<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                               ------------------

                                   FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
            OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

                                       OR

     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, 1997 TO JUNE 30, 1998

                       Commission File Number: 01-9723

                    PHARMACEUTICAL MARKETING SERVICES INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                 DELAWARE                           51-0335521
     (State or other jurisdiction of              (I.R.S. employer
      incorporation or organization)             identification no.)

 SUITE 912, 45 ROCKEFELLER PLAZA, NEW YORK             10111
  (Address of principal executive offices)           (Zip Code)

       Registrant's telephone number, including area code: (212) 841 0610

          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 July 31, 1998 was approximately $116,597,031 million.

     As of July 31, 1998 there were outstanding 13,325,375 shares of Common 
Stock of Pharmaceutical Marketing Services Inc.

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<PAGE>   2
                      DOCUMENTS INCORPORATED BY REFERENCE

     The registrant's definitive proxy statement for its meeting of stockholders
in connection with its fiscal year ended June 30, 1998, which is to be filed
pursuant to Regulation 14A not later than October 28, 1998 is incorporated by
reference into Part III of this Form 10-K.



                                       2

<PAGE>   3
                                     PART 1

ITEM 1. BUSINESS

INTRODUCTION

     Pharmaceutical Marketing Services Inc,. a Delaware corporation (the
"Company" or "PMSI"), provides a range of information and market research
services to pharmaceutical and healthcare companies in the United States to
enable them to optimize the performance of their sales and marketing activities.
Prior to August 5, 1998, it also provided information services for similar
purposes in Europe and Japan. Most of the Company's services are generated from
its own proprietary databases containing unique prescription, managed care,
healthcare market and medical prescriber data.

     On August 5, 1998 the Company sold its non-US assets, with the exception of
its Source and PMSI targeting businesses in Belgium, to IMS Health Incorporated
("IMS Health") (NYSE:RX) for consideration of 1,197,963 shares of common stock
of IMS Health. IMS Health has an option to acquire either or both of the Belgian
businesses within a three-month period.

     The transaction on August 5, 1998 superseded a merger agreement signed 
with Cognizant Corporation on March 23, 1998, whereby IMS Health, the assignee 
of Cognizant Corporation, would have acquired all of the issued and outstanding 
shares of PMSI's common stock. The revision in the structure of the transaction 
was necessitated by uncertainty regarding both the outcome and the timetable 
for resolution of issues raised by regulatory authorities in the United States 
and Europe. IMS Health was uniquely placed to be able to exploit the future 
potential of PMSI's European and Japanese businesses it acquired through this 
transaction. Consequently the Company was able to realize an attractive price 
for the information businesses sold to IMS Health. The businesses sold include 
Source Europe, which was acquired on December 15, 1997 and which is a 
developing business that would have required further investment by PMSI through 
1999.

     PMSI remains a publicly traded corporation having retained its Scott-Levin
business, a leading provider of market research and managed care information
services principally to the pharmaceutical industry in the US. The Company will
continue to aggressively develop its successful Scott-Levin business, which
delivered operation profits of $6.6 million on revenues of $26 million in the
year ended June 30, 1998; a growth of 36% and 21%, respectively, compared with
fiscal 1997.

     PMSI's principal executive offices are located at Suite 912, 45 
Rockefeller Plaza, New York, New York and its telephone number is (212) 
841-0610.




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<PAGE>   4

SCOTT-LEVIN BUSINESS

     Through its Scott-Levin subsidiary in the United States, PMSI provides a
range of pharmaceutical and healthcare information and market research services.
The services are comprised of proprietary database services, syndicated market
research audits, managed care and governmental information services and added
value services, including strategic studies and surveys, consulting service and
software solutions. Scott-Levin has designed state-of-the-art technology and
internet capabilities for virtually all services.

Proprietary Healthcare Databases

     The foundation of Scott-Levin's business is a variety of proprietary
databases. Through self-administered surveys Scott-Levin maintains various
comprehensive databases that contain information collected from physicians on
their diagnoses, prescribing activities; the incidence of, and response to,
direct selling and other promotion activities; information regarding healthcare
legislation and key influencers in the United States; a managed care database,
detailing cost containment measures imposed by United States managed care
organizations ("MCOs") that influence or restrict physicians' prescribing
activities, which also covers formularies, administrators and the physicians
affiliated with the MCOs.

     Pursuant to a contract with National Data Corporation ("NDC") (NYSE: NDC),
Scott-Levin obtains prescription information which NDC collects not less
frequently that monthly from approximately 35,000 pharmacies located across the
United States. Scott-Levin creates projected state and national data on product
level prescription movement from which, among other things, it generates the
Source Prescription Audit.

     Scott-Levin does not hold any identifiable individual patient data, except
data collected directly from the patient, which is held with the patients'
permission.

Syndicated Market Research Audits

     Scott-Levin's marketing research audits are generated from databases
containing information collected by questionnaire, diary or personal interview,
dispensed prescriptions and secondary research. The results of the audits are
delivered in hard copy or through PC-based data delivery systems. These audits
include the SOURCE PRESCRIPTION AUDIT, which analyzes pharmaceutical product
consumption; PHYSICIAN DRUG AND DIAGNOSIS AUDIT, which analyzes the
pharmaceuticals prescribed by physicians relative to the associated diagnosis;
the PERSONAL SELLING AUDIT ("PSA"), which analyzes the effectiveness of the
client company's sales activities compared with those of its competitors; the
HOSPITAL PERSONAL SELLING AUDIT, which complements the PSA by monitoring and
analyzing sales activity in the hospital environment; the PHYSICIAN MEETING AND
EVENT AUDIT, which assesses the impact of this promotional activity on
subsequent attendee prescribing; the HIV THERAPY AUDIT, which provides a
projectable database tracking physicians who treat HIV, and HIV positive
patients; and the DIRECT-TO-CONSUMER ADVERTISING AUDIT, designed to evaluate and
measure the impact of direct-to-consumer advertising on physicians and
consumers.


                                       4

<PAGE>   5
Managed Care Information and Governmental Information Services

     Scott-Levin provides a range of services derived from its managed care 
database, including the INTEGRATED MANAGED CARE PROFILES service, which enables 
pharmaceutical companies to identify, target and prioritize those MCOs that are 
most relevant to their own specific pharmaceutical products. Additionally, the 
Company has developed information services that identify the influences of 
federal and state governments on pharmaceutical prescribing and dispensing. An 
example of these services is STATELINE, a PC-based database product which 
provides pharmaceutical companies with detailed information on the health 
policies of each of the 50 states and the District of Columbia and on the 
government officials involved in shaping these policies.

Added Value Services

     Scott-Levin provides pharmaceutical companies in the United States with a 
range of added value and research services that are used (i) to study specific 
issues and trends in the marketplace and the broader health care industry, (ii) 
to evaluate the effectiveness of marketing programs, (iii) to analyze in depth 
particular components of a product marketing program at any stage of its 
implementation, and (iv) for consultancy on optimizing company strategy, sales 
and marketing activities and product commercialization.

MARKETING AND SALES

     PMSI employs marketing, sales and client service professionals in its 
Scott-Levin subsidiary. Many members of the Company's sales and marketing staff 
have substantial pharmaceutical and IT industry experience.

     Sales to the pharmaceutical or information services industry accounted for 
substantially all of the Company's revenue in fiscal 1998. Virtually every 
major US pharmaceutical company is a customer of the Company. The Company also 
provides certain information services to the financial services industry.

For the year ended June 30, 1998, PMSI's ten largest customers were responsible 
for 38.7% of its revenue, with no one customer accounting for 10% or more. 
Although the Company's business is dependent upon its relationships within the 
healthcare and pharmaceutical industries and the prospects of those industries, 
the Company's business would not be materially adversely affected by the loss 
of any single customer.

COMPETITION

     The Company's information services in the United States have been 
systematically established over sixteen years, however, their market position 
may be affected in the future by competitors' efforts to create or acquire 
enhanced databases or to develop and market new information products and 
services. The Company has competitors that are significantly larger with 
substantially greater resources than the Company, including, but not limited 
to, IMS Health and NDC.


                                       5


                      
<PAGE>   6
NON-US BUSINESSES SOLD TO IMS HEALTH

     PMSI provided a range of information services throughout Japan and Europe. 
On August 5, 1998 PMSI sold these businesses to IMS Health. The services sold 
comprised proprietary database services, targeting information services and 
added value services, including marketing research, software and conference 
management services.

ACQUISITION AND DIVESTMENT STRATEGY

     PMSI was built through a series of strategic acquisitions that have 
positioned the Company to provide comprehensive information services to the 
pharmaceutical and healthcare industries in major world markets.

     On August 5, 1998 the Company announced that it had completed the sale of 
all of its non-US operating assets, with the exception of its Source and PMSI 
targeting businesses in Belgium, to IMS Health for consideration of 1,197,963 
shares of IMS Health common stock. IMS Health has an option to purchase either 
or both of the Company's Belgian businesses within a three-month period. The 
transaction is more fully described in the Company's Form 8K filed August 18, 
1998.

     The Company sold IMR, its French point of sale marketing business on March
31, 1998. This was the last remaining business to be sold as a result of the
Company's decision in May 1996 to discontinue its non-database segment. The
business was sold for consideration of approximately $3.2 million in cash. The
assets sold included cash and cash equivalents of $1.2 million. A net loss on
sale of this business of $16.9 million, after selling costs and before a tax
benefit of $8.8 million, has been reflected in the statement of operations for
the year ended June 30, 1998.

     For the period through December 15, 1997, the Company jointly exploited, 
through a long-term agreement, a database of prescription data (the "Source 
Database") created and maintained by Source Informatics Inc. ("Source") in the 
United States ("Source US"). On December 15, 1997, the Company completed 
transactions with NDC and Source to sell its interest in Source US to NDC and 
to acquire Source Informatics European Holdings L.L.C. and its subsidiaries 
(collectively, "Source Europe") from Source.

     The Company sold to NDC (i) its interest in Source US and (ii) its OTC 
Physician Database business in the US. The Company received 1,084,950 
registered shares of NDC Common Stock with a market value on December 15, 1997 
of $35.3 million, plus $6.5 million in cash. This resulted in a pre-tax gain of 
$33.6 million and net gain of $19.8 million, after deducting selling and other 
transaction related expenses of $4.5 million and taxation of 41%.

     The Company acquired Source Europe for consideration of $8.4 million in 
the form of the cancellation of amounts advanced to Source under a line of 
credit of $6.4 million and direct costs of $2.0 million. Source Europe is a 
developing business involved in building databases of information from 
prescriptions dispensed in the UK, Germany, France, Belgium and Italy and in 
developing the software technology to support, access and generate information 
from such databases. This information enables pharmaceutical companies to 
measure and analyze product performance at a detailed geographical level, 
namely small groups of physicians or at the individual physician level and 
thereby to improve salesforce productivity. Source Europe was subsequently sold 
to IMS Health in the transaction completed on August 5, 1998.


                                       6
<PAGE>   7
     On July 30, 1997 the Company sold its Dutch and US-based international 
publishing and communications operations to Excerpta Medica, the medical 
communications division of Elsevier Science, for $9 million, resulting in a 
net gain on sale of approximately $3 million. The sale of these businesses 
formed part of the program of divestitures of non-core businesses announced by 
the Company in May 1996. 

     The Company previously acquired 80% of the common stock of Mediphase 
Limited ("Mediphase"), a specialist software and information company in the 
United Kingdom that has developed and markets retail pharmacy dispensary 
management software. As a condition of purchase, the Company obtained the right 
to acquire the remaining 20% of the common stock between July 1997 and July 
1999, based upon the number of Mediphase systems installed at certain dates. 
The minority interest in Mediphase was acquired during July 1997 for $1.7 
million.

BACKLOG

     As of June 30, 1998, the Company (including the business sold to IMS 
Health) had contracts running through 2003 of $48.0 million of which $29.0 
million are for contracts to be completed by June 30, 1999. Included in the 
total backlog, is $24.2 million for contracts to be completed by Scott-Levin.

INDUSTRY REGULATION

     The pharmaceutical industry is subject to extensive regulations in the 
countries in which the Company operates. A number of governments have enacted 
regulations limiting the prices pharmaceutical companies may charge for drugs. 
While the Company believes that cost containment measures that may be adopted 
by government agencies will cause pharmaceutical companies to seek more 
effective means of marketing their products (which will benefit the Company in 
the medium and long term), such governmental regulation has caused 
pharmaceutical companies to revise or reduce their marketing programs. These 
cost containment measures, together with pharmaceutical companies' desire to 
increase market share or improve their research pipelines, have caused both 
vertical and horizontal integration and several significant mergers. 

     In addition to pharmaceutical industry regulation, the Company is directly 
subject to certain restrictions on the collection and use of data. There has 
been legislation enacted in many countries to regulate the collection, use and 
dissemination of certain information that may be deemed to be personal. All 
countries of the European Union are required to have data privacy legislation 
in effect no later than 1998. In the United States, certain states have enacted 
legislation prohibiting the use of personally identifiable prescription drug 
information without consent. Because the Company does not generally receive 
information regarding the identity of patients, the Company believes that such 
state legislation will have no material adverse effect on its business. There 
can be no assurance that future legislation or regulations will not directly or 
indirectly restrict the dissemination of information regarding physicians or 
prescriptions. Such legislation, if enacted, could have a material adverse 
effect on the operations of the Company.

     The Market Research Code of Conduct, a pharmaceutical industry-promulgated 
code of conduct to which the Company adheres, provides that the identity of the 
individual researched may never be disclosed to the company sponsoring such 
research without such individual's consent. PMSI supplies only aggregated 
statistics to the sponsoring company when information is generated from market 
research databases. As recommended by the 



                                       7
<PAGE>   8
board of directors of the Pharmaceutical Manufacturer's Association, the PMSI
databases do not contain patient names, thus preserving confidentiality. Data
provided at the physician level is obtained from prescribing activity by product
or therapy class over a given period. Pharmaceutical companies receive
information as to the projected prescribing levels of particular physicians. The
Company does not hold any identifiable individual patient data, except on a
temporary basis with the patients' prior permission for follow-up research and
disease management purposes.

EMPLOYEES

     As of June 30, 1998, the Company's operations had approximately 489
full-time employees. Of these employees, 217 are located at Scott-Levin in the
United States, with the remainder located in Europe and Japan. In the
Netherlands and France, PMSI had Workers Committees, a legal requirement in
those countries. There are no collective bargaining agreements in effect with
employees of the Company. The Company considers its relationships with its
employees to be good.

ITEM 2. PROPERTIES

     PMSI leases or subleases space in various locations in the United States
and, until August 5, 1998, in Europe and Japan. In those instances in which the
Company is a sublessee Source is the sublessor, and the subleases have terms
extending through calendar 1998, prior to renewal options. The Company's
principal office facilities in the United States are located in Newtown,
Pennsylvania. The Company's usage of such facilities aggregates approximately
35,100 square feet for which the aggregate lease rentals are $578,000 per annum
under a lease expiring in 2002. The Company owns approximately 30,000 square
feet of office and warehouse facilities in the Netherlands with a recorded cost
of approximately $4.5 million which has been leased to a third party following
the divestment of the Company's international publishing business.

ITEM 3. LEGAL PROCEEDINGS

     The Company is not a party to any outstanding material legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.


                                       8
<PAGE>   9
                                    PART II

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

        The Company's Common Stock is traded on the NASDAQ National Market 
System under the symbol PMRX.

        The reported high and low closing sales prices for the Company's Common 
Stock as reported by NASDAQ for each full quarterly period within the two most 
recent fiscal years were:

<TABLE>
<CAPTION>

Calendar Year Period          High           Low
<S>                          <C>           <C>
1996
Third Quarter                 10 1/8         6 1/8
Fourth Quarter                11 1/2         8 5/8

1997
First Quarter                 10 3/4         8 3/4
Second Quarter                11 5/8         8 3/4
Third Quarter                 13 1/8         9 7/8
Fourth Quarter                11 1/2         8 3/4

1998
First Quarter                 14 3/4         8 3/4
Second Quarter                14 5/8        12 1/8
</TABLE>

        As of July 31, 1998, there were approximately 1,000 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 cash dividends in the foreseeable 
future.




                                       9


<PAGE>   10
ITEM 6. SELECTED FINANCIAL DATA

                            SELECTED FINANCIAL DATA
                     (in thousands, except per share data)

     The selected financial data set forth below have been derived from the
audited consolidated financial statements of PMSI for the years ended June 30,
1994, 1995, 1996, 1997 and 1998, and 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.

<TABLE>
<CAPTION>
                                                                                 Year Ended June 30, 
Statement of Operations Data:                             1994           1995           1996           1997           1998
----------------------------                              ----           ----           ----           ----           ----
<S>                                               <C>  <C>            <C>            <C>            <C>            <C>
Revenue                                                $ 76,876       $ 89,893       $ 93,027       $ 98,485       $ 77,966
Production costs                                        (43,168)       (49,991)       (51,605)       (54,457)       (43,663)
Selling, general and administrative                     (25,791)       (29,773)       (34,208)       (34,847)       (34,243)
In-process research and development write-off              -              -              -               -          (12,046)
Amortization of intangible assets                        (1,541)        (1,889)        (2,012)        (1,733)        (1,596)
Income (loss) from assets held for sale                    -              -              -                76           (281)
Impairment of long-lived assets                            -              -            (2,368)           -              -
Impairment of assets held for sale                         -              -              -               -          (14,735)
Restructuring costs                                      (1,820)          -            (2,314)           -              -
Transaction costs                                          -              -              -               -           (1,151)
                                                       --------       --------       --------       --------       --------

Operating income (loss)                                   4,556          8,240            520         7,524         (29,749)
Gain on sale of operations, net of loss                    -              -              -               -           34,106
Interest and other income                                 2,805          2,940          2,503         3,299           5,677
Interest expense                                         (3,032)        (2,915)        (2,633)       (3,490)         (4,632)
                                                       --------       --------       --------       -------        --------
Income from continuing operations
  before income taxes                                     4,329          8,265           390          7,333           5,402
Income tax provision                                     (1,662)        (2,950)        (1,156)       (2,655)         (5,705)
Minority interest                                         -                 (3)            57           (17)            -
                                                       --------       --------       --------       -------        --------
Income (loss) from continuing operations                  2,667          5,312           (709)        4,661            (303)

Income (loss) from discontinued
  operations, net                                         2,057           (131)        (8,915)       (9,914)           -
                                                       --------       --------       --------       -------        --------
Net income (loss)                                      $  4,724       $  5,181       $ (9,624)      $(5,253)       $   (303)
                                                       ========       ========       ========       ========       =========

Basic and diluted earnings (loss) per share:      (1)
Continuing operations, basic                           $   0.21       $  0.41        $  (0.05)      $   0.35       $   (0.02)
Net income (loss) per share, basic                     $   0.37       $  0.40        $  (0.73)      $  (0.40)      $   (0.02)
                                                       ========       =======        ========       ========       =========
Continuing operations, diluted                         $   0.20       $  0.41        $  (0.05)      $   0.35       $   (0.02)
Net income (loss) per share, diluted                   $   0.36       $  0.40        $  (0.73)      $  (0.40)      $   (0.02)
                                                       ========       =======        ========       ========       =========
</TABLE>

<TABLE>
<CAPTION>
                                                                                      June 30,
Balance Sheet Data:                                       1994           1995           1996           1997           1998
----------------------------                              ----           ----           ----           ----           ----
<S>                                               <C>  <C>           <C>             <C>            <C>             <C>
Working capital                                   (2)  $ 74,553      $ 72,901        $ 47,627       $ 64,210        $ 73,722
Total assets                                      (3)   189,229       187,681         173,408        167,202         186,358
Long-term debt, excluding current portion                69,248        69,295          69,131         69,552          69,114
Stockholders' equity                                     73,525        86,697          72,954         63,744          58,106
</TABLE>

(1)  The Company adopted the Statement of Financial Accounting
     Standards No. 128 "Earnings per Share" and accordingly all
     per share data has been restated to comply with the standard.

(2)  As of June 30, 1995 and 1996, includes net current assets
     of discontinued operations of $15,032 and $9,276, respectively.
     As of June 30, 1997 includes net current assets held for sale of $4,236.

(3)  As of June 30, 1995 and 1996, includes total assets of discontinued
     operations of $50,032 and $42,871, respectively. As of June 30, 1997
     includes net current assets held for sale of $4,236.

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<PAGE>   11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND 
FINANCIAL CONDITION

OVERVIEW

     The following discussion and analysis 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.

     Much of PMSI's business is based upon proprietary databases, computer
technology and product know-how, and assets that are generally difficult,
time-consuming or costly for third parties to duplicate. The Company's strategy
is to take advantage of its operating leverage and grow the business by
increasing the market penetration of existing products and services, by
developing products and services for different national markets, and by creating
new information services from data in the PMSI databases or from linking such
data with data from third parties to meet the evolving information needs of the
pharmaceutical and healthcare industry.

     On August 5, 1998 the Company sold its non-US operating assets, with the
exception of its Source and PMSI targeting businesses in Belgium, to IMS Health
for consideration of 1,197,963 shares of IMS Health common stock, IMS Health has
an option to acquire either or both of the Belgian businesses within a
three-month period.

Revenue

     Revenue for the year ended June 30, 1998 was $78.0 million, a decrease of
$20.5 million (21%), compared with revenue for the year ended June 30, 1997. The
reduction in reported revenues resulted from the sale of the Company's
international publishing business in July 1997 and its interest in the Source US
joint venture and OTC businesses in the US in December 1997. In the year ended
June 30, 1997 revenues from the divested businesses totaled $37.3 million. These
divestments offset revenue growth in the Company's ongoing businesses, in
particular Scott-Levin in the US and the Company's targeting business in Japan,
both of which contributed revenue growth of more than 20% compared with the
prior year. Currency exchange rate movements negatively impacted the year's
revenue by $2.3 million, or 3%.

     Revenue for the year ended June 30, 1997 was $98.5 million, an increase of
$5.5 million (6%) over revenue for the year ended June 30, 1996. Revenues grew
significantly in the United States market research and database businesses,
Japanese information services and UK market research division. This growth was
partially offset by the revenue reduction of $1.0 million, due to the divestment
of poorly performing database businesses at the end of fiscal 1996 and during
1997. Currency exchange rate movements when compared to 1996 rates, principally
in Japan and the Netherlands, negatively impacted the year's revenue by $3.5
million, or 4%.


                                       11

<PAGE>   12
Production Costs

     PMSI's production costs include the costs of data collection, outside
supplies and services, internal computer costs and the costs attributable to
personnel involved in the production of the Company's products and services.

     Production costs for the year ended June 30, 1998 were $43.7 million (56%
of revenue), compared to $54.5 million (55% of revenue) for the year ended June
30, 1997. The decrease in costs of $10.8 million is attributable to the sale of
the Company's international publishing business in July 1997 and its interest in
Source US joint venture and OTC businesses in the US in December 1997. In fiscal
1997, production costs of $23.1 million were attributable to these businesses.
As a percentage of revenue production costs have increased due to the
disproportionately high costs associated with the further development of the
Source Europe business.

     Production costs for the year ended June 30, 1997 were $54.5 million (55%
of revenue), compared to $51.6 million (55% of revenue) for the year ended June
30, 1996. The 6% increase in costs was primarily attributable to revenue growth
and new product development in Japan and Europe.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses were $34.2 million (44% of
revenues) for the year ended June 30, 1998 as compared to $34.8 million (35% of
revenues) for the year ended June 30, 1997. The reduction in selling, general
and administrative costs was due to the sale of the Company's international
publishing business and its interest in the Source US and OTC businesses in the
US, while the increase in expenses as a percentage of revenue is attributable to
the inclusion of the Source Europe business from December 15, 1997 for which a
high level of sales and marketing costs were required to develop the business.

     Selling, general and administrative expenses were $34.8 million (35% of
revenues) for the year ended June 30, 1997 as compared to $34.2 million (37% of
revenues) for the same period in 1996. The reduction in general and
administrative expenses as a percentage of sales is attributable to the
implementation of improved cost controls in the US and the divestment of poorly
performing database businesses with disproportionately high general and
administrative expenses.

In-process Research & Development Write-off

     The acquisition of Source Europe during the quarter ended December 31, 1997
resulted in a one-time charge of $12.0 million for the write-off of in-process
research and development (IPR&D).

     The acquired IPR&D relates to Source Europe's current development projects,
in five countries, to create complex software-based projection methodologies for
prescription data. Each projection methodology has been customized to adapt to
each country's unique characteristics regarding data collection, manipulation,
validation, zone definition, prescription mix, pharmacy volume weights, and
dynamic rounding. The five countries are Germany, United Kingdom, Italy, Belgium
and France.

     The aggregate completion costs for these IPR&D programs are expected to be
approximately $3.7 million. The Company intends to further develop the IPR&D
projects and

                                       12
<PAGE>   13
expects either successful completion of or abandonment of the projects within
6-18 months of the acquisition. The Company expects to address the remaining
technological issues with the IPR&D, however, the Company recognizes that the
development of the IPR&D involves certain risks such as failure of one or more
of the critical components to function according to specifications, which may
prevent these projects from reaching technological feasibility.

     The Company expects the economic lives of the IPR&D projects to be
approximately six to eight years, if technological feasibility is reached.
Failure to successfully develop the IPR&D projects would negatively impact the
Company's future performance and its ability to compete in the pharmaceutical
and healthcare information markets in Europe.

Amortization of Intangible Assets

     Acquired databases, software and other purchased intangibles are valued at
their fair value at the date of acquisition and are amortized over periods of up
to five years. Goodwill is amortized on a straight-line basis over periods
between 5 and 40 years. The cost of updating and maintaining databases is
expensed as incurred, as is the cost of developing software for internal use,
which has not reached technological feasibility.

In the Company's consolidated financial statements, amortization has been
recorded as follows (in thousands):

<TABLE>
<CAPTION>
                   1996           1997           1998
                  ------         ------         ------
<S>               <C>            <C>            <C>
Databases         $  126         $    6         $   --
Software             247            205            436
Goodwill           1,639          1,522          1,160
                  ------         ------         ------
Total             $2,012         $1,733         $1,596
                  ======         ======         ======
</TABLE>

     For the year ended June 30, 1998, compared to the same period in fiscal
1997, goodwill amortization decreased due to the sale of the Company's
international publishing business, while software amortization increased due to
the amortization of completed technology recognized on the acquisition of the
Source Europe business.

     For the year ended June 30, 1997, compared to the same period in 1996,
database, software and goodwill amortization decreased due to the effects of the
charge for the impairment of long lived assets recorded during fiscal 1996.

Impairment of Assets Held for Sale

     An impairment charge of $14.7 million was made in the second quarter of
fiscal 1998 in respect of IMR, the Company's French point of sale business.
During the third quarter of fiscal 1998 this business was divested.

Impairment of Long-Lived Assets and Restructuring Costs

     In the third-quarter of fiscal 1996, the Company recorded a $2.4 million
write-down in the value of long-lived assets, primarily goodwill and databases
pursuant to the adoption of FAS 121, "Accounting for the Impairment of Long
Lived Assets and Long Lived Assets to be Disposed Of". In addition, the Company
recorded $2.3 million of restructuring costs. These 

                                       13
<PAGE>   14
charges were primarily related to the disposal of two database businesses that 
did not meet performance expectations.

Transaction costs

     Transaction costs of $1.1 million, relating to the proposed sale of the 
entire Company to Cognizant, were expensed during the third and fourth quarters
of the year ended June 30, 1998. These principally related to fees for the 
Company's investment bankers. Transaction costs associated with the sale of the 
non-US assets of the Company to IMS Health during the first quarter of fiscal 
1999 will be included in the calculation of the gain on sale of those assets.

Gain of Sale of Operations, net of Loss

     Sales of the US Source and OTC businesses, Bugamor and IMR were completed 
during the year ended June 30, 1998, resulting in a net pre-tax gain of $34.1 
million. The individual components of the pretax gain were as follows:

1.   On July 1, 1997 the Company sold its Dutch and US-based international 
publishing and communications operations to Excerpta Medica, the medical 
communications division of Elsevier Science, for approximately $9 million in
cash, resulting in a pre-tax gain on sale of $2.6 million.

2.   The sale of the Company's interest in Source US and the OTC businesses was 
completed during the second quarter of fiscal 1998, the resulting in a pre-tax 
gain of $33.6 million.

3.   The sale of IMR, the Company's French point of sale marketing business, 
was completed during the third quarter of fiscal 1998 and the Company incurred 
a pre-tax loss on sale of $2.1 million in the year.

Interest and Other Income

     PMSI invests its excess cash with major banks, and cash equivalents and 
marketable securities in a professionally managed fund.

     For the year ended June 30, 1998, the Company's interest and other income 
was $5.7 million, compared with $3.3 million for the year ended June 30, 1997. 
The increased interest income and other income was principally attributable to a
realized gain amounting to $1.7 million on the sale by the Company of NDC 
shares during the third quarter of fiscal 1998 and, to a lesser extent, 
increased returns on the higher balance available for investment following the 
receipt of proceeds from businesses divested in the period.

     For the year ended June 30, 1997, the Company's interest income was $3.3 
million, compared to $2.5 million for the same period in 1996, mainly due to 
an increased return on the Company's investments.

Interest Expense

     For the year ended June 30, 1998, the Company's interest expense was $4.6 
million, compared with $3.5 million for the year ended June 30, 1997. The 
interest expense was lower in fiscal 1997 due to the allocation of enterprise 
interest to discontinued operations for part of the year.



                                       14

<PAGE>   15
     For the year ended June 30, 1997, the Company's interest expense was $3.5
million, compared to $2.6 million for the same period in 1996 due to the
allocation of enterprise interest to discontinued operations for a full year in
1996 but only for part of fiscal 1997.

Income Tax Provision

     The tax provisions of $1.2 million, $2.7 million and $5.7 million for the
years ended June 30, 1996, 1997 and 1998, respectively, reflect taxes payable in
respect of profitable foreign and domestic operations.

     The effective income tax rate for the year ended June 30, 1998 was 106%.
This overall rate was due to the Company's inability to recognize deferred tax
assets in European jurisdictions where it made substantial losses while
incurring significant taxes on profits earned in the US and Japan,
non-deductable goodwill amortization and non-recurring items, including an
additional provision for taxes of $1.5 million for probable liabilities arising
from tax audits in progress. The full liability assessed by the tax authorities
as a result of the audits was approximately $3 million and, at the request of
the tax authorities, the Company paid approximately $3 million into an escrow
account pending the outcome of its appeal. The escrow amount was included in
other assets at June 30, 1998.

     During fiscal 1998, The Company recognized a tax benefit of $8.8 million on
the sale of IMR, and provisions for tax on a $33.6 million gain on the sale of
the Source US joint venture and OTC business and a $1.7 million gain on the sale
of NDC shares.

     The Company recognizes deferred tax assets in situations where it is more
likely than not that the Company will benefit in the future from temporary
differences between book and taxable income. A valuation allowance has been made
against a significant part of the net operating losses established in the
current year,  due to the expectation of further statutory tax losses in certain
foreign jurisdictions.

Discontinued Operations

     Following the decision to divest the Company's non-database segment, a $5.7
million loss on disposal was recorded during fiscal 1996. This, together with
the net loss for the period through March 31, 1996 of $3.2 million, were
classified as the "loss from discontinued operations, net" in the 1996 statement
of operations.

     During fiscal 1997, the Company recorded a further net charge for the loss
on disposal of discontinued operations of $9.9 million. This arose from changes
to the original estimates of net proceeds and income expected to be generated
during the disposal period.

     At the end of the measurement period, one business from the discontinued
non-database segment still remained to be sold and the results of this business
subsequent to the measurement period were included within operating income from
continuing operations as "income from assets held for sale". Its net assets,
together with the remaining accrual for the loss expected to be generated on
disposition, are recorded in the balance sheet as "net current assets held for
sale" and "net assets held for sale".




                                       15

<PAGE>   16
Currency Fluctuations

     As an international company, PMSI is affected by fluctuations in foreign
currency exchange rates. Although most of the Company's services are priced in
the local currency of the business unit providing the service, the effects of
foreign currency fluctuations are mitigated by the fact that expenses of foreign
subsidiaries are incurred in the same currency as sales. The reported net income
of foreign subsidiaries will be affected by changes in the exchange rates of
foreign currencies against the United States dollar. The magnitude of the
effects on the Company of future exchange rate changes will be dependent upon
the relative contributions to the Company's results of its United States and
non-United States operations. The foreign currency risk applicable to the
Company's operations has not been hedged.

Quarterly Results

     The production costs of the Company's pharmaceutical information services
(which are expensed as incurred) have a relatively high fixed direct cost
component because of the relatively constant cost of maintaining the databases
from which the services are derived. Once these fixed costs are covered, a
higher gross margin is achieved on incremental revenues. The Company's overall
gross profit margin in any quarter and any improvement in such margin over time
will therefore be highly dependent on the relative gross profit margins of the
Company's various products and services that contribute to revenue in such
quarter and the relative revenue growth rates for such products and services.

     Historically, quarter to quarter comparisons of the Company's results of
operations have not necessarily been indicative of these trends, principally as
a result of: (i) timing of acquisitions and divestments to create the PMSI
business; (ii) revenue reductions resulting from product changes or
discontinuations in the post-acquisition period; (iii) cost of investing in the
turnaround or profit improvement of certain acquired businesses; (iv) write
downs of asset values; and (v) the investment in new products and services.

Liquidity and Capital Resources

     At June 30, 1998, the Company's cash and cash equivalents and marketable
securities totaled $111.9 million and its current ratio was 2.5:1. The current
ratio at June 30, 1997 was 2.9:1.

     During the year ended June 30, 1998, cash and cash equivalents and
short-term marketable securities increased due to the switch from long-term to
short-term marketable securities and proceeds from the businesses divested in
the period. The Company anticipates that capital expenditures in fiscal 1999
will be less than $1.0 million and will be funded from internally generated
funds.

     The Company anticipates that existing cash, together with internally
generated funds, will provide the Company with the resources that are needed to
satisfy the Company's working capital requirements in fiscal 1999 and subsequent
years.

Subsequent Events

     On August 5, 1998 the Company announced that it had sold all of its non-US
operating assets, with the exception of its Source and PMSI targeting businesses
in Belgium, to IMS


                                       16


<PAGE>   17
Health (NYSE:RX) for consideration of 1,197,963 shares of common stock of IMS
Health. IMS Health has an option to purchase either or both of the Belgian
businesses within a three-month period.

     As of June 30, 1998, the total assets and total liabilities of the non-US
operations totaled $48.4 million and $33.8 million, respectively. Total revenues
for the year ended June 30, 1998 from the non-US operations totaled $40.9
million.

     Between September 2, and September 15, 1998, the Company redeemed $17.7 
million of its 6.25% Convertible Subordinated Debentures due in 2003. The 
debentures were redeemed at 87% of the principal amount with accrued interest 
through the date of redemption.

Year 2000

     Scriptrac for Windows and Source Europe client software used for delivering
Scriptrac and Source database products, respectively, have been developed to 
ensure compliance with the Year 2000.

     The internal systems within all of PMSI's local operations are being 
reviewed for the impact of the year 2000. No significant impact on the 
Company's operating results, financial condition or liquidity is expected with 
respect to Year 2000 compliance.

Recently Issued Accounting Standards

     On June 15, 1998 the Financial Accounting Standards Board ("FASB") issued 
FAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 
133). SFAS 133 establishes a new model for accounting for derivatives and 
hedging activities and supersedes and amends a number of existing standards. 
The Company will be required to adopt SFAS for the year ended June 30, 1999. 
Currently the Company is evaluating this standard but does not expect it to 
impact materially on the Company's consolidated financial statements 
disclosures.

     In February 1998, FASB issued FAS No. 132, Employer's Disclosures about
Pension and Other Postretirement Benefits ("SFAS 132"). SFAS 132 standardizes
the disclosure requirements for pensions and other postretirement benefits and
amends SFAS 87, "Employers' Accounting for Pensions", SFAS 88, "Employers'
Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and
for Termination Benefits", and SFAS 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions". The statement does not change the
existing measurement or recognition provisions of SFAS Nos. 87, 88 or 106, and
is effective for the fiscal years beginning after December 15, 1997. Therefore,
the Company will be required to adopt SFAS 132 for the year ended June 30, 1999.
The Company is in the process of evaluating the disclosure requirements under
this standard and does not believe it will have a significant impact.

     In June 1997, FASB issued FAS No. 131, "Disclosures About Segments of an 
Enterprise and Related Information", which changes the way public companies 
report information about segments. SFAS No. 131, which is based on the 
management approach to segment reporting, includes requirements to report 
selected segment information quarterly and entity-wide disclosures about 
products and services, major customers and the material countries in which the 
entity holds assets and reports revenues. This statement is effective for 
financial statements for periods beginning after December 15, 1997. The Company 
is currently evaluating the disclosure requirements under this standard and 
does not believe it will have a significant impact.



                                      17
                                        
<PAGE>   18
     In June 1997, FASB issued SFAS No. 130, "Reporting Comprehensive Income," 
which is effective for financial statements issued for fiscal years commencing 
on or after December 15, 1997. Comprehensive income represents the change in 
net assets of a company as a result of non-owner transactions. Had the Company 
adopted SFAS 130 as of July 1, 1997, the comprehensive income reported would 
have been approximately $4.0 million. 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See the Financial Statements and Supplementary Data listed in the 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.







                                       18
<PAGE>   19
            PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES

            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL
                               STATEMENT SCHEDULE

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                            PAGE
                                                                            ----
<S>                                                                       <C>

Report of Independent Accounts.............................................  F-1

Financial Statements:

     Consolidated Balance Sheets as of June 30, 1997 and 1998..............  F-2

     Consolidated Statements of Operations for the Years Ended
     June 30, 1996, 1997 and 1998..........................................  F-3

     Consolidated Statements of Stockholders' Equity
     for the Years Ended June 30, 1996, 1997 and 1998......................  F-4

     Consolidated Statements of Cash Flows for the Years Ended
     June 30, 1996, 1997 and 1998..........................................  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, 1996, 1997 and 1998.........................................  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.



                                       19


<PAGE>   20
                        REPORT OF INDEPENDENT ACCOUNTANTS

                                                Stamford, Connecticut
                                                August 14, 1998, except for Note
                                                21, as to which the date is
                                                September 2, 1998.

To the Board of Directors and Stockholders of
Pharmaceutical Marketing Services Inc.

         In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, stockholders' equity and cash
flows present fairly, in all material respects, the financial position of
Pharmaceutical Marketing Services Inc. and Subsidiaries ("the Company") as of
June 30, 1997 and 1998 and the results of their operations and their cash flows
for each of the three years in the period ended June 30, 1998, in conformity
with generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audits 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

                                                   PricewaterhouseCoopers L.L.P.


                                      F-1
<PAGE>   21

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share numbers)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                    JUNE 30, 1997    JUNE 30, 1998
                                                                    -------------    -------------
<S>                                                                 <C>              <C>      
                          ASSETS
Current assets
    Cash and cash equivalents                                         $  32,414        $  42,315
    Marketable securities                                                24,738           50,097
    Accounts receivable, principally trade (less
     allowance for doubtful accounts of $388 and $538,
     respectively)                                                       27,442           21,332
    Work in process                                                       3,798            1,489
    Prepaid expenses and other current assets                             4,905            9,866
    Net current assets held for sale                                      4,236               --
                                                                      ---------        ---------
     Total current assets                                                97,533          125,099

Marketable securities                                                     7,384           19,444
Property and equipment, net                                              11,761            9,548
Goodwill, net                                                            25,303           22,063
Other assets, net                                                         6,424           10,204
Net assets held for sale                                                 18,797               --
                                                                      ---------        ---------
     Total assets                                                     $ 167,202        $ 186,358
                                                                      =========        =========

           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Current maturities of long-term debt                              $     407        $      61
    Accounts payable                                                      5,036            5,730
    Accrued liabilities
     (including employee compensation and
     benefits of $3,234 and $5,429, respectively)                        10,507           23,499
    Unearned income                                                      17,373           22,087
                                                                      ---------        ---------
     Total current liabilities                                           33,323           51,377

Long-term debt                                                           69,552           69,114
Other liabilities                                                           583            7,761
                                                                      ---------        ---------
     Total liabilities                                                  103,458          128,252

Commitments and contingencies
Stockholders' equity
    Common stock, $0.01 par value, 25,000,000
     shares authorized and 13,199,475 and 13,314,975
     shares issued, respectively                                            132              133
    Paid-in capital                                                      87,179           88,199
    Treasury stock at cost, 0 and 918,254 shares, respectively               --           (8,494)
    Accumulated deficit                                                 (20,029)         (20,332)
    Cumulative translation adjustment                                    (3,534)          (7,170)
    Unrealized gain (loss) on investments, net of income
     tax (benefits) provisions of $(4) and $4,010, respectively              (4)           5,770
                                                                      ---------        ---------
       Total stockholders' equity                                        63,744           58,106
                                                                      ---------        ---------
       Total liabilities and stockholders' equity                     $ 167,202        $ 186,358
                                                                      =========        =========
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                      F-2
<PAGE>   22

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands,except for per share data)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                               Year Ended June 30,
                                                    ----------------------------------------
                                                      1996            1997            1998
                                                    --------        --------        --------
<S>                                                 <C>             <C>             <C>     
Revenue                                             $ 93,027        $ 98,485        $ 77,966
Production costs                                     (51,605)        (54,457)        (43,663)
Selling, general and administrative expenses         (34,208)        (34,847)        (34,243)
In-process research and development write-off             --              --         (12,046)
Amortization of intangible assets                     (2,012)         (1,733)         (1,596)
Income from assets held for sale                          --              76            (281)
Impairment of long-lived assets                       (2,368)             --              --
Impairment of assets held for sale                        --              --         (14,735)
Restructuring costs                                   (2,314)             --              --
Transaction costs                                         --              --          (1,151)
                                                    --------        --------        --------
Operating income (loss)                                  520           7,524         (29,749)
Gain on sale of operations, net of loss                   --              --          34,106
Interest and other income                              2,503           3,299           5,677
Interest expense                                      (2,633)         (3,490)         (4,632)
                                                    --------        --------        --------
Income from continuing operations
   before income taxes                                   390           7,333           5,402
Income tax provision                                  (1,156)         (2,655)         (5,705)
Minority interest                                         57             (17)             --
                                                    --------        --------        --------
Income (loss) from continuing operations                (709)          4,661            (303)
Discontinued operations:
Loss from discontinued operations, net                (8,915)         (9,914)             --
                                                    --------        --------        --------
Net loss                                            $ (9,624)       $ (5,253)       $   (303)
                                                    ========        ========        ========
Basic and diluted earnings (loss) per share:
   Continuing operations                            $  (0.05)       $   0.35        $  (0.02)
   Discontinued operations, net                        (0.68)          (0.75)             --
                                                    --------        --------        --------
Net loss per share                                  $  (0.73)       $  (0.40)       $  (0.02)
                                                    ========        ========        ========
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                      F-3
<PAGE>   23

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (in thousands)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                                         
                                                    Common Stock                                           Cumulative    
                                                No. of                       Paid-in       Accumulated     Translation   
                                                Shares         Amount        Capital        Deficit        Adjustment    
                                               --------       --------       --------       --------        --------     
<S>                                            <C>            <C>            <C>           <C>             <C>           
Balance June 30, 1995                            13,085       $    131       $ 86,176       $ (5,152)       $  5,544     

Net loss                                             --             --             --         (9,624)             --     
Stock options exercised                              84              1            747             --              --     
Change in unrealized loss on
          marketable securities, net of
          income tax benefit of $30                  --             --             --             --              --     
Foreign currency translation                         --             --             --             --          (4,822)    
                                               --------       --------       --------       --------        --------     

Balance June 30, 1996                            13,169            132         86,923        (14,776)            722     

Net loss                                             --             --             --         (5,253)             --     
Stock options exercised                              30             --            256             --              --     
Change in unrealized loss on
          marketable securities, net of
          income tax provision of $29                --             --             --             --              --     
Foreign currency translation                         --             --             --             --          (4,256)    
                                               --------       --------       --------       --------        --------     
Balance June 30, 1997                            13,199            132         87,179        (20,029)         (3,534)    

Net loss                                             --             --             --           (303)             --     
Stock options exercised                             116              1          1,020             --              --     
Treasury stock                                       --             --             --             --              --     
Change in unrealized gain (loss) on
          investments, net of income tax
          provision of $4,014                        --             --             --             --              --     
Foreign currency translation                         --             --             --             --          (3,636)    
                                               --------       --------       --------       --------        --------     
Balance June 30, 1998                            13,315       $    133       $ 88,199       $(20,332)       $ (7,170)    
                                               ========       ========       ========       ========        ========     
</TABLE>

<TABLE>
<CAPTION>
                                                Unrealized
                                               Gain (Loss) on         Treasury Stock
                                                Investments       No. of         Paid-in
                                                 net of tax       Shares         Capital
                                                 --------        --------        --------
<S>                                             <C>              <C>             <C>
Balance June 30, 1995                            $     (2)             --              --

Net loss                                               --              --              --
Stock options exercised                                --              --              --
Change in unrealized loss on
          marketable securities, net of
          income tax benefit of $30                   (45)             --              --
Foreign currency translation                           --              --              --
                                                 --------        --------        --------

Balance June 30, 1996                                 (47)             --              --

Net loss                                               --              --              --
Stock options exercised                                --              --              --
Change in unrealized loss on
          marketable securities, net of
          income tax provision of $29                  43              --              --
Foreign currency translation                           --              --              --
                                                 --------        --------        --------
Balance June 30, 1997                                  (4)             --              --

Net loss                                               --              --              --
Stock options exercised                                --              --              --
Treasury stock                                         --            (918)       $ (8,494)
Change in unrealized gain (loss) on
          investments, net of income tax
          provision of $4,014                       5,774              --              --
Foreign currency translation                           --              --              --
                                                 --------        --------        --------
Balance June 30, 1998                            $  5,770            (918)       $ (8,494)
                                                 ========        ========        ========
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                      F-4
<PAGE>   24

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                             Year Ended June 30,
                                                                                     1996            1997            1998
                                                                                   --------        --------        --------
<S>                                                                                <C>             <C>             <C>      
Cash flows provided by (used in) operating activities:
       Net loss                                                                    $ (9,624)       $ (5,253)       $   (303)
       Loss from discontinued operations                                              8,915           9,914              --

Adjustments to reconcile net income (loss) to net cash (used in) provided by
     operating activities:
       Depreciation and amortization                                                  3,372           3,715           3,289
       Loss (gain) on disposal of businesses, net                                        --             773         (34,106)
       Deferred taxes                                                                  (789)            953          (6,560)
       Minority interest share of net income (loss)                                     (57)             17              --
       Restructuring costs                                                            2,314              --              --
       Impairment of long lived assets                                                2,368              --              --
       Impairment of assets held for sale                                                --              --          14,735
       In process research and development write off                                     --              --          12,046

Change in operating assets and liabilities, net of effect of acquisitions:
       Accounts receivable                                                           (5,716)            881             999
       Work-in-process                                                                 (781)           (986)            898
       Prepaid expenses and other assets                                               (822)          3,471            (934)
       Accounts payable and accrued liabilities                                      (6,221)           (561)            161
       Unearned income                                                                5,156           3,199            (741)
       Other liabilities                                                                200               5              98
                                                                                   --------        --------        --------
       Total adjustments                                                               (976)         11,467         (10,115)
                                                                                   --------        --------        --------

Net cash (used in) provided by operating activities                                  (1,685)         16,128         (10,418)
                                                                                   --------        --------        --------

Cash flows provided by (used in) investing activities:
       Capital expenditures                                                          (2,166)         (4,592)         (2,138)
       Proceeds from disposal of fixed assets                                           115              66               5
       Proceeds from businesses disposed, net of selling costs                           --           4,285          15,793
       Cash consideration advanced to Source Europe under a line of
         credit                                                                          --              --          (6,433)
       Cash acquired in Source Europe                                                    --              --           9,942
       Sale (purchase) of marketable securities, net                                 (5,743)          2,610           3,685
       Acquisition and contingent purchase price payments                              (624)         (2,799)         (2,159)
                                                                                   --------        --------        --------
Net cash provided by (used in) investing activities                                  (8,418)           (430)         18,695
                                                                                   --------        --------        --------

Cash flows provided by (used in) financing activities:
       Net proceeds from options exercised                                              748             256           1,021
       Repayments of long-term debt and capital lease
         obligations                                                                   (245)           (195)           (262)
                                                                                   --------        --------        --------
Net cash provided by financing activities                                               503              61             759
                                                                                   --------        --------        --------
Effect of discontinued operations and assets held for sale                           (2,038)          5,838           2,160
Effect of exchange rate movements                                                    (3,521)         (1,852)         (1,295)
                                                                                   --------        --------        --------
Net increase (decrease) in cash and cash equivalents                                (15,159)         19,745           9,901
Cash and cash equivalents at beginning of period                                     27,828          12,669          32,414
                                                                                   --------        --------        --------
Cash and cash equivalents at end of period                                         $ 12,669        $ 32,414        $ 42,315
                                                                                   ========        ========        ========
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                      F-5
<PAGE>   25

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
                                 (in thousands)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                           Year Ended June 30,
                                                                                   1996            1997           1998
                                                                                 --------        --------       --------
<S>                                                                              <C>             <C>            <C>     
Supplemental information:

Cash paid during the period for:
     Interest                                                                    $  4,474        $  4,521       $  4,345
     Income taxes                                                                $  1,381        $  1,694       $  8,430
                                                                                 ========        ========       ========

Supplemental disclosure of non-cash investing and financing activities:
     Fair value of assets acquired                                                                              $ 19,104
     PMSI shares received                                                                                          8,494
     In-process research and development                                                                          12,046
     Completed technology acquired                                                                                 1,363
                                                                                                                --------
     Liabilities assumed                                                                                        $ 41,007
                                                                                                                ========

     Cancellation of amounts due from Source Europe under a line of credit                                      $ (6,433)
                                                                                                                ========
     National Data Corporation shares received                                                                  $ 35,328
                                                                                                                ========

     Capital leases                                                              $     40        $    802       $    262
                                                                                 ========        ========       ========
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                      F-6
<PAGE>   26

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         THE COMPANY. Pharmaceutical Marketing Services Inc. ("PMSI" or the
         "Company") provides a range of information services to pharmaceutical
         and healthcare companies in the United States, Europe and Japan to
         enable them to optimize their sales and marketing performance in a
         value driven environment. The services are comprised of targeting
         information services, prescription database services and added value
         services. Most of the Company's information services are generated from
         its own proprietary databases containing unique prescription, managed
         care, healthcare market and medical prescriber data. On August 5, 1998,
         the Company entered into a transaction whereby it sold substantially
         all of its non-US operations (see note 20).

         BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION. The consolidated
         financial statements comprise the accounts of PMSI and its
         subsidiaries. The consolidated financial statements have been restated
         where applicable for discontinued operations (see Note 19). The
         accompanying notes present amounts related to continuing operations
         only. All intercompany balances and transactions have been eliminated.

         CASH EQUIVALENTS. Cash equivalents consist primarily of highly liquid
         investments with a maturity of three months or less at the date of
         acquisition.

         MARKETABLE SECURITIES. The Company accounts for its marketable
         securities in accordance with Statement of Financial Accounting
         Standards No. 115, "Accounting for Certain Investments in Debt and
         Equity Securities" ("FAS 115").

         As required by FAS 115, 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 investment in equity securities.
         Available-for-sale securities 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, 1998, the Company had no
         investments that qualified as trading or held to maturity.

         WORK IN PROCESS. Work in process consists of unbilled costs incurred on
         behalf of clients, principally outside vendor costs attributable to the
         Company's products and services.

         PROPERTY AND EQUIPMENT. Property and equipment is recorded at cost. All
         maintenance and repairs are expensed as incurred.

         Depreciation is provided using the straight-line method. Furniture,
         office equipment and computer equipment are depreciated over five years
         and automobiles over four years. Leasehold improvements are amortized
         over the shorter of their useful lives or


                                      F-7
<PAGE>   27

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

         the terms of the respective leases. Buildings are depreciated over
         their estimated useful lives ranging from twenty to thirty years.

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

         GOODWILL. Under the purchase method of accounting, the excess of the
         purchase price of businesses acquired over the fair value of net
         tangible and 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 PMSI from their respective dates of purchase. Goodwill is
         amortized on a straight-line basis over periods between five and forty
         years.

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

         DATABASES. Acquired databases have been valued at their estimated fair
         values at the dates of acquisition. Databases are amortized using
         straight-line and accelerated methods over periods of up to five years.
         Costs associated with maintenance and updating of databases are
         expensed as incurred.

         SOFTWARE ACQUIRED. Computer software of businesses acquired is recorded
         at its fair value at the date of acquisition. This software is
         amortized on a straight-line basis over its useful life, which is
         estimated to be two to five years.

         FOREIGN CURRENCY. The balance sheets and results of operations of
         PMSI's 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. 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. Revenues and costs are translated into United States
         dollars at the average rate during the period.

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

         REVENUE RECOGNITION. Revenue is recognized on delivery of a product or
         as the service is rendered. Subscription-type revenue is recognized
         over the life of the


                                      F-8
<PAGE>   28

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

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

         CONCENTRATION OF CREDIT RISK. Financial instruments that potentially
         subject PMSI to concentrations of credit risk consist principally of
         cash and cash equivalents, marketable securities and trade receivables.
         PMSI invests its excess cash with major banks and cash equivalents and
         marketable securities in a professionally managed fund. At June 30,
         1998 marketable securities included 903,950 shares of common stock of
         National Data Corporation ("NDC") with a fair value of $39,548,000.
         PMSI's customer base principally comprises companies within the
         pharmaceutical industry. Although the Company's receivables are
         concentrated in the pharmaceutical industry, the concentration of
         credit risk is limited due to the credit worthiness of the customers.
         PMSI does not require collateral from its customers.

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

         EARNINGS/LOSS PER SHARE. In 1998, the Company adopted Statement of
         Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS
         128"). Previously reported earnings per share amounts have been
         restated to comply with FAS 128. Basic earnings (loss) per share
         amounts are calculated by dividing income (loss) amounts by the
         weighted average number of common shares outstanding. Diluted earnings
         (loss) per share amounts are calculated by dividing income (loss)
         amounts by the weighted average number of common shares outstanding
         increased, if dilutive, by the effects of potentially dilutive common
         shares which includes stock options and convertible debentures.
         Dilutive potential common shares are calculated in accordance with the
         treasury stock method.

         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. The most significant estimates that affect the
         financial statements are those related to goodwill and deferred tax
         assets.

         FAIR VALUE OF FINANCIAL INSTRUMENTS. The carrying value of certain of
         the Company's financial instruments including cash and cash
         equivalents, accounts payable and other accrued liabilities
         approximates fair value due to their short maturities. The fair value
         of the Company's debentures is based on quoted market prices.


                                      F-9
<PAGE>   29

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

         ALLOCATION OF INTEREST TO DISCONTINUED OPERATIONS. Enterprise interest
         is allocated to discontinued operations in proportion to net assets.

2.       TRANSACTIONS WITH SOURCE

                  Effective as of December 31, 1991, Walsh International Inc.
         ("Walsh") transferred to PMSI all the assets and liabilities of the
         PMSI business in exchange for shares of PMSI common stock. In
         connection with the transfer, the Company and Walsh entered into two
         long-term license agreements permitting the use by PMSI of certain
         Walsh proprietary databases. In addition, PMSI and Walsh entered into
         further agreements, covering data processing, administrative and
         management services and subleasing of certain facilities for various
         periods of time, all subject to renewal terms. During fiscal year 1996,
         Walsh separated into two independent companies ("the spin-off"); Walsh
         International Inc. and Source Informatics Inc. ("Source") and the
         agreements were assigned from Walsh to Source. All agreements were
         terminated effective December 15, 1997 upon the sale of certain assets
         to NDC. The principal agreements and terms were as follows:

         ALPHA (PRESCRIPTION) DATABASE LICENSE AGREEMENT. Source had granted the
         Company an exclusive license to use its US databases for a period of
         five years through December 2001, with an option to renew for two
         additional 5-year periods. The license fee amounts paid to Source in
         the years ended June 30, 1996, 1997 and for the period ended December
         15, 1997 in respect of this agreement were $3,094,000, $3,126,000 and
         $1,728,000, respectively.

         DATA PROCESSING AGREEMENT. The Company contracted for Source to provide
         specific data processing services in the US. In the years ended June
         30, 1996 and 1997 and for the period ended December 15, 1997 costs
         incurred by the Company in connection with the data processing
         agreement totaled $3,353,000, $5,395,000 and $3,041,000, respectively.
         These costs are included in production costs.

         FACILITIES AGREEMENT. PMSI sublet space from Source in the US. The net
         cost to the Company in the years ended June 30, 1996 and 1997 and for
         the period ended December 15, 1997 totaled $545,000, $29,000 and
         $45,000, respectively. Such amounts have been included in selling,
         general and administrative expenses,

         MANAGEMENT AND EXECUTIVE SERVICES AGREEMENT. Source provided
         administrative, management and executive services to PMSI in the US
         which resulted in a net cost to the Company of $2,319,000, $977,000 and
         $542,000 in the years ended June 30, 1996 and 1997 and for the period
         ended December 15, 1997, respectively. These costs are included in
         selling, general and administrative expenses.


                                      F-10
<PAGE>   30

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

                  At June 30, 1998 there were no amounts receivable or payable
         from/to Source. At June 30, 1997, the Company had a net current
         receivable from Source of $1,646,000, which was included in other
         current assets. Source held 831,144 shares or 6.3% of PMSI's Common
         Stock at June 30, 1997 which represented the remaining shares that were
         transferred to Source in the "spin-off" of the Source businesses from
         Walsh. These shares, together with a further 87,110 shares, were
         transferred to the Company as part of the assets acquired on the
         purchase of the Source Europe companies from Source on December 15,
         1997 (see note 3).

3.       ACQUISITIONS AND DIVESTITURES

         ACQUISITIONS. The consolidated financial statements comprise various
         business operations and entities that have been acquired by PMSI. These
         acquisitions have been accounted for as purchases. Accordingly, the
         acquired assets and assumed liabilities have been recorded at their
         estimated fair value at the dates of acquisition. The results of
         operations are included in the consolidated financial statements from
         the respective dates of acquisition.

         SOURCE INFORMATICS EUROPEAN HOLDINGS LLC

                  On December 15, 1997 the Company acquired Source Informatics
         European Holdings L.L.C. and its subsidiaries ("Source Europe") from
         Source for consideration of $8.4 million in the form of the
         cancellation of amounts advanced to Source under a line of credit of
         $6.4 million and direct costs of $2.0 million.

                  Source Europe is a developing business involved in building
         databases of information from prescriptions dispensed in the UK,
         Germany, France, Belgium and Italy and in developing the software
         technology to support, access and generate information from such
         databases. This information enables pharmaceutical companies to measure
         and analyze product performance at a detailed geographical level,
         namely small groups of physicians or at the individual physician level
         and thereby improve salesforce productivity. Currently, the businesses
         are at various stages of development, but revenues are being generated
         at an increasing level as more products begin to be delivered to
         clients throughout Europe.

                  The excess of the purchase price over the fair value of the
         net assets acquired of $13.4 million was allocated to in-process
         research and development and completed technology as follows:

<TABLE>
<S>                                                                      <C>    
                           In-Process Research & Development             $12,046
                           Completed Technology                          $ 1,363
                                                                         -------
                                                                         $13,409
                                                                         -------
</TABLE>

                  Included in the assets acquired in Source Europe were 918,254
         shares of common stock of the Company with a fair value on December 15,
         1997 of $8.5 million.


                                      F-11
<PAGE>   31

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

         These shares were placed in treasury upon acquisition during the second
         quarter of fiscal 1998.

                  Presented below are summarized unaudited pro forma results as
         if the acquisition of Source Europe had occurred on July 1, 1996 and
         July 1, 1997. The pro forma results include pro forma adjustments
         relate principally to the amortization of completed technology and the
         elimination of inter-company transactions.

<TABLE>
<CAPTION>
                                                Unaudited             Unaudited
                                                Year Ended            Year Ended
                                               June 30 ,1997         June 30, 1998
                                               -------------         -------------
<S>                                            <C>                   <C>     
Revenue                                          $ 98,892              $ 79,502
Net loss                                         $(26,198)             $(14,152)
Net loss per share                               $  (1.97)             $  (1.11)
</TABLE>

         MEDIPHASE LIMITED

                  On July 1, 1994, PMSI acquired 80% of the common stock of
         Mediphase Limited, a specialist software and information company in the
         United Kingdom. During the year ended June 30, 1998, the Company
         purchased the remaining 20% of the common stock of Mediphase Limited
         for $1.7 million.

         IMR FINANCE

                  During 1993, the Company purchased an 80% holding in IMR
         Finance, a French corporation. The owners of the minority interest had
         the option to require the Company to purchase their holding based on a
         multiple of projected pre-tax earnings.

                   During May 1997, the minority shareholders exercised their
         option, and the Company purchased the remaining 20% of the outstanding
         share capital of IMR Finance. The purchase price of $2.6 million has
         been accounted for in net assets held for sale.

       DIVESTITURES.

                  On December 15, 1997, the Company sold to NDC (i) the
         Company's interest in the US joint operating venture with Source
         ("Source US") and (ii) its OTC Physician Database business in the US.
         The Company received 1,084,950 registered shares of common stock of
         NDC, with a market value on December 15, 1997 of $35.3 million, plus
         $6.5 million in cash. This resulted in a pre-tax gain of $33.6 million.

                  The Company sold IMR (see Note 18), its French point of sale
         marketing business on March 31, 1998. This was the last remaining
         business to be sold as a result of the Company's decision in the third
         quarter of fiscal 1996 to discontinue its non-database segment. The
         business was sold for consideration of approximately


                                      F-12
<PAGE>   32

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

         $3.2 million in cash. The assets sold included cash and cash
         equivalents of $1.2 million.

                  On July 1, 1997 the Company sold its Dutch and US-based
         international publishing and communications operations to Excerpta
         Medica, the medical communications division of Elsevier Science for
         approximately $9 million, resulting in a net gain on sale of $2.6
         million.

                  During the third quarter of fiscal 1997, Marketing Resources
         International Limited in the United Kingdom and Patient Programs in the
         US were divested by the Company for $0.4 million. The total revenue and
         operating loss from these businesses included in the consolidated
         statement of operations for the year ended June 30, 1996 were $0.7
         million and $1.0 million, respectively. The total revenue and operating
         loss for the year ended June 30, 1997 were $1.1 million and $1.0
         million, respectively.


                                      F-13
<PAGE>   33

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

4.       MARKETABLE SECURITIES

                  Marketable securities consisted of the following as of June
         30, 1997 and 1998 (in thousands):

<TABLE>
<CAPTION>
                                                    Amortized                    Fair Value
       Name of Issuer                                Cost of                     at Balance                   Unrealized Gains
       and Title of                                 Each Issue                   Sheet Date                    (Losses), net
       Each Issue                                   at June 30,                  at June 30,                     at June 30,
                                             -----------------------       -----------------------        ------------------------
                                               1997           1998           1997           1998            1997            1998
                                             --------       --------       --------       --------        --------        --------
<S>                                          <C>            <C>            <C>            <C>             <C>             <C>     
Equity Securities                            $     --       $ 30,319       $     --       $ 40,109              $-        $  9,790

Corporate debt securities                      41,486         47,925         41,482         47,909              (4)            (16)

Debt securities issued by the  U.S. 
     Treasury and other U.S. 
     government corporations and
     agencies                                   4,121            400          4,121            400              --              --

Debt securities issued by foreign
     governments                                4,228          2,059          4,226          2,060              (2)              1
                                             --------       --------       --------       --------        --------        --------
                                             $ 49,835       $ 80,703       $ 49,829       $ 90,478        $     (6)       $  9,775
                                             ========       ========       ========       ========        ========        ========
Maturities

Cash equivalents (1)                         $ 17,708       $ 20,942       $ 17,707       $ 20,937        $     (1)       $     (5)

Short-term investments (2)                     24,742         40,313         24,738         50,097              (4)          9,784

Due after one year through three years          7,385         19,448          7,384         19,444              (1)             (4)
                                             --------       --------       --------       --------        --------        --------
                                             $ 49,835       $ 80,703       $ 49,829       $ 90,478        $     (6)       $  9,775
                                             ========       ========       ========       ========        ========        ========
</TABLE>

(1) Maturities of three months or less at acquisition

(2) Short term investments include debt securities with maturities greater than
    3 months and equity securities.

               For the years ended June 30, 1996 and 1997, gross realized gains
       and losses were not significant. Gross realized gains for the year ended
       June 30, 1998 were $1.7 million, and were included in interest and other
       income within the consolidated statement of operations. In computing
       realized gains and losses, the Company compares the cost of its
       investments on a specific identification basis. Such cost includes the
       direct cost to acquire the securities adjusted for the amortization of
       any discount or premium.


                                      F-14
<PAGE>   34

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

5.       PROPERTY AND EQUIPMENT

                  Property and equipment at June 30, 1997 and 1998 comprised the
         following (in thousands):

<TABLE>
<CAPTION>
                                                       1997              1998
                                                     --------          --------
<S>                                                  <C>               <C>     
Land and buildings including leasehold
   improvements                                      $  5,546          $  6,187
Furniture and office equipment                          2,528             3,077
Computer equipment                                      7,756             4,936
Automobiles                                               321               425
                                                     --------          --------
                                                       16,151            14,625
Less accumulated depreciation
   and amortization                                    (4,390)           (5,077)
                                                     --------          --------
                                                     $ 11,761          $  9,548
                                                     ========          ========
</TABLE>

                  Depreciation and amortization charged to operations for the
         years ended June 30, 1996, 1997 and 1998 were $1,342,000, $1,981,000
         and $1,461,000, respectively.

6.       GOODWILL

                  Goodwill at June 30, 1997 and 1998 comprised the following (in
         thousands):

<TABLE>
<CAPTION>
                                                    1997                 1998
                                                    ----                 ----
<S>                                               <C>                  <C>     
Goodwill on acquisition                           $ 34,752             $ 29,175
Accumulated amortization                            (9,449)              (7,112)
                                                  --------             --------
                                                  $ 25,303             $ 22,063
                                                  ========             ========
</TABLE>

                  The decrease in goodwill on acquisition is a result of the
         sale of the Bugamor and Medialert businesses.

                  Amortization charged to operations for the years ended June
         30, 1996, 1997 and 1998 was $1,639,000, $1,522,000 and $1,160,000,
         respectively.


                                      F-15
<PAGE>   35
             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.       OTHER ASSETS

         Other assets at June 30, 1997 and 1998 consisted of the following (in
         thousands):

<TABLE>
<CAPTION>
                                                                     1997                1998
                                                                     ----                ----
<S>                                                           <C>                <C>
                Software                                          $ 5,206             $ 6,381
                Acquired databases                                 21,539              22,193
                                                              ------------       -------------
                                                                   26,745              28,574
                Less accumulated amortization                     (26,324)            (26,671)
                                                              ------------       -------------
                                                                      421               1,903

                Debenture financing costs                           1,302 (1)           1,070 (1)
                Deposits                                              766               4,432
                Deferred taxes                                        723                 452
                Investments                                         1,670                 725
                Deferred charges                                      422                 455
                Note receivable from Walsh                          1,120 (2)           1,167 (2)
                                                              ------------       -------------
                                                                  $ 6,424            $ 10,204
                                                              ============       =============
</TABLE>


         (1)      Debenture financing costs are being amortized over the life of
                  the debentures. The amortization charge for the years ended
                  June 30, 1996, 1997 and 1998 was $232,000

         (2)      Represents an interest free note receivable of $1,200,000 due
                  from Walsh in June 1999 relating to the Scriptrac acquisition.
                  The note receivable was recorded initially at its present
                  value and as a result of accretion, the balance at June 30,
                  1998 is $1,167,000


         Amortization of acquired databases and software charged to operations
for the years ended June 30, 1996, 1997 and 1998 was $373,000, $211,000 and
$436,000, respectively.


                                      F-16

<PAGE>   36

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.       LONG-TERM DEBT

         Long-term debt at June 30, 1997 and 1998 consisted of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                      1997                     1998
                                                                      ----                     ----
<S>                                                           <C>                      <C>
                Debentures (1)                                    $ 69,000                 $ 69,000
                Other long-term debt (2)                               959                      175
                                                              -------------            -------------
                                                                    69,959                   69,175
                Less current portion                                  (407)                     (61)
                                                              -------------            -------------
                                                                  $ 69,552                 $ 69,114
                                                              =============            =============
</TABLE>


(1)      On February 3, 1993 the Company completed an offering of an aggregate
         $69 million Convertible Subordinated Debentures due in 2003. The
         debentures, issued at par, bear annual interest at 6-1/4% and are
         convertible into Common Stock of the Company at a conversion price of
         $20 per share, subject to adjustments for certain events. The current
         value of the debentures at June 30, 1998, based on quoted market
         prices, was $66,240,000.

(2)      Capital lease obligations (see Note 13).


                                      F-17



<PAGE>   37



             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9.       STOCK OPTIONS AND RESTRICTED STOCK PURCHASE PLAN

                  A Stock Option and Restricted Stock Purchase Plan (the "Plan")
         was established on August 17, 1991 for employees, officers and
         directors of the Company or any of its subsidiaries. The number of
         stock options authorized by the Plan is 2,250,000. The Plan provides
         for the granting of "non-qualified stock options" and "incentive stock
         options" to acquire Common Stock of PMSI and/or the granting of rights
         to purchase Common Stock. The terms and conditions of individual option
         agreements may vary, subject to the following guidelines: (i) the
         option price of incentive stock options may not be less than market
         value on the date of grant; the option price of non-qualified options
         may be less than market value on the date of grant, (ii) the term of
         all incentive stock options may not exceed ten years from the date of
         grant; the term of non-qualified stock options may exceed ten years,
         (iii) no options may be granted after August 17, 2001 and (iv) in
         general, options vest evenly over a period of five years from the date
         of issue.

                  A Non-Employee Directors' Stock Option Plan (the "Directors
         Plan") was adopted on May 27, 1993. The Directors' Plan provides for
         the granting of non-qualified stock options to purchase shares of the
         Company's Common Stock. The terms and conditions of individual option
         agreements may vary, subject to the following guidelines: (i) the
         option exercise price will be equal to 100% of the fair market value of
         the Common Stock on the date of grant, (ii) the term of the stock
         options may not exceed ten years from the date of grant, (iii) in
         general, options vest evenly over a period of three years from the date
         of issue (iv) the total number of shares of Common Stock that may be
         subject to options pursuant to the Directors' Plan is 120,000, subject
         to automatic adjustments following certain events, and (v) no options
         may be granted after May 27, 2003.

                  Additional information relating to the Plan and the Directors
         Plan is as follows:

<TABLE>
<CAPTION>
                                                           Year Ended June 30,
                                               1996               1997               1998
                                               ----               ----               ----
<S>                                        <C>                <C>                <C>
Options outstanding at July 1, 1995,
     1996 and 1997                           1,786,400          1,848,200          1,903,750
Options granted                                234,250            392,200            458,600
Options exercised                              (84,050)           (30,200)          (115,050)
Options lapsed                                 (88,400)          (306,450)          (253,400)
                                           -----------        -----------        -----------
Options outstanding at June 30               1,848,200          1,903,750          1,993,900
                                           ===========        ===========        ===========
Options exercisable at June 30                 980,700          1,150,610          1,229,300
                                           ===========        ===========        ===========
Option prices per share:
     Granted                                    $8-$14             $9-$10                 $9
     Exercised                                  $8-$10           $8-$9.50          $8-$10.75
     Outstanding                                $8-$22             $8-$22             $8-$22
</TABLE>

                                      F-18

<PAGE>   38

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         The exercise price of options granted during the years ended June 30,
         1996, 1997 and 1998 equaled the market price of the Company's common
         stock on the date of the grant. As of June 30, 1998 the Plan and the
         Directors Plan had available 76,900 and 40,000 shares of common stock,
         respectively, available for future grants.

10.      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, 1996,
         1997 and 1998.

                  Pursuant to SFAS 123, "Accounting for Stock-Based
         Compensation", the Company is required to disclose the pro-forma
         effects on net loss and net loss per share data as if the Company had
         elected to use the fair value approach to account for all its
         stock-based compensation plans. 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 loss and net loss per share
         for the years ended June 30, 1996, 1997 and 1998 would have changed as
         indicated below (in thousands, except per share data):


<TABLE>
<CAPTION>

                                      Year Ended June 30,
                             1996             1997            1998
                             ----             ----            ----
<S>                       <C>              <C>              <C>
Net loss:
    As reported           $  (9,624)       $  (5,253)       $  (303)
    Pro-forma             $  (9,726)       $  (5,556)       $  (747)
Net loss per share:
    As reported           $  (0.73)        $   (0.40)       $ (0.02)
    Pro-forma             $  (0.74)        $   (0.42)       $ (0.05)
</TABLE>


                  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 fiscal years 1996, 1997
         and 1998; risk-free interest rate of 6%; expected life of 6 years; 41%
         expected volatility and no dividends. The weighted average fair value
         of options granted during the years ended June 30, 1996, 1997 and 1998
         were $13.34, $9.38 and $9.02.

                  Since option grants vest over several years and additional
         grants are expected in the future, the pro forma results noted above
         are not likely to be representative of the effects on future years of
         the application of the fair value based method.


                                      F-19

<PAGE>   39

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  A summary of the status of the Company's Plan and the
         Directors Plan as of June 30, 1997 and 1998 and changes during the
         years ended on those dates is as follows:

<TABLE>
<CAPTION>
                                                June 30, 1997                 June 30, 1998
                                                -------------                 -------------
                                            Number         Weighted-      Number         Weighted-
                                              of            average         of            average
        Fixed options                       shares       exercise price   shares       exercise price
        -------------                       ------       --------------   ------       --------------
<S>                                       <C>            <C>             <C>           <C>      
Outstanding at beginning of year          1,848,200        $   11.77     1,903,750        $   11.02
   Granted                                  392,200        $    9.38       458,600        $    9.02
   Exercised                                (30,200)       $    8.48      (115,050)       $    9.07
   Cancelled                               (306,450)       $   13.43      (253,400)       $   12.32
                                          ---------        ---------     ---------        ---------
Outstanding at end of year                1,903,750        $   11.02     1,993,900        $   10.49
                                          =========                      =========

Options exercisable at end of year        1,150,610        $   11.35     1,229,300        $   11.06
                                          =========                      =========
</TABLE>


                  A summary of information regarding the outstanding options and
         those exercisable at June 30, 1998 is given in the following tables:

<TABLE>
<CAPTION>
                                                 Weighted Average
                              Number of              remaining                   Number of
  Exercise Price               Options          Contractual life of               Options
       ($)                   Outstanding        options outstanding             Exercisable
                                                       (Yrs)
  --------------             -----------        -------------------             -----------    
<S>                          <C>                <C>                             <C>    
       8.40                     533,900                3.17                        533,900
       8.75                     112,000                6.67                         92,000
       9.00                     525,500                9.35                        138,000
       9.38                      24,000                9.50                              0
       9.50                     348,200                7.90                         96,900
      13.50                     202,800                6.65                        121,000
      14.00                      36,000                3.58                         36,000
      15.00                      15,000                3.92                         15,000
      15.25                      67,500                4.29                         67,500
      15.75                      15,000                4.95                         15,000
      18.50                      12,000                4.33                         12,000
      22.00                     102,000                3.58                        102,000
                              ---------                ----                      ---------
                              1,993,900                6.34                      1,229,300
                              =========                ====                      =========
</TABLE>

                                      F-20

<PAGE>   40

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.      TAXES

                  The components of the income tax (provision) benefit for the
         years ended June 30, 1996, 1997 and 1998 are comprised of the following
         (in thousands):

<TABLE>
<CAPTION>
                                                                    Year Ended
                                                                     June 30,
                                                     ---------------------------------------
                                                        1996           1997           1998
                                                        ----           ----           ----
<S>                                                   <C>            <C>            <C>
U.S. income tax (provision) benefit                   $(1,666)       $     9        $(8,363)
Foreign tax provision                                    (279)        (1,711)        (3,902)
Deferred income tax (provision) benefit                   789           (953)         6,560
                                                      -------        -------        -------
                                                      $(1,156)       $(2,655)       $(5,705)
                                                      =======        =======        =======
</TABLE>

                  The domestic and foreign components of income before income
         taxes were as follows (in thousands):

<TABLE>
<CAPTION>
                              Year Ended
                               June 30,
              -----------------------------------------
                 1996            1997           1998
                 ----            ----           ----
<S>            <C>             <C>            <C>
Domestic       $  1,153        $  4,022       $ 13,184
Foreign            (763)          3,311         (7,782)
               --------        --------       --------

               $    390        $  7,333       $  5,402
               ========        ========       ========
</TABLE>

                  The provision for income taxes differs from that computed
         using the 35% statutory federal income tax rate as follows (in
         thousands):

<TABLE>
<CAPTION>
                                                                    Year Ended
                                                                     June 30,
                                                     ---------------------------------------
                                                        1996           1997           1998
                                                        ----           ----           ----
<S>                                                   <C>            <C>            <C>
Provision based on federal statutory rate             $  (133)       $(2,493)       $(1,891)
Goodwill and other non-deductible items                  (304)          (301)        (1,149)
Foreign earnings and dividends taxed at 
   different rates                                       (538)         1,124           (254)
Tax refund claims, audit issues & other matters          --              833         (1,490)
State tax, net of federal benefit                        (135)          (149)        (2,148)
Purchase accounting adjustments                        (1,182)          --             --
Disposal of assets held for sale                         --             --            3,078
Valuation of temporary differences                        848         (2,386)          (990)
All other, net                                            288            717           (861)
                                                      -------        -------        -------
Consolidated effective tax rate                       $(1,156)       $(2,655)       $(5,705)
                                                      =======        =======        =======
</TABLE>

                                      F-21

<PAGE>   41

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  An additional provision for taxes was recorded during the
         second quarter of the fiscal year of $1.5 million for probable
         liabilities arising from tax audits in progress. The full liability
         assessed by the tax authorities was approximately $3.0 million which,
         at the request of the tax authorities, the Company paid into an escrow
         account during the third quarter of fiscal 1998 pending the outcome of
         an appeal. The escrow amount was included in other assets at June 30,
         1998.

                  The tax effect of significant temporary differences
         representing deferred tax assets and liabilities at June 30, 1997 and
         1998 were as follows (in thousands):

<TABLE>
<CAPTION>
CURRENT ASSETS (LIABILITIES):                  1997             1998
                                               ----             ----
<S>                                          <C>             <C>
      Accrued liabilities                    $  1,655        $  2,427
      Foreign tax credits                        --              --
      Net operating losses                       --            13,563
      Prepaid and other current assets            212           2,768
      Bad debts                                   130             115
                                             --------        --------
                                                1,997          18,873
      Valuation allowance                        (405)        (14,082)
                                             --------        --------
      Net current assets                        1,592           4,791
                                             --------        --------


NON-CURRENT ASSETS (LIABILITIES):

      Fixed assets & intangibles                 (200)            496
      Net operating losses                      4,113             226
      Other liabilities                           222              88
                                             --------        --------
                                                4,135             810
      Valuation allowance                      (3,412)           (358)
                                             --------        --------
      Net non-current assets                      723             452
                                             --------        --------

      Deferred taxes, net                    $  2,315        $  5,243
                                             ========        ========
</TABLE>



                  As of June 30, 1998, there was available for foreign income
         tax purposes net operating loss carryforwards of approximately $
         45,096,000 which expire as follows: 1999: $199,000, 2000: $146,000,
         2001: $357,000, 2002: $2,343,000 and thereafter: $42,051,000.

                  The undistributed earnings of foreign subsidiary companies for
         which deferred U.S. income taxes have not been provided at June 30,
         1997 and June 30, 1998 because of permanent reinvestment of earnings in
         the operations of those subsidiaries, amounted to $15,272,000 and
         $1,041,000, respectively. It is not practicable to estimate the amount
         of tax that might be payable on the eventual remittance of such
         earnings. On remittance, certain foreign countries impose withholding
         taxes. The amount of withholding taxes that would be payable on
         remittance of the entire amount of such undistributed earnings would
         approximate $3,727,000 and $206,000 at June 30, 1997 and June 30, 1998,
         respectively.

                                      F-22


<PAGE>   42

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12.      EMPLOYEE BENEFIT PLANS

                  Subsidiaries of PMSI in the United Kingdom, Holland, Japan and
         the United States have defined contribution pension or profit sharing
         plans covering substantially all their employees. The total costs
         associated with these plans for the years ended June 30, 1996, 1997 and
         1998 were $729,000, $1,245,000 and $1,007,000, respectively.

13.      LEASE OBLIGATIONS & OTHER COMMITMENTS

                  Various PMSI subsidiaries lease certain property and
         equipment. Obligations under long-term non-cancelable lease agreements
         expiring at various dates have the following aggregate approximate
         annual minimum rentals (in thousands):


<TABLE>
<CAPTION>
                                                           Capital           Operating
                                                           -------           ---------
<S>                                                     <C>                <C>
1999                                                            $ 120            $ 2,060
2000                                                               83              1,702
2001                                                               11              1,430
2002                                                                -              1,121
After 2002                                                          -                832
                                                        -------------      -------------
                                                                  214            $ 7,145
                                                                           =============
Less amount representing interest                                 (39)
                                                        -------------
Present value of minimum lease payments                           175

Less current portion                                              (61)
                                                        -------------
                                                                $ 114
                                                        -------------
</TABLE>

                  Operating lease rental expense for the years ended June 30,
         1996, 1997 and 1998 was $1,471,000, $1,559,000 and $1,676,000,
         respectively. Included in furniture, fixtures and equipment are assets
         subject to capitalized leases with an original cost of $337,000 (1997:
         $1,332,000) and accumulated amortization of $166,000 (1997: $351,000).

                                      F-23

<PAGE>   43

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14.      GEOGRAPHIC DATA

                  The following table presents certain financial information by
         geographic area (in thousands):

<TABLE>
<CAPTION>
                      As of and For the Year Ended
                             June 30, 1998
                             -------------

                                       Operating      Identifiable
                         Revenues     Income(Loss)       Assets
                         --------     ------------       ------
<S>                      <C>          <C>             <C>
United States            $ 37,052       $  7,221        $ 26,976
Europe and Pacific         40,914         (3,837)         48,339
General corporate            --          (33,133)        111,043
                         --------       --------        --------
Total                    $ 77,966       $(29,749)       $186,358
                         ========       ========        ========
</TABLE>

<TABLE>
<CAPTION>
                      As of and For the Year Ended
                             June 30, 1997
                             -------------

                                       Operating      Identifiable
                         Revenues     Income(Loss)       Assets
                         --------     ------------       ------
<S>                      <C>          <C>             <C>
United States            $ 47,555       $  9,552        $ 32,142
Europe and Pacific         50,930          2,887          74,694
General corporate            --           (4,915)         60,366
                         --------       --------        --------
Total                    $ 98,485       $  7,524        $167,202
                         ========       ========        ========
</TABLE>

<TABLE>
<CAPTION>
                      As of and For the Year Ended
                             June 30, 1996
                             -------------

                                       Operating      Identifiable
                         Revenues     Income(Loss)       Assets
                         --------     ------------       ------
<S>                      <C>          <C>             <C>
United States            $ 41,421       $  5,566        $ 28,023
Europe and Pacific         51,256          1,508          56,614
General corporate             350         (6,554)         45,900
                         --------       --------        --------
Total                    $ 93,027       $    520        $130,537
                         ========       ========        ========
</TABLE>

                                      F-24

<PAGE>   44

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15.      SUPPLEMENTAL OPERATIONS STATEMENT DATA

                  Advertising costs are charged to costs and expensed as
         incurred and for the years ended June 30, 1996, 1997 and 1998 amounted
         to $1,308,000, $1,391,000 and $893,000, respectively.

16.      RESTRUCTURING COSTS

                  During the third quarter of fiscal 1996, following the
         completion of a strategic review of the Company's operations, the
         Company recorded a $2.3 million ($1.3 million after tax) restructuring
         charge for elimination of non-core product lines. These products were
         unprofitable and there was no assurance of future profitability. The
         charge related primarily to the write-off of prepaid data acquisition
         expenses and severance payments. The $2.3 million charge included
         estimated cash payments of $1.5 million and non-cash asset write-offs
         of $0.8 million. The balance of the restructuring liability as of June
         30, 1996 was $0.9 million, which was fully utilized during fiscal year
         1997.

17.      IMPAIRMENT

                  During the third quarter of fiscal 1996, following the
         completion of a strategic review of the Company's entire operations,
         management concluded that, as well as divesting the non-database
         businesses, the value of certain long-lived assets recorded in its
         balance sheet could not be recovered, based upon a discounted cash flow
         analysis, due to changes in market conditions. Therefore, in accordance
         with Statement of Financial Accounting Standard No. 121, "Accounting
         for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
         Disposed of" and the Company's existing accounting policy, the Company
         recorded a pre-tax charge of $2.4 million ($1.6 million after tax).
         This principally related to the write-off of goodwill and capitalized
         database costs arising on the acquisition of database businesses now
         being exited.

                                      F-25

<PAGE>   45

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18.      ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

                  During the third quarter of fiscal 1996, the Company announced
         its decision to develop its business as a focused information services
         provider to the pharmaceutical and healthcare industries and that its
         European marketing and communication businesses would be divested.
         These businesses, comprising the non-database segment of PMSI's
         operations, were accounted for as discontinued operations and,
         accordingly, their operations through divestment have been segregated
         in the accompanying statements of operations.

                  During the second quarter of fiscal 1997, the Company recorded
         an additional net charge for the loss on disposal of the discontinued
         operations of $9.9 million. The charge was based upon the Company's
         quarterly review of the assumptions used in determining the estimated
         loss relating to the discontinued operations. This further charge was
         principally the result of revisions to the original estimates of
         expected net proceeds from the remaining businesses to be sold. The
         estimated proceeds from the French point of sale marketing business,
         IMR, were reduced by $9.6 million following an independent valuation
         report commissioned as part of the process of preparing the memorandum
         of sale. A net increase in the estimated loss on sale of the remainder
         of the discontinued businesses accounted for a $0.3 million charge due
         to changes in estimated sale proceeds. All discontinued businesses were
         sold during the measurement period except IMR.

                  Summary operating results of the discontinued operations for
         the years ended June 30, 1996 and 1997 were as follows:

<TABLE>
<CAPTION>
                                                              Year Ended
                                                               June 30,
                                                               --------
                                                         1996            1997
                                                         ----            ----
<S>                                                    <C>             <C>
Results of discontinued operations:
Revenue                                                $ 44,849        $   --
Income (loss) from operations:
Income (loss) before taxes                               (2,288)           --
Income tax provision                                       (917)           --
                                                       --------        --------

Loss from discontinued operations                        (3,205)           --

Loss on disposal of discontinued operations, net           --
  of taxes of $1,236 and $0, respectively                (5,710)         (9,914)
                                                       --------        --------
Loss from discontinued operations                      $ (8,915)       $ (9,914)
                                                       ========        ========
</TABLE>



                  The operating loss from discontinued operations for the nine
         months to March 31, 1997, when the measurement period ended, was $1.3
         million net of income taxes.

                  At the end of the measurement period and at June 30, 1997, IMR
         was the only operation that had not been sold and in accordance with
         EITF 90-6, its net assets, together with the remaining accrual for the
         loss expected to be generated on disposition, were reclassified to net
         current assets held

                                      F-26

<PAGE>   46

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         for sale and net assets held for sale in the balance sheet at June 30,
         1997. IMR's operating result for the fourth quarter of fiscal 1997 was
         recorded in operating income as a separate item "income from assets
         held for sale". The revenues attributable to assets held for sale in
         the fourth quarter of fiscal 1997 and in the year ended June 30, 1998
         were $5.2 million and $8.8 million, respectively.

                  On March 31, 1998, the Company divested IMR for consideration
         of approximately $3.2 million in cash. The assets sold included cash
         and cash equivalents of $1.2 million. A net charge of $8.0 million
         relating to IMR is reflected in the statement of operations for the
         year ended June 30, 1998. This comprises a pre-tax loss on sale in the
         third quarter (after selling costs) of $2.1 million, an impairment
         charge of $14.7 million in the second quarter and a total tax benefit
         of $8.8 million.

19.       INCOME (LOSS) PER SHARE

                  The Company has adopted the Financial Accounting Standards
         Board issued Statement of Financial Accounting Standards No. 128,
         "Earnings per Share" ("SFAS 128"). Basic per share amounts are computed
         using the weighted average number of shares of Common Stock
         outstanding. Diluted per share amounts include common equivalent
         shares, where dilutive, (using the treasury stock method) from stock
         options and convertible debt. The prior periods presented have been
         restated applying SFAS 128.

                  For the years ended June 30, 1996 and 1998 the effects of
         common stock equivalents on the per share amounts were anti-dilutive
         and accordingly such amounts were excluded from the computations. For
         the year ended June 30, 1997, the effects of common stock equivalents
         or per share amounts were not material.

                  These calculations are summarized below:

<TABLE>
<CAPTION>
                                                                       Year Ended June 30,
                                                            1996               1997               1998
                                                            ----               ----               ----
<S>                                                      <C>                <C>                <C>
Weighted average common shares outstanding
Shares used in computing basic earnings per share        13,123,998         13,186,564         12,771,195

Assumed exercise of in the money
  stock options                                             980,700          1,283,950          1,543,600

Less assumed buy-back under the treasury
  stock method                                             (706,082)        (1,173,193)        (1,185,368)
                                                        -----------        -----------        -----------
Shares used in computing diluted earnings per
  share if the result is dilutive                        13,398,616         13,297,321         13,129,427
                                                        ===========        ===========        ===========
</TABLE>


                  Options to purchase 887,500, 607,800 and 450,300 shares of
         common stock at prices ranging from $13.50 to $22.00 were outstanding
         at June 30, 1996, 1997 and 1998, respectively, but were not included in
         the computation of diluted earnings per share amounts for those years
         because the options exercise price was greater than the average market
         price of the common shares.

                                      F-27

<PAGE>   47

             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  The convertible debentures have not been assumed converted for
         the diluted earnings per share as the effect would be anti-dilutive.
         Had the convertible debentures been included, the number of shares
         would have increased by 3,450,000 for each of the years ended June 30,
         1996, 1997 and 1998. The reduced interest expense would have had a
         favorable impact on net income (loss) of $2,588,000 for each of these
         years.

20.       SALE OF NON-US OPERATING ASSETS

                  On August 5, 1998 the Company announced that it had completed
         the sale of its non-US operations, with the exception of its Source and
         PMSI targeting businesses in Belgium, to IMS Health Incorporated ("IMS
         Health") for consideration of 1,197,963 shares of IMS Health common
         stock. IMS Health has an option to purchase the Company's businesses in
         Belgium within a three-month period.

                  As of June 30, 1998, the total assets and total liabilities of
         the non-US operations totaled $48.4 million and $33.8 million,
         respectively. Total revenues for the year ended June 30, 1998 from the
         non-US operations totaled $40.9 million.

                  This transaction superseded the merger agreement signed with
         Cognizant Corporation ("Cognizant") on March 23, 1998, whereby IMS
         Health (as assignee of Cognizant) would have acquired all outstanding
         shares of PMSI common stock.

21.       RETIREMENT OF DEBENTURES

                  Between September 2, 1998 and September 15, 1998 the Company
         redeemed an aggregate amount of $14.7 million of its 6.25% Convertible
         Subordinated Debentures due in 2003. The debentures were redeemed at
         87% of the principal amount with interest accrued through the date of
         redemption.


22.       STOCKHOLDER RIGHTS PLAN

                  On December 30, 1997, the Board of Directors of the Company
         adopted a stockholder rights plan (the "Rights Plan") and declared a
         distribution of one common share purchase right (a "Right") for each
         outstanding share of common stock, $.01 par value (the "Common
         Shares"), of the Company. The distribution was payable to the
         stockholders of record on January 9, 1998. The Rights will
         automatically trade with the Company's common stock. Additional rights
         are issuable upon subsequent issuances of common stock by the Company
         so long as the Rights Plan is in effect.

                  The Rights are not currently exercisable but become
         exercisable upon the earlier of (i) ten days following the first public
         announcement that a person or group, which did not beneficially own 5%
         of the common stock as of December 30, 1997, has acquired beneficial
         ownership of 15% or more of the Company's common stock, and (ii) ten
         business days following the announcement of an offer the consummation
         of which would result in the beneficial ownership by a person or group
         of 15% or more of the Company's common stock.

                  Once exercisable, the holder will be entitled to buy from the
         Company one-third (1/3) of a

                                      F-28

<PAGE>   48
             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Common Share of the Company at a price of $60 per one-third of a Common
         share or in certain circumstances to buy at the Rights exercise price a
         number of shares of the Company's common stock having a market value of
         twice the exercise price of each Right or, if the Company is acquired
         in a merger or a business combination, to buy at the Rights exercise
         price a number of shares of common stock of an acquiring company having
         a market value of twice the exercise price of each Right. At the
         Company's option the Rights are redeemable prior to becoming
         exercisable for $0.001 per Right. The Rights expire on the close of
         business on the tenth anniversary of the Rights Agreement.

                                      F-29
<PAGE>   49
                        REPORT OF INDEPENDENT ACCOUNTANTS
                         ON FINANCIAL STATEMENT SCHEDULE

                                                           Stamford, Connecticut
                                                           August 14, 1998


The Board of Directors and Stockholders of
Pharmaceutical Marketing Services Inc.




         Our report on the consolidated financial statements of Pharmaceutical
Marketing Services 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 19 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.





                                                   PricewaterhouseCoopers L.L.P.



                                       S-1
<PAGE>   50
             PHARMACEUTICAL MARKETING SERVICES INC. AND SUBSIDIARIES
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                    YEARS ENDED JUNE 30, 1996, 1997 AND 1998



<TABLE>
<CAPTION>
          Col. A                       Col. B                 Col. C                              Col. D                Col. E
------------------------------   --------------------  ------------------                     -----------------   -----------------

                                                                    Additions                          
                                     Balance at           Charged to         Charged to                            Balance at
                                    Beginning of           Costs and            Other                                End of
Descriptions                           Period              Expenses           Accounts        Deductions             Period
------------------------------   --------------------  ------------------  ----------------   -----------------   -----------------

<S>                              <C>                   <C>                 <C>                <C>                 <C>
Allowance for doubtful
accounts

June 30, 1996                              $ 415,000             207,000                 -            (222,000)          $ 400,000
June 30, 1997                              $ 400,000             246,000                 -            (258,000)          $ 388,000
June 30, 1998                              $ 388,000             461,000                 -            (311,000)          $ 538,000

Valuation allowance
for deferred tax assets

June 30, 1996                             $2,576,000                   -                 -          (1,145,000)        $ 1,431,000
June 30, 1997                             $1,431,000           2,386,000                 -                   -         $ 3,817,000
June 30, 1998                             $3,817,000           1,200,000        13,240,000          (3,817,000)        $14,440,000
</TABLE>



                                      S-2
<PAGE>   51
                                     
                                    PART III

         Pursuant to General Instruction G(3) to the Annual Report on Form 10K,
the information required by Part III of Form 10-K is hereby incorporated by
reference from the Registrant's definitive Proxy Statement for its annual
meeting of stockholders, which is to be filed pursuant to Regulation 14A not
later than October 28, 1998.


                                       S-3
<PAGE>   52
                                     PART IV

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

              (a)(1-2) Financial Statements and Schedule

              See Index to Financial Statements and Schedule on page 19 of this 
              Annual Report.


              EXHIBITS

              Exhibit
              Number

              2.1         Transfer and Exchange Agreement, dated as of October
                          11, 1991, between Walsh International Inc. and
                          Pharmaceutical Marketing Services Inc. (incorporated
                          by reference to Exhibit 2.1 to the Registrant's
                          Registration Statement Number 33-43226)

              2.2         Merger Agreement and Plan of Reorganization, dated
                          October 11, 1991, by and between Walsh International
                          Inc., Pharmaceutical Marketing Services Inc. and SLA
                          Acquisition Corp., on the one hand, and Scott-Levin
                          Associates, Inc., Joy Scott and Larry Levin, on the
                          other (incorporated by reference to Exhibit 2.2 to the
                          Registrant's Registration Statement Number 33-43226)

              2.3         English translation of Agreement for the Sale and
                          Purchase of the Shares of IMR S.A. (translation for
                          information purposes only) (incorporated by reference
                          to Exhibit 2.1 to the Registrant's Current Report on
                          Form 8-K filed May 13, 1993)

              2.4         Contrat pour l'Achat et la Vente des Actions de la
                          Societe IMR S.A. (incorporated by reference to Exhibit
                          2.2 to the Registrant's Current Report on Form 8-K
                          filed May 13, 1993)

              2.5         Sale and Purchase Agreement dated July 30, 1997 by and
                          among Bugamor Databases BV, PMSI Nederland BV and PMSI
                          Bugamor Inc. (as sellers), and Excerpta Medica Medical
                          Communications BV and Elsevier Science Inc. (as
                          purchasers) (incorporated by reference to Exhibit 2.2
                          to the Registrant's Current Report on Form 8-K filed
                          August 19, 1997)

              3.1         Certificate of Incorporation of Pharmaceutical
                          Marketing Services Inc. and Amendment thereto
                          (incorporated by reference to Exhibit 3.1 to the
                          Registrant's Registration Statement No. 33-43226)

              3.2         By-laws of Pharmaceutical Marketing Services Inc.
                          (incorporated by reference to Exhibit 3.2 to the
                          Registrant's Registration Statement No. 33-43226)


                                      S-4
<PAGE>   53
              3.3         Amendment to Certificate of Incorporation of
                          Pharmaceutical Marketing Services Inc.

              4.1         Indenture, dated as of February 1, 1993, between
                          Pharmaceutical Marketing Services Inc., and Harris
                          Trust Company of New York, Trustee (incorporated by
                          reference to Exhibit 4.1 to the Registrant's Annual
                          Report on Form 10-K filed March 30, 1993)

              10.1(a)(i)  Purchase and Sale Agreement, dated as of April 1,
                          1994, by and between Walsh Belgium N.V. and PMSI
                          Belgium, S.A.

              10.1(a)(ii) Purchase and Sale Agreement, dated as of April 1,
                          1994, by and among Walsh Nederland B.V., Walsh Medical
                          Data and Research B.V. and PMSI Bugamor B.V.

              10.1(b)     Amended and Restated Alpha Database License Agreement,
                          dated as of July 1, 1994 by and between Walsh America
                          Limited and Pharmaceutical Data Services, Inc., on the
                          one hand, and Pharmaceutical Marketing Services Inc.,
                          on the other.

              10.1(c)     Physician Database License Agreement, dated as of
                          December 2, 1991, by and between Walsh International
                          Inc. and Pharmaceutical Marketing Services Inc.
                          (incorporated by reference to Exhibit 10.1(c) to the
                          Registrant's Registration Statement No. 33-43226)

              10.1(d)     Management and Executive Services Agreement, dated as
                          of December 2, 1991, by and between Walsh
                          International Inc., Pharminfo Advisors Limited and
                          Informed Management Limited, on the one hand, and
                          Pharmaceutical Marketing Services Inc., on the other
                          (incorporated by reference to Exhibit 10.1(d) to the
                          Registrant's Registration Statement No. 33-43226)

              10.1(e)     Data Processing Agreement, dated as of December 2,
                          1991, by and between Walsh International Inc. and
                          Pharmaceutical Marketing Services Inc. (incorporated
                          by reference to Exhibit 10.1(e) to the Registrant's
                          Registration Statement No. 33-43226)

              10.1(f)     Facilities Agreement, dated as of December 2, 1991, by
                          and between Walsh International Inc. and
                          Pharmaceutical Marketing Services Inc. (incorporated
                          by reference to Exhibit 10.1(f) to the Registrant's
                          Registration Statement No. 33-43226)

              10.1(g)     Collaborative Marketing Agreement, dated as of
                          December 2, 1991, by and between Walsh America Limited
                          and Pharmaceutical Data Services, Inc., on the one
                          hand, and Pharmaceutical Marketing Services Inc. and
                          American Medical Census Corp., on the other
                          (incorporated by reference to Exhibit 10.1(g) to the
                          Registrant's Registration Statement No. 33-43226)

              10.1(h)     Health and Benefits Agreement, dated as of December 2,
                          1991, by and between Walsh International Inc. and
                          Pharmaceutical Marketing Services Inc. (incorporated
                          by reference to Exhibit 10.1(h) to the Registrant's
                          Registration Statement No. 33-43226)

              *10.1(i)    Mailing Services Agreement, dated as of December 2,
                          1991, by and between Walsh International Inc. and
                          Pharmaceutical Marketing Services Inc. (incorporated
                          by reference to Exhibit 10.1(i) to the Registrant's
                          Registration Statement No. 33-43226)


                                      S-5
<PAGE>   54
              10.1(j)     English translation of Warranty Agreement (translation
                          for information purposes only) (incorporated by
                          reference to Exhibit 3.1 to the Registrant's Current
                          Report on Form 8-K filed May 13, 1993)

              10.1(k)     Contrat de Garantie (incorporated by reference to
                          Exhibit 3.2 to the Registrant's Current Report on Form
                          8-K filed May 13, 1993)

              10.1(l)     English translation of Agreement for the Supply of
                          Services (translation for information purposes only)
                          (incorporated by reference to Exhibit 4.1 to the
                          Registrant's Current Report on Form 8-K filed May 13,
                          1993)

              10.1(m)     Contrat de Prestations de Services (incorporated by
                          reference to Exhibit 4.2 to the Registrant's Current
                          Report on Form 8-K filed May 13, 1993)

              10.1(n)     English translation of Put Option (translation for
                          information purposes only) (incorporated by reference
                          to Exhibit 5.1 to the Registrant's Current Report on
                          Form 8-K filed May 13, 1993)

              10.1(o)     Promesse Unilaterale de Vente d'Actions (incorporated
                          by reference to Exhibit 5.2 to the Registrant's
                          Current Report on Form 8-K filed May 13, 1993)

              10.1(p)     English translation of Call Option (translation for
                          information purposes only) (incorporated by reference
                          to Exhibit 6.1 to the Registrant's Current Report on
                          Form 8-K filed May 13, 1993)

              10.1(q)     Purchase Agreement, dated as of August 3, 1998, among
                          IMS Helath Incorporated, Pharmaceutical Marketing
                          Services Inc., PMSI Holdings Limited and Source
                          Informatics European Holdings LLC (incorporated by
                          reference to Exhibit 2 to the Registrant's Current
                          Report on Form 8-K filed August 18, 1998)

              10.2(a)     Pharmaceutical Marketing Services Inc. and its
                          Subsidiaries Stock Option and Restricted Stock
                          Purchase Plan (incorporated by reference to Exhibit
                          10.2 to the Registrant's Registration Statement No.
                          33-43226)

              10.2(b)     Pharmaceutical Marketing Services Inc. Non-Employee
                          Directors' Stock Option Plan (incorporated by
                          reference to Exhibit 4.3 to the Registrant's
                          Registration Statement No. 33-66306)

              10.2(c)     Pharmaceutical Marketing Services Inc. 1998 Employee
                          Stock Plan

              22.1        List of subsidiaries of Pharmaceutical Marketing
                          Services Inc. (incorporated by reference to Exhibit
                          22.1 to the Registrant's Registration Statement No.
                          33-43226)

              23          Consent of PricewaterhouseCoopers L.L.P.

*        Certain portions of this Exhibit have been omitted pursuant to an order
         of the Securities and Exchange Commission granting confidential
         treatment.

              (b)         Reports on Form 8-K filed during the three months
                          ended June 30, 1998.

              (i)         Form 8-K filed April 3, 1998 reporting the execution
                          of a merger agreement with Cognizant Corporation (that
                          has since been terminated)


                                      S-6
<PAGE>   55
              (ii)        Form 8-K filed April 14, 1998 reporting the sale of
                          IMR Finance S.A.

                          Financial statements filed:

                          Unaudited Pro Forma Consolidated Balance Sheet at
                          December 31, 1997

                          Unaudited Pro Forma Consolidated Statement of
                          Operations for the Fiscal Year Ended June 30, 1997

                          Unaudited Pro Forma Consolidated Statement of
                          Operations for the Six Months Ended December 31, 1997

                          Notes to Pro Forma Financial Statements


                                      S-7
<PAGE>   56
                                   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:  September 15, 1998

                                PHARMACEUTICAL MARKETING SERVICES INC.


                                By /s/ Raymund M. Davies
                                   ---------------------------------------------
                                      Raymund M. Davies
                                      Vice President and Chief Financial Officer


                                POWER OF ATTORNEY

              Each person whose individual signature appears below hereby
authorizes Dennis M.J. Turner, Frederick W. Kyle and Raymund Davies, 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.

<TABLE>
<CAPTION>
Signature                                    Title                                               Date
---------                                    -----                                               ----


<S>                                  <C>                                                  <C> 

/s/ Dennis M.J. Turner               Director, Chief Executive Officer                    September 15, 1998
---------------------------------
    Dennis M.J. Turner


/s/ Frederick W. Kyle                Director                                             September 15, 1998
-----------------------------------
    Frederick W. Kyle


/s/ Robert J. Frattaroli             Director                                             September 15, 1998
----------------------------------
    Robert J. Frattaroli


/s/ Raymund M. Davies                Vice President, Chief Financial                      September 15, 1998
---------------------                Officer and Treasurer   
    Raymund M. Davies     


/s/  Carolyne K. Davis               Director                                             September 15, 1998
-----------------------
    Carolyne K. Davis
</TABLE>



                                      S-8
<PAGE>   57
<TABLE>
<CAPTION>
<S>                                          <C>                                        <C> 
/s/ Robert A. Schwed                         Director                                   September 15, 1998
--------------------------
    Robert A. Schwed


/s/ Carlos Gonzales                          Director                                   September 15, 1998
--------------------------
    Carlos Gonzales
</TABLE>



                                      S-9
<PAGE>   58
                                INDEX TO EXHIBITS



        
Exhibit                                                 
Number                              Description
-------                             -----------

                                                                              
2.1            Transfer and Exchange Agreement, dated as of October 11, 1991,
               between Walsh International Inc. and Pharmaceutical Marketing
               Services Inc. (incorporated by reference to Exhibit 2.1 to the
               Registrant's Registration Statement Number 33-43226)

2.2            Merger Agreement and Plan of Reorganization, dated October 11,
               1991, by and between Walsh International Inc., Pharmaceutical
               Marketing Services Inc. and SLA Acquisition Corp., on the one
               hand, and Scott-Levin Associates, Inc., Joy Scott and Larry
               Levin, on the other (incorporated by reference to Exhibit 2.2
               to the Registrant's Registration Statement Number 33-43226)

2.3            English translation of Agreement for the Sale and Purchase of
               the Shares of IMR S.A. (translation for information purposes
               only) (incorporated by reference to Exhibit 2.1 to the
               Registrant's Current Report on Form 8-K filed May 13, 1993)

2.4            Contrat pour l'Achat et la Vente des Actions de la Societe IMR
               S.A. (incorporated by reference to Exhibit 2.2 to the
               Registrant's Current Report on Form 8-K filed May 13, 1993)

2.5            Sale and Purchase Agreement dated July 30, 1997 by and among
               Bugamor Databases BV, PMSI Nederland BV and PMSI Bugamor Inc.
               (as sellers), and Excerpta Medica Medical Communications BV
               and Elsevier Science Inc. (as purchasers) (incorporated by
               reference to Exhibit 2.2 to the Registrant's Current Report on
               Form 8-K filed August 19, 1997)

3.1            Certificate of Incorporation of Pharmaceutical Marketing
               Services Inc. and Amendment thereto (incorporated by reference
               to Exhibit 3.1 to the Registrant's Registration Statement No.
               33-43226)

3.2            By-laws of Pharmaceutical Marketing Services Inc.
               (incorporated by reference to Exhibit 3.2 to the Registrant's
               Registration Statement No. 33-43226)

                                             


                                      S-11
<PAGE>   59
3.3               Amendment to Certificate of Incorporation of Pharmaceutical
                  Marketing Services Inc.

4.1               Indenture, dated as of February 1, 1993, between
                  Pharmaceutical Marketing Services Inc., and Harris Trust
                  Company of New York, Trustee

10.1(a)(i)        Purchase and Sale Agreement, dated as of April 1, 1994, by and
                  between Walsh Belgium N.V. and PMSI Belgium, S.A.

10.1(a)(ii)       Purchase and Sale Agreement, dated as of April 1, 1994, by and
                  among Walsh Nederland  B.V., Walsh  Medical Data and Research
                  B.V. and PMSI Bugamor B.V.

10.1(b)           Amended and Restated Alpha Database License Agreement, dated
                  as of July 1, 1994 by and between Walsh America Limited and
                  Pharmaceutical Data Services, Inc., on the one hand, and
                  Pharmaceutical Marketing Services Inc., on the other.

10.1(c)           Physician Database License Agreement, dated as of December 2,
                  1991, by and  between Walsh International Inc. and
                  Pharmaceutical Marketing Services Inc. (incorporated by
                  reference to Exhibit 10.1(c) to the Registrant's Registration
                  Statement No. 33-43226)

10.1(d)           Management and Executive Services Agreement, dated as of
                  December 2, 1991, by and between Walsh International Inc.,
                  Pharminfo Advisors Limited and Informed Management Limited, on
                  the one hand, and Pharmaceutical Marketing Services Inc., on
                  the other (incorporated by reference to Exhibit 10.1(d) to the
                  Registrant's Registration Statement No. 33-43226)

10.1(e)           Data Processing Agreement, dated as of December 2, 1991, by
                  and between Walsh International Inc. and Pharmaceutical
                  Marketing Services Inc. (incorporated by reference to Exhibit
                  10.1(e) to the Registrant's Registration Statement No.
                  33-43226)

10.1(f)           Facilities  Agreement, dated as of December 2, 1991, by
                  and between Walsh International Inc. and Pharmaceutical
                  Marketing Services Inc.  



                                      S-12
<PAGE>   60
                  (incorporated by reference to Exhibit 10.1(f) to the
                  Registrant's Registration Statement No. 33-43226)

10.1(g)           Collaborative Marketing Agreement, dated as of December 2,
                  1991, by and between Walsh America Limited and Pharmaceutical
                  Data Services, Inc., on the one hand, and Pharmaceutical
                  Marketing Services Inc. and American Medical Census Corp., on
                  the other (incorporated by reference to Exhibit 10.1(g) to the
                  Registrant's Registration Statement No. 33-43226)

10.1(h)           Health and Benefits Agreement, dated as of December 2, 1991,
                  by and between Walsh International Inc. and Pharmaceutical
                  Marketing Services Inc. (incorporated by reference to Exhibit
                  10.1(h) to the Registrant's Registration Statement No.
                  33-43226)

*10.1(i)          Mailing Services Agreement, dated as of December 2, 1991, by
                  and between Walsh International Inc. and Pharmaceutical
                  Marketing Services Inc. (incorporated by reference to Exhibit
                  10.1(i) to the Registrant's Registration Statement No.
                  33-43226)

10.1(j)           English translation of Warranty Agreement (translation for
                  information purposes only) (incorporated by reference to
                  Exhibit 3.1 to the Registrant's Current Report on Form 8-K
                  filed May 13, 1993)

10.1(k)           Contrat de  Garantie (incorporated by reference to Exhibit 3.2
                  to the  Registrant's Current Report on Form 8-K filed May 13,
                  1993)

10.1(l)           English translation of Agreement for the Supply of Services
                  (translation for information purposes only) (incorporated by
                  reference to Exhibit 4.1 to the Registrant's Current Report on
                  Form 8-K filed May 13, 1993)

10.1(m)           Contrat de Prestations de Services (incorporated by reference
                  to Exhibit 4.2 to the Registrant's Current Report on Form 8-K
                  filed May 13, 1993)

10.1(n)           English translation of Put Option (translation for information
                  purposes only) (incorporated by reference to Exhibit 5.1 to
                  the Registrant's Current Report on Form 8-K filed May 13,
                  1993)


                                      S-13
<PAGE>   61
10.1(o)           Promesse Unilaterale de Vente d'Actions (incorporated by
                  reference to Exhibit 5.2 to the Registrant's Current Report on
                  Form 8-K filed May 13, 1993)

10.1(p)           English translation of Call Option (translation for
                  information purposes only) (incorporated by reference to
                  Exhibit 6.1 to the Registrant's Current Report on Form 8-K
                  filed May 13, 1993)

10.1(q)           Purchase Agreement, dated as of August 3, 1998, among IMS
                  Helath Incorporated, Pharmaceutical Marketing Services Inc.,
                  PMSI Holdings Limited and Source Informatics European Holdings
                  LLC (incorporated by reference to Exhibit 2 to the
                  Registrant's Current Report on Form 8-K filed August 18, 1998)

10.2(a)           Pharmaceutical Marketing Services Inc. and its Subsidiaries
                  Stock Option and Restricted Stock Purchase Plan (incorporated
                  by reference to Exhibit 10.2 to the Registrant's Registration
                  Statement No. 33-43226)

10.2(b)           Pharmaceutical Marketing Services Inc. Non-Employee Directors'
                  Stock Option Plan (incorporated by reference to Exhibit 4.3 to
                  the Registrant's Registration Statement No. 33-66306)

10.2(c)           Pharmaceutical marketing Services Inc. 1998 Employee Stock
                  Plan

22.1              List of subsidiaries of Pharmaceutical Marketing Services Inc.
                  (incorporated by reference to Exhibit 22.1 to the Registrant's
                  Registration Statement No. 33-43226)

23                Consent of PricewaterhouseCoopers L.L.P.

27                Financial Data Schedule

* Certain portions of this Exhibit have been omitted pursuant to an order of the
Securities and Exchange Commission granting confidential treatment.


                                      S-14