assets, recoverability of assets, fair market value, estimates of liabilities and accrued income tax benefits and liabilities;

·to the extent unforeseen cash needs arise, the ability to obtain financing on favorable terms, or at all during adverse credit market conditions;

·to the extent we seek growth through acquisitions, alliances or joint ventures, the ability to identify, consummate and integrate acquisitions, alliances and joint ventures on satisfactory terms;

·our ability to develop new or advanced technologies, including sophisticated information systems, software and other technology used to deliver our products and services and to do so on a timely and cost-effective basis, and the exposure to the risk of obsolescence or incompatibility of these technologies with those of our customers or suppliers; our ability to maintain effective security measures for our computer and communications systems; and failures or delays in the operation of our computer or communications systems;

·consolidation in the pharmaceutical industry and the other industries in which our customers operate;

·our ability to successfully maintain historic effective tax rates;

·our ability to maintain and defend our intellectual property rights in jurisdictions around the world;

·competition, particularly in the markets for pharmaceutical information and consulting and services;

·regulatory, legislative and enforcement initiatives to which our customers in the pharmaceutical industry are or may become subject restricting the prices that may be charged for prescription or other pharmaceutical products or the manner in which such products may be marketed or sold; and

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·terrorist activity, epidemics, credit market disruptions or other conditions that could disrupt commerce, the threat of any such conditions, and responses to and results of such conditions and threats, including but not limited to effects, domestically and/or internationally, on us, our personnel and facilities, our customers and suppliers, financial markets and general economic conditions.

Consequently, all of the forward-looking statements we make in this document are qualified by the information contained herein, including, but not limited to, the information contained under this heading, “Risk Factors” and our Condensed Consolidated Financial Statements (Unaudited) and notes thereto for the three months ended March 31, 2009 and by the material set forth under the headings “Business” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2008.  We are under no obligation to publicly release any revision to any forward-looking statement contained or incorporated herein to reflect any future events or occurrences.

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change in our exposure to market risk during the three months ended March 31, 2009. For a discussion of our exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our 2008 Annual Report on Form 10-K.

Item 4. Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits to the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-14c and 15d-14c under the Exchange Act) as of March 31, 2009 (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b)Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

Information in response to this Item is incorporated by reference to the information set forth in “Note 7. Contingencies” in the Notes to the Condensed Consolidated Financial Statements (Unaudited) included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, except as follows:

Law restricting the use of information may restrict our product and service offerings.

We provide several product and service offerings to clients in the U.S. that involve the license, use and transfer of prescriber-identifiable information for commercial purposes.  New Hampshire, Vermont and Maine have passed laws placing certain restrictions on the license, use or transfer of such information for commercial purposes.  We have challenged all three laws in Federal court, asking the courts to declare these laws unconstitutional.

·With respect to the New Hampshire law, the Federal District Court in Concord, New Hampshire ruled on April 30, 2007 that the law violated the First Amendment and was therefore unconstitutional and enjoined its enforcement.  However, that decision was recently overturned by the U.S. Court of Appeals for the First Circuit, which declared the law constitutional.  The appeals court vacated the lower court’s injunction and the New Hampshire statute became effective on February 9, 2009.  On March 27, 2009, we filed a petition for certiorari to the U.S. Supreme Court asking that the Supreme Court review the appeals court’s decision in this matter.  We are currently awaiting the Supreme Court’s decision on whether to hear the case.  We have modified our offerings and believe we are operating in compliance with the New Hampshire law.

·With respect to the Maine law, the Federal District Court in Bangor, Maine issued a preliminary injunction on December 21, 2007, prohibiting enforcement of the Maine law.  The Maine Attorney General appealed the preliminary injunction ruling to the U.S. Court of Appeals for the First Circuit, but then agreed to stay the district court proceedings and the appeal pending the outcome of the New Hampshire case.

·With respect to the Vermont law, the Federal District Court in Brattleboro, Vermont held a full trial ending on August 1, 2008. On April 23, 2009 the court issued its decision upholding the Vermont law. The data restrictions in the Vermont law are scheduled to become effective on July 1, 2009.

These three states collectively represent approximately one percent of prescription activity in the United States, so the potential financial impact of these laws on our business, financial condition and results of operations is not expected to be material.  However, there have been a significant number of state legislative initiatives over the past several years that seek to impose similar restrictions on the commercial use of prescriber-identifiable information (including sixteen states currently considering such legislation as of April 24, 2009).  We are unable to predict whether and in what form these initiatives will

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continue or whether additional states or the Federal government will seek to enact similar or more restrictive legislation or regulation of such information.  In addition, while we will continue to seek to adapt our products and service offerings (including consulting and services offerings) to comply with the requirements of these laws, there can be no assurance that our efforts to adapt our offerings will be successful and provide the same financial contribution to us.  There can also be no assurance that these kinds of legislative initiatives will not adversely affect our ability to generate or assemble data or to develop or market current or future offerings, which could, over time, result in a material adverse impact on our revenues, net income and earnings per share.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased Under Publicly Announced Programs	Maximum Number of Shares that May Yet Be Purchased Under the Programs (1)
January 1-31, 2009	—	—	—	9,505,300
February 1-28, 2009	—	—	—	9,505,300
March 1-31, 2009	—	—	—	9,505,300
Total	—	—	—	9,505,300

(1) In December 2007, the Board of Directors authorized a stock repurchase program to buy up to 20,000,000 shares. As of March 31, 2009, 9,505,300 shares remained available for repurchase under the December 2007 program. Unless terminated earlier by resolution of our Board of Directors, this program will expire when we have repurchased all shares authorized for repurchase thereunder. See Note 12 of our Notes to Condensed Consolidated Financial Statements (Unaudited) for further details.

Item 5.  Other Information

On April 28, 2009, the Human Resources Committee of the Board of Directors approved a continuation of certain benefits to Gilles Pajot, our Executive Vice President and Chief Operating Officer, relating to his work assignment in the United States.  Under his employment agreement, certain expatriate benefits expire on May 7, 2009.  We provide these benefits to this executive, a citizen of France, as an inducement to him to work in the United States.  The expatriate benefits approved for continuation through May 31, 2010 are (i) an annual commercial flight home plus commercial flights necessitated by family emergencies; (ii) tax preparation for U.S. taxes; (iii) the executive’s monthly allowance for housing; (iv) continued automobile lease until July 2009; and (v) a tax “gross-up” payment for the expatriate benefits.   Certain expiring benefits, including tax equalization payments, will not continue after May 7, 2009.

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Item 6.  Exhibits

(a)           Exhibits

Exhibit Number	Description of Exhibits
10.1	IMS Health Incorporated Long-Term Incentive Program (as amended and restated February 10, 2009).
31.1	CEO 302 Certification pursuant to Rule 13a-14(a)/15d-14(a).
31.2	CFO 302 Certification pursuant to Rule 13a-14(a)/15d-14(a).
32.1	Joint CEO/CFO Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002.

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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 thereunto duly authorized.

		IMS Health Incorporated
	By:	/s/ Leslye G. Katz
Date: May 1, 2009		Leslye G. Katz
		Senior Vice President and Chief Financial Officer
		(principal financial officer)
		/s/ Harshan Bhangdia
Date: May 1, 2009		Harshan Bhangdia
		Vice President, Controller
		(principal accounting officer)

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EXHIBIT INDEX

Exhibit  Number	Description of Exhibits
10.1	IMS Health Incorporated Long-Term Incentive Program (as amended and restated February 10, 2009).
31.1	CEO 302 Certification pursuant to Rule 13a-14(a)/15d-14(a).
31.2	CFO 302 Certification pursuant to Rule 13a-14(a)/15d-14(a).
32.1	Joint CEO/CFO Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002.

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EX-10.1

Exhibit 10.1

IMS HEALTH INCORPORATED

Long-Term Incentive Program

(As Amended and Restated February 10, 2009)

1.             General.  This Long-Term Incentive Program (the “Program”) of IMS HEALTH INCORPORATED (the “Company” or “IMS HEALTH”) authorizes the grant of certain awards under Section 9 of the Company’s Employees’ Stock Incentive Plan (the “ESIP”) and Section 9 of the Company’s 2000 Stock Incentive Plan (the “2000 Plan” and, with the ESIP, the “Plans”) and sets forth certain terms and conditions of such grants.  The purpose of the Program is to help the Company secure and retain employees of outstanding ability and to motivate such employees to exert their best efforts on behalf of the Company and its subsidiaries by providing incentives directly linked to the profitability of the Company, and otherwise to further the purposes of the Plans.  The applicable terms and conditions of each of the Plans are incorporated by reference in this Program, and shall apply to the extent that the Committee has specified that the cash or Shares that are issuable or deliverable in settlement of an Award are drawn from either of the Plans.  If any provision of this Program or an agreement hereunder conflicts with a provision of the applicable Plan, the provision of the applicable Plan shall govern.  The Committee may delegate to specified officers or employees of the Company authority to perform administrative or other functions under the Program.

2.             Definitions.  Capitalized terms used in this Program but not defined herein have the same meanings as defined in the applicable Plan.  In addition to such terms and those terms defined in Section 1 above, the following are defined terms under this Program:

(a)           “Account” means the account established for a Participant under Section 6(a).

(b)           “Award” means the amount of a Participant’s Award Opportunity in respect of a Performance Period determined by the Committee to have been earned and the Participant’s rights to future payments of cash, Shares, Restricted Stock Units or non-restricted Stock Units, or Restricted Shares in settlement thereof.

(c)           “Award Opportunity” means the Participant’s opportunity to earn specified dollar-denominated and/or Stock Unit-denominated amounts in respect of a Performance Period.  An Award Opportunity constitutes a conditional right to receive settlement of an Other Stock-Based Award for purposes of the Plans.

(d)           “Cause” means “cause” as defined in an employment agreement between the Company and the Participant in effect at the time of Termination of Employment or, if there is no such employment agreement, Cause shall mean the (1) willful malfeasance or willful misconduct by the Participant in connection with his or her employment, (2) continuing failure to perform such duties as are requested by any employee to whom the Participant reports, directly or indirectly, or by the Board of Directors of the Company or the board of directors of any Subsidiary or affiliate which employs Participant, (3) failure by the Participant to observe policies of the Company or his or her employer applicable to the Participant, or (4) commission by the Participant of (i) any felony or (ii) any misdemeanor involving moral turpitude.

(e)           “Covered Employee” means an employee whom the Committee deems likely to be, at the end of a given Performance Period, a “covered employee” within the meaning of Section 162(m) of the Code.

(f)            “Dividend Equivalents” means credits to a Participant’s Account in respect of each Stock Unit as determined under Section 6(b).

(g)           “Participant” means an employee participating in this Program.

(h)           “Performance Goal” means the Company or individual accomplishment required as a condition to the earning of an Award Opportunity.  Unless otherwise determined by the Committee, Performance Goals shall meet the requirements of Section 9(b) of the ESIP.

(i)            “Performance Period” means the period of two consecutive fiscal years over which an Award Opportunity may be earned, provided that the Committee may specify a different duration for any Performance Period.

(j)            “Restricted Share” means a Share granted as an Other Stock-Based Award under the Plans, subject to a risk of forfeiture, non-transferable prior to vesting, restricted as to the right to receive dividends, and subject to such other restrictions as specified in the Plans or this Program and as the Committee may specify in any applicable agreement which must be executed by the Participant as a condition to receipt of the grant.  A Restricted Share will be actually issued by the Company at the time of grant, but the certificate therefor may be retained in the custody of the Company.

(k)           “Stock Unit” is a bookkeeping unit which represents a conditional right to receive one Share upon settlement, together with a right to Dividend Equivalents as specified in Section 6(b).  Stock Units constitute a commitment by the Company to issue or deliver Common Stock at specified future dates in settlement of Other Stock-Based Awards under the Plans.  Stock Units are arbitrary accounting measures created and used solely for purposes of this Program, and do not represent ownership rights in the Company, Shares, or any asset of the Company.  Stock Units subject to a risk of forfeiture based on continued employment and vesting may be referred to as “Restricted Stock Units.”

(l)            “Termination of Employment” means the termination of a Participant’s employment by the Company or a Subsidiary immediately after which the Participant is not employed by the Company or any Subsidiary; provided, however, that in the case of an Award Opportunity or Award that constitutes a deferral of compensation under Code Section 409A, “Termination of Employment” means a “separation from service” as defined in Treasury Regulation § 1.409A-1(h).

3.             Eligibility.  Employees who are eligible to participate in any of the Plans may be selected by the Committee to participate in this Program.

4.             Designation and Earning of Award Opportunities.

(a)           Designation of Award Opportunities and Performance Goals.  The Committee shall select employees to participate in the Program for a Performance Period and designate, for each such Participant, the Award Opportunity such

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Participant may earn for such Performance Period, the nature of the Performance Goal the achievement of which will result in the earning of the Award Opportunity, and the levels of earning of the Award Opportunity corresponding to the levels of achievement of the performance goal.  If an Award is intended to be a “Performance-Based Award” under Section 9(b) of the ESIP, which would qualify under Section 162(m) of the Code, the Committee’s determinations under this Section 4(a) shall be made not later than 90 days after the Performance Period begins and in no event after 25% of the Performance Period has elapsed.  The Award Opportunity earnable by each Participant shall range from 0% to a specified maximum percentage of a specified target Award Opportunity.  The Committee shall specify a table, grid, or formula that sets forth the amount of a Participant’s Award Opportunity that will be earned corresponding to the level of achievement of a specified Performance Goal.  The foregoing notwithstanding, the per-person limitation under Section 9(b) of the ESIP shall apply to the portion of the Award Opportunity that is denominated in cash and the per-person limitation under Section 3(b) of the ESIP shall apply to the portion of the Award Opportunity that is denominated in Stock Units in the case of any Award governed by the ESIP.  The ESIP’s per-person limitation shall be applied taking into account the fact that Performance Periods may overlap.  Accordingly, any Award Opportunity designated for any new Performance Period under the Program shall be limited such that the maximum amounts earnable under such Award Opportunity, together with the maximum amounts earnable under all other previously authorized Performance Periods which overlap with such new Performance Period, will not exceed the applicable per-person limitation in effect for the first year of the new Performance Period.

(b)           Additional Participants and Award Opportunity Designations During a Performance Period.  The provisions of Section 4(a) notwithstanding, at any time during a Performance Period the Committee may select a new employee or a newly promoted employee to participate in the Program for that Performance Period and/or designate, for any such Participant, an Award Opportunity (or additional Award Opportunity) amount for such Performance Period.  In determining the amount of the Award Opportunity for such Participant under this Section 4(b), the Committee may take into account the portion of the Performance Period already elapsed, the performance achieved during such elapsed portion of the Performance Period, and such other considerations as the Committee may deem relevant.  The Committee shall have no authority to grant additional Award Opportunities under this Section 4(b) if and to the extent that such authority would cause any Award Opportunity granted to a Covered Employee to not qualify as “performance-based compensation” under Section 162(m) of the Code.

(c)           Determination of Award.  As promptly as practicable after the end of each Performance Period, the Committee shall determine the extent to which the Performance Goal for the earning of Award Opportunities was achieved during such Performance Period and the resulting Award to the Participant for such Performance Period.  The Committee may adjust upward or downward the amount of an Award, in its sole discretion, in light of such considerations as the Committee may deem relevant (but subject to applicable limitations of the Program, including the maximum Award Opportunity authorized for each Participant); provided, however, that, with respect to a Covered Employee, no upward adjustment may be made and adjustments otherwise shall comply with applicable requirements of Treasury Regulation 1.162-27(e) under the Code; and provided further that, for any Performance Period beginning in 2009 or thereafter, the Committee shall have no discretion to adjust an Award upward or downward (non-discretionary adjustments

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in accordance with explicit and objective terms set forth as part of the designation of the Performance Goal under Section 4(a) will be permitted, however).  In all cases, the Committee’s determination under this Section 4(c) shall be made between January 1 and March 15 following the end of a Performance Period that ends on the last day of the Company’s fiscal year, and shall be made within 75 days following the end of any Performance Period ending at a date other than the last day of the Company’s fiscal year.

(d)           Change in Control.  In the event of a Change in Control during the Performance Period, each Participant’s Award Opportunity shall be deemed earned at the target level and settled by delivery of cash and Shares without further restrictions or vesting requirements, unless otherwise provided by the Committee at the time the Award Opportunity is designated under Section 4(a).  If, upon a Change in Control, an Award Opportunity is deemed earned at any level less than the maximum level, Participants shall retain the opportunity to earn any unearned portion of the Award Opportunity based on performance in the remainder of the Performance Period.  For purposes of this Section 4(d), settlement shall occur within five business days after the Change in Control, except that, in the case of any Award that constitutes a deferral of compensation under Code Section 409A, settlement shall occur within five business days after (i) the occurrence of a “409A Change in Control” (as defined in the applicable Plan) occurring at the time of or following the Change in Control or (ii) upon occurrence of the Change in Control occurring within 90 days after the 409A Change in Control, but only if the occurrence of the Change in Control is non-discretionary and objectively determinable at the time of the 409A Change in Control (in this case, the Participant shall have no influence on when during such 90-day period the settlement shall occur).  If a Change in Control occurs but settlement of an Award that constitutes a deferral of compensation under Code Section 409A does not occur under the preceding sentence, such Award shall be settled at the earliest of (i) the earliest permitted time of settlement that would have applied if the Performance Period continued to its conclusion in the absence of a Change in Control, (ii) occurrence of a 409A Change in Control, or (iii) the Participant’s separation from service, subject to the six-month delay rule in Section 17(a)(iii)(B) of the ESIP and Section 16(a)(iii)(B) of the 2000 Plan.  In the event that any vested Stock Unit that constitutes a deferral of compensation under Code Section 409A cannot be settled upon a Change in Control or immediately upon the Participant’s separation from service after a Change in Control, the Participant shall have the right to elect to denominate such Stock Units in cash (based on the then Fair Market Value of Shares) both at the time of the Change in Control and again upon separation from service following the Change in Control.  If the Participant elects to denominate such Award in cash, the Company will adjust the cash payment to reflect the deferred settlement date by multiplying the cash amount by the product of the six-month CMT Treasury Bill annualized yield rate as published by the U.S. Treasury for the date on which the award was denominated in cash (or the most appropriate surrogate for such rate if such rate is not available) multiplied by a fraction, the numerator of which is the number of days from and including the date on which the award was denominated in cash until and including the date of payment of such award to Executive and the denominator of which is 365, and pay such adjusted amount at settlement.

5.             Vesting of Awards and Settlement.

(a)           Vesting of Award .  Awards with respect to a given Performance Period shall become vested at such times as the Committee shall determine.  The foregoing

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notwithstanding, the unvested portion of any Award shall immediately vest upon a Change in Control or as otherwise provided under Section 7 in the event of Termination of Employment in specified circumstances.  In addition, the Committee may, in its sole discretion, accelerate the vesting of any unvested portion of an Award. Restricted Stock Units and unvested deferred cash amounts shall be credited to the “unvested subaccount” under the Participant’s Account.

(b)           Form of Award and Deferral.  The Committee shall specify whether cash, deferred cash, Shares, Restricted Stock Units, non-restricted Stock Units or Restricted Shares will be paid, issued, credited or granted to the Participant upon the earning of an Award Opportunity.  A Participant will be permitted to elect to defer settlement of the Award, in the discretion of the Committee; any deferral election must be made in accordance with Exhibit A to the 1998 ESIP and any other restrictions imposed by the Senior Vice President — Human Resources.   If Stock Units (Restricted or non-restricted) or deferred cash are credited to a Participant’s Account, the Participant will not be permitted to elect to change the form of deferral in a way affecting Stock Units (i.e., he or she may not switch out of the Stock Units into deferred cash or vice versa), except as otherwise provided under Section 4(d).

(c)           Settlement of Award and Account.  Any non-deferred, vested Award shall be paid   by the Company in settlement promptly after the date of determination by the Committee under Section 4(c), subject to Sections 4(d) and 7.  For this purpose, the term “promptly” means, for a Performance Period that ends on the last day of a fiscal year, by the following April 30, and for a Performance Period that ends earlier than the last day of a fiscal year, within 75 days after the lapse of the Participant’s substantial risk of forfeiture with respect to such Award.  With respect to any unvested and/or deferred amount in the Participant’s Account, deferred cash will be paid in cash on the first business day after the date it is both vested and subject to no further deferral, Stock Units will be settled by issuing and/or delivering to the Participant one Share for each Stock Unit being settled on the first business day after the date the Stock Units are both vested and subject to no further deferral, and certificates representing Shares will be delivered promptly after the date Restricted Shares vest.  Any deferral period will end immediately prior to a 409A Change in Control, subject to the settlement and related rules under Section 4(d) (including cash denomination election rules).  The Committee or its delegee may, in its sole discretion, determine the manner in which whole Shares shall be delivered by the Company and the manner of settlement of any fractional Share.

(d)           Tax Withholding.  The Company shall deduct from any settlement of a Participant’s Award or other payment to the Participant any Federal, state, or local withholding or other tax or charge which the Company is then required to deduct under applicable law with respect to the Award.  In furtherance of this requirement, the Company shall withhold from the Shares issuable or deliverable in settlement of a Participant’s Stock Units or upon the vesting of Restricted Shares the number of Shares having an aggregate Fair Market Value equal to any Federal, state, and local withholding or other tax or charge which the Company is required to withhold under applicable law, unless the Participant has otherwise elected and has made other arrangements satisfactory to the Company to pay such withholding amounts.

(e)           Non-Transferability.  An Award Opportunity and any resulting Award, including any deferred cash, Stock Unit, Restricted Share, Account or Account balance, or other right hereunder shall be non-transferable and subject to such

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related restrictions as specified in Sections 13 and 17(a)(vii) of the ESIP and Sections 12 and 16(a)(viii) of the 2000 Plan.

6.             Certain Terms of Accounts and Awards.

(a)           Account.  The Company shall maintain a bookkeeping account for each Participant reflecting the amount of Stock Units, deferred cash and other amounts then credited to the Participant hereunder.  Restricted Shares will not be deemed to be credited to such Account, but the Company may provide include on any account statement information with respect to the Participant’s Restricted Shares under the Program.  The Account may include subaccounts or other appropriate designations.

(b)           Dividend Equivalents and Dividends.  Dividend Equivalents shall be payable or credited on Stock Units (whether Restricted or non-restricted), and dividends shall be payable on Restricted Shares, if and to the extent specified by the Committee.  Without limiting the authority of the Committee, the Committee may specify that Dividend Equivalents will not be credited to the Participant’s Account and dividends will not be paid on Restricted Shares on regular dividend payment dates, but at such time as Stock Units are to be settled or Restricted Shares vest the Participant shall receive a cash payment, together with the issuance of each Share in settlement of each Stock Unit or the vesting of each Restricted Share, equal to the aggregate amount of regular cash dividends on one Share the record date for which occurr ed between the beginning of the Performance Period and the date of such settlement or vesting.  No interest will be payable in connection with such dividend equivalents or dividends.  Dividend Equivalents will be deemed to be separate payments from the underlying Stock Units or Restricted Shares for purposes of Code Section 409A.  Determinations as to the form and timing of payment of Dividend Equivalents under this Section 6(b) shall be made at the time of designation of the Award Opportunity, except to the extent otherwise permitted in compliance with Code Section 409A.

(c)           Adjustments.  The Committee may adjust the number of Stock Units credited to Participant’s Account and/or the number of the Participant’s Restricted Shares in order to prevent dilution or enlargement of Participants’ rights with respect thereto, to reflect any changes in the number of outstanding Shares or other effect resulting from any event referred to Section 10(a) of the ESIP or Section 9(a) of the 2000 Plan.  Participants shall have a legal right to adjustments to Award Opportunities and Awards in the event of an equity restructuring to the extent provided in Section 10(a) of the ESIP or Section 9(a) of the 2000 Plan.

(d)           Grandfathered Awards.  Any Award that was vested before 2005 and remains outstanding at the date of amendment and restatement of the Plan on October 21, 2008 shall be subject to the terms of this Plan and interpretations hereunder as in effect on October 3, 2004, and shall not be materially modified thereafter.

7.             Effect of Termination of Employment.

(a)           Termination Prior to Completion of Performance Period.  Except to the extent set forth in subsections (i) and (ii) of this Section 7(a), upon a Participant’s Termination of Employment prior to completion of a Performance Period, the Participant’s Award Opportunity relating to such Performance Period shall cease to be

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earnable and shall be canceled, and the Participant shall have no further rights or opportunities hereunder:

(i)Disability or death.  If Termination of Employment is due to the Disability or death of the Participant, the Participant or his or her beneficiary shall be deemed to have earned and shall be entitled to receive an Award for any Performance Period in which termination occurs equal to the Award which would have been earned had Participant’s employment not terminated multiplied by a fraction the numerator of which is the number of calendar days from the beginning of the Performance Period to the date of Participant’s Termination of Employment and the denominator of which is the number of calendar days in the Performance Period.  Such pro rata Award will be determined at the same time as Awards for continuing Participants are determined (i.e., normally at the end of the Performance Period in accordance with Section 4(c)).  Upon its determination, such pro rata Award shall be fully vested and shall be settled in cash and Shares (without further vesting required) by March 15th of the year following completion of the Performance Period (or at any earlier applicable date under Section 5(c) or 4(d)), except that, if the Participant is eligible to file and has timely filed an irrevocable election to defer settlement following a Termination of Employment due to Disability, such pro rata Award shall be settled in accordance with such deferral election.  The portion of the Participant’s Award Opportunity not earned will cease to be earnable and will be canceled.  Section 17(g) of the 1998 ESIP and Section 16(g) of the 2000 Plan shall apply, but the Award shall be deemed to be subject to a performance-based vesting condition until the determination as to the extent of earning is made hereunder.

(ii)Committee Discretion.  The Committee may determine that the Participant shall be deemed to have earned all or a portion of an Award Opportunity for the Performance Period in which termination occurred, either at the time of termination or following completion of the Performance Period, except that no such determination may be made if the Company terminated the Participant for Cause, and in the case of an Award that constitutes a deferral of compensation under Code Section 409A, the Committee’s determination as to the deemed earning of the Award shall not result in an acceleration of the time of settlement of the Award not otherwise permitted under Code Section 409A.

(b)           Termination After Completion of Performance Period.  Upon a Participant’s Termination of Employment after completion of a given Performance Period (including a termination prior to the Committee’s determination of the amount of the Participant’s Award Opportunity earned), the following provisions shall apply:

(i)Vested Portion of Award.  Any vested portion of the Participant’s Award (regardless of any elective deferral) shall be settled on the 30th day following Termination of Employment, subject to the six-month delay rule in Section 17(a)(iii)(B) of the ESIP and Section 16(a)(iii)(B) of the 2000 Plan (applicable to any Award that constitutes a deferral of compensation under Code Section 409A), except that, if Termination of Employment is by the Company for Cause and prior to the Committee’s determination of the amount of Award Opportunity earned for a given Performance Period,

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the Participant’s Award for that Performance Period will be forfeited, and if Termination of Employment is due to Disability or Retirement and the Participant is eligible to file and has timely filed an irrevocable election to defer settlement of his Account following Termination of Employment, such Account shall be settled in accordance with such deferral election.

(ii)Unvested Portion of Award.  Except to the extent set forth in subsections (A) and (Bi) of this Section 7(b)(ii), any unvested Award, including any Restricted Stock Units and unvested deferred cash credited to the Participant’s Account and unvested Restricted Shares, will be forfeited:

(A)Disability, death, or Retirement.  If Termination of Employment is due to the Disability or death of the Participant, or if Termination of Employment is due to Retirement and the Committee has specifically approved the vesting upon such Retirement, any Award, including Restricted Stock Units, deferred cash and Restricted Shares, shall be deemed vested for purposes of this Section 7(b)(ii). Section 17(g) of the 1998 ESIP and Section 16(g) of the 2000 Plan shall apply.

(B)Committee Discretion.  The provisions of (A) above notwithstanding, the Committee may determine to accelerate the vesting of all or any portion of a Participant’s Award, except in the event that the Company terminated the Participant for Cause.

(C)409A Awards.  In the case of an Award that constitutes a deferral of compensation under Code Section 409A, the lapse of the substantial risk of forfeiture of the Award under (A) or (B) above shall not result in an acceleration of the time of settlement of the Award not otherwise permitted under Code Section 409A.

(c)           Other Termination Provisions.  Any vesting and settlement of Award Opportunities and Awards provided for in a separate agreement between the Participant and the Company shall be subject to the rules for compliance with Code Section 409A set forth in Section 17 of the 1998 ESIP and Section 16 of the 2000 Plan, and to the terms and provisions of such separate agreement.

8.             Forfeiture of Awards and Gain Realized Upon Prior Vesting and Settlement.

The greatest assets of IMS HEALTH are its employees, technology and customers.  In recognition of the increased risk of unfairly losing any of these assets to its competitors, IMS HEALTH has adopted the following policy:

If a Participant directly or indirectly engages in any of the “Detrimental Activities” defined below during his or her employment or after having left employment (to the extent provided below) by the Company or any of its affiliates (each, an “IMS HEALTH Company”):

Any unvested Awards (including Restricted Stock Units, cash, and Restricted Shares) shall automatically be forfeited on the later of the date of the

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Participant’s  Termination of Employment or the date of his or her Detrimental Activity, without regard to the provisions of Section 7; and

Any Awards that vested within one year prior to, or at any time after, the date of the Participant’s  Detrimental Activity (the “Forfeiture Period”) but which have not yet been settled shall automatically be forfeited at the later of the date of his or her Termination of Employment or the date of his or her Detrimental Activity; and

The Participant shall pay to the Company, in cash, a forfeiture amount  with respect to any Awards that vested and were settled during the Forfeiture Period equal to the amount of cash paid to Participant in such settlement plus the fair market value (determined as of the date of settlement of the Stock Units or date of vesting of Restricted Shares) of the Shares delivered to the Participant in settlement of his or her Stock Units or the Restricted Shares that became vested during the Forfeiture Period, such forfeiture amount payable at the later of the Participant’s Termination of Employment or the date of his or her Detrimental Activity.

Detrimental Activities are defined as:

using or disclosing any information that has been treated by an IMS HEALTH Company as confidential or proprietary and is of competitive advantage to such IMS HEALTH Company, unless the Participant is using or disclosing it in the course of his or her job with such IMS HEALTH Company,

during the period beginning at the start of the Performance Period and ending twelve months after the Participant leaves employment with any IMS HEALTH Company (the “Prohibitive Period”), soliciting for anyone other than an IMS HEALTH Company the trade or business of any entity that was a customer, prospective customer or data supplier of an IMS HEALTH Company during the period that the Participant worked for any IMS HEALTH Company,

during the Prohibitive Period, soliciting any employee of any IMS HEALTH Company to leave his or her employment; or employing or otherwise using the services of any person who is or was an IMS HEALTH Company employee during the last twelve months that the Participant  worked for an IMS HEALTH Company, or

during the Prohibitive Period, directly or indirectly (including without limitation as an officer, director, employee, advisor, consultant or investor), (i) seeking or accepting any employment or other work with or providing assistance to any person or entity that offers Competitive Services (as defined below) to any person or entity that was a customer or potential customer of any IMS HEALTH Company at any time during the last two years of his or her employment with any IMS HEALTH Company, or (ii) otherwise providing Competitive Services.

For purposes hereof, “Competitive Services” means engaging in of the following activities anywhere in the world in connection with providing information services to the pharmaceutical and healthcare industry:

(a)creating market research reports or audits;

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(b)using or developing technology similar to that which IMS HEALTH uses to process pharmaceutical or health care information, including but not limited to decision support tools, data warehousing applications and data mining applications;

(c)management of sales forces;

(d)measurement of sales force performance or product performance;

(e)creation of physician profiles for purposes of targeting; or

(f)micromarketing programs based on actual prescribing behavior of physicians and other prescribers.

By accepting any grant of an Award Opportunity or Award, the Participant shall be deemed to have consented to a deduction from any amounts the Company or the Participant’s employer owes to him or her from time to time equal to the forfeiture amount, to the extent such deduction is permitted by applicable law.

9.             General Provisions.

(a)           Changes to this Program.  The Committee may at any time amend, alter, suspend, discontinue, or terminate this Program, and such action shall not be subject to the approval of the Company’s shareholders; provided, however, that any amendment to the Program beyond the scope of the Committee’s authority shall be subject to the approval of the Board of Directors; and provided further, that, without the consent of an affected Participant, no such action may materially impair the rights of such Participant with respect to an Award outstanding at the time of the amendment.  The foregoing notwithstanding, the Committee may, in its discretion, accelerate the termination of any deferral period and the resulting settlement of Stock Units or other deferred amounts, with respect to an individual Participant or all Participants, without the consent of the affected Participants.

(b)           Not Annual Bonus for Purposes of Other Plans.  Amounts earned or payable under the Program shall not be deemed to be annual incentive or annual bonus compensation for purposes of any retirement or supplemental pension plan of the Company, any employment agreement or change in control agreement between the Company and any Participant, or for purposes of any other plan, unless the Company shall enter into a written agreement that specifically identifies this Program by name and specifies that amounts earned or payable hereunder shall be considered to be annual incentive or annual bonus compensation.

(c)           Unfunded Status of Participant Rights.  Award Opportunities, Awards (other than Restricted Shares), Accounts, Stock Units and other deferred amounts, and related rights of a Participant represent unfunded deferred compensation obligations of the Company for ERISA and federal income tax purposes and, with respect thereto, the Participant shall have rights no greater than those of an unsecured creditor of the Company.

(d)           Nonexclusivity of the Program.  The adoption of this Program shall not be construed as creating any limitations on the power of the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant.

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(e)           Additional Terms Relating to Participants in Japan.  The Shares subject to Awards to Participants in Japan shall consist solely of treasury shares, that is, the shares of IMS Health Incorporated already issued and held in the name of IMS Health Incorporated.

11

EX-31.1

Exhibit 31.1

CEO CERTIFICATION

I, David R. Carlucci, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of IMS Health Incorporated (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 1, 2009
By:	/s/ David R. Carlucci
David R. Carlucci
Chairman, Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CFO CERTIFICATION

I, Leslye G. Katz, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of IMS Health Incorporated (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 1, 2009
By:	/s/ Leslye G. Katz
Leslye G. Katz
Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned does hereby certify that:

The Form 10-Q for the quarter ended March 31, 2009 (the “Form 10-Q”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ David R. Carlucci
Date: May 1, 2009	David R. Carlucci
	Chairman, Chief Executive Officer and President

	/s/ Leslye G. Katz
Date: May 1, 2009	Leslye G. Katz
	Senior Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to IMS Health Incorporated and will be retained by IMS Health Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.