SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


                                    FORM 10-Q

(Mark one)

(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the quarterly period ended September 30, 1999

                                       OR

(_)  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

                        Commission file number 001-14049


                             IMS Health Incorporated
             (Exact name of registrant as specified in its charter)

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

     200 Nyala Farms, Westport, CT                         06880
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code (203) 222-4200

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:


             Title of Class                         Shares Outstanding
             Common Stock,                         at September 30, 1999
        par value $.01 per share                        307,927,288

<PAGE>


                             IMS HEALTH INCORPORATED

                               INDEX TO FORM 10-Q


PART I. FINANCIAL INFORMATION
                                                                         PAGE(S)
                                                                         -------
Item 1. Financial Statements (Unaudited)

Condensed Consolidated Statements of Income
     Three Months Ended September 30, 1999 and 1998                         3
     Nine Months Ended September 30, 1999 and 1998                          4

Condensed Consolidated Statements of Comprehensive Income
     Three Months Ended September 30, 1999 and 1998                         5
     Nine Months Ended September 30, 1999 and 1998                          5

Condensed Consolidated Statements of Financial Position
     September 30, 1999 and December 31, 1998                               6

Condensed Consolidated Statements of Cash Flows
     Nine Months Ended September 30, 1999 and 1998                          7

Notes to Condensed Consolidated Financial Statements                       9-21

Item 2. Management's Discussion and Analysis of Financial
     Condition and Results of Operations                                  22-35

PART II.  OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K                                    36

SIGNATURES                                                                  37


                                       2

<PAGE>


IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                        Three Months Ended
                                                                                          September 30,
                                                                                      1999             1998
                                                                                 -------------------------------
<S>                                                                              <C>              <C>
Operating Revenue                                                                   $348,409         $283,606

Operating Costs                                                                      131,298          112,364
Selling and Administrative Expenses                                                   94,865           87,468
Depreciation and Amortization                                                         26,288           25,102
Direct Acquisition Integration Costs                                                       0           43,019
Acquired In-Process Research and Development                                               0           10,900
----------------------------------------------------------------------------------------------------------------
Operating Income                                                                      95,958            4,753
----------------------------------------------------------------------------------------------------------------
Interest Income                                                                        2,591            7,241
Interest Expense                                                                      (2,138)            (335)
Gains from Dispositions--Net                                                           4,313           12,047
Other Expense--Net                                                                    (3,221)          (3,441)
----------------------------------------------------------------------------------------------------------------
Non-Operating Income--Net                                                              1,545           15,512
----------------------------------------------------------------------------------------------------------------
Income Before Provision for Income Taxes                                              97,503           20,265
Provision for Income Taxes                                                           (27,263)          (5,479)
----------------------------------------------------------------------------------------------------------------
Income from Continuing Operations                                                     70,240           14,786
Income from Discontinued Operations, Net of Income Taxes of $931 and $7,261
  for 1999 and 1998, respectively                                                      1,384           10,169
----------------------------------------------------------------------------------------------------------------
Net Income                                                                          $ 71,624         $ 24,955
----------------------------------------------------------------------------------------------------------------
Basic Earnings Per Share of Common Stock:
   Income from Continuing Operations                                                   $0.23            $0.05
   Income from Discontinued Operations                                                  0.00             0.03
----------------------------------------------------------------------------------------------------------------
Basic Earnings Per Share of Common Stock                                               $0.23            $0.08
----------------------------------------------------------------------------------------------------------------
Diluted Earnings Per Share of Common Stock:
   Income from Continuing Operations                                                   $0.22            $0.04
   Income from Discontinued Operations                                                  0.00             0.03
----------------------------------------------------------------------------------------------------------------
Diluted Earnings Per Share of Common Stock                                             $0.22            $0.07
----------------------------------------------------------------------------------------------------------------

Average Number of Shares Outstanding--Basic                                      311,159,000      328,102,000
Dilutive Effect of Shares Issuable as of Period-End Under Stock Option Plans       6,185,000        8,110,000
Adjustment of Shares Applicable to Exercised Stock Options                           328,000        1,468,000
----------------------------------------------------------------------------------------------------------------
Average Number of Shares Outstanding--Diluted                                    317,672,000      337,680,000
----------------------------------------------------------------------------------------------------------------
</TABLE>

See  accompanying  notes  to the  Condensed  Consolidated  Financial  Statements
(unaudited).  The third quarter of 1998 for the IMS operating units includes the
three months ended August 31, 1998. (See Note 2. Basis of Presentation).


                                       3

<PAGE>


IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                                    Nine Months Ended
                                                                                                      September 30,
                                                                                                  1999             1998
                                                                                             -------------------------------
<S>                                                                                          <C>              <C>
Operating Revenue                                                                               $994,303         $795,070

Operating Costs                                                                                  412,659          391,819
Selling and Administrative Expenses                                                              293,047          244,560
Depreciation and Amortization                                                                     75,174           68,303
Direct Acquisition Integration Costs                                                                   0           48,019
Acquired In-Process Research and Development                                                           0           32,800
----------------------------------------------------------------------------------------------------------------------------
Operating Income                                                                                 213,423            9,569
----------------------------------------------------------------------------------------------------------------------------
Interest Income                                                                                    6,371           16,110
Interest Expense                                                                                  (4,672)            (747)
Gain on Sale of Subsidiary Stock                                                                       0           12,777
Gains from Dispositions--Net                                                                      20,590           22,462
Other Expense--Net                                                                               (11,457)          (8,688)
----------------------------------------------------------------------------------------------------------------------------
Non-Operating Income--Net                                                                         10,832           41,914
----------------------------------------------------------------------------------------------------------------------------
Income Before Provision for Income Taxes                                                         224,255           51,483
Provision for Income Taxes                                                                       (64,048)         (26,703)
----------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations                                                                160,207           24,780
Income from Discontinued Operations, Net of Income Taxes of $12,635 and $38,780
  for 1999 and 1998, respectively                                                                 25,695           82,902
----------------------------------------------------------------------------------------------------------------------------
Net Income                                                                                      $185,902         $107,682
----------------------------------------------------------------------------------------------------------------------------
Basic Earnings Per Share of Common Stock:
   Income from Continuing Operations                                                               $0.51            $0.08
   Income from Discontinued Operations                                                              0.08             0.25
----------------------------------------------------------------------------------------------------------------------------
Basic Earnings Per Share of Common Stock                                                           $0.59            $0.33
----------------------------------------------------------------------------------------------------------------------------
Diluted Earnings Per Share of Common Stock:
   Income from Continuing Operations                                                               $0.50            $0.07
   Income from Discontinued Operations                                                              0.08             0.25
----------------------------------------------------------------------------------------------------------------------------
Diluted Earnings Per Share of Common Stock                                                         $0.58            $0.32
----------------------------------------------------------------------------------------------------------------------------

Average Number of Shares Outstanding--Basic                                                  314,431,000      326,474,000
Dilutive Effect of Shares Issuable as of Period-End Under Stock Option Plans                   6,810,000        6,432,000
Adjustment of Shares Applicable to Exercised Stock Options                                       565,000        4,220,000
----------------------------------------------------------------------------------------------------------------------------
Average Number of Shares Outstanding--Diluted                                                321,806,000      337,126,000
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

See  accompanying  notes  to the  Condensed  Consolidated  Financial  Statements
(unaudited). The Statement of Income at September 30, 1998 for the IMS operating
units  includes the nine months  ended  August 31,  1998.  (See Note 2. Basis of
Presentation).


                                       4

<PAGE>


IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                                 Three Months Ended
                                                                                                    September 30,
                                                                                                 1999          1998
                                                                                               ----------------------
<S>                                                                                            <C>          <C>
Net Income                                                                                     $  71,624    $  24,955
Other Comprehensive Income, Net of Tax:

   Foreign Currency Translation Adjustments Gains                                                 10,301          175

   Unrealized Gains/(Losses) on Securities:
      Unrealized Holding Gains/(Losses) on Securities Arising During the Period:
         Other (Net of Tax Benefit of $502 for 1998)                                                   4       (1,329)
         Gartner (Net of Tax Expense at $10,195 for 1999)                                         18,934           --
   Less: Reclassification Adjustment for Gains included in Net Income (Net of Tax
       Expense of $1,410 and $2,302 for 1999 and 1998, respectively)                              (3,738)      (6,100)
---------------------------------------------------------------------------------------------------------------------
   Net Change in Unrealized Gains (Losses) on Investments                                         15,200       (7,429)
---------------------------------------------------------------------------------------------------------------------
Total Other Comprehensive Income (Loss), Net of Tax                                               25,501       (7,254)
---------------------------------------------------------------------------------------------------------------------
Comprehensive Income                                                                           $  97,125    $  17,701
---------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                                  Nine Months Ended
                                                                                                    September 30,
                                                                                                 1999          1998
                                                                                               ---------    ---------
<S>                                                                                            <C>          <C>
Net Income                                                                                     $ 185,902    $ 107,682
Other Comprehensive Income, Net of Tax:

   Foreign Currency Translation Adjustments Losses                                               (21,133)      (9,421)

   Unrealized Gains/(Losses) on Securities:
      Unrealized Holding Gains/(Losses) on Securities Arising During the Period:
         Other (Net of Tax Benefit of $710 and $2,440 for 1999 and 1998,
         respectively)                                                                            (1,880)      (6,464)
         Gartner (Net of Tax Expense at $10,195 for 1999)                                         18,934           --
   Less: Reclassification Adjustment for Gains included in Net Income (Net of Tax
       Expense of $4,212 and $1,557 for 1999 and 1998, respectively)                             (11,161)      (4,126)
---------------------------------------------------------------------------------------------------------------------
   Net Change in Unrealized Gains (Losses) on Investments                                          5,893      (10,590)
---------------------------------------------------------------------------------------------------------------------
Total Other Comprehensive Loss, Net of Tax                                                       (15,240)     (20,011)
---------------------------------------------------------------------------------------------------------------------
Comprehensive Income                                                                           $ 170,662    $  87,671
---------------------------------------------------------------------------------------------------------------------
</TABLE>

See  accompanying  notes  to the  Condensed  Consolidated  Financial  Statements
(unaudited). The Statement of Comprehensive Income at September 30, 1998 for the
IMS  operating  units  includes the three and nine months ended August 31, 1998,
respectively. (See Note 2. Basis of Presentation).

In the third  quarter and first nine months of 1999,  Unrealized  Holding  Gains
include $18,934 of unrealized  gains, net of $10,195 of tax expense,  related to
the Company's Gartner Group holdings, classified in Net Assets from Discontinued
Operations. (See Note 2. Basis of Presentation).

The Company has significant  investments outside of the U.S. Therefore,  changes
in the value of foreign currencies affect the Company's  Condensed  Consolidated
Financial Statements when translated into U.S. dollars. The currency translation
adjustment excludes the offsetting impact of the Company's hedging program. (See
Note 8. Financial Instruments with Off-Balance Sheet Risk).


                                       5

<PAGE>


IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)

(Dollar amounts in thousands, except per share data)

                                                    September 30,   December 31,
                                                        1999            1998
                                                    ----------------------------
Assets:
Current Assets:
     Cash and Cash Equivalents                       $  230,714      $  206,390
     Accounts Receivable-Net                            246,991         324,219
     Other Current Assets                               106,236         103,868
     Net Assets from Discontinued Operations            100,356         240,708
--------------------------------------------------------------------------------
         Total Current Assets                           684,297         875,185
--------------------------------------------------------------------------------
Securities and Other Investments                         82,455         106,276
Property, Plant and Equipment-Net                       170,550         179,151
Other Assets-Net:
     Computer Software                                  174,989         168,994
     Goodwill                                           344,123         363,841
     Other Assets                                        23,915          25,928
--------------------------------------------------------------------------------
         Total Other Assets-Net                         543,027         558,763
--------------------------------------------------------------------------------
Total Assets                                         $1,480,329      $1,719,375
--------------------------------------------------------------------------------

Liabilities and Shareholders' Equity:
Current Liabilities:
      Short Term Debt                                $  168,834      $   39,169
      Accounts Payable                                   48,197          51,715
      Accrued and Other Current Liabilities             222,353         298,625
      Accrued Income Taxes                               81,900          32,537
      Deferred Revenues                                 102,349         128,272
--------------------------------------------------------------------------------
         Total Current Liabilities                      623,633         550,318
--------------------------------------------------------------------------------
Post-retirement and Post-employment Benefits             27,943          27,577
Minority Interests                                      120,628         116,225
Other Liabilities                                       191,634         199,985
--------------------------------------------------------------------------------
Total Liabilities                                       963,838         894,105
--------------------------------------------------------------------------------
Shareholder's Equity:
Common Stock, Par Value $.01,
  Authorized 800,000,000 Shares:
    Issued 335,045,390 Shares in September 1999
    and December 1998 respectively                        3,350           3,350
Capital in Excess of Par                                732,088         732,014
Retained Earnings                                       720,413         686,653
Treasury Stock, at Cost, 27,118,102 and
  16,303,690 Shares at September 1999 and
  December 1998, respectively                          (866,753)       (535,971)
Cumulative Translation Adjustment                      (101,873)        (84,149)
Unrealized Gains on Gartner Group                        18,934               0
Unrealized Gains on Investments                          10,332          23,373
--------------------------------------------------------------------------------
Total Shareholders' Equity                              516,491         825,270
--------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity           $1,480,329      $1,719,375

See  accompanying  notes  to the  Condensed  Consolidated  Financial  Statements
(unaudited).  The  Financial  Position  at  December  31,1998  includes  the IMS
operating units as of November 30,1998. (See Note 2. Basis of Presentation).


                                       6

<PAGE>


IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                       Nine Months Ended September 30,
                                                                             1999         1998
                                                                       -------------------------------
<S>                                                                        <C>          <C>
Cash Flows from Operating Activities:
     Net Income                                                            $ 185,902    $ 107,682
     Less Income from Discontinued Operations                                (25,695)     (82,902)
------------------------------------------------------------------------------------------------------
Income from Continuing Operations                                            160,207       24,780
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
     Depreciation and Amortization                                            75,174       68,303
     Gains from Sale of Investments, Net                                     (20,590)     (22,462)
     Write-off of Purchased In-Process Research and Development                    0       32,800
     Direct Acquisition Integration Costs                                          0       48,019
     Benefit Payments                                                        (10,469)      (2,748)
     Net Decrease in Accounts Receivable                                      24,414       29,790
     Net (Decrease)/Increase in Deferred Revenues                            (16,583)      14,161
     Gain from Sale of Subsidiary Stock                                            0      (12,777)
     Minority Interests                                                        4,189        7,012
     Deferred Income Taxes                                                    (2,338)       1,118
     Net increase in Accrued Income Taxes                                     46,006        3,999
     Other Working Capital Items                                             (28,252)     (36,436)
------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                                    231,758      155,559
------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
     Proceeds from Sale of Investments                                        46,759       42,432
     Acquisition and Integration Payments                                    (28,248)           0
     Payments for Acquisition of Businesses                                   (3,100)      (2,938)
     Cash of Companies Acquired in Stock Purchases                                 0       11,895
     Capital Expenditures                                                    (23,243)     (20,375)
     Additions to Software                                                   (44,496)     (45,428)
     Net Increase in Other Investments                                       (16,500)     (20,705)
     Other Investing Activities - Net                                          8,355        4,369
------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities                                        (60,473)     (30,750)
------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
     Payments for Purchase of Treasury Stock                                (359,859)    (510,867)
     Proceeds from Exercise of Stock Options                                  22,669       61,638
     Proceeds from the Sale and Issuance of Subsidiary Stock                       0       27,128
     Dividends Paid                                                          (18,923)     (14,805)
     Proceeds from Employee Stock Purchase Plan                                3,514        3,403
     Proceeds from Debt Assumed by Nielsen Media Research                          0      300,000
     Short-Term Borrowings                                                   243,443       35,165
     Short-Term Debt Repayments                                             (113,306)           0
     Other Financing Activities - Net                                           (213)      (1,877)
------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities                                       (222,675)    (100,215)
------------------------------------------------------------------------------------------------------
 Effect of Exchange Rate Changes on Cash and Equivalents                      (7,827)      (7,618)
 Effect of the elimination of the one-month reporting lag                     30,664            0
 Cash Flow from Discontinued Operations                                       52,877      (17,173)
------------------------------------------------------------------------------------------------------
 Increase/(Decrease) in Cash and Cash Equivalents                             24,324         (197)
 Cash and Cash Equivalents, Beginning of Period                              206,390      312,442
------------------------------------------------------------------------------------------------------
 Cash and Cash Equivalents, End of Period                                  $ 230,714    $ 312,245
------------------------------------------------------------------------------------------------------
</TABLE>

See  accompanying  notes  to the  Condensed  Consolidated  Financial  Statements
(unaudited).  The  Statement  of Cash  Flows  for the nine  month  period  ended
September  30, 1998 for the IMS operating  units  includes the nine months ended
August 31, 1998. (See Note 2. Basis of Presentation).


                                       7

<PAGE>


IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                      Nine Months Ended September 30,
                                                            1999          1998
                                                          --------      --------
<S>                                                       <C>           <C>
Supplemental Disclosure of Cash Flow Information:

Cash Paid during the Period for Interest                  $  4,731      $    747
Cash Paid during the Period for Income Taxes              $ 57,478      $ 65,313
Cash received from Income Tax Refunds                     $ 42,449      $  6,832

Non-Cash Investing Activities:
    Stock Issued in Connection with Acquisitions                --      $243,854
    Dividend of Gartner Shares                            $134,259            --
</TABLE>

See  accompanying  notes  to the  Condensed  Consolidated  Financial  Statements
(unaudited).


                                       8

<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Unaudited)
(Dollar amounts in thousands, except per share data)


Note 1.   Interim Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and Article 10 of Regulation S-X under the Securities and
Exchange  Act  of  1934,  as  amended.  The  condensed   consolidated  financial
statements and related notes should be read in conjunction with the consolidated
financial statements and related notes of IMS Health Incorporated (the "Company"
or "IMS  Health")  in the 1998  Annual  Report on Form  10-K.  Accordingly,  the
accompanying  condensed consolidated financial statements do not include all the
information and notes required by generally accepted  accounting  principles for
complete financial statements. In the opinion of management,  all adjustments of
a normal  recurring  nature  considered  necessary  for a fair  presentation  of
financial  position,  results  of  operations  and cash  flows  for the  periods
presented  have  been   included.   Certain   prior-period   amounts  have  been
reclassified to conform to the 1999 presentation.

Note 2.   Basis of Presentation

This  document  relates  to IMS  Health.  The  Common  Stock of IMS  Health  was
distributed by Cognizant Corporation  ("Cognizant"),  which subsequently changed
its name to Nielsen Media Research, Inc. ("NMR"), to Cognizant's shareholders on
June  30,  1998  (the  "Distribution").  The  condensed  consolidated  financial
statements  of  the  Company  have  been   reclassified  to  reflect  NMR  as  a
discontinued operation for periods up to and including June 30, 1998.

IMS Health  consists of the market  information  and decision  support  services
business  for the  pharmaceutical  and  healthcare  industries  conducted by IMS
Health  and  various   subsidiaries   ("IMS")  including  IMS  Health  Strategic
Technologies, Inc. ("Strategic Technologies"); ERISCO Managed Care Technologies,
Inc.  ("Erisco");  Enterprise  Associates LLC  ("Enterprises") and a controlling
interest  (approximately  61% of shares  outstanding)  in  Cognizant  Technology
Solutions Corporation ("CTS").

On July 26, 1999, having received the approval of Gartner Group Inc. ("Gartner")
shareholders  and the Boards of Directors  of both the Company and Gartner,  the
Company completed a spin-off of the majority of its equity investment in Gartner
to IMS Health shareholders (the "Gartner Spin-Off").  The distribution consisted
of 0.1302 shares of Gartner Class B Common Stock for each share of the Company's
Common  Stock  outstanding  on the July 17, 1999  record  date and totaled  40.7
million Gartner Class B shares. The condensed  consolidated financial statements
of the Company have been  reclassified for all periods  presented to reflect the
Gartner equity investment as a discontinued  operation.  (See Note 3. Investment
in Gartner Group Stock).


                                       9

<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Unaudited)
(Dollar amounts in thousands, except per share data)


Note 2.   Basis of Presentation (continued)

A summary of Gartner and Nielsen Media Research as discontinued operations is as
follows:

Results of Operations
<TABLE>
<CAPTION>
                                                           Three Months Ended              Nine Months Ended
                                                              September 30,                   September 30,
                                                        -------------------------       -------------------------
                                                          1999            1998            1999            1998
                                                        -------------------------       -------------------------
<S>                                                     <C>             <C>             <C>             <C>
Operating Revenue - Nielsen Media Research              $      --       $      --       $      --       $ 193,996

Income Before Provision for Income Taxes -
   Nielsen Media Research                                      --              --              --          57,980
Equity Income and SAB 51 Gains ($1,459 and
   $14,838 for the three and nine month periods in
   1998, respectively) Before Provision for Income
   Taxes - Gartner                                          2,315          17,430          38,330          63,702
                                                        -------------------------       -------------------------
Provision for Income Taxes - Nielsen Media Research            --              --              --         (15,887)
Provision for Income Taxes - Gartner                         (931)         (7,261)        (12,635)        (22,893)
Income from Discontinued Operations                     $   1,384       $  10,169       $  25,695       $  82,902
                                                        =========================       =========================
</TABLE>

Elimination of one-month reporting lag in IMS operating entities

Effective in the first  quarter of 1999,  IMS operating  units which  previously
reported on a fiscal year ended  November 30 revised their  reporting  period to
conform to the Company's  fiscal year ended  December 31. The 1998 third quarter
and year-to-date  results for the IMS operating units include the three and nine
months ended  August 31. The $1,040 of net income  related to the results of the
IMS  operating  units for the period  December 1 through  December  31, 1998 was
recorded as an  addition  to  Retained  Earnings.  In  addition,  December  1998
included  a  $3,409  credit  that  was  recorded  as  a  cumulative  translation
adjustment.   The  following   table  presents  IMS  operating  units  condensed
consolidated financial information for the one month ended December 31, 1998.

                                                               One Month Ended
                                                              December 31, 1998
     --------------------------------------------------------------------------
     Revenue                                                      $ 71,754

     Operating Income                                                1,137

     Income Before Provision for Income Taxes                        1,432
     Provision for Income Taxes                                       (392)
                                                               --------------
     Net Income                                                   $  1,040
                                                               ==============
     Earnings Per IMS Health Share                                $  0.003


                                       10

<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Unaudited)
(Dollar amounts in thousands, except per share data)


Note 2.   Basis of Presentation (continued)

The following table presents IMS operating  units cash flow  information for the
one month ended December 31, 1998:

                                                               One Month Ended
                                                              December 31, 1998
     --------------------------------------------------------------------------
     Net Cash Provided by Operating Activities                    $ 30,852
     Net Cash Used in Investing Activities                          (3,645)
     Net Cash Provided by Financing Activities                       2,276
     Effect of Exchange Rate Changes on Cash and Cash
          Equivalents                                                1,181
                                                               --------------
     Increase in Cash and Cash Equivalents                        $ 30,664
                                                               ==============


Note 3.   Investment in Gartner Group Stock

On November  11,  1998 the Company  announced  that its Board of  Directors  had
approved a plan, subject to numerous conditions,  to spin-off  substantially all
of its equity ownership of Gartner. The transaction was structured as a tax-free
distribution  of  Gartner  stock  to IMS  Health  shareholders  and the  Company
received a favorable ruling from the Internal Revenue Service ("IRS").

On July 16, IMS Health and Gartner  Board of Directors  approved the final plan,
terms and  conditions  governing  the spin-off of the  Company's  investment  in
Gartner  Group.  Accordingly,  pursuant to Accounting  Principles  Board No. 30,
"Reporting  the  results of  Operations  - Effects of Disposal of a Segment of a
Business  and  Extraordinary,  Unusual  and  Infrequently  Occuring  Events  and
Transactions",  the condensed  consolidated  financial statements of the Company
have been  reclassified to reflect  Gartner equity  investment as a discontinued
operation for all periods presented.

Gartner  declared a special  cash  dividend  which was paid on July 23,  1999 to
holders of record on July 16,  1999.  IMS  Health's  portion of the dividend was
$52,877,  net of taxes, and is included as Cash from Discontinued  Operations in
the Condensed Consolidated Statements of Cash Flow.

On July 16, 1999,  the Company's  Board of Directors  declared a dividend of all
Gartner Class B Shares, which was distributed on July 26, 1999 to holders of the
Company's Common Stock of record as of July 17, 1999. The tax-free  distribution
consisted of 0.1302  Gartner  Class B Shares for each  outstanding  share of the
Company's  Common  Stock  (the  "Gartner  Distribution").  The net assets of the
Gartner discontinued operations at December 31, 1998 were $240,708.  Income from
discontinued  operations for the nine month period ended  September 30, 1999 was
$25,695,  net of taxes of $12,635.  The  allocated  value of the Gartner Class B
Shares distributed was $132,104 and was recorded as a reduction of net assets of
discontinued operations and Dividend of Gartner Shares. The allocated


                                       11

<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Unaudited)
(Dollar amounts in thousands, except per share data)


Note 3.   Investment in Gartner Group Stock (continued)

value was calculated  from the original cost of the shares and the  proportional
allocation of the earnings from past periods,  less the net dividend received on
the shares prior to the Distribution.

The  Company's  remaining  investment in Gartner  consists of 6,909,457  Gartner
Class A Shares and warrants to purchase a further 599,400 Gartner Class A Shares
(at a cost basis of  $81,422).  The Company  expects to monetize  the  remaining
position in Gartner.  Accordingly,  the net assets from discontinued  operations
are included in current assets.  The Company's  Gartner Class A shares have been
accounted for as "available for sale"  securities under SFAS No. 115 "Accounting
for Certain Investments in Debt and Equity  Securities".  The unrealized gain as
of the date of the Gartner Distribution (based on a per share price of $22.75 on
Gartner Stock) was $51,716 (net of taxes of $27,847),  and was recorded as Other
Comprehensive  Income and included as a component of equity.  Subsequent changes
in the  per  share  price  of  Gartner  Stock  from  the  date  of  the  Gartner
Distribution  to  September  30,  1999  (based on a per share price of $16.00 on
Gartner  Stock)  generated  an  unrealized  loss of  $32,782  (net of  taxes  of
$17,652),  which was also recorded as Other Comprehensive Income and included as
a  component  of equity.  Upon sale of these  securities,  the  unrealized  gain
related to those securities  measured based on the value of Gartner shares as of
the  date  of the  Gartner  Distribution  will  be  recognized  in  Discontinued
Operations.  Gains or losses  in the fair  value  subsequent  to the date of the
Gartner  Distribution will be recognized in Continuing  Operations as shares are
sold.

Holders of options to purchase the Company's stock did not receive shares in the
Gartner  Distribution.  Consequently,  options granted under the Company's plans
were adjusted to recognize the effect of the Gartner Distribution.  The options,
as  adjusted,  represented  as  increase in the number of shares  issuable  when
exercised  but had the same ratio of the exercise  price to the market value per
share, the same aggregate difference between market value and exercise price and
the same vesting  provisions,  option  periods and other terms and conditions as
the options  prior to the  adjustment.  The option  adustment  was  performed in
accordance with the provisions of EITF90-9.  Accordingly, no compensation charge
was required for this options adjustment.

Note 4.   Dispositions

During the third  quarter of 1999,  the Company  recorded  $4,313 of pre-tax net
gains due primarily to the sale of Enterprises  investments in TSI International
Software Ltd. and Pegasus Systems Inc.  Pre-tax cash received from  dispositions
in the quarter amounted to $7,602.

Year-to-date the Company has recorded $20,590 of pre-tax net gains due primarily
to the sale of Super Systems  Japan kk ("SSJ") and  Enterprises  investments  in
edata  resources  Inc.,  Oacis  Healthcare  Inc.,  Pegasus  Systems Inc. and TSI
International  Software Ltd.  Pre-tax cash received  year-to-date as a result of
dispositions was $46,759.

Note 5.   Acquisitions

During the first  quarter of 1999,  the  Company  acquired  100% of the stock of
PharmaFELAX  Kft., a  pharmaceutical  information  company based in Hungary.  In
connection with the acquisition, the Company recorded goodwill of $3,100.


                                       12

<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Unaudited)
(Dollar amounts in thousands, except per share data)


Note 5.   Acquisitions (continued)

Walsh Acquisition

On June 24, 1998,  Cognizant acquired Walsh International,  Inc. ("Walsh").  The
final purchase price was $193,748, including $167,148 of Cognizant common stock,
$9,521 for Cognizant stock options issued and $17,079 of direct  acquisition and
integration costs.

Walsh shareholders  received 6,454,600 shares of Cognizant common stock,  issued
from treasury stock,  with a market value of $167,148.  The original estimate of
direct acquisition and integration costs consisted of severance ($4,876),  lease
terminations  ($2,569)  and  other  direct  acquisition  and  integration  costs
($9,634).  These  acquisition  and  integration  costs were incurred as a direct
result of the plan to exit certain activities as part of the overall integration
effort  (such as  severance  costs  related  to  Walsh  employees)  and  certain
contractual costs (such as Walsh leases).  Incurred  acquisition and integration
costs to date are within original projections.  The Company incurred higher-than
anticipated  severance  costs and  restructured  acquired Walsh leases at a cost
lower than  originally  anticipated  and,  as a result,  reduced  the  remaining
liability  for  acquisition   and  integration   costs  and  goodwill  by  $890.
Approximately  $155,667 (originally  $156,557) was recorded as the excess of the
purchase price over the fair value of identifiable net assets (goodwill),  which
is being amortized on a straight-line basis over 15 years.

PMSI Acquisition

On August 5, 1998, IMS Health acquired certain non-U.S. assets of Pharmaceutical
Marketing  Services  Inc.  ("PMSI").  The final  purchase  price  was  $103,291,
consisting of IMS Health common stock ($75,292), IMS Health stock options issued
($5,415) and direct acquisition and integration costs ($22,584).

PMSI received 2,395,926 shares of IMS Health common stock,  issued from treasury
stock,  with a  market  value  of  $75,292.  The  original  estimate  of  direct
acquisition  and  integration  costs  consisted  of  severance  ($3,794),  lease
terminations  ($1,623),   contract  cancellation  ($10,935),  and  other  direct
acquisition  and  integration  costs  ($6,232).  The acquisition and integration
costs  were  incurred  as a direct  result of the  formal  plan to exit  certain
activities as part of the overall  integration  effort (such as severance  costs
related to PMSI employees) and certain  contractual  cancellation costs (such as
PMSI contracts and leases).  $115,275 was recorded as the excess of the purchase
price over the fair value of identifiable net assets (goodwill),  which is being
amortized on a straight-line basis over 15 years.

Purchase Price Allocation

In  connection  with both the  Walsh and PMSI  acquisitions,  the  Company  made
allocations  of  the  purchase  price  to  acquired   in-process   research  and
development ("IPR&D") amounting to $21,900 in the second quarter of 1998 related
to the Walsh acquisition and $10,900 in the third quarter of 1998 related to the
PMSI acquisition. At the date of the respective acquisitions, the development of
the  IPR&D  projects  had  not  reached  technological  feasibility  and  had no
alternative  future  uses.  Accordingly,  these  costs were  expensed  as of the
respective acquisition dates.


                                       13

<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Unaudited)
(Dollar amounts in thousands, except per share data)


Note 5.   Acquisitions (continued)

In accordance  with  Securities  and Exchange  Commission  guidance,  the amount
allocated to IPR&D reflects the relative value and  contribution of the acquired
IPR&D.  Consideration  was  given  to the  projects'  stage of  completion,  the
complexity of the work  completed to date,  the  difficulty  of  completing  the
remaining  development,  the costs already  incurred and the  projected  cost to
complete the projects.

In addition, the Company allocated $29,000 in the Walsh businesses and $7,700 in
the PMSI businesses to existing core technology,  representing computer software
that is currently in use. Such amounts are being amortized over 5 years.

The  allocation of the Company's  aggregate  purchase  price to the tangible and
identifiable  intangible  assets acquired and liabilities  assumed in connection
with these  acquisitions  was based  primarily on estimates of fair values by an
independent  appraisal  firm.  The  initial  allocations,   prior  to  the  $890
adjustment to Walsh goodwill referred to above, were:

                                              Walsh        PMSI         Total
     --------------------------------------------------------------------------
     In-process R&D write-off               $  21,900    $  10,900    $  32,800
     Net liabilities assumed                   (5,009)     (28,274)     (33,283)
     Software/ Core technology                 29,000        7,700       36,700
     Deferred taxes                            (8,700)      (2,310)     (11,010)
     Goodwill                                 156,557      115,275      271,832
     --------------------------------------------------------------------------
     Total Purchase Price                   $ 193,748    $ 103,291    $ 297,039
     ==========================================================================

In connection with the PMSI acquisition, the Company evaluated then-existing IMS
Health  product  offerings.  Based on this  strategic  assessment,  the  Company
abandoned certain then- existing IMS Health software products.  Accordingly, the
Company recognized the impairment of certain computer software assets ($36,300),
the  closure of certain  IMS  facilities  ($800) and the  severance  of some IMS
employees  ($5,600).  This resulted in a one-time charge of $43,019  recorded in
the third quarter of 1998 as a component of operating income.

Note 6.   Minority Interests

The Company consolidates the assets, liabilities, results of operations and cash
flows of businesses in which it maintains a controlling interest. Third parties'
ownership  interests  are  reflected  as a minority  interest  on the  Company's
financial statements.  Two of the Company's subsidiaries have contributed assets
to, and participate in, a limited partnership.  One subsidiary serves as general
partner,  and  all  other  partners  hold  limited  partnership  interests.  The
partnership,  which is a separate and distinct legal entity,  is in the business
of licensing  database  assets and computer  software.  In the second quarter of
1997,  third-party investors contributed $100,000 to the partnership in exchange
for minority ownership  interests.  The Company and its subsidiaries  maintain a
controlling  (85%)  interest  in  the  partnership.   The  Company  also  has  a
controlling  interest  in  CTS  (approximately  61% of  the  outstanding  shares
representing  approximately 94.1 % of the voting power) and the related minority
interest at September 30, 1999 was $15,900.


                                       14

<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Unaudited)
(Dollar amounts in thousands, except per share data)


Note 7.   Contingencies

The Company and its  subsidiaries  are involved in legal  proceedings and claims
litigation arising in the ordinary course of business. In addition,  the Company
enters into global tax planning and financing  strategies and initiatives in the
normal course of business which are subject to review by the tax authorities. In
the opinion of  management,  the outcome of such current legal  proceedings  and
claims litigation and tax matters,  if decided adversely,  could have a material
effect on  quarterly or annual  operating  results,  cash flows or  consolidated
financial position when resolved in a future period. The Company has established
reserves  for  specific   liabilities  in  connection  with  these  proceedings,
litigations and tax matters to the extent the Company currently deems them to be
probable and estimatable.  Management does not expect the ultimate resolution of
the foregoing will have a material effect on its financial condition, results of
operations, or cash flows.

In addition,  the Company is subject to certain other  contingencies not arising
in the ordinary course of business as discussed below:

Information Resources Litigation

On July 29, 1996, Information  Resources,  Inc. ("IRI") filed a complaint in the
United States  District Court for the Southern  District of New York,  naming as
defendants D&B, A.C. Nielsen Company and IMS (the "IRI Action").

The complaint  alleges various  violations of the United States  antitrust laws,
including  alleged  violations  of  Sections  1 and 2 of the  Sherman  Act.  The
complaint  also alleges a claim of tortious  interference  with a contract and a
claim of tortious interference with a prospective business  relationship.  These
latter claims relate to the  acquisition by defendants of Survey  Research Group
Limited  ("SRG").  IRI alleges that SRG violated an alleged  agreement  with IRI
when it agreed to be acquired by defendants and that the defendants  induced SRG
to breach that agreement. IRI's complaint alleges damages in excess of $350,000,
which  amount IRI has asked to be trebled  under the  antitrust  laws.  IRI also
seeks punitive damages in an unspecified amount.

In October 15, 1996,  defendants moved for an order dismissing all claims in the
complaint.  On May 6, 1997 the United  States  District  Court for the  Southern
District  of New York  issued a decision  dismissing  IRI's  claim of  attempted
monopolization  in the United  States,  with leave to replead within sixty days.
The Court denied  defendants' motion with respect to the remaining claims in the
complaint.  On June 3, 1997,  defendants  filed an answer  denying the  material
allegations in IRI's  complaint,  and A.C.  Nielsen Company filed a counterclaim
alleging that IRI has made false and  misleading  statements  about its services
and  commercial  activities.  On July 7, 1997, IRI filed an amended and restated
complaint repleading its alleged claim of attempted monopolization in the United
States and realleging its other claims. On August 18, 1997, defendants moved for
an order  dismissing the amended  claims.  On December 1, 1997, the court denied
the motion and, on December 16, 1997,  defendants  filed a  supplemental  answer
denying the remaining material  allegations of the amended complaint.  Discovery
is continuing in this matter.

In light of the potentially  significant  liabilities which could arise from the
IRI  Action  and in  order to  facilitate  the  1996  distribution  by The Dun &
Bradstreet Corporation ("D&B") of shares


                                       15

<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Unaudited)
(Dollar amounts in thousands, except per share data)


Note 7.   Contingencies (continued)

of Cognizant and ACNielsen Corporation ("ACNielsen";  the parent company of A.C.
Nielsen  Company),  D&B,  ACNielsen and Cognizant  entered into an Indemnity and
Joint  Defense   Agreement   pursuant  to  which  they  agreed  (i)  to  certain
arrangements  allocating liabilities that may arise out of or in connection with
the IRI  Action,  and  (ii)  to  conduct  a joint  defense  of such  action.  In
particular,  the Indemnity and Joint Defense  Agreement  provides that ACNielsen
will assume  exclusive  liability for  liabilities  up to a maximum amount to be
calculated  at the time  such  liabilities,  if any,  become  payable  (the "ACN
Maximum Amount") and that Cognizant and D&B will share liability equally for any
amounts in excess of the ACN  Maximum  Amount.  The ACN  Maximum  Amount will be
determined by an investment  banking firm as the maximum amount which  ACNielsen
will be able to pay  after  giving  effect  to (i) any  plan  submitted  by such
investment  bank which is  designed  to maximize  the claims  paying  ability of
ACNielsen without  impairing the investment  banking firm's ability to deliver a
viability  opinion (but which will not require any action requiring  shareholder
approval) and (ii) payment of related fees and expenses.

For these purposes,  financial  viability means the ability of ACNielsen,  after
giving  effect to such plan,  the payment of related  fees and  expenses and the
payment of the ACN  Maximum  Amount,  to pay its debts as they become due and to
finance the current and  anticipated  operating and capital  requirements of its
business,  as  reconstituted  by such plan, for two years from the date any such
plan is expected to be implemented.

IMS Health and Nielsen Media  Research are jointly and  severally  liable to D&B
and ACNielsen for Cognizant's  obligations  under the terms of the  Distribution
Agreement  dated October 28, 1996 among D&B,  Cognizant and ACNielsen (the "1996
Distribution Agreement").

IMS Health and Nielsen Media  Research have agreed that, as between  themselves,
IMS Health will assume 75%, and Nielsen  Media  Research will assume 25%, of any
payments to be made in respect of the IRI Action under the  Indemnity  and Joint
Defense  Agreement or otherwise,  including any legal fees and expenses  related
thereto  incurred  in  1999  or  thereafter.  IMS  Health  agreed  to  be  fully
responsible for any legal fees and expenses incurred during 1998.  Nielsen Media
Research's  aggregate liability to IMS Health for payments in respect of the IRI
Action and certain other contingent liabilities shall not exceed $125,000.

Management of the Company is unable to predict at this time the final outcome of
this matter or whether the resolution of this matter could materially affect the
Company's results of operations, cash flows or financial position.

Other Contingencies

Prior  to the  Distribution,  Cognizant  and IMS  Health  entered  into  certain
agreements that govern the  relationship  between Nielsen Media Research and IMS
Health and provide for the  allocation  of tax,  employee  benefits  and certain
other   liabilities   and   obligations   arising  from  periods  prior  to  the
Distribution.  Among other things,  the  agreements  set forth  principles to be
applied in allocating certain Distribution-related costs and specify portions of
contingent  liabilities,  including  those  described  herein,  to be  shared if
certain  amounts are exceeded,  including  certain  liabilities  to D&B that may
arise in connection with the 1996 Distribution Agreement.


                                       16

<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Unaudited)
(Dollar amounts in thousands, except per share data)


Note 7.   Contingencies (continued)

Cognizant  and D&B entered  into global tax planning  initiatives  in the normal
course of their  business.  These  activities  are  subject to review by the tax
authorities.  As a result of the review process,  uncertainties  exist and it is
possible that some of these matters could be resolved  adversely to Cognizant or
D&B.

The Company has been informed by D&B that the IRS is currently  reviewing  D&B's
utilization of certain  capital  losses during 1989 and 1990.  While D&B has not
received an assessment with respect to these  transactions,  it understands that
the IRS will  challenge  D&B's  position.  The Company has estimated  that D&B's
total cash  liability to the IRS, if an  assessment  were to be made and the IRS
prevail,  would be approximately $444,000 for taxes and accrued interest, net of
tax benefit,  as of September 30, 1999. Under the terms of the 1996 Distribution
Agreement,  the Company is liable to pay half of such taxes and interest, net of
tax benefit,  owed to the IRS to the extent that D&B's total liabilities  exceed
$137,000.  A portion of the  Company's  liability  would in turn be shared  with
Nielsen Media Research  under the  Distribution  Agreement  dated as of June 30,
1998 between IMS Health and Nielsen Media Research.  The Company  estimates that
its share of the  liability,  were the IRS to  prevail,  would be  approximately
$142,000. This liability is included in Other Liabilities.

Management  does not believe  that these  matters  will have a material  adverse
effect on the Company's  consolidated  financial  position or operating  results
when  they are  resolved  in  future  periods.  However,  should  the IRS  issue
assessment notices, payment of the Company's share could have a material adverse
effect on cash flows in the  period in which it is made.  The  Company  believes
that it has more than  sufficient  funds available from operating cash flows and
committed bank lines to cover any such payment  without a material effect on its
liquidity or its financial  condition.  At September  30, 1999,  the Company has
committed short-term borrowing  arrangements with several banks to provide up to
$350,000 of borrowings.

In connection with the Gartner Spin-Off,  the Company and Gartner entered into a
Distribution   Agreement  and  an  Agreement  and  Plan  of  Merger  (the  "1999
Distribution Agreements"). Pursuant to the 1999 Distribution Agreements, Gartner
has agreed to indemnify the Company and its  stockholders  for additional  taxes
which may become  payable as a result of  certain  actions  that may be taken by
Gartner that adversely  affect the tax-free  treatment of the Gartner  Spin-Off.
However,  the Company may become  obligated for certain tax  liabilities  in the
event the Gartner Spin-Off is deemed to be a taxable  transaction as a result of
certain Gartner share transactions that may be undertaken  following the Gartner
Spin-Off.  In the opinion of  management,  it is highly  unlikely  that any such
liabilities will be incurred by the Company.

Note 8.   Financial Instruments with Off-Balance-Sheet Risk

The  Company  transacts  business  in  virtually  every part of the world and is
subject to risks associated with foreign exchange rates. The Company's objective
is to reduce earnings and cash flow volatility  associated with foreign exchange
rates  to  allow  management  to  focus  its  attention  on  its  core  business
activities.  Accordingly,  to protect the value of a portion of foreign currency
revenues and non-functional currency assets and liabilities,  the Company enters
into hedge


                                       17

<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Unaudited)
(Dollar amounts in thousands, except per share data)


Note 8.   Financial Instruments with Off-Balance-Sheet Risk (continued)

agreements  which change in value as foreign  exchange rates change.  By policy,
the Company maintains hedge coverage between minimum and maximum  percentages of
its  anticipated  foreign  exchange  exposures over the next twelve  months,  in
amounts  intended  to protect  operating  income  from the effect on revenues of
fluctuations in currency exchange rates.

It is the Company's policy to enter into foreign  currency hedging  transactions
only to the extent necessary to meet its objectives as stated above. The Company
uses a  variety  of  financial  instruments,  primarily  forward  contracts  and
purchased currency options,  to hedge committed and anticipated foreign currency
denominated  revenues.   The  Company  also  uses  forward  contracts  to  hedge
non-functional  currency  assets  and  liabilities.  The  currencies  hedged are
primarily the Euro,  the Japanese yen and the Swiss franc.  The Company does not
enter into foreign currency transactions for speculative purposes.

Gains and losses on contracts hedging anticipated and committed foreign currency
revenues are deferred  until such revenues are  recognized and offset changes in
the value of such revenues due to fluctuations in currency exchange rates. Gains
and losses on contracts hedging  non-functional  currency assets and liabilities
are not deferred and are included in other expense--net.  At September 30, 1999,
the notional amounts of committed foreign currency  revenues and  non-functional
currency assets and liabilities hedged were $64,266 and $56,226 respectively.

Note 9.   Summary of Recent Accounting Pronouncements

In March 1998,  the  American  Institute of Certified  Public  Accountants  (the
"AICPA") issued Statement of Position ("SOP 98-1"), "Accounting for the Costs of
Computer  Software  Developed or Obtained For Internal  Use." SOP 98-1  provides
guidance on costs to be capitalized, including when capitalization of such costs
should  commence.  SOP  98-1  applies  to costs  incurred  after  its  adoption,
including  costs for internal use software  projects that are in progress at the
time of the adoption. The implementation of SOP 98-1, as of January 1, 1999, did
not have a material effect on the Company's financial statements.


In April 1998, the AICPA issued SOP 98-5,  "Accounting For the Costs of Start-up
Activities."  SOP 98-5 requires all costs of start-up  activities to be expensed
as  incurred.  SOP 98-5 is  effective  for  financial  statements  for the years
beginning after December 15, 1998. The implementation of SOP 98-5, as of January
1, 1999, did not have a material effect on the Company's financial statements.


In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities."  SFAS No. 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value.  In July 1999,
the Financial  Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standard ("SFAS") No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective date of SFAS No.133- an amendment
of FASB Statement No. 133".  Citing concerns about companies'  ability to modify
their  information  systems  in time to apply  SFAS 133,  the FASB  delayed  its
effective  date for one year,  to fiscal  years  beginning  after June 15,  2000
(January 1, 2001 for the Company).  Management continues to evaluate the effects
of SFAS No.133 on the Company's financial statements.


                                       18

<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Unaudited)
(Dollar amounts in thousands, except per share data)


Note 10.  Operations by Business Segment

The  IMS  segment  consists  of IMS,  the  leading  global  provider  of  market
information and  decision-support  services to the pharmaceutical and healthcare
industries,  and Strategic  Technologies,  a leading provider of automated sales
support  technologies  to  the  pharmaceutical  industry.  The  Walsh  and  PMSI
businesses   acquired  in  1998  have  been  integrated  into  the  IMS  segment
operations.  Effective in the first quarter of 1999, the IMS segment's operating
units revised  their  reporting  period to conform to the Company's  fiscal year
ended December 31 (the "Calendarization"). (See Note 2. Basis of Presentation)

The  Emerging   Markets  segment   includes   Erisco,   a  leading  supplier  of
software-based  administrative  and  analytical  solutions  to the managed  care
industry,  and  Enterprises,  the  Company's  venture  capital  unit  focused on
investments  in emerging  businesses.  In 1998,  it included  SSJ, a marketer of
financial  application  software  products  to the  Japanese  market,  which was
divested in the first quarter of 1999.

CTS  delivers  life  cycle  software  development  and  maintenance   technology
consulting  services  through the use of a seamless on-site and offshore project
teams. These services include application  development and maintenance services,
Year 2000 and Eurocurrency  compliance  services,  testing and quality assurance
services and re-hosting and re-engineering services.

Historical results are restated to reflect Gartner and Nielsen Media Research as
discontinued  operations.  (See  Note 2.  Basis of  Presentation).  The  Company
evaluates  the  performance  of its  operating  segments  based on  revenue  and
operating income.


                                       19

<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Unaudited)
(Dollar amounts in thousands, except per share data)


Note 10.  Operations by Business Segment (continued)

<TABLE>
<CAPTION>
                                        Periods Ended September 30, 1999
-------------------------------------------------------------------------------------------------------------------
                                                                                   Emerging
Three Months:                                                            IMS        Markets      CTS        Total
                                                                       --------------------------------------------
<S>                                                                    <C>         <C>         <C>         <C>
Operating Revenue (1)                                                  $317,086    $ 12,246    $ 19,077    $348,409
Segment Operating Income                                                 99,418       2,465       4,169     106,052
General Corporate Expenses (2)                                                                              (10,094)
Interest Income (3)                                                       2,264                     327       2,591
Interest Expense (4)
Non-Operating Income/(Expense):
   Gains from Dispositions                                                            4,313                   4,313
   Other Expense - Net                                                                                       (5,359)
-------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations Before Provision for Income Taxes                                          97,503
Provision for Income Taxes                                                                                  (27,263)
-------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations                                                                            70,240
Income from Discontinued Operations, Net of Income Taxes (5)                                                  1,384
-------------------------------------------------------------------------------------------------------------------
Net Income                                                                                                  $71,624
-------------------------------------------------------------------------------------------------------------------

Nine Months:
Operating Revenue (1)                                                  $905,719    $ 34,472    $ 54,112    $994,303
Segment Operating Income                                                230,139       4,685      12,109     246,933
General Corporate Expenses (2)                                                                              (33,510)
Interest Income (3)                                                       5,249                     853       6,102
Interest Expense (4)                                                       (753)                               (753)
Non-Operating Income/(Expense):
   Gains from Dispositions                                                           20,590                  20,590
   Other Expense - Net                                                                                      (15,107)
-------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations Before Provision for Income Taxes                                         224,255
Provision for Income Taxes                                                                                  (64,048)
-------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations                                                                           160,207
Income from Discontinued Operations, Net of Income Taxes (5)                                                 25,695
-------------------------------------------------------------------------------------------------------------------
Net Income                                                                                                 $185,902
-------------------------------------------------------------------------------------------------------------------
</TABLE>

(See Notes to Operations by Business Segments on next page)


                                       20

<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Unaudited)
(Dollar amounts in thousands, except per share data)


Note 10.  Operations by Business Segment (continued)

<TABLE>
<CAPTION>
                                        Periods Ended September 30, 1998
-------------------------------------------------------------------------------------------------------------------
                                                                                   Emerging
Three Months:                                                            IMS        Markets      CTS        Total
                                                                       --------------------------------------------
<S>                                                                    <C>         <C>         <C>         <C>
Operating Revenue (1)                                                  $257,411    $ 12,463    $ 13,732    $283,606
Segment Operating Income                                                  8,922       1,149       2,453      12,524
General Corporate Expenses (2)                                                                               (7,771)
Interest Income (3)                                                       2,806                     257       3,063
Interest Expense (4)                                                       (178)                               (178)
Non-Operating Income/(Expense):
   Gains from Dispositions - Net                                                     10,248                  10,248
   Other Expense - Net                                                                                        2,379
-------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations Before Provision for Income Taxes                                          20,265
Provision for Income Taxes                                                                                   (5,479)
-------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations                                                                            14,786
Income from Discontinued Operations, Net of Income Taxes (5)                                                 10,169
-------------------------------------------------------------------------------------------------------------------
Net Income                                                                                                 $ 24,955
-------------------------------------------------------------------------------------------------------------------

Nine Months:
Operating Revenue (1)                                                  $730,234    $ 36,306    $ 28,530    $795,070
Segment Operating Income                                                 63,034       1,048       5,141      69,223
General Corporate Expenses (2)                                                                              (59,654)
Interest Income (3)                                                       6,956                     337       7,293
Interest Expense (4)                                                       (558)                               (558)
Non-Operating Income/(Expense):
  Gains from Sale of Subsidiary Stock                                                                        12,777
  Gains from Dispositions - Net                                                                              20,663
  Other Expense  - Net                                                                                        1,739
-------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations Before Provision for Income Taxes                                          51,483
Provision for Income Taxes                                                                                  (26,703)
-------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations                                                                            24,780
Income from Discontinued Operations, Net of Income Taxes (5)                                                 82,902
-------------------------------------------------------------------------------------------------------------------
Net Income                                                                                                 $107,682
-------------------------------------------------------------------------------------------------------------------
</TABLE>

Notes to Operations by Business Segments:

(1)  Excludes intersegment sales in 1999 of $3,799 and $10,688 for the three and
     nine month periods presented, respectively.  Excludes intersegment sales in
     1998 of $2,669 and $10,576 for the three and nine month periods  presented,
     respectively.  These sales, primarily from CTS to IMS, are accounted for on
     a time and materials basis and recognized as the service is performed.

(2)  General Corporate Expenses in 1999 include $2,000 and $9,500 related to the
     Gartner   Spin-Off  for  the  three  and  nine  month  periods   presented,
     respectively.  General Corporate  Expenses in 1998 include one-time charges
     of $35,025 related to the Distribution for the nine month period presented.

(3)  Interest Income in 1999 excludes  amounts recorded at Corporate of $269 for
     the nine month period  presented.  Interest Income in 1998 excludes amounts
     recorded  at  Corporate  of $4,178  and $8,817 for the three and nine month
     periods presented, respectively.

(4)  Interest  expense in 1999 excludes  amounts recorded at Corporate of $2,138
     and $3,919 for the three and nine month  periods  presented,  respectively.
     Interest expense in 1998 excludes amounts recorded at Corporate of $157 and
     $189 for the three and nine month periods presented, respectively.

(5)  Income from Discontinued  Operations,  Net of Income Taxes in 1999 includes
     $1,384 and $25,695  related to Gartner for the three and nine month periods
     presented, respectively. Income from Discontinued Operations, Net of Income
     Taxes in 1998 includes $10,169 and $40,809 related to Gartner for the three
     and nine month periods  presented,  respectively and $42,093 related to NMR
     for the nine month period presented.


                                       21

<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


This  discussion  and  analysis  relates  to IMS  Health  and  should be read in
conjunction with the accompanying  unaudited  condensed  consolidated  financial
statements and related notes. IMS Health consists of the market  information and
decision  support  services  business  for  the  pharmaceutical  and  healthcare
industries  conducted by IMS Health and various  subsidiaries  ("IMS") including
IMS Health  Strategic  Technologies,  Inc.  ("Strategic  Technologies");  ERISCO
Managed  Care  Technologies,   Inc.   ("Erisco");   Enterprise   Associates  LLC
("Enterprises")  and  a  controlling  interest   (approximately  61%  of  shares
outstanding) in Cognizant Technology Solutions Corporation ("CTS").

Forward-Looking Statements

This  Quarterly  Report on Form  10-Q as well as  information  included  in oral
statements or other written statements made or to be made by IMS Health, contain
statements which, in the opinion of IMS Health, may constitute  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995 (the "Litigation  Reform Act").  These statements  appear in a number of
places in this  quarterly  report  and  include,  but are not  limited  to,  all
statements  relating to plans for future growth and other  business  development
activities as well as capital expenditures, financing sources, dividends and the
effects of regulation and  competition,  Y2K readiness and all other  statements
regarding  the  intent,  plans,  beliefs  or  expectations  of IMS Health or its
directors or officers.  Stockholders  are  cautioned  that such  forward-looking
statements are not assurances for future performance or events and involve risks
and  uncertainties  that could cause actual results and  developments  to differ
materially from those covered in such  forward-looking  statements.  These risks
and  uncertainties  include,  but are not  limited  to,  risks  associated  with
operating  on a global  basis,  including  fluctuations  in the value of foreign
currencies  relative to the U.S. dollar,  and the ability to successfully  hedge
such risks;  to the extent IMS Health  seeks  growth  through  acquisition,  the
ability to identify,  consummate  and  integrate  acquisitions  on  satisfactory
terms; the ability to develop new or advanced technologies and systems for their
businesses  on  schedule  and  on  a   cost-effective   basis;  the  ability  to
successfully  achieve  estimated  effective  tax  rates and  corporate  overhead
levels; competition, particularly in the markets for pharmaceutical information;
regulatory  and  legislative  initiatives,  particularly  in the area of medical
privacy;  the  ability  to timely  and  cost-effectively  resolve  any  problems
associated  with the Y2K  issue;  the  ability  to obtain  future  financing  on
satisfactory terms;  deterioration in economic  conditions,  particularly in the
pharmaceutical,  healthcare, or other industries in which customers may operate;
conditions in the securities  markets which may effect the value or liquidity of
portfolio   investments   and   management's   estimates  of  lives  of  assets,
recoverability  of assets,  fair market  value,  estimates and  liabilities  and
accrued   income  tax   benefits   and   liabilities.   Consequently,   all  the
forward-looking  statements  contained in this Quarterly Report on Form 10-Q are
qualified by the information  contained herein,  including,  but not limited to,
the  information  contained  under this heading and the  condensed  consolidated
financial  statements  and notes  thereto  for the three and nine month  periods
ended September 30, 1999. IMS Health is under no obligation to publicly  release
any revision to any  forward-looking  statement contained or incorporated herein
to reflect any future events or occurrences.


                                       22

<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


Spin-Off of Equity Investment in Gartner

On November  11,  1998 the Company  announced  that its Board of  Directors  had
approved a plan, subject to numerous conditions,  to spin-off  substantially all
of its equity ownership of Gartner. The transaction was structured as a tax-free
distribution  of  Gartner  stock  to IMS  Health  shareholders  and the  Company
received a favorable ruling from the Internal Revenue Service ("IRS")  regarding
the tax-free nature of the proposed transaction.

On July 16, IMS Health and Gartner  Board of Directors  approved the final plan,
terms and  conditions  governing  the spin-off of the  Company's  investment  in
Gartner  Group.  Accordingly,  pursuant to Accounting  Principles  Board No. 30,
"Reporting  the  results of  Operations  - Effects of Disposal of a Segment of a
Business  and  Extraordinary,  Unusual  and  Infrequently  Occuring  Events  and
Transactions",  the condensed  consolidated  financial statements of the Company
have been  reclassified to reflect  Gartner equity  investment as a discontinued
operation for all periods  presented.  The Gartner spin transaction is discussed
in more detail in Note 3. Investment in Gartner Group Stock.



                                       23

<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


Walsh Acquisition

On June 24, 1998, Cognizant acquired Walsh International,  Inc. ("Walsh").  (See
Note 5. Acquisitions).  The severance costs included in the final purchase price
are related to  approximately  80 terminated  Walsh  employees.  The outstanding
employee  separation  costs are due to be paid in the fourth quarter of 1999 and
the  first  quarter  of 2000.  The  Company  incurred  higher  than  anticipated
severance  costs and  restructured  acquired  Walsh  leases at a cost lower than
originally  anticipated.  To reflect the net  reduction  in costs,  the original
liability estimate, and goodwill, have been reduced by $890. The following table
displays the status of such activities:

<TABLE>
<CAPTION>
                          Original Liability      Expenditures to                      September 30, 1999
                               Estimate                Date         Reclassifications        Balance
---------------------------------------------------------------------------------------------------------
<S>                            <C>                  <C>                 <C>                  <C>
Employee Separation            $  4,876             $  (4,602)          $  1,278             $ 1,552
Lease Terminations                2,569                  (256)            (2,168)                145
Other Direct Costs                9,634                (9,634)                 0                   0
---------------------------------------------------------------------------------------------------------
Total                          $ 17,079             $ (14,492)          $   (890)            $ 1,697
---------------------------------------------------------------------------------------------------------
</TABLE>

PMSI Acquisition

On August 5, 1998, IMS Health acquired certain non-U.S. assets of Pharmaceutical
Marketing  Services Inc.  ("PMSI").  (See Note 5.  Acquisitions).  The severance
costs  included in the final  purchase  price are related to 63 terminated  PMSI
employees.  As of  September  30,  1999,  the  severance  costs and the costs of
terminating  various  leaseholdings  were  lower  than  originally  anticipated.
However, the Company has incurred higher costs related to contract cancellations
and other costs such as legal fees.  The following  table displays the status of
such activities:


                                       24

<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


<TABLE>
<CAPTION>
                          Original Liability      Expenditures to                      September 30, 1999
                               Estimate                Date         Reclassifications        Balance
---------------------------------------------------------------------------------------------------------
<S>                            <C>                  <C>                 <C>                  <C>
Employee Separation            $  3,794             $  (3,342)          $    (11)            $   441
Lease Terminations                1,623                  (774)              (849)                  0
Contract Cancellations           10,935                (5,345)               835               6,425
Other Direct Costs                6,232                (6,232)          $     25                  25
---------------------------------------------------------------------------------------------------------
Total                          $ 22,584             $ (15,693)          $      0             $ 6,891
---------------------------------------------------------------------------------------------------------
</TABLE>

Purchase Price Allocation

In  connection  with  the  Walsh  and the PMSI  acquisition,  the  Company  made
allocations  of  the  purchase  price  to  acquired   in-process   research  and
development  ("IPR&D").  (See Note 5.  Acquisitions).  Management  continues  to
support the IPR&D  efforts that were  underway at the time of the Walsh and PMSI
acquisitions. IMS Health is currently on target to begin realizing the estimated
benefits from these various  projects  through product  introductions at various
launch dates through  January 2000.  There are currently no material  variations
from the underlying projections and assumptions made at the time of the purchase
price allocations.

Operations

Effective in the first  quarter of 1999,  IMS  operating  units that  previously
reported on a fiscal year ended  November 30 revised their  reporting  period to
conform to the Company's fiscal year ended December 31 (the  "Calendarization").
(See Note 2. Basis of Presentation)

Revenue  for the third  quarter  of 1999  increased  by 22.8% to  $348,409  from
$283,606 for the third quarter of the prior year. Year-to-date revenue increased
25.1% to $994,303 from $795,070 for the comparable period a year ago.  Adjusting
the quarter and year-to-date 1998 for the  Calendarization and the sale of Super
Systems Japan kk ("SSJ"),  revenue  increased by 15.8% and 21.7%,  respectively.
This increase  reflected  double-digit  constant  dollar  revenue growth at IMS,
Erisco and CTS and is further  described  in the  Results  by  Business  Segment
discussion  (below).  The impact of a stronger U.S.  dollar  decreased  reported
revenue by less than 0.5% for the quarter and year-to-date, including the impact
of the Company's hedging program.

Operating  income for the third quarter of 1999 was $95,958,  compared to $4,753
for the third quarter of the prior year.  Operating results in the third quarter
of 1999 and 1998  include  Year 2000 costs ("Y2K  Costs") of $4,189 and $11,780,
respectively.  Adjusting  for Y2K Costs,  1999  charges  related to the  Gartner
Spin-Off ($2,000), the Calendarization  ($11,724),  the 1998 in-process research
and  development  write-off  ($10,900)  and  the  1998  direct  acquisition  and
integration  costs related to the PMSI acquisition  ($43,019),  operating income
for the third quarter of 1999 increased by 24.3%.

Year-to-date  operating  income  was  $213,423  compared  with  $9,569  for  the
comparable  period a year ago.  Year-to-date  operating results in 1999 and 1998
include Y2K Costs of $19,989 and $34,081, respectively. Adjusting for Y2K Costs,
1999  charges  related to the Gartner  Spin-Off  ($9,500),  the  Calendarization
($26,631), 1998 charges related to the Distribution ($35,025), the 1998 research
and development  write-off ($32,800) and 1998 direct acquisition and integration
costs  ($48,019)  related  to the  Walsh  and  PMSI  acquisitions,  year-to-date
operating income for 1999 increased by 30.5%.


                                       25

<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


Operations (continued)

Adjusted  operating  income  growth in the 1999 third  quarter and  year-to-date
outpaced  revenue growth due primarily to the Company's  ability to leverage its
worldwide  resources.  The impact of a stronger U.S. dollar  affected  operating
income  growth  by  less  than  2% in the  third  quarter  and  less  than  0.5%
year-to-date, including the impact of the Company's hedging program.

Non-operating  income-net for the third quarter of 1999 was $1,545 compared with
$15,512 for the third  quarter of the prior year.  The decrease is due primarily
to reduced gains related to the sale of Enterprise investments ($4,823), reduced
interest income from lower cash balances ($4,650) and increased expense on short
term borrowings ($1,803).

Year-to-date  non-operating income-net was $10,832 compared with $41,914 for the
comparable  period a year ago.  The  decrease  is due  primarily  to 1998  gains
related  to the  CTS  IPO  ($12,777),  reduced  gains  related  to the  sale  of
Enterprise investments ($1,872),  reduced interest income on lower cash balances
($9,739) and increased interest expense on short term borrowings ($3,925).

The third quarter 1999  effective tax rate of 28.0%  reflected a  non-deductible
one-time  charge of $2,000  related to the Gartner  Spin-Off.  The third quarter
1998  effective  tax  rate of  27.0%  reflected  the  research  and  development
write-off related to the PMSI acquisition ($10,900),  which did not give rise to
a tax benefit.  The Company's effective tax rate is attributable to numerous tax
planning  initiatives.  For example, to consolidate certain of its international
operations,   in  1999  and  1998  the  Company  engaged  in  certain   non-U.S.
reorganizations which give rise to tax deductable non-U.S. intangible assets.

The   Company's   year-to-date   effective   tax  rate  of  28.6%   reflected  a
non-deductible   one-time  Gartner   spin-related  charge  ($9,500).   The  1998
year-to-date  effective  tax  rate of  51.9%  reflected  non-deductible  charges
related to the Distribution  ($30,125),  the research and development  write-off
related  to the  Walsh  and  PMSI  acquisitions  ($32,800)  and  certain  direct
acquisition and integration  costs related to both  acquisitions,  which did not
give rise to a tax benefit.

Income from  continuing  operations  in the third  quarter of 1999 was  $70,240,
compared  with  $14,786 in the third  quarter of the prior year.  Excluding  the
after-tax  impact of Y2K costs and net gains  associated with  investments  from
both years, charges related to the 1999 Gartner  Distribution,  the 1998 CTS IPO
gain,  1998  direct  acquisition  and  integration  costs  related  to the  PMSI
acquisition and the 1998 in-process research and development  write-off,  income
from  continuing  operations  in the  third  quarter  of 1999  increased  11.2%.
Further,  adjusting  the 1998 tax rate to  mitigate  the  impact of the  Gartner
Spin-Off on the Company's  recurring tax rate of $27.4%,  income from continuing
operations for the quarter increased to 16.3%.

Year-to-date  income from  continuing  operations  was  $160,207  compared  with
$24,780 for the  comparable  period ago.  Excluding the after-tax  impact of Y2K
costs and net gains  associated  with  investments  in both years,  1999 charges
related to the Gartner Spin-Off,  the 1998 CTS IPO gain, 1998 charges related to
the  Distribution,  the 1998 in-process  research and development  write-off and
1998 direct  acquisition  and  integration  costs  related to the Walsh and PMSI
acquisitions,  year-to-date income from continuing  operations  increased 15.6%.
Further,  adjusting  the 1998 tax rate to  mitigate  the  impact of the  Gartner
Spin-Off on the Company's recurring tax rate of 27.4%,  year-to-date income from
continuing operations increased 21.0%.

Income from discontinued  operations,  net of income taxes, in the third quarter
of 1999 was  $1,384,  compared  with  $10,169 in the third  quarter of the prior
year. Income from discontinued operations net of income taxes represents Gartner
equity income through July 1999 and SAB 51 gains from Gartner in 1998.


                                       26

<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


Operations (continued)

Year-to-date  income from  discontinued  operations,  net of income  taxes,  was
$25,695, compared with $82,902 for the comparable period a year ago. Income from
discontinued  operations net of income taxes represents Gartner equity income in
both  years and SAB 51 gains  from  Gartner  and six  months of the  results  of
Nielsen Media Research in 1998.

Net income for the third quarter of 1999 was $71,624, an increase of 187.0% from
net income of $24,955 in the third quarter of the prior year.  Year-to-date  net
income  increased  72.6% to $185,902 from $107,682 for the  comparable  period a
year ago.

Basic  earnings per share in the third quarter of 1999 were $0.23  compared with
$.05 in the  third  quarter  of the  prior  year.  Excluding  the  impact of the
previously  identified  one-time items,  at a continuing  operations tax rate of
27.4% and 24.1% in 1999 and 1998,  respectively,  basic  earnings per share from
continuing  operations for the quarter  increased 9.5%.  Further,  adjusting the
1998 tax rate to mitigate  the impact of the Gartner  Spin-Off on the  Company's
recurring tax rate of 27.4% basic  earnings per share for the quarter  increased
21.1%.

Year-to-date  basic earnings per share in 1999 were $0.51 compared with $.08 for
the  comparable  period a year  ago.  Excluding  the  impact  of the  previously
identified  one-time  items,  at a continuing  operations  tax rate of 27.4% and
24.1% in 1999 and 1998, respectively, year-to-date basic earnings per share from
continuing operations increased 20.0%.  Further,  adjusting the 1998 tax rate to
mitigate the impact of the Gartner Spin-Off on the Company's  recurring tax rate
of 27.4%, year-to-date basic earnings per share increased 25.6%.

Diluted earnings per share in the third quarter of 1999 were $0.22 compared with
$0.04 in the  third  quarter  of the prior  year.  Excluding  the  impact of the
previously  identified  one-time items,  at a continuing  operations tax rate of
27.4% and 24.1% in 1999 and 1998, respectively,  diluted earnings per share from
continuing  operations for the quarter increased 15.0%.  Further,  adjusting the
1998 tax rate to mitigate  the impact of the Gartner  Spin-Off on the  Company's
recurring  tax  rate of  27.4%,  diluted  earnings  per  share  for the  quarter
increased 21.1%.

Year-to-date diluted earnings per share in 1999 were $0.50 compared with diluted
earnings per share of $.07 for the comparable  period a year ago.  Excluding the
impact of the previously  identified one-time items, at a continuing  operations
tax rate of 27.4% and 24.1% in 1999 and 1998, respectively, year-to-date diluted
earnings  per  share  from  continuing   operations  increased  23.3%.  Further,
adjusting  the 1998 tax rate to mitigate  the impact of the Gartner  Spin-Off on
the Company's  recurring tax rate of 27.4%,  year-to-date  diluted  earnings per
share increased 26.2%

Results by Business Segment

IMS Segment

The  IMS  segment  consists  of IMS,  the  leading  global  provider  of  market
information and  decision-support  services to the pharmaceutical and healthcare
industries,  and Strategic  Technologies,  a leading provider of automated sales
support technologies to the pharmaceutical industries.

IMS Segment  revenue for the third quarter of 1999  increased  23.2% to $317,086
from $257,411 in the third quarter of the prior year. Adjusting 1998 revenue for
the Calendarization


                                       27

<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


IMS Segment (continued)

revenue for the third quarter 1999 increased by 14%.  Market  Research  Products
increased  10.6% to  $108,737,  Sales  Management  Products  increased  17.8% to
$170,526  and Other  Services  increased  11.3% to $37,823.  This growth was due
primarily to the strong  performance of Sales Management  Products and Services,
introduction of new products and expansion in existing markets.

Third  quarter  1999  operating  income  increased to $99,418 from $8,922 in the
prior year.  Excluding Y2K costs in both years, the Calendarization and the 1998
direct acquisition and integration costs related to the PMSI acquisition and the
1998 in-process  research and development  write-off,  operating income for 1999
increased  20.3%.  Adjusted  operating income growth outpaced revenue growth due
primarily to the segment's ability to leverage its worldwide resources.

Year-to-date  IMS Segment  revenue  increased 24.0% to $905,719 from $730,234 in
the prior year.  Adjusting  for the  Calendarization  revenue for the first nine
months of 1999  increased by 19%.  Market  Research  Products  increased 8.6% to
$301,874,  Sales  Management  Products  increased  25.6% to  $496,091  and Other
Services  increased  23.76% to  $107,754.  This growth was due  primarily to the
strong  performance of Sales Management  Products and Services,  introduction of
new products, expansion in existing markets and the impact of the Walsh and PMSI
acquisitions.

IMS  Segment  operating  income for the first nine months of 1999  increased  to
$230,139 from $63,034 in the first nine months of the prior year.  Excluding Y2K
costs,  the  impact of the  Calendarization,  the 1998  direct  acquisition  and
integration  costs  related  to the  Walsh  and PMSI  acquisitions  and the 1998
in-process  research and development  write-off,  operating income for the first
nine months of 1999 increased 23.4%.

Emerging Markets Segment

The  Emerging   Markets  segment   includes   Erisco,   a  leading  supplier  of
software-based  administrative  and  analytical  solutions  to the managed  care
industry,  and  Enterprises,  the  Company's  venture  capital  unit  focused on
investments in emerging  businesses.  In 1998, this segment  included SSJ, which
was divested in the first quarter of 1999.

Emerging Markets revenue for the third quarter of 1999 decreased 1.7% to $12,246
from $12,463 in the prior year.  This  decrease was due primarily to the absence
of revenues from SSJ during 1999.  Excluding SSJ,  Emerging  Markets revenue for
the third  quarter of 1999  increased by 22.4%.  Operating  income  increased to
$2,465 in the third  quarter from $1,149 in the third quarter of the prior year.
Excluding SSJ, operating income for the third quarter of 1999 increased 77.1%.

Emerging  Markets  revenue for the first nine months of 1999  decreased  5.1% to
$34,472 from $36,306 in the prior year.  This  decrease was due primarily to the
absence of revenues from SSJ during 1999. Excluding SSJ,  year-to-date  Emerging
Markets revenue increased by 20.7%. Year-to-date


                                       28

<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


Emerging Markets Segment (continued)

Emerging  markets  operating  income  increased  to $4,685  from  $1,048 for the
comparable period a year ago.

CTS Segment

CTS  delivers  life  cycle  software  development  and  maintenance   technology
consulting  services  through the use of a seamless on-site and offshore project
team. These services include application  development and maintenance  services,
Year 2000 and Eurocurrency  compliance  services,  testing and quality assurance
services and re-hosting and re-engineering services.

CTS  revenue,  net of  intersegment  sales,  increased  to  $19,077 in the third
quarter  of  1999  from  $13,732  in the  prior  year.  The  increase  is due to
continuing  strong demand for  application  development  and  maintenance,  Euro
currency  compliance  services,  the  addition  of  new  customers  and  further
penetration of its existing client base to generate new project work.  Operating
income increased to $4,169 from $2,453 in the third quarter of the prior year.

Year-to-date CTS revenue net of intersegment  sales,  increased 89.7% to $54,112
from $28,530 in the prior year.  Year-to-date  CTS  operating  income  increased
135.5% to $12,109 from $5,141 for the comparable period a year ago.

Condensed Consolidated Statement of Cash Flows

Net cash provided by operating  activities  totaled $231,758 for the nine months
ended  September 30, 1999 compared with $155,559 in 1998.  The $76,199  increase
was due primarily to increased income from continuing  operations ($135,427) and
higher  income tax  accruals  ($42,007),  which were  partially  offset by lower
deferred  revenues  ($30,744)  and  the  absence  of the  1998  IPR&D  write-off
($32,800)  and  direct  acquisition  and  integration  costs  ($48,019).   As  a
consequence of accounting for the Calendarization through retained earnings, the
December  1998 cash  flows  from IMS  operating  units are not  included  in the
Company's  net cash provided by operating  activities  for the nine months ended
September 30, 1999.  During the month of December 1998, IMS generated $30,664 of
cash, including a significant decrease in accounts receivable ($35,353).

Net cash used in investing  activities totaled $60,473 for the first nine months
of 1999 compared  with $30,750 used during the  comparable  period in 1998.  The
$29,723 increase was due primarily to 1999 acquisition and integration  payments
($28,248) and 1998 cash from companies acquired  ($11,895),  partially offset by
lower expenditure on other investments ($4,205) and higher proceeds from sale of
investments ($4,327).

Net cash used in financing activities totaled $222,675 for the nine months ended
September 30, 1999 compared with $100,215 used in 1998. The increase of $122,460
was due primarily to 1998  proceeds  received from debt assumed by Nielsen Media
Research  ($300,000)  and the CTS IPO ($27,128) and lower 1999 proceeds from the
exercise of stock  options  ($38,969),  partially  offset by lower  purchases of
treasury stock ($151,008) and increased proceeds from short-term


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<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


Condensed Consolidated Statement of Cash Flows (continued)

debt  ($94,972,  net of  repayments).  Short-term  borrowings  have been used to
partially fund the Company's stock repurchase program.

Cash flow from discontinued  operations was $52,877 for the first nine months of
1999 compared with an outflow of $17,173 in 1998. The Gartner dividend accounted
for all of the cash flow from discontinued  operations in 1999 and Nielsen Media
Research discontinued operations accounted for all of the 1998 cash outflow from
discontinued operations.

The Company's cash, cash equivalents, marketable securities, cash generated from
operations  and debt  unutilized  capacity are expected to be sufficient to meet
the  Company's   current   long-term  and  short-term   requirements   including
operations,  cash dividends,  acquisitions,  stock repurchase programs and other
contingencies.

Changes in  Financial  Position at September  30, 1999  Compared to December 31,
1998

Cash & Cash  Equivalents  increased  to  $230,714  at  September  30,  1999 from
$206,390 at  December,  1998 due  primarily  to cash  generated  from  operating
activities  ($231,758),  the  Gartner  dividend  ($52,877),  proceeds  from  the
disposal of investments  ($46,759) and cash provided by the IMS operating  units
during December 1998 ($30,664), partially offset by payments for the purchase of
treasury stock ($359,859).

Accounts  Receivable  decreased to $246,991 at September 30, 1999, from $324,219
at December  31,  1998,  due  primarily  to  increased  collections.  Days sales
outstanding  improved to 64 days at the end of the quarter  compared to 100 days
as of December 31, 1998.

Net Assets of  Discontinued  Operations  decreased to $100,356 at September  30,
1999,  from  $240,708 at  December  31, 1998  reflecting  primarily  the Gartner
Spin-Off  ($132,104)  and  special  cash  dividend  ($52,877,  net of  taxes  ),
partially  offset by the  after-tax  equity  income from Gartner  ($25,695)  and
unrealized gain in the Gartner shares.  (See Note 3. Investment in Gartner Group
Stock)

Securities  and Other  Investments  decreased to $82,455 at September  30, 1999,
from $106,276 at December 31, 1998,  due primarily to the net  reductions in the
Enterprise  portfolio of  investments  arising  from  additions,  disposals  and
marking investments to market value.

Short Term Debt  increased  to $168,834 at September  30, 1999,  from $39,169 at
December 31, 1998,  due primarily to increased  borrowings to partially fund the
Company's stock  re-purchase  program.  The July receipt of the Gartner dividend
($52,877) was used to pay down short-term borrowing.


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<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


Changes in  Financial  Position at September  30, 1999  Compared to December 31,
1998 (continued)

During  the  third  quarter,   the  Company  purchased  5.1  million  shares  of
outstanding  stock for a total  cost of  $137,208.  The  Company's  third  share
repurchase program was completed in October.  On October 19, 1999, the Company's
Board of Directors authorized a fourth systematic stock repurchase program of up
to 16 million shares, which is underway.

As of November 12, 1999,  the Company had U.S.  short term debt of $226,700,  an
increase since  September 30, which reflects  primarily the funding of the share
repurchases thus far in the fourth quarter.

Accrued  Liabilities  decreased to $222,353 at September 30, 1999, from $298,625
at December  31, 1998 due  primarily  to payments  related to the PMSI and Walsh
accrued direct  acquisition and integration  costs and a lower level of accruals
for salaries, wages, bonuses and other compensation.

Accrued  Taxes  increased  to $81,900 at  September  30,  1999,  from $32,537 at
December  31,  1998.  The  increase of $49,363  reflected  a reduction  of a tax
receivable  included in accrued  taxes  relating  to a tax refund  from  Germany
received during the quarter.

Deferred  Revenue  decreased to $102,349 at September 30, 1999, from $128,272 at
December 31, 1998 due primarily to the  amortization of annual  contracts billed
in advance at December 31, 1998 and the effect of the Calendarization.

Shareholders'  Equity decreased to $516,491 at September 30, 1999, from $825,270
at December 31, 1998 due primarily to the purchase of treasury stock ($359,859),
the Gartner Spin-Off ($134,259), change in the cumulative translation adjustment
($21,133)  and  dividends  paid  ($18,923),   partially  offset  by  net  income
($185,902),  December equity changes ($4,449) and the change in unrealized gains
on investments ($5,893).

Year 2000

Many  computer  systems and software  applications  use two digits,  rather than
four,  to record years (for example  "98" instead of "1998").  Unless  modified,
such systems will not properly record or interpret years after 1999, which could
lead to  business  disruptions.  This is known as the "Year 2000  issue"  ("Year
2000").  Assessments  of the  potential  effects  of the Year  2000  issue  vary
markedly among  different  companies,  governments,  consultants  and economists
which results in the inability to predict what the actual impact may be.

The Company began to address the Year 2000 issue in 1996.  In 1997,  the Company
created a Year 2000 Task Force (the "Task Force") to manage overall risks and to
facilitate activities across the entire Company. The Task Force, in consultation
with  operating  personnel,  evaluated  whether  conversion or  replacement  and
enhancement (i.e.  "reengineering") was necessary. CTS was engaged to do work on
a significant  portion of conversion  and  reengineering  projects to allow most
internal staff members to focus on the core business.  The Company has also used
outside services to assist in conversions,  reengineering  and the assessment of
progress of its Year 2000 program.


                                       31

<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


Year 2000 (continued)

The Task Force  developed a conversion  methodology  that included three phases:
analysis, coding and testing, and testing and implementation. The analysis phase
includes planning,  inventory and impact analysis.  The coding and testing phase
involves code  changes,  using  conversion  rules and criteria and unit testing,
verifying  and  documenting  the  results of the  conversion.  The  testing  and
implementation  phase includes system test across  platforms and verification of
data, an acceptance  test within the user  environment,  and  implementation  or
releasing the systems back into production. This conversion methodology has been
utilized throughout the Company to achieve substantial systems compliance by the
Year 2000. The  reengineering  projects followed the same procedures as are used
for  new  product  development  including  customer  requirements,  development,
testing and rollout.

The creation of customer  products  relies on the receipt of data from  external
data  suppliers  and the  Company's  ability to convert the data and deliver the
information  to its  customers.  The  consolidation  of the data is  principally
performed at central processing locations.  The Company believes central systems
represent  approximately  85% of its Year 2000 conversion  efforts.  The Company
operates central processing  facilities in Germany,  England,  the United States
and Japan.  The systems at these sites contained the most lines of code required
to undergo  conversion.  At September 30, 1999, the Company has completed 99% of
Year 2000 conversions at central processing locations.

IMS Health continues to enhance its existing product  portfolio and continues to
launch new products.  There is an ongoing effort to ensure this software is Year
2000  compliant.  As an alternative  to conversions  and as a result of business
needs for  individual  products,  the Company has decided to replace and enhance
certain  non-compliant  software.   There  are  only  two  reengineered  systems
remaining to be completed. Core development has been completed for these systems
and they are Y2K enabled.  Only  country-based  customization for these products
remains, with implementation scheduled for the fourth quarter of 1999.

The  data in  these  country-specific  customization  systems  is  offered  as a
stand-alone  product and also feed into other IMS products and services.  In the
event  there  are  delays  in  the  rollout  of any  of  these  country-specific
reengineered  systems,  the  Company  believes  the  revenue  impact will not be
material to the Company as a whole.

The Company  operates local offices in over 90 countries with about half of them
using systems for data  collection,  panel  administration  and customized local
requirements.   Varied  approaches  have  been  utilized  to  ensure  Year  2000
compliance,  including the replacement of localized systems with central systems
and the conversion of the local system.  In some cases,  specialized  teams from
CTS were  used to assist  the  local  offices  with all  phases of their  system
conversions  and hardware  compliance.  At September  30, 1999,  the Company has
completed 98% of Year 2000  conversions  of local systems and personal  computer
applications across the world.


                                       32

<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


Year 2000 (continued)

The Company's Year 2000 project incorporates  administrative  operations systems
and software such as accounts receivable,  accounts payable,  general ledger and
payroll. These systems are 99% compliant.

The Year 2000 readiness of the Company's  customers  varies,  and the Company is
actively  encouraging  its  customers  to  prepare  their  own  systems  for the
millennium.  The Company  continues to emphasize the importance for customers of
installing  Y2K  compliant  versions  and we  anticipate  99% in  production  by
December 31, 1999. As data and services are often transmitted electronically, to
the extent that there are disruptions in the customer or the Company's  internal
operations,  the  customer  may not be able to make normal use of the  Company's
products or services.  Additional risk includes disruptions in critical services
on which the Company relies such as electricity,  telephone  systems and banking
services.


The Company  developed an internal  audit  program that examines the testing and
effectiveness of controls, assesses the accuracy and completeness of inventories
and  reviews  the  documentation  for  completeness  and  accuracy.  The Company
continues  to audit  central  systems  and local  country  conversions  with the
assistance  of CTS and  outside  consultants.  To date  over  95% of IMS  Health
revenue has been audited for Year 2000  compliance.  These audits will  continue
throughout  the world until Year 2000 with  several  sites  revisited  to ensure
continued compliance.

The Company  engaged TRW to conduct an audit review of the Year 2000 program for
business  critical  and mission  critical  systems in sixteen  locations.  These
audits were  conducted  in the first half of 1999 and focused on  survivability,
preparedness  and due  diligence in  addressing  the Year 2000  problem.  Issues
identified as a result of these audits were initially responded to and necessary
actions as well as contingency  planning will continue throughout the end of the
year.

The Company  relies on tens of thousands of suppliers of electronic  data in the
healthcare  industry and has been  proactive in working with these  suppliers to
determine   their  Year  2000  readiness  and  ability  to  maintain  data  flow
continuity.  A program  consisting of seminars,  visits,  mailings and telephone
calls  continues  to be  administered  to track the  status of and to assess and
address  risks  associated  with Year 2000  readiness by the  Company's key data
suppliers.

The Company assesses risk regarding the readiness of its data suppliers  through
the use of detailed questionnaires regarding Year 2000 conversion plans in order
to verify the supplier's  ability to continue to deliver data. As a contingency,
statistically  valid methods of data  extrapolation  have been  developed in the
event the supply of data from a limited  number of  suppliers is  incomplete  or
found to be unusable.  Investigation  of  alternate  sources is pursued when the
risk assessment  determines the data source to have a high risk of impacting the
Company's  ability to deliver products and services.  Some of the Company's data
suppliers could be disrupted due to Year


                                       33

<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


Year 2000 (continued)

2000 problems with their internal systems or circumstances beyond their control,
such as  power  outages.  As these  instances  are out of the  Company's  direct
control, the magnitude of the risk depends on the speed in which the Company and
the supplier can mitigate the  problem.  The  Company's  most recent  assessment
indicates  that the primary risk  continues to be with hospital  information  in
certain countries, which the Company believes will not have a material impact on
the consolidated revenues of the Company.

As year end approaches, the Company will continue to focus its Year 2000 efforts
on (i) the  implementation  of  reengineered  products  and  services;  (ii) the
continued  assessment of supplier readiness to address the Year 2000 conversion;
and (iii) finalizing contingency plans to address unanticipated issues.

The Company is  establishing  an  operational  command  center to coordinate the
rollover  from  1999  into  2000.  For  each  area  of  the  business,  specific
individuals are responsible for the development and execution of recovery plans,
if deemed necessary.

External and internal  costs of  addressing  the Year 2000 issue are expensed as
incurred.  It is currently  estimated  that the aggregate  cost of the Company's
Year 2000 program will be approximately  $76,000 to $80,000.  Through  September
30,  1999,  the Company has  incurred  $74,730 of which  $44,922 was incurred in
1998.  The  Company  expects  to incur  between  $2,000  and  $5,000  during the
remainder  of 1999.  These  estimates  do not include the costs of software  and
systems that are being replaced or enhanced in the normal course of business.

The cost of  addressing  the Year 2000  issue and the  dates  which the  Company
currently expects to complete Year 2000 compliance are based on the current best
estimates  of  management,  which  are  derived  utilizing  various  assumptions
regarding the future events. There can be no guarantee that these estimates will
be achieved, and actual results may differ. Specific factors that may cause such
differences  include,  but are not  limited  to,  the  availability  and cost of
personnel  trained in this area of expertise,  the ability to locate and correct
all  relevant  computer  codes,  and the success of customers  and  suppliers in
addressing the Year 2000 issue.  The Company's plans are dependent on industries
out of the Company's direct control such as utilities and transportation.

The above expectations are subject to uncertainties. For example, if the Company
is  unsuccessful in identifying or fixing all Year 2000 problems in its critical
operations,  or  effected  by the  inability  of its  data  suppliers  or  major
customers to continue operations due to such a problem, the Company's results of
operations or financial condition could be materially impacted.

The Year 2000  statements set forth above are designated as "Year 2000 Readiness
Disclosures"  pursuant to the Year 2000  Information  Readiness  Disclosure  Act
(P.L. 105-271).


                                       34

<PAGE>


IMS HEALTH INCORPORATED

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations (Dollar amounts in thousands, except per share data)


Euro Conversion

On January 1, 1999, 11 member countries of the European Union  established fixed
exchange rates between their existing currencies and the European Union's common
currency  ("Euro").  The transition  period for the  introduction of the Euro is
between January 1, 1999 and January 1, 2002.

The Company  instituted plans for the introduction of the Euro and addressed the
related  issues,  including the  conversion of information  technology  systems,
recalculating  currency  risk,  recalibrating  derivatives  and other  financial
instruments,  continuity of contracts,  taxation and accounting records, and the
increased  price  transparency  resulting  from the use of a single  currency in
eleven participating countries which may affect the ability of some companies to
price products differently in the various European markets. The Company believes
that  differences in national  market size,  data  collection  requirements  and
specific product  specifications  required due to the diverse market information
needs in the  healthcare  markets of Europe will reduce the  potential for price
harmonization in most of the Company's product ranges.

IMS Health's expectations  regarding the Euro currency issue are forward-looking
statements  that  involve a number of risks and  uncertainties  that could cause
actual results to differ materially from the projected results. Factors that may
cause  these  differences  include,  but are not  limited  to,  the  ability  or
willingness  of third  parties  to convert  systems  in a timely  manner and the
actions of  governmental  agencies or other third  parties  with respect to Euro
currency issues.


                                       35

<PAGE>


IMS HEALTH INCORPORATED

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K.

     (a)  Exhibits:

     10   Material Contracts

          .1   First  Amendment  to the IMS Health  Incorporated  Savings  Plan,
               dated as of July 19, 1999.

          .2   First Amendment to the IMS Health  Incorporated  Retirement Plan,
               dated as of July 19, 1999.

          .3   Amended  and  Restated  1998 IMS Health  Incorporated  Employees'
               Stock Incentive Plan dated July 20, 1999.

          .4.1 IMS Health  Incorporated  Executive  Deferred  Compensation Plan,
               dated July 20, 1999

          .4.2 Selected portions of the Prospectus  Supplement,  dated September
               27,  1999  setting  forth  certain  terms and  conditions  of the
               Executive Deferred Compensation Plan for U.S. employees.

          .4.3 Selected  portions of the  Private  Placement  Memorandum,  dated
               September 27, 1999 setting forth certain terms and  conditions of
               the Executive Deferred Compensation Plan for U.S. employees.

          .5   Second  Amendment to the IMS Health  Incorporated  Savings  Plan,
               dated as of September 1, 1999.

          .6   First  Amendment  to the  IMS  Health  Incorporated  Supplemental
               Executive Retirement Plan, dated September 1, 1999.

          .7   First Amendment to the IMS Health Incorporated  Retirement Excess
               Plan, dated September 1, 1999.

          .8   First   Amendment   to  the  IMS  Health   Incorporated   Savings
               Equalization Plan, dated September 1, 1999.

     27   Financial Data Schedules

     (b)  Reports on 8-K:

          There  were no  reports on Form 8-K filed  during  the  quarter  ended
          September 30, 1999.


                                       36

<PAGE>


IMS HEALTH INCORPORATED

                                   SIGNATURES

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


                                    IMS Health Incorporated


                               By:  /s/ J. MICHAL CONAWAY
                                    --------------------------------------------
                                    J. Michal Conaway
                                    Chief Financial Officer


                               By:  /s/ JAMES C. MALONE
                                    --------------------------------------------
                                    James C. Malone
                                    Senior Vice President - Finance & Controller


Date: November 15, 1999


                                       37