8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 17, 2001

QUINTILES TRANSNATIONAL CORP.

(Exact name of registrant as specified in its charter)

North Carolina
(State or other jurisdiction
of incorporation) 000-23520
(Commission File No.) 56-1714315
(I.R.S. Employer
Identification Number)

4709 Creekstone Drive, Riverbirch Building, Suite 200, Durham, North Carolina 27703-8411
(Address of principal executive offices)

(919) 998-2000
(Registrant’s telephone number, including area code)

N/A
(Former name or former address, if changed since last report)

Item 5. Other Events and Regulation FD Disclosure.

     On October 17, 2001, Quintiles Transnational Corp. issued a press release regarding its financial results for the period ended September 30, 2001. A copy of the press release is attached hereto as Exhibit 99.01 and incorporated by reference herein.

Item 7. Financial Statements and Exhibits.

     (c) Exhibits.

Exhibit Number	Description of Exhibit
99.01	Press Release, dated October 17, 2001, of Quintiles Transnational Corp.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	QUINTILES TRANSNATIONAL CORP.
Dated: October 19, 2001	By:	/s/ James L. Bierman James L. Bierman Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
99.01	Press Release, dated October 17, 2001, of Quintiles Transnational Corp.

EX-99.01 3 g72205ex99-01.htm PRESS RELEASE DATED 10/17/01

FOR IMMEDIATE RELEASE www.quintiles.com

CONTACT:	Pat Grebe, Media Relations (pat.grebe@quintiles.com)
	Greg Connors, Investor Relations (invest@quintiles.com)
	(919) 998 2000

QUINTILES REPORTS INCOME FROM OPERATIONS OF $11.7 MILLION
BEFORE NON-RECURRING TRANSACTIONS

Fourth consecutive quarterly increase; net revenue rises to $407 million

RESEARCH TRIANGLE PARK, N.C. — October 17, 2001 — Quintiles Transnational Corp. (Nasdaq: QTRN) today announced financial results for third quarter 2001. Net revenue for the quarter ended Sept. 30, 2001, was $407.1 million, compared to $404.3 million for second quarter 2001. Income from operations, excluding non-recurring transactions, was $11.7 million vs. $9.9 million for the previous quarter. Net income, excluding non-recurring transactions, was $10.4 million vs. comparable net income for the previous quarter of $11.1 million. Earnings per share on a diluted basis, excluding non-recurring transactions, were $0.09, unchanged from the previous quarter.

Including one-time transactions detailed later in this press release, net loss for the quarter was $123.9 million, or $1.03 per share on a diluted basis. Third quarter 2000 net revenue, net income and EPS were $412.3 million, $4.6 million and $0.04, respectively.

“This is the fourth consecutive quarter in which we’ve increased our income from operations, a key metric of our business plan,” said Quintiles Transnational Chief Executive Officer Pam Kirby, Ph.D. “I’m also pleased that we grew net revenue on a sequential basis for the first time in more than a year. The business plan we unveiled last month emphasized Quintiles’ commitment to quality, efficiency and innovation. I believe our third quarter results and the recent WebMD settlement agreement are clear evidence of the progress we’re making.”

About $2 million in revenue and operating profit was lost because of travel restrictions implemented after the Sept. 11 terrorist events and because of e-mail and Internet connectivity precautions relating to the Nimda computer virus. No data were lost or compromised because of the virus.

“Our Clinical Development Services’ operations recovered relatively quickly from those two events and have now returned to normal levels,” Kirby said.

Last week Quintiles and WebMD jointly announced the settlement of litigation between the companies and the resolution of their disputes. As part of the settlement, WebMD agreed to pay Quintiles $185 million in cash for all 35 million shares of WebMD stock held by Quintiles, realizing a 50% premium to market. Quintiles also will receive an additional payment from WebMD if, on or before June 30, 2004, WebMD is acquired for a price greater than $4.00 per share or its ENVOY subsidiary is acquired for a price greater than $500 million.

Quintiles Transnational Chairman Dennis Gillings, Ph.D., said: “Including the WebMD payment, Quintiles’ cash balance now exceeds $600 million. This gives us a great deal of flexibility in continuing to build strategic customer relationships through our PharmaBio Development deals, in securing new, more robust data sources for our Informatics business, and in helping our customers solve corporate challenges in ways our competitors can’t. It also will allow us to repurchase Quintiles stock at attractive prices and implement new e-business solutions to help grow our business and add value.”

In other third quarter developments, Quintiles Transnational repurchased 420,000 shares of its common stock for an aggregate price of approximately $6.9 million as part of its previously announced stock repurchase program.

The non-recurring transactions that impacted Quintiles’ third quarter earnings were previously discussed in the company’s conference call and press release last month announcing its operational plan and restructuring. The non-recurring transactions pre-tax amounts were: a $341.9 million write-down of the value of investments held by Quintiles, primarily WebMD stock; a restructuring charge of $52.0 million; and a $20.1 million write-down of goodwill and operating asset impairments related to the restructuring. The fourth non-recurring transaction was an income tax benefit of $142.0 million related to the sale of Envoy. The combined effect of these transactions was a loss of $134.2 million, net of taxes.

Supplemental financial information is available now under “Additional Financials” in the Investors section of Quintiles’ Web site, http://www.quintiles.com/corporate_info/investors/additional_financials.

Quintiles Transnational’s third quarter 2001 financial briefing will be held at 11 a.m. EDT on Thursday, Oct. 18, and will be broadcast live over the Web. Interested parties can access the Webcast at http://www.quintiles.com/corporate_info/investors/broadcast_center. Additionally, a replay of the Webcast will be available via the same link about two hours after completion of the call. The replay will be available through 5 p.m. EST, Friday, Nov. 2, 2001.

Quintiles Transnational is the world’s leading provider of information, technology and services to help bring new medicines to patients faster and improve healthcare. Headquartered near Research Triangle Park, North Carolina, Quintiles Transnational is a member of the S&P 500 and Fortune 1000. For more information visit the company’s Web site at www.quintiles.com.

The schedule attached to this release is an integral part of this release. Information in this press release contains “forward-looking statements” about Quintiles. These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the risk the market for our products and services will not grow as we expect, the risk that our PharmaBio transactions will not generate revenues or profit at the rate or levels we anticipate, the risk that our uses of cash will not yield the intended results, our ability to efficiently distribute backlog among therapeutic business units and match demand to resources, actual operating performance, the actual savings and operating improvements resulting from the restructuring, the ability to maintain large client contracts or to enter into new contracts, changes in trends in the pharmaceutical industry, and the ability to operate successfully in new lines of business. Our

data products business remains subject to state and federal regulations, and contracts with data vendors, including WebMD. Additional factors that could cause actual results to differ materially are discussed in the company’s recent filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K, its Form 8-Ks, and its other periodic reports, including Form 10-Qs.

# # #

Condensed Consolidated Statements of Income
(Unaudited)

			Three Months Ended					Nine Months Ended
			September 30					September 30
			2001			2000		2001			2000
In thousands, except per share data
Net revenue			$	407,103		$	412,344	$	1,215,873		$	1,250,296
Costs and expenses:
	Direct			242,745			247,577		724,859			755,887
	General and administrative			128,089			141,042		392,208			421,768
	Depreciation and amortization			24,597			22,934		71,143			68,805
	Restructuring			52,023			0		54,169			58,592
	Write-off of goodwill and other assets			20,120			0		20,120			0
	Disposal of business			0			0		0			17,325
Total costs and expenses				467,574			411,553		1,262,499			1,322,377
(Loss) income from operations				(60,471	)		791		(46,626	)		(72,081	)
Impairment of investments				(341,949	)		0		(345,048	)		0
Gain on investments, net				235			1,387		4,702			1,387
Other income				3,580			4,635		14,433			9,776
Total other (expense) income				(338,134	)		6,022		(325,913	)		11,163
(Loss) income before income taxes				(398,605	)		6,813		(372,539	)		(60,918	)
Income taxes (benefit) expense				(132,694	)		2,248		(124,093	)		(20,102	)
(Loss) income from continuing operations				(265,911	)		4,565		(248,446	)		(40,816	)
Income from discontinued operation, net of taxes				0			0		0			16,770
Extraordinary gain from sale of discontinued operation, net of taxes				142,030			0		142,030			436,327
Net (loss) income			$	(123,881	)	$	4,565	$	(106,416	)	$	412,281
Basic net (loss) income per share:
	(Loss) income from continuing operations		$	(2.22	)	$	0.04	$	(2.11	)	$	(0.35	)
	Income from discontinued operation		$	0.00		$	0.00	$	0.00		$	0.14
	Extraordinary gain from sale of discontinued operation		$	1.19		$	0.00	$	1.21		$	3.77
	Basic net (loss) income per share		$	(1.03	)	$	0.04	$	(0.90	)	$	3.56
Diluted net (loss) income per share:
	(Loss) income from continuing operations		$	(2.22	)	$	0.04	$	(2.11	)	$	(0.35	)
	Income from discontinued operation		$	0.00		$	0.00	$	0.00		$	0.14
	Extraordinary gain from sale of discontinued operation		$	1.19		$	0.00	$	1.21		$	3.77
	Diluted net (loss) income per share		$	(1.03	)	$	0.04	$	(0.90	)	$	3.56
Shares used in computing net (loss) income per share:
		Basic		119,838			115,702		117,786			115,711
		Diluted		119,838			118,139		117,786			115,711

Consolidated Balance Sheet Data
(Unaudited)

	September 30,		December 31,
	2001		2000
In millions
Cash, cash equivalents and debt investments	$	479	$	438
Investments in marketable equity securities		204		384
Working capital		453		309
Total assets		1,977		1,962
Debt including current portion		37		39
Shareholders’ equity		1,418		1,405

Proforma Condensed Consolidated Statements of Income*
(Unaudited)

			Three Months Ended				Nine Months Ended
			September 30				September 30
			2001		2000		2001		2000
In thousands, except per share data
Net revenue			$	407,103	$	412,344	$	1,215,873	$	1,250,296
Costs and expenses:
	Direct			242,745		247,577		724,859		755,887
	General and administrative			128,089		141,042		392,208		421,768
	Depreciation and amortization			24,597		22,934		71,143		68,805
Total costs and expenses				395,431		411,553		1,188,210		1,246,460
Income from operations				11,672		791		27,663		3,836
Gain on investments, net				235		1,387		4,702		1,387
Other income				3,580		4,635		14,433		9,776
Total other income				3,815		6,022		19,135		11,163
Income before income taxes				15,487		6,813		46,798		14,999
Income taxes				5,125		2,248		15,457		4,950
Income from continuing operations				10,362		4,565		31,341		10,049
Income from discontinued operation, net of income taxes				0		0		0		16,770
Net income			$	10,362	$	4,565	$	31,341	$	26,819
Basic net income per share:
	Income from continuing operations		$	0.09	$	0.04	$	0.27	$	0.09
	Income from discontinued operation		$	0.00	$	0.00	$	0.00	$	0.14
	Basic net income per share		$	0.09	$	0.04	$	0.27	$	0.23
Diluted net income per share:
	Income from continuing operations		$	0.09	$	0.04	$	0.27	$	0.09
	Income from discontinued operation		$	0.00	$	0.00	$	0.00	$	0.14
	Diluted net income per share		$	0.09	$	0.04	$	0.27	$	0.23
Shares used in computing net income per share:
		Basic		119,838		115,702		117,786		115,711
		Diluted		119,838		118,139		117,786		115,711

• Proforma results exclude restructuring charges, write-off of goodwill and other assets, disposal of business, impairment of investments, transaction costs and gain on disposal of discontinued operation.

Condensed Consolidated Statements of Income Reconciliation
For the three months ended September 30, 2001
(Unaudited)

			As
			Reported			Adjustments			Proforma*
In thousands, except per share data
Net revenue			$	407,103		$	0		$	407,103
Costs and expenses:
	Direct			242,745			0			242,745
	General and administrative			128,089			0			128,089
	Depreciation and amortization			24,597			0			24,597
	Restructuring			52,023			52,023			0
	Write-off of goodwill and other assets			20,120			20,120			0
	Disposal of business			0			0			0
Total costs and expenses				467,574			72,143			395,431
Income (loss) from operations				(60,471	)		(72,143	)		11,672
Impairment of investments				(341,949	)		(341,949	)		0
Gain on investments, net				235			0			235
Other income				3,580			0			3,580
Total other income (expense)				(338,134	)		(341,949	)		3,815
Income (loss) before income taxes				(398,605	)		(414,092	)		15,487
Income taxes (benefit) expense				(132,694	)		(137,819	)		5,125
Income (loss) from continuing operations				(265,911	)		(276,273	)		10,362
Income from discontinued operation, net of taxes				0			0			0
Extraordinary gain from sale of discontinued operation, net of taxes				142,030			142,030			0
Net income			$	(123,881	)	$	(134,243	)	$	10,362
Basic net income per share:
	Income (loss) from continuing operations		$	(2.22	)				$	0.09
	Income from discontinued operation		$	0.00					$	0.00
	Extraordinary gain from sale of discontinued operation		$	1.19					$	0.00
	Basic net income per share		$	(1.03	)				$	0.09
Diluted net income per share:
	Income (loss) from continuing operations		$	(2.22	)				$	0.09
	Income from discontinued operation		$	0.00					$	0.00
	Extraordinary gain from sale of discontinued operation		$	1.19					$	0.00
	Diluted net income per share		$	(1.03	)				$	0.09
Shares used in computing net (loss) income per share:
		Basic		119,838						119,838
		Diluted		119,838						119,838

• Proforma results exclude restructuring charges, write-off of goodwill and other assets, disposal of business, impairment of investments, transaction costs and gain on disposal of discontinued operation.

Condensed Consolidated Statements of Income Reconciliation
For the nine months ended September 30, 2001
(Unaudited)

			As
			Reported			Adjustments			Proforma*
In thousands, except per share data
Net revenue			$	1,215,873		$	0		$	1,215,873
Costs and expenses:
	Direct			724,859			0			724,859
	General and administrative			392,208			0			392,208
	Depreciation and amortization			71,143			0			71,143
	Restructuring			54,169			54,169			0
	Write-off of goodwill and other assets			20,120			20,120			0
	Disposal of business			0			0			0
Total costs and expenses				1,262,499			74,289			1,188,210
Income (loss) from operations				(46,626	)		(74,289	)		27,663
Impairment of investments				(345,048	)		(345,048	)		0
Gain on investments, net				4,702			0			4,702
Other income				14,433			0			14,433
Total other income (expense)				(325,913	)		(345,048	)		19,135
Income (loss) before income taxes				(372,539	)		(419,337	)		46,798
Income taxes (benefit) expense				(124,093	)		(139,550	)		15,457
Income (loss) from continuing operations				(248,446	)		(279,787	)		31,341
Income from discontinued operation, net of taxes				0			0			0
Extraordinary gain from sale of discontinued operation, net of taxes				142,030			142,030			0
Net income			$	(106,416	)	$	(137,757	)	$	31,341
Basic net income per share:
	Income (loss) from continuing operations		$	(2.11	)				$	0.27
	Income from discontinued operation		$	0.00					$	0.00
	Extraordinary gain from sale of discontinued operation		$	1.21					$	0.00
	Basic net income per share		$	(0.90	)				$	0.27
Diluted net income per share:
	Income (loss) from continuing operations		$	(2.11	)				$	0.27
	Income from discontinued operation		$	0.00					$	0.00
	Extraordinary gain from sale of discontinued operation		$	1.21					$	0.00
	Diluted net income per share		$	(0.90	)				$	0.27
Shares used in computing net (loss) income per share:
		Basic		117,786						117,786
		Diluted		117,786						117,786

• Proforma results exclude restructuring charges, write-off of goodwill and other assets, disposal of business, impairment of investments, transaction costs and gain on disposal of discontinued operation.

EX-99.01

PRESS RELEASE DATED 10/17/01 OF QUINTILES