SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 AMENDMENT NO. 1
                                       TO
                                    FORM 10-K

x    Annual report  pursuant to Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934 (Fee required)

     For fiscal year ended June 30, 1997 or

o    Transition  report  pursuant  to  section  13 or  15(d)  of the  Securities
     Exchange Act of 1934 (No fee required)

                FOR THE PERIOD FROM JULY 1, 1996 TO JUNE 30, 1997

                         COMMISSION FILE NUMBER: 0-28202

                            WALSH INTERNATIONAL INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Delaware                                                  51-0309207
(State or Other Jurisdiction of                           (I.R.S. Employer
Incorporation or Organization)                            Identification Number)

105 Terry Drive, Suite 118, Newtown, Pennsylvania         18940
(Address of principal executive offices)                  (Zip Code)

       Registrant's telephone number, including area code: (215) 860 4949

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                                          NAME OF EACH EXCHANGE
     TITLE OF EACH CLASS                                  ON WHICH REGISTERED
     -------------------                                  ---------------------
                                                          None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                          Common Stock, $.01 par value
                                (Title of Class)

         Indicate by check mark whether the registrant (1) has filed all reports
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X . No .

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

         The aggregate  market value of the Common Stock of the registrant  held
by non-affiliates as of August 18, 1997 was approximately $108,020,373.

         As of August 18, 1997 there were 10,538,573  outstanding  shares of the
registrant's Common Stock.


Total Number of Pages: 57

                                        1
<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE

         The  registrant's   definitive  proxy  statement  for  its  meeting  of
stockholders in connection with its fiscal year ended June 30, 1997, which is to
be  filed  pursuant  to  Regulation  14A not  later  than  October  28,  1997 is
incorporated by reference into Part III of this Form 10-K.


                                       2
<PAGE>
                                                                          PART 1

ITEM 1.  BUSINESS

INTRODUCTION

Walsh International Inc. ("Walsh" or the "Company") develops,  markets, provides
and  supports   comprehensive  sales  and  marketing   information  systems  for
pharmaceutical  companies  to assist them in the more  efficient  management  of
their sales  organizations.  Walsh is a market  leader in  providing  electronic
territory management systems ("ETMS") and sales management information solutions
("SMIS") to the  pharmaceutical  industry  worldwide.  Walsh also  provides data
services  and  marketing  support  services  based on  proprietary  databases of
medical professionals and others who influence prescribing decisions.

The Company was  incorporated in Delaware in 1988. In December 1991 the business
of Pharmaceutical  Marketing  Services Inc. ("PMSI") was carved out of Walsh and
taken public.  Following the carve out Walsh  operated in two business  segments
and on  April  16,  1996  the  Source  Business,  which  develops  and  provides
proprietary   databases   of   prescriptions   dispensed   by   retail   outlets
internationally was spun off.

All of the  issued  and  outstanding  capital  stock of a  newly-formed  holding
company of the Source Business, Source Informatics Inc. ("Source"), was spun-off
to  the  existing  stockholders  of  the  Company  as of  April  16,  1996  (the
"Spin-Off").  The results of the Source Business are presented as  "discontinued
operations" throughout this document.

The Company's  principal executive offices are located at 105 Terry Drive, Suite
118, Newtown, Pennsylvania, telephone no. (215) 860 4949. Walsh has a technology
development  center in  Belgium,  Regional  Support  Centres in Europe and North
America, with a third one planned for Asia-Pacific and local operating companies
in the United States,  Australia,  Austria,  Belgium,  Canada, France,  Germany,
Italy, the Netherlands,  New Zealand,  Singapore,  Spain and the United Kingdom.
With the  exception  of  Austria,  and New  Zealand,  all such  local  operating
companies provide full service support for Walsh's technology and data services,
including a client  sales and support  team, a database  maintenance  team and a
facilities management center.


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<PAGE>

SERVICES

Walsh  provides  three  types of  services  that it has  designed to work either
independently  or  together  to  provide a  comprehensive  sales  and  marketing
information solution:

o    Technology Services,  consisting of PREMIERE, the Company's SMIS which was
     launched in fiscal 1996 and PRECISE,  the  Company's  established  advanced
     ETMS;

o    Data Services, consisting of the PHARBASE customer database service; and

o    Marketing Support Services,  consisting of PHARBASE-driven selective direct
     marketing  services  which  support the sales  organization,  research  and
     consulting services.


TECHNOLOGY SERVICES

PREMIERE,  the Company's  SMIS  introduced  in Fiscal 1996,  is a  Windows-based
system  designed to support both the client's sales and marketing  teams and all
other employees within the client company who interact with customers, including
general management, medical, clinical research and planning personnel.

PREMIERE  is a true  Windows-based  application,  rather  than an  upgrade  of a
DOS-based system with a Windows user interface.  As a result,  PREMIERE does not
have the file size and  networking  limitations  imposed by a DOS-based  system.
Additionally,  it allows  multi-tasking  by  end-users  through  an  icon-driven
graphical  user   interface.   PREMIERE  is  based  on  a  proprietary,   highly
sophisticated and flexible data model which both reflects the current healthcare
environment   and,   importantly,   also  permits  any  changes  or   unforeseen
requirements to be incorporated  quickly. It is due to this extensive data model
that the PREMIERE  relational  database can integrate  data from many different
sources - clients' own data,  third-party data or Walsh's own data. In addition,
its  relational  links ensure that each user has fast access to the  information
which is relevant to them,  without  having to go through  large  quantities  of
data. Like PRECISE, PREMIERE is designed to handle data over a wide area network
("WAN").  Multiple  file  servers can operate on a local area  network  ("LAN"),
giving  PREMIERE the  capability of  supporting  the largest of  pharmaceutical
sales  forces.  PREMIERE  supports both Oracle and SQL server  database  engines
under Windows NT at the server end and Oracle and SQL Anywhere  database engines
under Windows 3.11 and Windows `95 at the remote end.

PREMIERE  is an open  system  and,  due to the fact  that it is Open  Data Base
Connectivity  ("ODBC")  compliant,  PREMIERE  can be developed to support other
ODBC  compliant  database  engines as the need  arises.  This  allows any client
selecting  PREMIERE  to  standardize  database  software  enterprise-wide,   if
required.

As of June 30, 1997 the Company and its licensee had  implemented  PREMIERE for
more than 50 sales forces.

PRECISE  is an  advanced  DOS-based  ETMS that can be run on  virtually  any PC,
enabling  the  Company  to  convert  clients  from  other  systems  without  the
requirement  for a hardware  upgrade.  As of June 30, 1997,  the Company and its
licensee had implemented PRECISE for more than 440 sales forces.

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<PAGE>


PREMIERE and PRECISE  systems are  customized for each client to meet the needs
of the various end-users within the client  organization.  PREMIERE and PRECISE
systems have been developed to help clients  maintain their  competitive edge by
making   the   initial   application   build,   the   implementation   and   any
post-installation  changes  quickly in response to evolving  market  conditions.
These  changes  are  made,  not by  reprogramming  which can be  costly,  but by
applying the unique, Walsh developed suite of Application Builders which enables
the modified system to be operational  more quickly than other systems that rely
on  source  code  reprogramming.  Sales  representatives  are  provided  with  a
user-friendly, comprehensive system enabling them to:

o    Maintain sophisticated customer databases

o    Plan sales calls

o    Report sales calls on medical and other health professionals

o    Analyze calling activity

o    Track sales and promotional activity

o    Collate and report discretionary promotional expenditure

o    Communicate  and  coordinate  across sales forces and divisions  within the
     client organization

o    Manage promotional meetings, samples and inventories


Field and head office managers are able to:


o    Monitor and direct the activities of sales representatives

o    Analyze  calling and  promotional  activities  versus  sales and  marketing
     strategy

o    Compare the performance of sales representatives or sales forces

o    Analyze effort versus results

o    Set and monitor individual representative training and development plans

o    Allocate resources

Walsh  currently  maintains  client  sales  and  support  teams  and  facilities
management centers for PREMIERE and PRECISE clients in 13 countries through its
local operating companies and one licensee. These operations are responsible for
the initial implementation and ongoing support of a PREMIERE or PRECISE system.
Because installations are conducted by these local operating companies,  each of
which can customize a


                                       5
<PAGE>

client's  system using  proprietary  Application  Builders,  Walsh can implement
multi-national  contracts  for  PREMIERE  or  PRECISE  in  different  countries
concurrently.

Walsh's clients receive only fully  executable  applications.  Walsh retains the
source codes for PREMIERE and PRECISE at its development  center,  distributing
only  executable  program code and  Application  Builders to the local operating
companies for use in the installation process. The process,  which usually takes
between three and five months, typically involves:

o    Project  management  designed  to  ensure  delivery  of an  application  to
     specification, on time and on budget.

o    Design consultancy to assist the client in creating detailed specifications
     for its system.

o    System customization to the client's specific requirements.

o    Software loading and testing with PREMIERE or PRECISE.

o    Data loading with PHARBASE, the client's own data and/or third-party data.

o    User documentation customized to match the client's functionality.

o    LAN set-up, as appropriate.

o    End-user training on the PREMIERE or PRECISE system, as appropriate.


All  PREMIERE  and PRECISE  systems are  available in the client's  language of
choice.  The Company has  delivered  systems that operate in over 15  languages.
Where  appropriate  to the  market,  e.g.  Canada  and  Belgium,  the  system is
delivered in a dual or multi-language format.

PREMIERE  and  PRECISE are  generally  offered to clients as part of an overall
service  package  under initial two or three year  contracts,  which then become
"evergreen"  (subject  to  automatic  annual  renewal  unless  terminated).  All
contracts  require the Company to customize its PREMIERE or PRECISE  technology
with Application  Builders to deliver a client-specific  version of the service,
with applications appropriate for sales representatives, field managers and head
office  users.  In most  markets,  the  majority of the  Company's  clients also
contract  for  comprehensive  facilities  management  by  the  Walsh  facilities
management  center,  including  location  and  maintenance  of the file  server,
telecommunications server and lines, full data back-up and archiving procedures,
user help line support, user problem reporting, change management, hardware swap
and other  client  support.  Continuing  support is  provided  to each client by
Walsh's local operating company in the country where the client operates.

In South  Africa,  Walsh has licensed  PRECISE  technology  to a third party and
receives royalties on the revenue.

In  July  1997  Walsh  acquired  100% of the  stock  of an  Australian  company,
Pharmaceutical   Marketing  Systems  Pty  Ltd  (PMS)  which  gives  the  Company
additional  technology  services;   EPIC  and  RXPLORE.  EPIC  is  a  salesforce
automation system based on Lotus Notes. It was developed by PMS to meet the


                                       6
<PAGE>

requirements  of the many  pharmaceutical  companies in Australia  which specify
Lotus Notes as a corporate standard.  RXPLORE is a sophisticated analysis report
generator which is capable of operating as an integration product between a data
warehouse and any proprietary  salesforce automation system. Both these products
are  complementary  to and not in  competition  with the other Walsh  technology
services and will form part of the PREMIERE range of products.

DATA SERVICES

PHARBASE  provides  demographic  information  and  data  on  physicians  in most
national markets and on their  professional  affiliations and other  prescribing
influences.  In some of these markets, the database also contains information on
other  medical  professionals,  such  as  pharmacists  and  key  administrators.
PHARBASE is a leading source of  pharmaceutical  industry  customer  data,  with
government and healthcare agencies in certain markets using PHARBASE-driven mail
programs  to  communicate  with  medical   professionals  for  critical  medical
information such as drug recalls, contra-indication notices, etc.

PHARBASE is available in Europe,  Canada,  Australia and New Zealand and is used
by over 350 sales  forces.  It is  delivered to clients  embedded in  PREMIERE,
PRECISE,  or can be used in a third-party  ETMS for integration  with a client's
head office systems, or as part of a direct marketing campaign, often in support
of the sales force's  activities.  See "Marketing Support Services." Over 75% of
PREMIERE  and PRECISE  clients  also  contract for PHARBASE to provide data for
their PREMIERE and PRECISE  applications.  Data services are generally provided
under contracts with an initial two or three year term that become "evergreen."

PHARBASE is  available on a  country-by-country  basis.  Through  PHARBASE-Link,
clients  can also reach  healthcare  professionals  throughout  the world from a
single point of contact. Access to data on a global scale is supported by a full
range of direct  marketing,  list selection,  mailing and  fulfillment  services
including the creation of a responder database.

Each of Walsh's local operating  companies has a database  maintenance team that
is  responsible  for the  maintenance  of the  comprehensive  national  PHARBASE
databases,  subsets of which are  delivered  to clients as part of the  PHARBASE
service.  The primary sources of information for the maintenance of the PHARBASE
databases are client pharmaceutical companies,  questionnaires to physicians and
hospital  administrators,  mailing returns and  publications.  Every client that
contracts to use PHARBASE  within  PREMIERE,  PRECISE or another ETMS agrees to
notify the Company of any  additions,  deletions or changes  within its customer
database  (such as changes of  location,  affiliation  or medical  specialty  of
medical  professionals).  By these means PHARBASE data is kept up to date and in
some countries is used as the government reference.

ALLIANCES

In addition to developing its own databases and system  technology,  Walsh works
closely  with a number of  organizations  to provide its  clients  with the most
effective solution for their particular needs.


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<PAGE>

These organizations include:

o    Microsoft  Consulting  Services  which  works with  Walsh as a  development
     partner  for  PREMIERE.   Microsoft  has  been  involved  in  the  design,
     specification  and  programming of the source code for  PREMIERE.  It also
     advises on how Microsoft  technologies  and products could be developed for
     use in the future.

o    Walsh entered into a strategic  partnership with Oracle in fiscal year 1997
     with  PREMIERE  as  the  focus  of  this  global  business  alliance.  The
     partnership  enables  the  PREMIERE  system  to run on  Oracle's  database
     technology at both the server and field sales level. The two  organizations
     also work together to optimise the  integration of Oracle's  latest On Line
     Analytical  Processing ("OLAP") technology into PREMIERE enabling powerful
     analysis  to be  carried  out  quickly  at  every  level  of  the  client's
     organization.

o    Source Informatics which specializes in prescription-level  information. In
     general,  prescription  data must be re-processed  before being distributed
     through ETMS or SMIS, which can delay  significantly the receipt of data by
     the sales force. Source Informatics has a Preferred Technology  Partnership
     Agreement  with Walsh which means that Walsh  clients will benefit from the
     collaboration in building,  maintaining and promoting a seamless  interface
     between SourceTM,  or PREMIERE and PRECISE to facilitate swift delivery of
     prescription data to sales representative level.

o    Zuellig   Pharma  which  is  the  Pacific  Rim's   leading   pharmaceutical
     distribution   and  services   company.   Walsh  and  Zuellig  Pharma  have
     established  a joint  venture,  Walsh  Asia-Pacific,  to promote  the Walsh
     product range in the region - including PREMIERE.


MARKETING SUPPORT SERVICES

In certain of its markets,  Walsh provides  marketing support services using the
PHARBASE databases. Marketing support services generally include direct mail and
market research services, and are contracted on a project-by-project basis.

Walsh's direct mail services  provide a cost effective  means for its clients to
reinforce  the impact of  personal  sales  calls by their  representatives.  The
Company  is  able  to  enhance  the  effectiveness  of a  client's  direct  mail
promotions  by using Data Selector  programs to extract from PHARBASE  databases
specific information regarding the targeted mailing audience. In Belgium,  Spain
and Australia, the Company provides a selective mailing label supply service. In
the United Kingdom,  the Netherlands,  Germany and Canada,  the Company combines
this service with mailing facilities capable of processing the range and size of
mailings required by the  pharmaceutical and healthcare  industries,  to provide
full-service direct mail marketing.

Walsh's market research services include data analysis, interviews (in person or
by telephone) and postal surveys. These services, which are available in Canada,
Australia and New Zealand, support the primary Walsh services by focusing on the
effectiveness of the sales and marketing process and general market forces. They
include both syndicated and client-specific services.


                                       8
<PAGE>
SALES AND MARKETING

The Company has organized its business in substantially all its current national
markets  through  local  operating  companies.  Walsh  believes  that the  local
expertise   developed  by  these  companies   permits  the  Company  to  develop
integrated,  customized solutions specific to each national selling environment.
Each  local  operating  company  has a team of sales and  client  support  staff
responsible  for sales and  support of the  Company's  services  in its  market,
providing  services  in local  languages,  and take into  account  local  market
conditions.

The Company's  locally-based sales executives are supported by a corporate sales
and  marketing  group  responsible  for  initiating,  coordinating  and managing
multi-national sales opportunities and creating strategic relationships with the
Company's  multi-national clients.  Increasingly,  international  pharmaceutical
companies are making decisions regarding sales and marketing information systems
centrally.  Together with the local operating companies, the corporate sales and
marketing group has developed  strategies  specific to each client and potential
client  in  order  to  address  more   effectively   all  key   influencers  and
decision-makers  wherever they may be in the client's  organisation.  Walsh also
presents a consistent  service and company image  internationally to its clients
and  potential  clients  through  international  marketing  campaigns,  industry
exhibitions, client meetings and regular user group forums.

GROWTH STRATEGY

The  Company's  growth  strategy  is to build on its  established  position as a
market leader through:

INCREASED MARKET PENETRATION FOR NEW AND EXISTING SERVICES

o    The Company  believes  that there is  significant  opportunity  to sell the
     PREMIERE  service to new clients and upgrade  existing  PRECISE clients to
     PREMIERE , while  increasing  the  penetration  of the Company's  PHARBASE
     service in established markets.

o    PREMIERE  , a  Microsoft  Windows-based  system that can serve large sales
     forces  more  effectively  than a  DOS-based  system  such as PRECISE , was
     introduced in November 1995. As of June 30, 1997, the Company had installed
     PREMIERE for 50 sales forces.

o    PRECISE is currently provided under contracts and licensing arrangements to
     more  than  440  sales  forces.  Because  PRECISE  can  run on  inexpensive
     hardware,  the Company expects that there will be continuing  opportunities
     to market PRECISE to clients that do not have Windows-compatible hardware.

o    PHARBASE  currently  supports over 350 sales forces,  approximately  90% of
     which are also PREMIERE or PRECISE  customers.  The Company  believes that
     the  introduction  of  PREMIERE  will present an  opportunity  for further
     market penetration for its PHARBASE service.  Walsh will continue to market
     PHARBASE independently of PREMIERE and PRECISE.


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EXPANSION OF  BUSINESSES

The  Company  continues  to expand its U.S.  presence  in  conjunction  with the
introduction of PREMIERE,  which can serve large sales forces more  effectively
than DOS-based systems such as PRECISE.  The Company may also seek to expand its
U.S. presence by acquiring businesses with complementary client bases, databases
or technology.

The Company has also expanded its business in Australia  through the acquisition
in July of Pharmaceutical Marketing Solutions Pty Ltd (PMS). The new company has
significant combined market presence.  This expansion is further enhanced by the
previously owned PMS products which have been incorporated  within the Company's
product range (see Technology Services).

EXPANSION INTO NEW GEOGRAPHIC MARKETS

The Company  intends to continue its  expansion  into other  growing  healthcare
markets worldwide. On January 25, 1996, the Company entered into a Joint Venture
Agreement  with an affiliate  of Zuellig  Pharma S.A.  ("Zuellig"),  pursuant to
which the parties have established a joint venture for the  commercialization of
the  Company's  PREMIERE,  PRECISE and  PHARBASE  services in 12  countries  in
Asia-Pacific.  The joint venture company was formed in Singapore. Walsh owns 51%
of the equity and has  operational  control of the joint  venture.  Zuellig is a
major healthcare company in the Asia-Pacific  market,  providing  pharmaceutical
distribution,  wholesaling,  manufacturing  and  sales  services  to a number of
international  pharmaceutical and healthcare companies. It will assist the joint
venture in establishing  commercial  relationships with potential clients in the
market.

The Company  also  intends to continue  its  expansion  into Central and Eastern
Europe and is also  investigating  a number of other  markets  where demand from
Walsh clients is high

DIVERSIFICATION WITHIN THE HEALTHCARE INDUSTRY

PREMIERE,  PRECISE  and  PHARBASE  have been  designed to support the sales and
marketing  function  of  healthcare   industry  suppliers  outside  the  ethical
pharmaceutical   industry.   The  Company  continues  to  diversify  within  the
healthcare  industry and currently provides PREMIERE or PRECISE to suppliers of
OTC pharmaceuticals,  nutritional products and medical diagnostics.  The Company
anticipates  that the OTC market will become  increasingly  important as branded
prescription-only drugs are reclassified to permit OTC sales.

ENTERING NEW INDUSTRY MARKETS

Building on its experience in the healthcare industry,  the Company will explore
opportunities  for  exploiting  the  PREMIERE  and  PRECISE  services  in other
industries that have complex selling  environments.  Walsh anticipates that such
expansion  would be  implemented  primarily  through joint  ventures,  strategic
partnerships  or  licensing  agreements  with  established  businesses  in  such
industries that could provide the necessary data  expertise.  The Company is not
currently  involved in negotiations or party to any agreements or understandings
with respect to any such arrangement that would be material.


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<PAGE>

COMPETITION

The market for sales and marketing  information  systems is highly  competitive.
Many companies offer ETMS and other sales force  automation  products,  although
few focus on the  pharmaceutical  industry.  The Company believes that there are
approximately  10  other  companies  that  supply  products   automating  sales,
marketing  and  customer   service   functions  and   specifically   target  the
pharmaceutical industry. Certain of these companies have a significantly greater
market share than Walsh in certain of the markets in which PREMIERE and PRECISE
are offered, including Dendrite International,  Sales Technologies and CorNET in
the United States and Cegedim in France.

Sales  and   marketing   information   systems   differ   greatly  in  terms  of
functionality,  flexibility  and the type of hardware  platform  supported.  The
Company's  products and services compete with others principally on the basis of
market  and data  expertise,  product  functionality,  flexibility  and speed of
customization,  name recognition, global coverage, service standards, breadth of
customer base,  technical  support and cost.  Management  believes the Company's
systems  compete  favorably  with respect to these factors.  In particular,  the
Company   believes  that  its   development   strategy,   which  permits  system
customization  and  modification  without  changing the underlying  source code,
allows the Company to deliver a fully-customized  or updated system more rapidly
and more cost effectively than competing systems.

Some of the  Company's  existing  competitors,  as well as a number of potential
market  entrants,  have larger  technical  staffs,  larger  marketing  and sales
organizations  and greater  financial  resources  than the Company.  The Company
believes that its unique  Application  Builder technology which allows PREMIERE
and PRECISE to be customised and modified without re-programming the source code
removes  the need for  large  numbers  of  technical  staff.  Additionally,  the
corporate  parent  of one  of the  Company's  competitors,  Sales  Technologies,
controls  certain  of the  proprietary  data  collection  systems  that  provide
prescription  sales data in some  countries  (including  the  United  States) to
pharmaceutical  companies.  It may be possible for Sales  Technologies to gain a
competitive  advantage  in the  pricing  of  its  ETMS  for  customers  who  are
interested in purchasing the data collected by its corporate affiliate. However,
the Company  believes that its  Preferred  Technology  Partnership  with Source,
which offers similar prescription sales data, will enable the Company to compete
effectively.

Competition  will increase in the future if new competitors  enter the market to
supply sales management systems to the  pharmaceutical  industry and as existing
competitors  expand and enhance their product  lines.  The Company may encounter
additional  competition  in  the  future  from  firms  offering  outsourcing  of
information  technology  services,  from vendors of software products  providing
specialized  applications  not offered by the  Company and from the  development
and/or operation of in-house systems by pharmaceutical companies.

GOVERNMENT REGULATION

Walsh's pharmaceutical  industry clients are subject to constraints put in place
by government payers in certain countries that restrict prescriber choices among
various  drugs,  and may also be subject to changes in the  healthcare  delivery
systems in Europe,  the United  States and other  countries in which the Company
operates.   These  factors  may  affect  the  sales  and  marketing   budget  of
pharmaceutical  companies  and,  in turn,  reduce the  demand for the  Company's
products and services.  There can be no assurance  that the Company will respond
effectively to all of these or other changes in the market place.

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<PAGE>

In addition to regulations affecting its pharmaceutical  industry clients, Walsh
is directly  subject to certain  restrictions  on the collection of data.  There
have been  legislative  efforts in many markets to limit the  dissemination  and
sale of  certain  information  that  may be  considered  patients.  The  Company
believes that its data collection and  dissemination  practices  comply with the
requirements  of  applicable  national  data  privacy  legislation,  as  well as
industry-promulgated and nationally recognized codes of conduct.  However, there
can be no assurance that future  legislation or regulations will not directly or
indirectly  restrict the collection or  dissemination  of information  regarding
physicians,  the  prescribing  history of  physicians  or other  data  currently
collected or disseminated  by the Company.  Any such  restrictions  could have a
material adverse effect on the operations of the Company.

EMPLOYEES

As of June 30, 1997, Walsh employed approximately 537 employees in 13 countries.
Local  operating  companies in the United States,  Australia,  Belgium,  Canada,
France, Germany, Italy, the Netherlands,  Spain and the United Kingdom employ at
least 20 people dedicated to client sales and support, facilities management and
database   maintenance.   The  Company  has  completed  an  extensive   personal
development  program  for its  senior  country  management,  as  well as  skills
training for its client sales, support and technical specialists at both a local
and regional level.

The Company  believes  that  relations  with  employees  are good.  There are no
collective  bargaining  agreements  in place.  In the  Netherlands,  France  and
Germany, the Company has Workers Councils, which is a legal requirement in those
countries.

ITEM 2  PROPERTIES

The Company's  principal  executive  offices in the United States are located in
Newtown, Pennsylvania.  Walsh owns office space consisting of 10,000 square feet
in the United  Kingdom.  The Company  leases  150,000  square feet of office and
warehouse  space in various  locations  in the United  States,  Canada,  Europe,
Australia,  New  Zealand and  Singapore.  Management  believes  that its current
facilities, and other space which is readily available, are adequate to meet its
needs for the foreseeable future.

On-line, batch processing and file server operations, which are performed at the
Company's database maintenance and facilities  management centers, are backed up
each night in fireproof  surroundings and stored off-site weekly.  Copies of the
Company's  operating  systems,  key  applications  and critical  client data are
maintained  off-site.  The Company does not rely on unique hardware systems, and
its purchase and  maintenance  agreements  with third parties provide for backup
support  in the  event of a  computer  failure.  Each  center  has a  documented
disaster recovery plan, which is subject to regular test.

All clients require that Walsh hold their  confidential  databases separate from
those of other clients.  Facilities  management centers are maintained as secure
areas.


                                       12
<PAGE>

ITEM 3  LEGAL PROCEEDINGS

The Company is not currently engaged in any legal proceedings that are expected,
individually  or in the  aggregate,  to have a  material  adverse  effect on the
business,  results  of  operations,  liquidity  or  financial  condition  of the
Company.

ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

                                       13
<PAGE>



         PART II


ITEM 5  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
            RELATED STOCKHOLDER MATTERS

The Company's Common Stock has been included in The NASDAQ National Market under
the symbol WSHI since April 17, 1996.

The reported high and low closing sales prices for the Company's Common Stock as
reported by NASDAQ for the period to June 30, 1997 were:


         Fiscal Year Period                          High              Low

         1996
         Fourth Quarter                              15 1/8            9

         1997
         First Quarter                               10 1/2            6 3/4
         Second Quarter                               9 3/4            7
         Third Quarter                                9 5/8            7 1/4
         Fourth Quarter                               9 5/8            7 1/4


As of August  18,  1997  there  were  approximately  95 holders of record of the
Company's Common Stock.

The Company has never paid dividends to holders of its Common Stock. The Company
intends  to retain  all  earnings  to finance  the  operation  and growth of its
business  and does not  anticipate  paying  cash  dividends  in the  foreseeable
future.



                                       14
<PAGE>


ITEM 6  SELECTED CONSOLIDATED FINANCIAL DATA


                      SELECTED CONSOLIDATED FINANCIAL DATA
                      (In thousands, except per share data)

The selected  consolidated  financial data set forth below has been derived from
the  audited  consolidated  financial  statements  of Walsh  for the year  ended
December 31, 1992, the six month  transition  period ended June 30, 1993 and the
years ended June 30, 1994, 1995, 1996 and 1997. The selected  financial data for
the years ended June 30, 1995, 1996 and 1997 should be read in conjunction  with
Management's  Discussion  and Analysis of Results of  Operations  and  Financial
Condition and the historical  consolidated  financial statements,  including the
notes  thereto,  included  elsewhere in this  Report.  The results of the Source
business are presented as discontinued operations for all periods presented.




                                       15
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA
                                               =====================================================================================
                                                YEAR ENDED        SIX MONTHS                       YEARS ENDED
                                                DECEMBER 31         ENDED                            JUNE 30,
                                                                  JUNE 30,
                                                ------------   -------------  ------------------------------------------------------
(Dollars in thousands, except per share
amounts)                                           1992             1993           1994             1995          1996        1997
                                                ------------   -------------  ------------     -----------   ------------  ---------
STATEMENT OF OPERATIONS DATA:
<S>                                             <C>            <C>            <C>              <C>           <C>           <C>
Revenues                                        $    33,293    $     16,506   $    34,532      $   40,269   $    47,262    $ 54,088
Costs and expenses:
  Production costs                                   16,023           7,374        15,401          17,733        18,442      20,049

  Selling, general and administrative expenses       24,080          11,121        21,366          19,423        21,348      24,433

  Research and development costs                      3,898           1,152         3,049           3,953         3,510       3,683

  Amortization of intangible assets                   4,982             142           138             112           130         144

  Restructuring costs                                     -               -           824              -              -           -
                                                -----------    ------------   -----------      ----------   -----------   ---------
Total costs and expenses                             48,983          19,789        40,778          41,221        43,430      48,309
                                                -----------    ------------   -----------      ----------   -----------   ---------
Operating profit (loss)                             (15,690)         (3,283)       (6,246)           (952)        3,832       5,779

Interest income                                         793             132           525             950           843         796

Interest expense                                     (2,393)         (1,162)       (2,076)         (2,325)       (2,045)       (265)

Gain on sale of shares in PMSI                       10,026               -         2,420             402             -           -

Equity income of PMSI                                 3,165             555           973           1,180             -           -

Other income, net                                         -             838             -               -             -           -

Minority Interest                                         -               -             -               -           113          20
                                                -----------    ------------   -----------      ----------   -----------   ----------
Income (loss) from continuing operations
  before income taxes                                (4,099)         (2,920)       (4,404)           (745)        2,743       6,330

Income tax (provision) benefit                          483             237        (1,509)         (2,212)         (658)     (1,540)
                                                -----------    ------------   -----------      ----------   -----------   ---------
Income (loss) from continuing operations             (3,616)         (2,683)       (5,913)         (2,957)        2,085       4,790

Discontinued operations:

Loss from discontinued operations, net              (18,214)         (5,123)       (5,800)         (1,554)       (1,755)          -
                                                ============   =============  ============     ===========  ===========  ===========
Net income (loss)                               $   (21,830)   $     (7,806)   $  (11,713)     $   (4,511)   $      330  $    4,790
                                                ============   =============  ============     ===========  ===========  ===========
Income (loss) per share from continuing
operations                                      $     (0.64)   $      (0.46)   $    (0.81)     $    (0.40)   $     0.25  $     0.45

Loss per share from discontinued operations,          (3.24)          (0.88)        (0.79)          (0.21)        (0.21)          -
net                                             ============   =============  ============     ============ ===========  ===========
Net income (loss) per share                     $     (3.88)          (1.34)        (1.60)     $    (0.61)   $     0.04  $     0.45
                                                ============   =============  ============     ===========  ===========  ===========
Shares used in computing income (loss) per        5,614,339       5,807,319     7,326,591       7,346,274     8,197,796   10,657,920
share(1)
                                                ===================================================================================
                                                AS AT                             AS AT JUNE 30,
                                                DECEMBER 31,
                                                --------------  --------------------------------------------------------------------
Dollars in thousands                                1992            1993          1994             1995         1996          1997
                                                -------------  -------------  ------------     -----------  ------------  ----------
BALANCE SHEET DATA:
Cash and cash equivalents                       $     1,901     $     2,083    $   11,881       $  15,110    $    8,629   $   5,784
Working capital (deficit) (2)                        (3,536)         (6,448)        7,061         (14,168)        2,323       4,825
Total assets                                         58,771          40,440        51,402          49,391        44,017      40,538

Total long-term debt and capital lease
  obligations (less current portion)                 17,101          17,115        17,792          17,022         2,757       2,667

Series A Convertible Preferred Stock,
  redemption value $25,000,000                            -               -        23,491          23,911             -

Total stockholders' (deficit) equity            $      (232)   $    (24,406)   $  (35,878)      $ (38,844)   $    4,546    $  9,657
                                                ------------   -------------  ------------     -----------   ------------  ---------
</TABLE>

1 Shares used in computing  income (loss) per share are calculated  based on the
  policy explained in Note 1 to the Consolidated  Financial Statements.

2 As of June 30, 1995,  includes net liabilities of  discontinued operations  of
  $10,310,000.

                                       16
<PAGE>

================================================================================

ITEM 7.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF RESULTS OF  OPERATIONS  AND
         FINANCIAL CONDITION

The following  discussion  contains  "forward  looking"  statements,  within the
meaning of Section  27A of the  Securities  Act of 1933 and  Section  21E of the
Securities  Exchange Act of 1934,  that  involve  risks and  uncertainties.  The
Company's actual results may differ  significantly from the results discussed in
the "forward looking" statements.

OVERVIEW

Since its inception in 1988 the Company has been built  principally  through the
acquisition  of  companies  providing   technology  and  data  services  to  the
pharmaceutical  industry.  Until  April 16,  1996 the  Company  operated  in two
business segments: (i) the Walsh Business, which includes sales force management
and integrated  sales and marketing  information  services,  associated  medical
professional  databases and other  services  related to those  databases such as
direct mail marketing and consulting and (ii) the Source Business which includes
a range of products and services  primarily  marketed  under the name  "Source",
that utilize proprietary databases of prescriptions  dispensed by retail outlets
in the United States.

The Board of Directors  decided that the businesses  needed separate  management
focus, as two independent companies.  Accordingly, prior to Walsh's public stock
offering in April 1996 all the issued and  outstanding  capital  stock of Source
Informatics  Inc.,  a newly  formed  holding  company  for the  Source  Business
("Source")  was spun-off to the Company's  stockholders  (the  "Spin-Off").  The
results of the Source Business are presented as  discontinued  operations in the
Consolidated Financial Statements.

The Company's future results will be dependent in part upon management's ability
to take advantage of the operating  leverage in the Walsh Business by increasing
revenues from both existing and new services.


                                       17
<PAGE>


RESULTS OF OPERATIONS

The  following  table  sets  forth  statement  of  operations  information  as a
percentage of total revenues:

<TABLE>
<CAPTION>
                                                               =====================================================
                                                                        YEARS ENDED JUNE 30,
                                                               -----------------------------------------------------
                                                                        1995                1996               1997
                                                               ---------------     --------------    ---------------
Revenues                                                                100%                100%             100%
                                                               ---------------     --------------    ---------------

<S>                                                                      <C>                 <C>              <C>
Operating Costs and Expenses:
  Production costs                                                       44                  39               37
  Selling, general and administrative expenses                           48                  45               45
  Research and development costs                                         10                   7                7
                                                               ---------------     --------------    ---------------
    Total operating costs and expenses                                  102                  91               89
                                                               ===============     ==============    ===============
          Operating profit (loss)                                       (2)%                  9%              11%
                                                               ===============     ==============    ===============
</TABLE>

REVENUES

Walsh derives its revenues primarily from technology services, including PRECISE
and PREMIERE,  along with other sales force management products,  and from data
services,  principally PHARBASE. Technology services and data services accounted
for  approximately  76% of the  Company's  revenues in fiscal 1997.  To a lesser
extent,  revenues are also generated by marketing  support  services,  including
direct mail  marketing,  market  research and other data  services.  The Company
sells its PRECISE and PREMIERE services under multi-year  contracts,  generally
with an initial  term of two or three  years and  subject to  automatic  renewal
annually   thereafter  unless   terminated.   PRECISE  revenues  are  recognized
proportionately  over the life of the  contract  with the  exception  of certain
set-up and training  charges,  which are  recognized on delivery.  Revenues from
PREMIERE are recognized in the same manner.  Over 95% of PRECISE  contracts are
renewed annually. The Company has also achieved a high degree of repeat business
with  respect  to  other  products  and  services  that are not  provided  under
multi-year  agreements.  Because  the  Company  has a short  lead  time  between
contract  signing and  commencing  service  delivery,  it does not have material
backlog.

Revenues  increased to $54.1 million for fiscal 1997,  compared to $47.3 million
for fiscal 1996, an increase of 18% excluding adverse currency  movements in the
year. The growth in revenues primarily  reflected a growing demand for PREMIERE
with 22% growth in PREMIERE  and PRECISE  revenues  (27%  excluding  currency).
PHARBASE  revenues  showed  strong  growth  of 14% for  the  year.  The  revenue
increases were spread across substantially all geographic markets,  most notably
the US, UK and Spain.

Revenues  increased to $47.3 million for fiscal 1996,  compared to $40.3 million
for fiscal 1995,  representing  an increase of 17%. The increase in revenues for
fiscal 1996 primarily reflected an 18% increase in PRECISE revenues and start-up
PREMIERE revenues.

                                       18
<PAGE>
PRODUCTION COSTS

The Company's production costs include internal computer costs, the cost of data
collection, the amortization of capitalized software development costs and costs
attributable  to  personnel  involved  in  both  database  maintenance  and  the
processing  and delivery of the Company's  services.  The Company  expenses,  as
incurred, the costs associated with the creation, development and maintenance of
its databases.  As a consequence,  the Company's balance sheets do not reflect a
value  assigned to such  databases.  Certain  elements of  production  costs for
technology  services and database  services,  such as data collection  costs and
amortization of capitalized  software  development costs are fixed costs that do
not increase as a result of adding new clients. Most of the remaining production
costs, such as personnel and internal  computer costs,  generally have increased
at a lower rate than  revenues.  These costs are variable in nature,  but do not
increase directly in proportion to the number of new clients or end-users.  Such
costs  increase  from  time to time as new  hardware  or staff are  required  to
support a larger client base.

As a result of this  operating  leverage,  production  costs  have  consistently
declined as a percentage of revenues for the periods presented. The decline also
reflects,  to a lesser degree, that revenues from direct mail services decreased
as a percentage of total revenues over the periods  presented.  Production costs
for direct mail marketing  services are significantly  higher as a percentage of
associated  revenues than production costs for other Walsh services,  reflecting
their relatively higher labor costs.

Production costs were $20.0 million (37% of revenues) for fiscal 1997,  compared
to $18.4  million (39% of revenues)  for fiscal 1996.  The increase in costs was
due  to  the  increased  revenue;  the  decrease  as a  percentage  of  revenues
demonstrate  the Company's  operating  leverage and the increased  percentage of
high margin technology product sales.

Production costs were $18.4 million (39% of revenues) for fiscal 1996,  compared
to $17.7  million  (44% of  revenues)  for fiscal  1995.  The increase in dollar
amount for fiscal  1996 was due to  increased  revenues.  Production  costs have
declined  as  a  percentage  of  revenues  reflecting  the  Company's  operating
leverage.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling,  general and administrative expenses increased to $24.4 million (45% of
revenues)  for fiscal 1997 from $21.3  million (45% of revenues) in fiscal 1996.
This increase of $3.1 million reflects the continued  investment in senior sales
and client service personnel, made to meet the growing demand for PREMIERE.

Selling,  general and administrative expenses increased to $21.3 million (45% of
revenues) for fiscal 1996, from $19.4 million (48% of revenues) for fiscal 1995.
This  increase of $1.9 million is  primarily  due to  increased  selling  costs,
including expansion of its worldwide management and sales capacities at both the
corporate and local levels and costs incurred with the launch of PREMIERE.

                                       19
<PAGE>
RESEARCH AND DEVELOPMENT COSTS

The Company has made  significant  investments in PREMIERE and actively invests
in expanding  its  databases and  enhancing  its  technology  and services.  The
Company's  accounting  policy is to expense as incurred  costs  associated  with
developing  the Company's  databases and computer  technology  for internal use.
Expenditures to develop software for resale to clients are capitalized  pursuant
to Statement of Financial Accounting Standards No. 86, "Accounting for the Costs
of Computer Software to be Sold, Leased or Otherwise  Marketed" ("SFAS No. 86").
The  Company  has  capitalized  no  more  than  22% of its  total  research  and
development  costs in any period.  Capitalized  costs are  amortized (as part of
production  costs)  over the life of the  software.  See Note 1 to  Consolidated
Financial Statements.

Research and  development  costs were $3.7  million (7% of revenues)  for fiscal
1997 compared to $3.5 million (7% of revenues) for fiscal 1996.  This  reflected
the company's on-going commitment to product development.

Research and  development  costs were $3.5  million (7% of revenues)  for fiscal
1996,  compared to $4.0  million  (10% of  revenues)  for fiscal 1995 due to the
reduction in consultants required for developing PREMIERE.

INTEREST EXPENSE

Interest expense in 1997 was $0.3 million versus $2.0 million in 1996 due to the
repayment of $14.7 million subordinated  debentures from the proceeds from the I
PO, during the 4th quarter of 1996.  In 1995 interest  expense was $2.3 million.
The decrease by $0.3 million to $2.0 million in 1996 was due to the reduction in
the average remaining debt outstanding.

INCOME TAXES

Federal, foreign and state income taxes in the consolidated financial statements
have been computed for each country  according to the fiscal and legal structure
under which the various  entities  operate.  Although Walsh incurred losses on a
consolidated  basis for the year ended June 30, 1995,  income taxes were paid by
profitable  foreign  subsidiaries  due to the  inability  to  offset  profitable
operations against loss making operations in the differing tax jurisdictions.

Statutory  income tax rates on such profitable  foreign  subsidiaries  ranged in
fiscal years 1997, 1996 and 1995 from  approximately  33% to approximately  41%.
The Company's  provision for taxes in fiscal years ended June 30, 1995, 1996 and
1997  represented  primarily  accruals for foreign  taxes.  The  Company's  1997
effective  income  tax rate  benefitted  from the  reassessment  of  income  tax
reserves  established in prior  periods.  United States federal and state income
taxes for fiscal years ended June 30, 1995, 1996 and 1997 were not provided as a
result of current year operating losses. At June 30, 1997, the Company had

                                       20
<PAGE>

available  foreign  NOLs  of  approximately  $12.7  million  and  U.S.  NOLs  of
approximately $24.0 million, which may provide future tax benefits.

Statement of Financial  Accounting  Standards ("SFAS No. 109"),  "Accounting for
Income  Taxes,"  requires  that a valuation  allowance  be recorded  against tax
assets which are not likely to be realized.  The Company's  carryforwards expire
at various future dates.  Realization is entirely dependent upon future earnings
in specific tax  jurisdictions.  While the need for this valuation  allowance is
subject to periodic review, if the allowance is reduced, the tax benefits of the
carryforwards  may be  recorded  in  future  operations  as a  reduction  of the
Company's  income  tax  expense.  Due  to  the  uncertainty  of  their  ultimate
realization  based upon past  performance  and expiration  dates, as of June 30,
1995 the  Company had  established  a full  valuation  allowance  against  these
carryforward benefits. Pursuant to the requirements of SFAS No. 109, in the year
ended June 30, 1996 the  Company  recognized  a tax benefit for the  reversal of
previously  established valuation allowances principally related to the transfer
of  the  shares  of  PMSI  stock  by  Walsh  to  Source  in the  Spin-off  and a
reassessment  of the  carryforwards  available  in Spain and Italy.  In the year
ended June 30, 1997 a full  valuation  allowance has been  recorded  against all
deferred tax assets. See Note 12 of Notes to Consolidated Financial Statements.

The Company has  received a ruling from the IRS that the  Spin-Off of the Source
business  qualified  as a tax-free  distribution  pursuant to Section 355 of the
Internal Revenue Code of 1986.

INCOME (LOSS) FROM CONTINUING OPERATIONS

The Company had income from  continuing  operations of $4.8 million for the year
ended June 30, 1997,  compared  with income from  continuing  operations of $2.1
million  for the  comparable  period  of fiscal  1996.  The  improvement  in the
Company's  results  reflects a $6.8  million  (14%)  increase in revenues  and a
smaller  increase in total  operating  costs and expenses ($4.9 million or 11%).
The  Company's  income from  continuing  operations  was $2.1 million for fiscal
1996,  compared to a net loss of $3.0 million for fiscal 1995.  For fiscal 1996,
revenues  increased by 17% while total operating costs and expenses increased by
5%.

The  reported  net income  (loss) of foreign  subsidiaries  will be  affected by
changes in the exchange  rates of foreign  currencies  against the U.S.  dollar.
Approximately  89% of the  Company's  revenues  for fiscal  1997 were  generated
outside the United  States in local  currencies.  Although most of the Company's
services  are  priced in the local  currency  of the  client's  operations,  the
effects of foreign currency fluctuations are mitigated by the fact that expenses
of the local operating  company  servicing the client are generally  incurred in
the same  currency  as  sales.  The  foreign  currency  risk  applicable  to the
operations of Walsh has not been hedged.

                                       21
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Since inception the Company has been financed primarily through private sales of
equity and debt  securities,  sales of shares in PMSI and,  to a lesser  extent,
from cash generated from operations.  On April 16, 1996 the Company completed an
Initial Public Offering ("IPO") which, including the overallotment generated net
proceeds  of $33.3  million of which $14.7  million  was  utilized to repay high
interest debentures.  At June 30, 1997 the Company had cash and cash equivalents
totaling  $5.8  million and a further  $8.2  million  invested in a portfolio of
marketable securities.

Net cash used in  operating  activities  amounted  to $1.9  million for the year
ended June 30,  1997 as compared to cash used by  operating  activities  of $0.2
million  for the year  ended  June 30,  1996.  Net cash  provided  by  operating
activities  was  $8.8  million  for  fiscal  1995.   Substantially  all  of  the
improvement  in 1995  was due to  improved  operating  performance  and  working
capital management.

The  Company's  investing  activities  for the year ended June 30, 1997 included
$1.8 million  withdrawn from a  professionally  managed  portfolio of marketable
securities  offset by  expenditures  for property and equipment and  capitalized
software  development  costs. For the year ended June 30, 1996, net cash used by
investing  activities  was $11.6  million  due to $10.0  million  invested  in a
professionally  managed  portfolio.  This  compared to $6.0 million  provided by
investing activities in Fiscal 1995.

Net cash used in financing  activities  for the year ended June 30, 1997, due to
the settlement of IPO costs, was $1.1 million compared with net cash provided by
financing  activities  of $14.5  million in fiscal  1996.  The cash  provided in
fiscal 1996 was primarily due to the completion of the IPO.

For fiscal 1996 and 1995,  discontinued operations consumed cash of $8.3 million
and $11.6 million  respectively.  In addition to funding  operations,  in fiscal
1995 cash was used to repay a loan of $5.0 million  received in connection  with
the acquisition of a Source business.

The Company believes that the anticipated cash flow from operations and existing
cash balances will satisfy the Company's  projected  working capital and capital
expenditure requirements beyond fiscal 1998.

YEAR 2000

PREMIERE has been  developed to ensure  compliance  for the year 2000.  PRECISE
V3.7 is not totally year 2000 compliant  however, a detailed plan to revise V3.7
has been implemented.

The internal  systems  within the Walsh local  operations are to be reviewed for
the impact of the year 2000. No significant  impact on the Company's  results of
operations, financial condition or liquidity, is expected.


                                       22
<PAGE>

NEW ACCOUNTING STANDARDS

The Financial Accounting Standards Board ("FASB") issued SFAS No. 128, "Earnings
Per Share" which is effective for financial  statements issued for period ending
after December 15, 1997.

The  new  standard  requires  changes  to  the  computation,   presentation  and
disclosure  requirements  of primary and fully diluted  earnings per share.  The
Company does not believe that the application of the new computation will have a
materially  different impact from that calculated under its existing  accounting
policy for the current period.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the Financial  Statements and Supplementary  Data listed in the accompanying
Index to Consolidated  Financial  Statements and Financial  Statement  Schedules
that appear elsewhere in this Annual Report.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
              ACCOUNTING AND FINANCIAL DISCLOSURE

None.


                                       23
<PAGE>


================================================================================

                    WALSH INTERNATIONAL INC. AND SUBSIDIARIES

            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL
                               STATEMENT SCHEDULE

<TABLE>
<CAPTION>

                                                                                     PAGE
                                                                                     ----

<S>                                                                                   <C>
Report of Independent Accountants.................................................... F-1

Financial Statements:

    Consolidated Balance Sheets as of June 30, 1996 and 1997......................... F-2

    Consolidated Statements of Operations for the years ended
    June 30, 1995, 1996 and 1997..................................................... F-3

    Consolidated Statements of Stockholders' Equity (Deficit) for the years ended
    June 30, 1995, 1996 and 1997..................................................... F-4

    Consolidated Statements of Cash Flows for the years ended
    June 30, 1995, 1996 and 1997..................................................... F-5

    Notes to Consolidated Financial Statements....................................... F-7

Report of Independent Accountants on Financial
Statement Schedule................................................................... S-1

Financial Statement Schedule:

    Schedule II Valuation and Qualifying Accounts for the years ended
    June 30, 1995, 1996 and 1997..................................................... S-2
</TABLE>


All financial statement schedules not mentioned above are omitted for the reason
that they are not required or are not applicable, or the information is included
in the Consolidated Financial Statements or the Notes thereto.

                                       24

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------


To the Board of Directors and Stockholders of
Walsh International Inc.



We  have  audited  the  accompanying   consolidated   balance  sheets  of  Walsh
International Inc. and Subsidiaries as of June 30, 1996 and 1997 and the related
consolidated  statements of operations,  stockholders' equity (deficit) and cash
flows for each of the three  years in the  period  ended  June 30,  1997.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the   consolidated   financial   position  of  Walsh
International  Inc.  and  Subsidiaries  as of June  30,  1996  and  1997 and the
consolidated  results of their  operations  and their cash flows for each of the
three  years in the period  ended June 30,  1997 in  conformity  with  generally
accepted accounting principles.





Stamford, Connecticut                                   COOPERS & LYBRAND L.L.P.
August 20, 1997



                                      F-1
<PAGE>

                                      WALSH INTERNATIONAL INC AND SUBSIDIARIES

                                             CONSOLIDATED BALANCE SHEETS
                                               (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                        ===================================
                                                                                 AS AT JUNE 30,
                                                                        -----------------------------------
ASSETS                                                                           1996                 1997
                                                                        --------------      ---------------
<S>                                                                     <C>                 <C>           
Current Assets:
  Cash and cash equivalents                                             $      8,629        $        5,784
                                                                        
  Marketable securities                                                        9,992                 6,803

  Accounts receivable, principally trade (less allowance for
  doubtful accounts of $336 and $454, respectively)                           13,050                 14,227
                                                                             
  Prepaid expenses and other current assets                                      923                    702
                                                                        --------------      ---------------
Total current assets                                                          32,594                 27,516
                                                                        
Property and equipment, net                                                    4,663                  4,169
                                                                        
Goodwill, net                                                                  3,551                  3,439

Marketable securities                                                              -                  1,437

Other assets, net                                                              3,209                  3,727
                                                                        --------------      ---------------
Total assets                                                            $     44,017          $      40,288
                                                                        ==============      ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:

  Current maturities of long-term debt                                  $         12        $           17

  Current portion of  capital lease obligations                                  443                   509

  Accounts payable                                                             7,808                 6,896
                                                                        
  Accrued liabilities                                                         17,467                11,166
                                                                        
  Unearned income                                                              4,541                 4,103
                                                                        --------------      ---------------
Total current liabilities                                                     30,271                 22,691
                                                                        
                                                                        --------------      ---------------
Long-term debt                                                                 1,105                 1,260
                                                                        
Capital lease obligations                                                      1,652                 1,407
                                                                        
Other liabilities                                                              6,295                 5,145
                                                                        
Minority interest                                                                148                   128
Commitments

Stockholders' equity:

  Common stock, $0.01 par value, 20,000,000 shares authorized and
  10,484,835 and 10,533,960 shares issued, respectively.                         105                   105

Paid-in capital                                                              119,175               119,475
                                                                        
Accumulated deficit                                                        (114,948)             (110,158)
                                                                        
Cumulative translation adjustment                                                675                   657

Unrealized (loss) gain on available for sale securities, net of tax              (4)                    35

Treasury stock, at cost, 20,750 shares                                         (457)                  (457)
                                                                        --------------      ---------------
Total stockholders' equity                                                     4,546                 9,657
                                                                        ==============      ===============
Total liabilities and stockholders' equity                              $     44,017        $       40,288
                                                                        ==============      ===============
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                      F-2
<PAGE>

<TABLE>
<CAPTION>

                                      WALSH INTERNATIONAL INC. AND SUBSIDIARIES
                                        Consolidated Statements of Operations
                                  (Dollars in thousands, except per share amounts)


                                                ---------------------------------------------
                                                             Years Ended June 30,
                                                ---------------------------------------------
                                                     1995            1996             1997
                                                ------------    -------------     -----------
                                                                
<S>                                             <C>             <C>               <C>

Revenue                                         $    40,269     $     47,262      $    54,088
                                                ------------    -------------     -----------
Costs and expenses:

  Production costs                                   17,733           18,442           20,049
                                                                                             
  Selling, general and administrative                                                        
      expenses                                       19,423           21,348           24,433
                                                                                             
  Research and development costs                      3,953            3,510            3,683
                                                                         
  Amortization of intangible assets                     112              130              144
                                                ------------    -------------     -----------
                                                                                             
Total costs and expenses                             41,221           43,430           48,309
                                                ------------    -------------     -----------
                                                                                             
Operating profit (loss)                                (952)           3,832            5,779

Interest income                                         950              843              796
                                                                                             
Interest expense                                     (2,325)          (2,045)           (265)


Gain on sale of shares in PMSI                          402                -                -

Equity income of PMSI                                 1,180                -                -

Minotiry Interest                                         -              113               20
                                                ------------    -------------     -----------
                                                                                             
Income (loss) from continuing operations                                                     
  before income taxes                                  (745)           2,743            6,330
                                                                                             
Income tax provision                                 (2,212)            (658)          (1,540)
                                                ------------    -------------     -----------
                                                                                             
Income (loss) from continuing operations             (2,957)           2,085            4,790
                                                                                             
Discontinued operations:                                                                     
Loss from discontinued operations, net               (1,554)          (1,755)               -
                                                ============    =============     ===========
Net income (loss)                               $    (4,511)    $        330      $     4,790
                                                ============    =============     ===========
Income (loss) per share from continuing 
  operations                                    $     (0.40)    $       0.25      $      0.45
                                                                                             
Loss per share from discontinued operations,
  net                                                 (0.21)           (0.21)               -
                                                                                             
                                                ------------    -------------     -----------
Net income (loss) per share                     $     (0.61)    $       0.04             0.45
                                                ============    =============     ============                                    
Shares used in computing income (loss) per
  share                                           7,346,274        8,197,796       10,657,920
                                                
</TABLE>

    The accompanying notes are an integral part of these financial statements

                                       F-3

<PAGE>

<TABLE>
<CAPTION>
                                                        WALSH INTERNATIONAL INC. AND SUBSIDIARIES                                   
                                                ---------------------------------------------------------                           
                                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)                           
                                                            (Dollars and shares in thousands)                                       
====================================================================================================================================
                                                  Common Stock                                                                   
                                                  ------------                                 Cumulative     Net Unrealized     
                                         Shares        Par        Paid-In      Accumulated     Translation         Gain/Loss     
                                                      Value       Capital          Deficit     Adjustment         net of Tax     
                                        ---------- ----------    ----------     -----------     -----------   ----------------   
<S>                                     <C>        <C>           <C>            <C>             <C>                   <C>        
Balance at June 30, 1994                  5,803    $    58       $   74,076     $  (110,755)    $     1,103                -     
                                                                                                                                 
Net loss for 1995                             -          -                -          (4,511)              -                -     
Exercise of Stock Options                     6          -               29               -               -                -     
Acretion of preferred stock                   -          -             (420)              -               -                -     
Cumulative Translation Adjustment             -          -                -               -            (171)               -     
Unrealized gain of available for sale                                                                                            
  securities, net of tax                      -          -                -               -               -           $2,107     
                                        -------    -------       ----------     -----------     -----------   ---------------    
                                                                                                                                 
Balance June 30, 1995                     5,809         58           73,685        (115,266)            932            2,107     
                                                                                                                                 
Net income for 1996                           -          -                -             330               -                -     
Initial Public Offering, net              3,187         32           33,329               -               -                -     
Conversion of preferred stock             1,486         15           12,094               -               -                -     
Cumulative translation adjustment             -          -                -               -            (257)               -     
Net unrealized gain on available for                                                                                             
 sale securities, net of tax                  -          -                -               -               -            2,046     
Purchase of Treasury Stock                    -          -                -               -               -                -     
Spin-off of Source Business                   -          -                -             (12)              -           (4,157)    
Shares issued                                 3          -               67               -               -                -     
                                        -------    -------       ----------     -----------     -----------   ---------------    
Balance June 30, 1996                    10,485        105          119,175        (114,948)            675               (4)    
                                                                                                                                 
Exercise of Stock Options                    49          -              300               -               -                -     
Net income for 1997                           -          -                -           4,790               -                -     
Cumulative translation adjustment             -          -                -               -             (18)               -     
Net unrealised gain on available for                                                                                             
sale securities, net of tax                   -          -                -               -               -               39     
                                                                                                                                 
                                        -------    -------       ----------     -----------     -----------   ---------------    
Balance June 30, 1997                    10,534       $105         $119,475     $  (110,158)    $       657           $   35     
                                        =======    =======       ==========     ===========     ===========   ===============    
</TABLE>
                                                  Treasury Stock                
                                                  --------------                
                                                                                
                                                 Shares      Amount             
                                                 ------      ------             
                                                                                
Balance at June 30, 1994                          (20)      $ (360)             
                                                                                
Net loss for 1995                                   -            -              
Exercise of Stock Options                           -            -              
Acretion of preferred stock                         -            -              
Cumulative Translation Adjustment                   -            -              
Unrealized gain of available for sale                                           
  securities, net of tax                            -            -              
                                                -----        -----              
                                                                                
Balance June 30, 1995                             (20)        (360)             
                                                                                
Net income for 1996                                 -            -              
Initial Public Offering, net                        -            -              
Conversion of preferred stock                       -            -              
Cumulative translation adjustment                   -            -              
Net unrealized gain on available for                                            
 sale securities, net of tax                        -            -              
Purchase of Treasury Stock                         (1)         (97)             
Spin-off of Source Business                         -            -              
Shares issued                                       -            -              
                                                -----        -----              
Balance June 30, 1996                             (21)        (457)             
                                                                                
Exercise of Stock Options                           -            -              
Net income for 1997                                 -            -              
Cumulative translation adjustment                   -            -              
Net unrealised gain on available for                                            
sale securities, net of tax                         -            -              
                                                                                
                                                -----        -----              
Balance June 30, 1997                             (21)      $ (457)             
                                                =====        =====              
                                                                                
                                       F-4

<PAGE>
<TABLE>
<CAPTION>

                                                                       WALSH INTERNATIONAL INC. AND SUBSIDIARIES
                                                                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                (Dollars in Thousands)
                                                                                              
                                                              ==============================================================
                                                                                   YEARS ENDED JUNE 30,
                                                              --------------------------------------------------------------
                                                                   1995                 1996                   1997
                                                              -----------------    ----------------      -----------------
 Cash flows from operating activities:
 
<S>                                                           <C>                  <C>                     <C>
  Net income (loss)                                           $    (4,511)         $      330              $ 4,790
  Loss from discontinued operations                                 1,554               1,755                    -
                                                                                      
Adjustments  to reconcile net income (loss) to net                                    
 cash  provided by (used in) operating activities:                                    
  Depreciation and amortization                                     1,485               1,241                1,688
  Gain on sale of shares in PMSI                                     (402)                  -                    -
  Equity income of PMSI                                            (1,180)                  -                    -
  Deferred taxes                                                     (286)             (2,739)                 371
  Minority interest                                                     -                (113)                 (20)
  Gain on sale of marketable securities                                 -                   -                 (162)

Change in assets and liabilities
  (Increase) decrease in accounts receivable                        2,922                 500                 (471)
  (Increase) decrease in prepaid expenses and
      other current assets                                            228                (588)                 (87)
  (Decrease) increase in accounts payable and                       8,628               1,153               (6,818)
      accrued liabilities
  (Decrease) increase in unearned income                              381              (2,459)                (622)
  Other                                                                25                 753                 (572)
                                                              -----------            --------              -------
  Net cash (used in) provided by operating activities               8,844                (167)              (1,903)
                                                              -----------            --------              -------
Cash flows (used in) provided by investing activities:


  Sales (purchases) of marketable securities                           -               (9,936)               1,953
  Proceeds from sale of shares in PMSI                             7,811                    -                    -
  Capital expenditures                                              (697)                (780)                (826)
  Capitalized software                                            (1,092)                (896)              (1,010)
                                                              -------------          --------              -------
  Net cash (used in) provided by investing activities         $    6,022             $(11,612)             $   117
                                                              -------------          --------              -------
</TABLE>



    The accompanying notes are an integral part of these financial statements


                                      F-5
<PAGE>



<TABLE>
<CAPTION>
                    WALSH INTERNATIONAL INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED
                             (Dollars in Thousands)
              ====================================================
                                                                            YEARS ENDED JUNE 30,
                                                             ----------------------------------------------------
                                                                 1995                1996               1997
                                                             -------------      --------------     --------------
Cash provided by (used in) financing activities:
<S>                                                          <C>                <C>                <C>       
  Collateral receipts                                        $        -         $  1,088           $        -
  Issuance of common stock                                           28           34,519                  300
  Common stock issuance costs                                         -                -               (1,174)
  Treasury stock purchases                                            -              (97)                   -
  Dividend to Source business                                         -           (5,182)                   -
  Repayments of long-term debt                                       (8)         (15,737)                   -
  Repayments of capital leases                                      (335)           (358)                (360)
  Cash provided by minority interest                                   -             261                  111
                                                               ---------        --------           ----------
Net cash (used in) provided by financing activities                 (315)         14,494               (1,123)
                                                             -----------        --------           ----------
  Effect of exchange rate movements                                  278            (856)                  64
  Effect of discontinued operations                              (11,600)         (8,340)                   -
                                                             -----------        --------           ----------
Net (decrease) increase in cash and cash
  equivalents                                                      3,229          (6,481)              (2,845)

Cash and cash equivalents at beginning of year                    11,881          15,110                8,629
                                                             -----------        --------           ----------
Cash and cash equivalents at end of year                     $    15,110        $  8,629           $    5,784
                                                             ===========        ========           ==========


Supplemental disclosures of cash flow information:
Cash paid during the period for:

  Interest                                                   $ 2,213            $  1,989           $      201
                                                             =======            ========           ==========
  Income taxes                                               $ 3,339            $  1,995           $      964
                                                             =======            ========           ==========

Supplemental disclosures of non-cash investing
and financing activities:

Capital lease obligations                                    $    89            $    444           $      509
                                                             =======            ========           ==========
Spin-off of the Source Business:
PMSI shares                                                                     $ 13,663
Unrealized gain on PMSI shares                                                  $ (4,157)
Net liabilities of Source business                                              $ (4,124)
Preferred stock                                                                 $(11,802)
Other corporate assets                                                          $  1,250
</TABLE>


    The accompanying notes are an integral part of these financial statements


                                      F-6
<PAGE>



                    WALSH INTERNATIONAL INC. AND SUBSIDIARIES
                    -----------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------




1.  THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------


THE COMPANY

Walsh   International  Inc.  ("Walsh"  or  the  "Company")  provides  electronic
territory management systems and sales management information solutions, as well
as data services and associated  support  services,  to the  pharmaceutical  and
healthcare industries. The Company's principal markets are located in Australia,
Austria, Belgium, Canada, France, Germany, Italy, the Netherlands,  New Zealand,
Singapore, Spain, the United Kingdom and the United States.

INITIAL PUBLIC OFFERING

On April 16, 1996 the Company  consummated an Initial Public  Offering ("IPO" or
"Offering").  The Offering  resulted in the issuance of approximately  3,187,000
shares  of the  Company's  common  stock and  generated  net  proceeds  of $33.3
million.

BASIS OF PRESENTATION

The consolidated  financial  statements include the accounts of Walsh and all of
its majority-owned subsidiaries. The consolidated financial statements have been
restated  for  discontinued  operations  (see Note 2).  The  accompanying  notes
present  amounts  related  only  to  continuing  operations.  All  inter-company
balances and transactions have been eliminated on consolidation. On February 21,
1996 the  Company's  Board of Directors  approved a  one-for-four  reverse stock
split  of  the  Company's  Common  and  Series  A  Convertible  Preferred  Stock
("Preferred Stock"). All references in the accompanying  consolidated  financial
statements to the number of shares and per share amounts have been retroactively
adjusted to reflect the reverse stock split.

GOODWILL

Under the purchase  method of  accounting,  the excess of the purchase  price of
businesses acquired over the fair value of tangible and identifiable  intangible
assets at the dates of acquisition has been assigned to goodwill. The net assets
and  results  of  operations  of the  acquisitions  have  been  included  in the
consolidated  financial statements of the Company from their respective dates of
purchase.  The goodwill  reflected in the Company's  balance sheets  principally
relates to the Company's  direct mail  marketing  business and is amortized on a
straight-line basis over periods not exceeding 40 years.


                                      F-7
<PAGE>

The Company  assesses the  recoverability  of its  goodwill,  on a subsidiary by
subsidiary  basis,  by  determining  whether  amortization  of  goodwill  can be
recovered  through  undiscounted   projected  net  income,   excluding  goodwill
amortization,  of the  respective  subsidiary.  Impairment,  if any, is measured
based on projected discounted net income, excluding goodwill amortization, using
a discount rate reflecting the Company's cost of funds.

PROPERTY AND EQUIPMENT

Property and equipment  are recorded at cost.  All  maintenance  and repairs are
expensed as incurred.

Depreciation  and  amortization  are  provided  on  the   straight-line   basis.
Furniture,  office  equipment and computer  equipment are depreciated  over five
years.  Leasehold  improvements are amortized over the estimated useful lives of
the assets or the lease terms  (maximum  of 10 years),  whichever  are  shorter.
Buildings are being depreciated over 50 years.

On disposal,  costs and  accumulated  depreciation  are removed from the balance
sheet and gains (losses) are recognized in the statement of operations.

CAPITALIZED SOFTWARE DEVELOPMENT COSTS

The Company capitalizes certain costs related to the development of new software
products or the enhancement of existing  software  products for sale or license.
These  costs  are  capitalized  from  the  point  in  time  that   technological
feasibility has been established,  as evidenced by a working model or a detailed
working program  design,  to the point in time that the product is available for
general release to customers.

Capitalized  software  development  costs are amortized on a  product-by-product
basis over the ratio of current revenues to total  anticipated  revenues or on a
straight-line basis over the estimated economic lives of the products (no longer
than five  years),  using  whichever  method  yields the  greater  amortization,
beginning  with the release to the  customer.  Research  and  development  costs
incurred  prior to  establishing  technological  feasibility  and costs incurred
subsequent  to general  product  release to customers  are charged to expense as
incurred. The Company continually evaluates whether events or circumstances have
occurred  that  indicate  that  the  remaining  useful  life of the  capitalized
software  development  costs should be revised or that the remaining  balance of
such assets may not be recoverable. As of June 30, 1997 management believes that
no  revisions  to  the  remaining  useful  life  or  write-down  of  capitalized
development costs are required.

REVENUE RECOGNITION

The Company recognizes revenue in accordance with Statement of Position No 91-1,
"Software Revenue Recognition". The Company recognizes revenue from the usage of
its  electronic  territory  management  systems  ratably  over  the  term of the
customer  agreements.  The contract


                                      F-8

<PAGE>

bundles the fees for the use of the software together with post contract support
revenues of maintenance, support and related data server/network management fees
("on-going fees"). As part of providing these services,  certain fees ("one-time
fees") relating to project scope and design,  application  building and testing,
loading and  installation  of user  equipment  and  training are  recognized  as
revenues when the service has been completed and accepted by the customer. Other
special projects are recognized as revenue upon completion of the project.

Revenue from market research and direct mail marketing is recognized on delivery
of  the  product.   Revenue  from  medical  professional  database  services  is
recognized ratably over the term of the contract.

Prebillings  for  products  that have not been  delivered  or for  services  not
rendered  are  classified  as  unearned  income  until the  earnings  process is
complete.

CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject the Company to concentrations of
credit risk consist  principally  of cash  balances,  marketable  securities and
trade receivables. The Company invests its excess cash with major banks and cash
equivalent  and  marketable  securities in a  professionally  managed fund.  The
Company's   customer   base   principally   comprises   companies   within   the
pharmaceutical  industry.  The Company  maintains  reserves for potential credit
losses and such  losses  have been within  management's  expectations  given the
generally  strong credit ratings of the customers.  The Company does not require
collateral from its customers.

FOREIGN CURRENCY

The  balance  sheet  and  results  of   operations  of  the  Company's   foreign
subsidiaries  that operate  outside the United  States are measured  using local
currency as the functional currency.

Assets and  liabilities  have been  translated into United States dollars at the
rates  of  exchange  at the  balance  sheet  date.  Revenues  and  expenses  are
translated  into United  States  dollars at the average  rate during the period.
Translation  gains and losses  arising from the use of differing  exchange rates
from year to year are included in the cumulative  translation  adjustment on the
balance sheet.

Transaction  gains and losses are  recognized  in the statement of operations as
incurred. For the years presented, these amounts were not material.

INCOME TAXES

Federal, foreign and state income taxes in the consolidated financial statements
have been  computed on a  stand-alone  return basis  according to the fiscal and
legal structure under which the various  tax-paying  entities operate.  Deferred
income  taxes are  recorded to reflect the tax


                                      F-9

<PAGE>

consequences on future years of differences  between the tax basis of assets and
liabilities and financial reporting amounts at each year-end.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with maturity dates of three
months  or  less  from  the  date  of  acquisition  by the  Company  to be  cash
equivalents.

INVESTMENTS

Management determines the appropriate  classification of its investments in debt
and  equity   securities  at  the  time  of  purchase  and   re-evaluates   such
determination  at each balance sheet date. Debt securities for which the Company
does not have the  intent or  ability  to hold to  maturity  are  classified  as
available for sale, along with any investments in equity securities.  Securities
available for sale are carried at fair value, as determined by the quoted market
value at the balance sheet date,  with the unrealized  gains and losses,  net of
tax, reported in a separate component of stockholders' equity. At June 30, 1997,
the Company had no investments that qualified as trading or held to maturity.

EARNINGS (LOSS) PER SHARE

Earnings  (loss) per share is  computed  using the  weighted  average  number of
shares of Common Stock outstanding.  Common equivalent shares from stock options
and  warrants  (using the  treasury  stock  method)  have been  included  in the
computation  when dilutive except that,  pursuant to the Securities and Exchange
Commission Staff Accounting  Bulletin,  all stock options and warrants issued by
the Company at an  exercise  price below the public  offering  price  during the
twelve-month  period,  prior  to  the  offering,   have  been  included  in  the
calculations as if they were outstanding for all periods  presented prior to the
offering  using the treasury  stock  method and the IPO price of $12.00.  Common
equivalent shares from the Preferred Stock (using the if-converted  method) have
been included for all periods in which the Preferred shares were outstanding.

USE OF ESTIMATES IN THE PREPARATION OF THE FINANCIAL STATEMENTS

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reported  amounts  of assets  and  liabilities,  the  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of certain of the Company's financial  instruments  including
cash and cash  equivalents,  accounts  receivable,  accounts  payable  and other
accrued liabilities approximates fair


                                      F-10

<PAGE>

value  due to  their  short  maturities.  Based  on  borrowing  rates  currently
available to the Company for loans with similar terms, the carrying value of its
capital lease obligations approximates fair value.


EMPLOYEE STOCK OPTION AND PURCHASE PLANS

The Company accounts for its stock-based  compensation  plans in accordance with
the provisions of Accounting  Principles Board (APB) Opinion No. 25, "Accounting
for  Stock  Issued  to  Employees",  and  related  interpretations.   Generally,
compensation  expense would be recorded  over the vesting  period if the current
market price of the underlying  stock exceeded the exercise price on the date of
grant.  On July 1, 1996,  the Company  adopted the  disclosure  requirements  of
Statement of Financial  Accounting  Standards  (SFAS) No. 123,  "Accounting  for
Stock  Based  Compensation".  Under SFAS No.  123,  the  Company  must  disclose
proforma  net income and proforma  earnings per share for employee  stock option
grants and employee stock purchases made in 1995 and future years as if the fair
value based method defined in SFAS No 123 had been employed.

IMPAIRMENT OF LONG-LIVED ASSETS

The  Financial  Accounting  Standards  Board  recently  adopted  SFAS  No.  121,
"Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to
be Disposed of". This statement  requires  long-lived assets to be evaluated for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying value of an asset may not be  recoverable.  The Company adopted SFAS No
121 on July 1, 1996. The adoption of SFAS No 121 did not have a material  impact
on the Company's consolidated results of operations.

2.  DISCONTINUED OPERATIONS - SOURCE BUSINESS
---------------------------------------------

In  conjunction  with the IPO, the Company  spun off the Source  Business to its
stockholders (the "Spin-Off") as of April 16, 1996. The Source Business provides
a range of data  services  for  pharmaceutical  companies  primarily  based on a
proprietary  database  of  prescriptions  dispensed  in the United  States.  The
Spin-Off was  accomplished by the distribution of all the issued and outstanding
capital  stock of Source  International  Inc.,  a  holding  company  formed  for
purposes of the Spin-Off.

Pursuant to the amendments to the Preferred  Stock, at the time of the Spin-Off,
one-half  of the shares of the  Company's  Preferred  Stock were  exchanged  for
shares of Preferred Stock of Source having substantially similar terms. Based on
the relative fair value of Walsh and Source,  $11,802,000  of obligations of the
Preferred Stock were transferred to the newly issued Source Preferred Stock. The
Company also contributed the  Pharmaceutical  Marketing  Services Inc.  ("PMSI")
shares;  certain other corporate  assets of the Company with a carrying value of


                                      F-11

<PAGE>

$1,250,000;  the  identifiable  net  liabilities  of the Source  business in the
amount of $4,124,000 and $5,182,000 of cash to consummate the Spin-Off.

The  remaining  issued and  outstanding  Preferred  Stock after the Spin-Off was
converted  into  1,486,252  shares  of  Common  Stock   concurrently   with  the
consummation of the offering.

The results of operations of Source have been  reclassified  to identify them as
discontinued operations. The summarized data for Source, through the date of the
Spin-Off, is as follows:

                                          ------------------------------------
Results of discontinued operations:              YEARS ENDED JUNE, 30
                                          ------------------------------------
Dollars in thousands                            1995                1996
                                          ---------------      --------------
Revenues                                   $   48,710           $  40,181
Loss from operations:

  Loss before taxes                            (2,653)             (1,570)
  Income tax provision                              -                   -
                                           ----------           ---------
Loss from operations                           (2,653)             (1,570)
                                           ----------           ---------
(Loss) gain on disposal of operations:

  (Loss) gain on disposal                       1,322                (185)
  Income taxes on disposal                       (223)                  -
                                           ----------           ---------
  (Loss) gain on disposal, net                  1,099                (185)
                                           ----------           ---------
       Loss from discontinued
        operations, net                    $   (1,554)          $  (1,755)
                                           ==========           =========

3.  TRANSACTIONS WITH SOURCE
----------------------------

In  connection  with the  Spin-off,  Walsh and Source have  entered into several
agreements:

PREFERRED  TECHNOLOGY  PARTNER  AGREEMENT.  Walsh  and  Source  have  created  a
preferred  technology  partnership  whereby the companies  collaborate to build,
maintain  and  promote  a  seamless  data  interface  between  their  respective
technologies to facilitate delivery by means of Premiere of prescription data at
the sales representative level. No compensation is payable under this agreement.

PHARBASE  LICENSE.  Walsh has granted to Source a  non-exclusive  license to its
Pharbase medical professional databases in certain European countries. Source is
allowed  to use  the  Pharbase  databases  only  for  internal  purposes  and in
connection with the development, delivery and marketing of its prescriber-linked
prescription  databases.  The initial term of the license runs for ten years and
the license is renewable for two additional  five-year terms.  Source has agreed
to provide Walsh with all updating  information which it receives with regard to
medical 


                                      F-12


<PAGE>

professionals,  their specialties,  affiliations and locations generated
as a result of the use of PHARBASE by Source. Source has agreed to pay $1.00 per
prescriber  in the  database  universe  in the first year of  prescription  data
collection in a particular  market.  In consideration of Source's  obligation to
provide updating  information to Walsh, such fee will be reduced to $0.75 in the
second year,  $0.50 in the third year and $0.25 per  prescriber  thereafter.  In
addition,  Source has agreed to pay Walsh 75% of the list price of the  PHARBASE
service for each Source  client to which it delivers  prescriber-level  data and
which does not have a current PHARBASE license.

Transitional  Services  Arrangements.  All transitional  service agreements were
completed  during fiscal year 1997. The Chief Executive  Officer of Source,  who
serves as the Chairman of Walsh  continues to be made  available as a consultant
to Walsh.

4.  INVESTMENTS
---------------

On January 25, 1996, the Company entered into a Joint Venture  Agreement with an
affiliate of Zuellig Pharma S.A., pursuant to which the parties have established
a joint venture for the commercialization of the Company's PRECISE, PREMIERE and
PHARBASE services in 12 countries in Asia-Pacific. The joint venture company has
been  formed in  Singapore.  Walsh owns 51% of the  equity  and has  operational
control of the joint  venture.  As such, the Company has included the results of
operations  of the joint  venture in its  consolidated  statement of  operations
since January 25, 1996.


                                      F-13


<PAGE>

5.  MARKETABLE SECURITIES
-------------------------

Marketable  securities  consist  of  the  following  as of  June  30,  1997  (in
thousands):
<TABLE>
<CAPTION>

==================================================================================================================
NAME OF ISSUER
AND TITLE OF EACH ISSUE                          AMORTIZED                 FAIR VALUE           UNREALIZED GAINS
                                                 COST OF EACH
                                                 ISSUE
--------------------------------------------     -----------------      -----------------      -------------------
<S>                                              <C>                    <C>                    <C>
CURRENT ASSETS:
Corporate debt securities                        $    4,985             $      5,000           $              15

Debt securities issued by the U.S.
Treasury and other U.S. government
corporations and  agencies                            1,047                    1,056                           9

Debt securities issued by foreign
governments                                             741                      747                           6
                                                 ----------             ------------           -----------------
                                                 $    6,773             $      6,803           $              30
                                                 ==========             ============           =================
NON-CURRENT ASSETS:

Debt securities issued by the U.S.
Treasury and other U.S. government
corporations and  agencies                       $      348             $        348           $               -
Debt securities issued by foreign
governments                                           1,084                    1,089                           5
                                                 ==========             ============           =================
                                                 $    1,432             $      1,437           $               5
                                                 ==========             ============           =================
Maturities

Due after one year through five years            $      805             $        808           $               3

Due after five years                                    627                      629                           2
                                                 ==========             ============           =================
                                                 $    1,432             $      1,437           $               5
                                                 ==========             ============           =================

</TABLE>


                                      F-14


<PAGE>

Marketable  securities  consist  of  the  following  as of  June  30,  1996  (in
thousands):
<TABLE>
<CAPTION>


==================================================================================================================
NAME OF ISSUER                                                             FAIR VALUE
AND TITLE OF EACH ISSUE                             AMORTIZED                                  UNREALIZED LOSSES
                                                   COST OF EACH
                                                      ISSUE
--------------------------------------------     -----------------      -----------------      -------------------
<S>                                              <C>                    <C>                    <C>               
Corporate debt securities                        $        6,608         $      6,606           $              (2)

Debt securities issued by the U.S.
Treasury and other U.S. government
corporations and  agencies                                2,613                2,613                           -

Debt securities issued by foreign
governments                                                 775                  773                          (2)
                                                 --------------         ------------           -----------------
                                                 $        9,996         $      9,992           $              (4)
                                                 ==============         ============           =================
Maturities
Short-term investments                           $        6,794         $      6,790           $              (4)
Due after one year through five years                     2,260                2,260                           - 

Due after five years                                        942                  942                           -
                                                 ==============         ============           =================
                                                 $        9,996         $      9,992           $              (4)
                                                 ==============         ============           =================
</TABLE>

The fair value of the marketable  securities has been reflected  entirely within
current  assets in the balance  sheet at June 30,  1996 as it was the  Company's
intention to utilize the marketable securities within the next operating cycle.

During 1997 the following sales of securities took place (there were no sales of
securities in 1996) (in thousands):


                 Net Proceeds of Sale                  $     43,612
                 Cost                                        43,450
                                                       ============
                 Realized Gain                         $        162
                                                       ============


                                      F-15


<PAGE>



6. PROPERTY AND EQUIPMENT
-------------------------

Property and  equipment at June 30, 1996 and 1997  comprised  the  following (in
thousands):

                                               =================================
                                                        JUNE 30,
                                               ---------------------------------
                                                   1996                1997
                                               -------------      -------------
Property including leasehold improvements      $    2,702          $  2,514
Furniture, computer & office equipment             12,716            11,058
                                               ----------          --------     
                                                   15,418            13,572
                                               
Less accumulated depreciation and
  amortization                                    (10,755)           (9,403)
                                               ----------          --------
                                               $    4,663          $  4,169
                                               ==========          ========

Depreciation and amortization charged to operations for the years ended June 30,
1995, 1996 and 1997 were $839,000, $1,106,000 and $1,297,000 respectively.






7.  OTHER ASSETS

Other assets at June 30, 1996 and 1997 comprised the following (in thousands):

                                                ================================
                                                        JUNE 30, 
                                                --------------------------------
                                                   1996                1997
                                                -----------       --------------
Capitalized software                            $   2,035          $  3,045
Deferred Taxes                                        250                 0
Collateral and other deposits                         924               924
                                                ---------         ---------
                                                    3,209             3,969
Less accumulated amortization                           -              (242)
                                                ---------         ---------
                                                $   3,209          $  3,727
                                                =========         =========

The Company  capitalized  software  development costs of $896,000 and $1,010,000
for the years ended June 30, 1996 and 1997,  respectively.  Amortization expense
and adjustments to net realizable  value charged to production costs amounted to
$520,000,  $0 and  $242,000  for the years ended June 30,  1995,  1996 and 1997,
respectively.


                                      F-16


<PAGE>

8.  LONG-TERM DEBT
------------------

Long term debt at June 30, 1996 and 1997 comprised the following (in thousands):

                                  ==========================================
                                                     JUNE 30,
                                  ------------------------------------------
                                         1996                     1997
                                  -------------------      -----------------
Long-term debt (1)                $        1,117           $         1,277
Less current portion                         (12)                      (17)
                                  --------------           ---------------
                                  $        1,105           $         1,260
                                  ==============           ===============

(1)    Long-term debt is  principally  comprised of the carrying value of a note
       payable to PMSI to cover  taxes  payable by Walsh on gains on the sale of
       the Source segment targeting  business.  This note which is due in fiscal
       year 2000, is non-interest bearing with a face value of $1.2 million

       Aggregate maturities of long-term debt at June 30, 1997 for the next five
       fiscal years are as follows: 1998-$17,000; 1999-$14,000; 2000-$1,131,000;
       and 2002 -$115,000.


9.  ACCRUED LIABILITIES
-----------------------

Accrued  liabilities  at June 30,  1996 and 1997  comprised  the  following  (in
thousands):

                                      ------------------------------------------
                                                     JUNE 30,
                                      ------------------------------------------
                                               1996                  1997
                                      -------------------      -----------------
Employee compensation and benefits    $        4,374                 4,101
Sales taxes                                      978                 1,057
Other liabilities                             12,115                 6,008
                                      --------------           -----------
                                      $       17,467           $    11,166
                                      ==============           ===========


10.  EQUITY PLANS
-----------------

A Stock  Option  and  Restricted  Stock  Purchase  Plan,  "The  Plan"  has  been
established by the Company for selected employees, officers and directors of the
Company or any of its  subsidiaries.  There are 1,500,000 shares of Common Stock
reserved for issuance under the Plan and a registration statement for such stock
was filed on August 22, 1996. At June 30, 1997 the Company had available 381,299
shares of Common Stock outstanding for issuance under the Plan.

Under the Plan, the exercise price for incentive options is at least 100% of the
fair market  value on the date of the grant and options  generally  expire in 10
years.  Vesting  periods are  determined by the Board of Directors and generally
provide for shares to vest ratably over 5 years.


                                      F-17

<PAGE>

During 1993,  the Company  established a  Non-Employee  Director's  Stock Option
Plan,  "The  Director's  Plan".  There are 120,000 shares  reserved for issuance
under the Director's  Plan. The options granted under the Director's Plan have a
vesting term of 3 years and expire after 10 years.

Information relating to the Company's Fixed Option Plan is as follows:


<TABLE>
                                              =================================================================
                                                                        AT JUNE 30,
                                              -----------------------------------------------------------------
                                                       1995                   1996                   1997
                                              -----------------      -------------------      -----------------

<S>                                           <C>                     <C>                     <C>
Options outstanding at beginning of year             584,543                 626,951                992,576
Options granted                                       93,189                 401,250                172,200
Options exercised                                     (6,825)                    (50)               (49,125)
Options lapsed                                       (43,956)                (35,575)               (51,700)
                                              --------------         ---------------          -------------
Options outstanding at end of year                   626,951                992,576                1,063,951
                                              ==============         ==============           ==============
Options exercisable at end of year                   344,863                392,950                  507,880
Option prices per share:
  Granted                                     $         6.36          $  6.36-12.00           $         8.87
  Exercised                                   $    2.12-6.36          $        6.36           $    2.12-8.48
</TABLE>


Under  agreements  dated May 31, 1994 and December 8, 1995,  the Company  issued
warrants to purchase 25,789 shares of Common Stock to a supplier. These warrants
are exercisable at $12.72 per share at any time for a period of three years from
April 16, 1996.

The exercise price of outstanding  options and warrants to purchase Walsh Common
Stock was  allocated,  as of the date of the Spin-Off,  between such options and
warrants and the options and warrants to be granted by Source in  proportion  to
the relative  fair market values of the Walsh Common Stock and the Source common
stock as of such date.  As such,  the ratio of the exercise  price per option to
the market value per share has not been reduced.  The vesting provisions and the
option period of the original  grant have not been affected by the amendments to
the exercise price.

11.  ACCOUNTING FOR STOCK-BASED COMPENSATION
--------------------------------------------

The Company has elected to continue to use the  intrinsic  value based method to
account  for all of its  employee  stock-based  compensation  plans.  Under  APB
Opinion No. 25,  "Accounting  for Stock  Issued to  Employees",  the Company has
recorded no  compensation  costs related to its stock option plans for the years
ended June 30, 1995, 1996 and 1997.

Pursuant to SFAS No. 123, "Accounting for Stock-Based Compensation", the Company
is required to disclose the  pro-forma  effects on net income and net income per
share data as if the  Company  had  elected to use the fair  value  approach  to
account for all its employee stock-based compensation plans.


                                      F-18

<PAGE>

Had  compensation  cost for the Company's plans been determined  consistent with
the fair value approach  enumerated in SFAS No. 123 the Company's net income and
net income  per share for the year ended June 30,  1997 and 1996 would have been
decreased as indicated below (in thousands, except per share data):

                                                         JUNE 30
                                                     1996        1997
                                               -----------------------------
Net Income              As reported               $330            $4,790
                        pro forma                 $230            $4,355

Net Income Per Share
                        As reported              $0.04             $0.45
                        pro forma                $0.02             $0.41

The weighted average fair value of options granted during the period at exercise
price  equal to market  price at grant  date is $6.32  and $5.51 for the  fiscal
years ended June 30, 1996 and 1997 respectively.

The fair value of options  granted was  estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions used for grants in 1996 and 1997;  risk-free  interest rate of 6.4%;
weighted  average  expected  life of 5 years;  60%  expected  volatility  and no
dividends.

A summary of the status of the Company's  fixed option plans as of June 30, 1996
and 1997 and changes during the years ended on those dates is presented below:

<TABLE>
<CAPTION>

YEARS ENDING                                     JUNE 30, 1996                            JUNE 30, 1997
                                    ----------------------------------------- ---------------------------------------
                                       SHARES          WEIGHTED AVERAGE          SHARES         WEIGHTED AVERAGE
                                                         EXERCISE PRICE                          EXERCISE PRICE
                                    -------------- -------------------------- ------------- -------------------------
<S>                                       <C>                <C>                   <C>                <C> 
Fixed Options
Outstanding at beginning of year          626,951            6.49                 992,576            8.13
Granted                                   401,250           10.56                 172,200            8.87
Exercised                                     (50)           6.36                 (49,125)           6.02
Cancelled                                 (35,575)           6.65                 (51,700)           9.04
                                     ============                             -----------
                                    
Outstanding at end of year                992,576            8.13                1,063,951            8.23
                                     ============                             ============
Options vested at year end                392,950            6.49                  507,880            7.10

</TABLE>

                                      F-19
<PAGE>

A  summary  of  information   regarding  the  options   outstanding   and  those
exerciseable at the year end is provided in the two tables below;


OPTIONS OUTSTANDING AT JUNE 30, 1997
------------------------------------


    EXERCISE PRICE ($)   NUMBER OF OPTIONS                 WEIGHTED AVERAGE
                                                      REMAINING CONTRACTUAL
                                                                 LIFE (YRS)
                  2.12               8,094                             1.73
                  6.36             503,045                             5.63
                  7.42              93,800                             8.38
                  8.48              30,737                             5.74
                  8.87             170,200                             9.26
                 10.60              13,325                             5.37
                 12.00             244,750                             8.81
                        ==================        =========================
                                 1,063,951                             7.15
                        ==================        =========================


OPTIONS EXERCISABLE AT JUNE 30, 1997
------------------------------------


        EXERCISE PRICE                   NUMBER OF OPTIONS
              ($)                              EXERCISABLE
             2.12                                    8,094
             6.36                                  390,269
             7.42                                   18,650
             8.48                                   28,837
             8.87                                        -
             10.60                                  13,080
             12.00                                  48,950
                                 ==========================
                                                   507,880
                                 ==========================


A Directors' Deferred Fee Program was approved by the Board of Directors on June
27th  1996.  This  provides   non-employee   directors  to  defer  income  until
termination of status as a director. Amounts deferred in a calendar year will be
deemed to have been invested in shares of Walsh International Inc. Common Stock.



                                      F-20
<PAGE>

12.  INCOME TAX
---------------

The  components  of the income tax  provision for the years ended June 30, 1994,
1995 and 1996 are comprised of the following:


<TABLE>
<CAPTION>
                                                        ==================================================================
                                                                                 YEARS ENDED JUNE 30,
                                                        ------------------------------------------------------------------
Dollars in thousands                                             1995                  1996                      1997
                                                        -------------------     ------------------      ------------------
<S>                                                     <C>                     <C>                     <C>
U.S. state taxes currently payable                      $             -         $             -         $            (45)
Foreign taxes currently payable                                  (2,498)                 (3,397)                  (1,124)
Deferred income taxes                                               286                   2,739                     (371)
                                                        ===============         ===============         ================
                                                        $        (2,212)        $          (658)        $         (1,540)
                                                        ===============         ===============         ================


The domestic and foreign components of income (loss) from continuing  operations
before income taxes were as follows:

                                                        ==================================================================
                                                                                YEARS ENDED JUNE 30,
                                                        ------------------------------------------------------------------
Dollars in thousands                                             1995                  1996                      1997
                                                        -------------------     ------------------      ------------------
<S>                                                     <C>                     <C>                     <C>             
Domestic                                                $       (4,728)         $       (3,729)         $        (2,732)
Foreign                                                          3,983                   6,472                    9,062
                                                        ==============          ==============          ===============
                                                        $         (745)         $        2,743          $         6,330
                                                        ==============          ==============          ===============
</TABLE>

Deferred tax (assets)  liabilities  comprised the following at June 30, 1996 and
1997:

                                     ==========================================
                                                       JUNE 30,
                                     ------------------------------------------
Dollars in thousands                          1996                   1997
                                     -------------------     ------------------
Deferred tax liabilities:
Other                                $              -        $             121
                                     ----------------        -----------------
                                     
Gross deferred tax liabilities                      -                      121
                                     ----------------        -----------------
Deferred tax assets:
  Loss carryforwards                          (13,625)                 (13,629)
  Capitalized software                         (3,335)                  (1,561)
  Other accrued liabilities                    (1,215)                    (694)
  Other                                          (513)                     (47)
                                     ----------------        -----------------
  Gross deferred tax assets                   (18,688)                 (15,931)
  Valuation allowance                          18,438                   15,931
                                     ----------------        -----------------
  Net deferred tax assets                        (250)                       0
                                     ================        =================
Deferred taxes, net                  $           (250)       $             121
                                     ================        =================


                                      F-21


<PAGE>

A reconciliation of federal statutory and effective income tax rates follows:

<TABLE>
<CAPTION>
                                                     ====================================================
                                                                    YEARS ENDED JUNE 30,
                                                     ----------------------------------------------------
                                                           1995               1996               1997
                                                     --------------     --------------     --------------
<S>                                                       <C>                <C>                 <C>
U.S. federal rate                                         (34)%               34%                 34%

Effect of:
  Net operating losses                                    321                (54)                  5
  Foreign income taxes                                      9                 44                  (1)
  Reduction of taxes provided in prior years                                                     (15)
  State taxes                                               1                  -                   1
                                                     ========           ========           =========
Effective income tax rate                                 297%                24%                 24%
                                                     ========           =========          =========
</TABLE>



At June 30,  1997 there were  available  for U.S.  federal  income tax  purposes
operating loss carryforwards of approximately  $24,015,000 expiring in the years
2008, 2009, 2010 and 2011 which may provide future tax benefits for U.S. federal
income tax purposes.

At June 30, 1997 there were available for foreign income tax purposes  operating
loss   carryforwards   of  approximately   $12,719,000.   These  operating  loss
carryforwards may provide future tax benefits totaling  $5,465,000,  expiring as
follows:  1999,  $227,000;  2000, $302,000;  2001, $267,000;  2002, $588,000 and
thereafter $4,081,000.

U.S.  income  taxes  have not been  provided  at June 30,  1997,  on  unremitted
earnings  aggregating  $13,176,000  of  entities  located  outside of the United
States,  as such earnings are  considered to be  permanently  invested.  If such
earnings  were to be  remitted  without  offsetting  tax  credits  in the United
States, withholding taxes would be approximately $562,000.

Included within accounts  payable is $2,948,000 and $3,008,000 of current income
taxes payable for the years ended June 30, 1996 and 1997, respectively.



                                      F-22
<PAGE>



13. EMPLOYEE BENEFIT PLANS
--------------------------

In the U.S., the Company maintains a defined  contribution  profit-sharing plan.
The  Company's   contribution  is  a  discretionary  amount  to  match  employee
contributions.

In the United  Kingdom,  a money  purchase plan is  maintained  with the Company
contributing an average of approximately 5% of salaries.

In the  Netherlands,  a defined  contribution  plan was established in 1990. The
contributions  (which vary,  depending on age and salary) are between 8% and 13%
of each employee's basic salary less a fixed deduction.  The Company pays 60% of
the premiums and the employee pays the remaining 40%.

In Belgium the Company  maintains a defined  contribution  plan.  The  Company's
contribution is 5% of basic salary.

The total costs associated with these plans were as follows:


<TABLE>
<CAPTION>
                                            ==================================================================
                                                                   YEARS ENDED JUNE 30,
                                            ------------------------------------------------------------------
Dollars in thousands                                 1995                   1996                         1997
                                            ------------------     -------------------     -------------------
<S>                                         <C>                    <C>                     <C>               
United States                               $         16           $          6            $               24
United Kingdom                                       185                    214                           251
The Netherlands                                       89                     79                            62
Belgium                                               48                     59                            60
                                            ==================     ===================     ===================
                                            $        338           $        358            $              397
                                            ==================     ===================     ===================
</TABLE>



                                      F-23


<PAGE>



14. LEASING ARRANGEMENTS
------------------------

The Company leases certain property and equipment.

Obligations  under long-term and  non-cancelable  lease  agreements  expiring at
various dates have the following aggregate approximate annual minimum rentals:

<TABLE>
<CAPTION>

                                                         =====================================================
Dollars in thousands                                      CAPITAL LEASING             OPERATING LEASES
                                                         ----------------------       ------------------------
<S>                                                      <C>                          <C>                    
June 30, 1998                                            $                 568        $                 3,011
June 30, 1999                                                              541                          2,168
June 30, 2000                                                              160                          1,228
June 30, 2001                                                              160                            720
June 30, 2002                                                              160                            433
After June 30, 2002                                                        501                          1,508
                                                         ----------------------       ========================
  Total minimum lease payments                                           2,090        $                 9,068
                                                                                      ========================
                                                                                      ========================
Less amount representing interest                                        (174)
                                                         ----------------------
  Present value of minimum lease payments                                1,916
Less current portion                                                     (509)
                                                         ======================
                                                         $              1,407
                                                         ======================

</TABLE>


Rental Expense for the years ended June 30, 1995,  1996 and 1997 was $2,901,000,
$2,633,000 and $3,474,000, respectively.

Included in property and equipment at June 30, 1996 and 1997 are assets  subject
to capitalized  leases with a cost of $3,206,000 and  $3,459,000,  respectively,
and accumulated amortization of $874,000 and $1,346,000 for the years ended June
30, 1996 and 1997, respectively.





                                      F-24

<PAGE>

15. GEOGRAPHIC DATA
-------------------

The following table presents information about the Company by geographic area:

                          ======================================================
                                                 YEAR ENDED
                                                JUNE 30, 1995
                          ------------------------------------------------------

                                               OPERATING
                                                  PROFIT        IDENTIFIABLE
                          REVENUES                (LOSS)             ASSETS
                          --------             ---------        ------------
  United States           $   3,010            $   (1,480)      $      2,073
  Canada                      4,384                   465              2,193
  Europe                     30,179                 3,957             23,464
  Pacific                     2,696                    26                695
  General corporate               -                (3,920)            20,966
                          =========            ==========       ============
                          $  40,269            $     (952)      $     49,391
                          =========            ==========       ============


                       =========================================================
                                              YEAR ENDED
                                             JUNE 30, 1996
                       ---------------------------------------------------------

                                               Operating
                                                  Profit        Identifiable
                          Revenues                (Loss)              Assets
                          --------             ---------        ------------
  United States           $  3,351             $     373        $        861
  Canada                     4,163                   190               2,065
  Europe                    36,256                 6,714              25,280
  Pacific                    3,432                   (68)               (667)
  Other                         60                    60                   -
  General Corporate              -                (3,437)             16,478
                          ========             =========        ============
                          $ 47,262             $   3,832        $     44,017
                          ========             =========        ============


                          ======================================================
                                               YEAR ENDED
                                              JUNE 30, 1997
                          ------------------------------------------------------

                                               OPERATING
                                                  PROFIT        IDENTIFIABLE
                          REVENUES                 (LOSS)        ASSETS
                          --------             ---------        ------------

  United States           $  6,041             $    124         $   2,048
  Canada                     3,955                    2             1,833
  Europe                    39,241                9,253            20,863
  Pacific                    4,790                 (254)            1,779
  Other                         61                   61                 -
  General corporate              -               (3,407)           14,015
                          ========             ========          ========
                          $ 54,088             $  5,779          $ 40,538
                          ========             ========          ========

    The accompanying notes are an integral part of these financial statements


                                      F-25

<PAGE>


16. SUBSEQUENT EVENTS
---------------------

On July 24,  1997,  the Company  acquired  100% of the equity of  Pharmaceutical
Marketing  Solutions Pty Ltd (PMS), a privately held Australian company for $3.8
million in cash.  PMS uses a salesforce  automation  system based on Lotus Notes
and an analysis  system which operates as an integration  product between a data
warehouse and proprietary salesforce automation system.

The Company is in the process of completing its valuation of the acquired assets
and cannot therefore estimate the allocation of the purchase price.





                                      F-26

<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS
                         ON FINANCIAL STATEMENT SCHEDULE



The Board of Directors and Stockholders of
Walsh International Inc.




Our report on the consolidated  financial statements of Walsh International Inc.
is included on Page F-1 of this Form 10-K. In connection with our audits of such
financial  statements,  we have also  audited  the related  financial  statement
schedule listed in the index on Page 24 of this Form 10-K.

In our  opinion,  the  financial  statement  schedule  referred  to above,  when
considered  in  relation  to the basic  financial  statements  taken as a whole,
presents  fairly,  in all  material  respects,  the  information  required to be
included therein.







Stamford, Connecticut                                   COOPERS & LYBRAND L.L.P.
August 20, 1997






                                      S-1
<PAGE>

<TABLE>
<CAPTION>

                    WALSH INTERNATIONAL INC. AND SUBSIDIARIES
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                    YEARS ENDED JUNE 30, 1997, 1996 AND 1995



                 COL. A                                COL. B             COL. C                    COL. D               COL. E
                 ------                                ------             ------                    ------               ------
                                                                          ADDITIONS
                                              BALANCE AT         CHARGED TO     CHARGED TO                               BALANCE
                 DESCRIPTIONS                 BEGINNING OF       COSTS AND        OTHER                                  END TO
                                              PERIOD             EXPENSES         ACCOUNTS        DEDUCTIONS
                 Allowance for doubtful
                 accounts

                 <S>                          <C>                <C>              <C>               <C>              <C>           
                 June 30, 1997                $ 336,000          147,000               -            (29,000)         $      454,000
                 June 30, 1996                $ 214,000          181,000          (9,000)           (50,000)         $      336,000
                 June 30, 1995                $ 261,000           15,000          20,000            (82,000)         $      214,000

                 Valuation allowance for
                 deferred tax assets
                 June 30, 1997                $ 18,438,000       (2,507,000)                                         $   15,931,000
                 June 30, 1996                $ 13,015,000       5,423,000             -                  -          $   18,438,000
                 June 30, 1995                $ 12,695,000       320,000               -                  -          $   13,015,000


</TABLE>


                                      S-2


<PAGE>

                                    PART III

     The  information  required  by Part  III of Form  10-K is  incorporated  by
reference from the  Registrant's  definitive  Proxy Statement for its meeting of
stockholders  in connection  with its  transition  period,  which is to be filed
pursuant to Regulation 14A not later than October 28, 1997.

     Pursuant to General Instruction G(3) to the Annual Report on Form 10-K, the
information  required by Part III of 10-K  regarding  executive  officers of the
Company  required  by Item  401 of  Regulation  S-K is  hereby  incorporated  by
reference  from the  Registrants'  Definitive  Proxy  Statement  for its  annual
meeting of  stockholders,  which is to be filed pursuant to Registration 14A not
later than October 28, 1997.

                                     PART IV

ITEM 10.  EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
----------------------------------------------------------------

Filed as part of this report are:

a)   1-2 All financial statements and schedules

b)   Reports on Form 8K
     None

c)   Exhibits
     Exhibit    Description
     -------    -----------

     3.1        Restated Certificate  of  Incorporation  of  Walsh International
                incorporated  by  reference  to  Exhibit 3.1 to the Registration
                Statement on Form S-1 of the company (file no. 333-316).

     3.2        By-laws of Walsh International Inc., as amended, incorporated by
                reference to Exhibit 3.2 to the  Registration  Statement on Form
                S-1 of the Company (file no. 333-316).

     11         Computation of Earnings (Loss) per Share

     23         Consent of Independent Accountants

     27         Selected Financial Data Schedule




<PAGE>

                  WALSH INTERNATIONAL INC. AND SUBSIDIARIES
                    COMPUTATION OF EARNINGS (LOSS) PER SHARE
                FOR THE YEARS ENDED JUNE 30, 1995, 1996 AND 1997
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                                  1995              1996                1997
                                                                  ----              ----                ----
<S>                                                           <C>               <C>                  <C>
 PRIMARY EARNINGS (LOSS)  PER SHARE
 Weighted average common shares outstanding                   5,806,661         6,783,837            10,505,245
 Assumed exercise of certain stock options and other common
 stock equivalents                                            1,539,613         1,413,959               152,675
                                                              =========         =========            ==========
                                                              7,346,274         8,197,796            10,657,920
                                                              =========         =========            ==========
 Income (loss) from continuing operations                     $  (2,957)        $   2,085            $    4,790
 Loss from discontinued operations, net                       $  (1,554)        $  (1,755)           $        -
                                                              =========         =========            ==========
 Net Income (Loss)                                            $  (4,511)        $     330            $    4,790
                                                              =========         =========            ==========
 Income (loss) per share from continuing operations           $   (0.40)        $    0.25            $     0.45
 Loss per share from discontinued operations, net             $   (0.21)        $   (0.21)           $        -
                                                              =========         =========            ==========
 Net income (loss) per share                                  $   (0.61)        $    0.04            $     0.45
                                                              =========         =========            ==========

                                                                  1995              1996                1997
                                                                  ----              ----                ----
 FULLY  DILUTED EARNINGS (LOSS) PER SHARE

 Weighted average common shares outstanding                   5,806,661         6,783,837            10,505,245
 Assumed exercise of certain stock options and other common
 stock equivalents                                            1,539,613         1,413,959               152,281
                                                              =========         =========            ==========

                                                              7,346,274         8,197,796            10,657,526
                                                              =========         =========            ==========
 Income (loss) from continuing operations                     $  (2,957)        $   2,085            $    4,790
 Loss from discontinued operations, net                       $  (1,554)        $  (1,755)           $        -
                                                              =========         =========            ==========
 Net Income (Loss)                                            $  (4,511)        $     330            $    4,790
                                                              =========         =========            ==========
 Income (loss) per share from continuing operations           $   (0.40)        $    0.25            $     0.45
 Loss per share from discontinued operations, net             $   (0.21)        $   (0.21)           $        -
                                                              =========         =========            ==========
 Net earnings (loss) per share                                $   (0.61)        $    0.04            $     0.45
                                                              =========         =========            ==========
</TABLE>

<PAGE>
                                                                      EXHIBIT 23


                       CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the  incorporation by reference in the  registration  statement on
Form S-8 (File No.  333-10625),  of our reports  dated August 20,  1997,  on our
audits of the consolidated financial statements and financial statement schedule
of Walsh  International  Inc. and Subsidiaries as of June 30, 1996 and 1997, and
for the years ended June 30, 1995,  1996 and 1997 which  reports are included in
this Annual Report on Form 10-K.








Stamford, Connecticut                     COOPERS & LYBRAND L.L.P.
September 3, 1997


<PAGE>


                                   SIGNATURES
                                   ----------

Pursuant to the  requirements of Section 13 or 15(d) 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.

Date:                              WALSH INTERNATIONAL INC

                                   By:    /s/ Michael A. Hauck
                                          ------------------------------------
                                   Name:      Michael A. Hauck
                                   Title:    Director, Chief Executive Officer

                                POWER OF ATTORNEY
                                -----------------

Each person whose individual  signature appears below hereby authorizes  Michael
A. Hauck,  Martyn D. Williams and Leonard R.  Benjamin,  and each of them,  with
full power of substitution and full power to act without the other, his true and
lawful  attorney-in-fact  and agent in his name,  place and stead, to execute in
the name and on behalf of such person,  individually and in each capacity stated
below, and to file any and all amendments to this report.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.

Signature                                    Title

_______________                              Director, Chief Executive Officer
Michael A. Hauck

_______________                              Director, President,
Robert Mander                                Chief Operating Officer


________________                             Director, Chairman of the Board
Dennis M. J. Turner

________________                             Director
James W. Stevens

________________                             Director
Harry C. Groome

________________                             Director
Leonard M. Lodish

________________                             Chief Financial Officer
Martyn D. Williams