SECURITIES AND EXCHANGE COMMISSION
                                Washington, D. C. 20549
                                    FORM 10-Q/A

(Mark one)

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

For the quarterly period ended June 30, 1998

                                           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 June 30, 1998
       par value $.01 per share                          166,812,695


<PAGE>


                               IMS HEALTH INCORPORATED

                                INDEX TO FORM 10-Q/A



PART I. FINANCIAL INFORMATION                                         PAGE(S)

Item 1. Financial Statements

Condensed Consolidated Statements of Income (Unaudited)
     Three Months Ended June 30, 1998 and 1997                           3
      Six Months Ended June 30, 1998 and 1997                            4

Condensed Consolidated Statements of Comprehensive Income (Unaudited)
      Three Months Ended June 30, 1998 and 1997                          5
      Six Months Ended June 30, 1998 and 1997                            5

Condensed Consolidated Statements of Financial Position (Unaudited)
      June 30, 1998 and December 31, 1997                                6

Condensed Consolidated Statements of Cash Flows (Unaudited)
     Six Months Ended June 30, 1998 and 1997                             7

Notes to Condensed Consolidated Financial Statements (Unaudited)       8-18

Item 2. Management's Discussion and Analysis of Financial
            Condition and Results of Operations                        19-27



PART II.  OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K                                28

SIGNATURE                                                               29












<PAGE>





PART I. FINANCIAL INFORMATION
Item I. FINANCIAL STATEMENTS
<TABLE>

IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollar amounts in thousands, except per share data)
                                                                                                Three Months Ended
                                                                                                June 30,
                                                                                            ----------------------------
<S>                                                                                     <C>                          <C>  

                                                                                       1998                     1997
                                                                               ----------------------     ------------------

Operating Revenue                                                                    $      270,496          $    251,076

Operating Costs                                                                             151,362               107,765

Selling and Administrative Expenses                                                          89,639                81,232

In-Process Research and Development                                                          21,900                     0

Depreciation and  Amortization                                                               21,507                22,724
                                                                               ----------------------     ------------------

Operating (Loss)/Income                                                                    (13,912)                39,355

Interest Income                                                                               4,771                 1,666
Interest Expense                                                                               (212)                 (131)
Gartner Equity Income                                                                        17,320                15,137
Gain from Stock Sale by Gartner                                                               5,392                     0
Gain on Issuance of Subsidiary Stock                                                         12,777                     0
Other Expense - Net                                                                         (2,477)                (1,331)
                                                                               ----------------------     ------------------
Non-Operating Income - Net                                                                   37,571                15,341

Income from Continuing Operations,
Before Provision for Taxes                                                                   23,659                54,696
Provision for Income Taxes                                                                 (22,107)               (14,629)
                                                                               ----------------------     ------------------
Income from Continuing Operations                                                             1,552                40,067
Income from Discontinued Operations, Net of Income Tax Provision
of $7,960 and $7,367 for June 30, 1998 and 1997, respectively                               21,088                 19,988
                                                                               ----------------------     ------------------
Net Income                                                                              $    22,640           $    60,055
                                                                               ======================     ==================

Earnings Per Share of Common Stock:
Basic
Income from Continuing Operations                                                           $0.01                  $ 0.24
Income from Discontinued Operations                                                          0.13                    0.12
                                                                               ----------------------     ------------------
Basic Earnings Per Share                                                                    $0.14                  $ 0.36
Diluted
Income from Continuing Operations                                                           $0.01                  $ 0.24
Income from Discontinued Operations                                                          0.12                    0.12
                                                                               ----------------------     ------------------
Diluted Earnings Per Share                                                                  $0.13                  $ 0.36

Average Number of Shares Outstanding - Basic                                            163,305,000            165,526,000

Dilutive Effect of Shares Issuable as of June 30, 1998 Under Stock Option                4,739,000                 435,000
Plans
Adjustment of Shares to Reflect Options Exercised and Cancelled During the
Period                                                                                   1,043,000                  93,000
                                                                               ======================     ==================
Average Number of Shares Outstanding - Diluted                                          169,087,000            166,054,000
                                                                               ======================     ==================

<FN>

See accompanying notes to the condensed consolidated financial statements (unaudited)

</FN>
</TABLE>

<PAGE>



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

<TABLE>
                                                                                                   Six Months Ended
                                                                                                       June 30,
                                                                                                 ----------------------
<S>                                                                                      <C>                <C>


                                                                                            1998                1997
                                                                                     -------------------  ------------------

Operating Revenue                                                                       $      511,464       $    480,381

Operating Costs                                                                                270,954            216,465

Selling and Administrative Expenses                                                            170,593            153,918

In-Process Research and Development                                                             21,900                  0

Depreciation and  Amortization                                                                  43,201             49,035
                                                                                     -------------------  ------------------

Operating Income                                                                                 4,816             60,963

Interest Income                                                                                  8,869              5,276
Interest Expense                                                                                  (412)              (581)
Gartner Equity Income                                                                           32,894             30,671
Gain from Stock Sale by Gartner                                                                 13,379                  0
Gain on Issuance of Subsidiary Stock                                                            12,777                  0
Gains from Dispositions, Net                                                                    10,415              5,436
Other Expense - Net                                                                            (5,247)            (2,094)
                                                                                     -------------------  ------------------
Non-Operating Income - Net                                                                      72,675             38,708

Income from Continuing Operations,
Before Provision for Taxes                                                                      77,491             99,671
Provision for Income Taxes                                                                     (36,857)           (26,233)
                                                                                     -------------------  ------------------
Income from Continuing Operations                                                               40,634             73,438
Income from Discontinued Operations, Net of Income Tax Provision of
$15,887 and $14,118 for six months ended June 30, 1998 and 1997,
respectively                                                                                    42,093             39,522

                                                                                     -------------------  ------------------
Net Income                                                                               $      82,727        $   112,960
                                                                                     ===================  ==================

Earnings Per Share of Common Stock:
Basic
Income from Continuing Operations                                                               $ 0.25             $ 0.44
Income from Discontinued Operations                                                               0.26               0.23
                                                                                     -------------------  ------------------
Basic Earnings Per Share                                                                        $ 0.51             $ 0.67
Diluted
Income from Continuing Operations                                                               $ 0.24             $ 0.44
Income from Discontinued Operations                                                               0.25               0.23
                                                                                     -------------------  ------------------
Diluted Earnings Per Share                                                                      $ 0.49             $ 0.67

Average Number of Shares Outstanding - Basic                                               162,843,000         167,610,000
Dilutive Effect of Shares Issuable as of June 30, 1998 Under Stock Option Plans             4,347,000              197,000
Adjustment of Shares to Reflect Options Exercised and Cancelled During the Period
                                                                                            1,734,000              108,000
                                                                                     ===================  ==================
Average Number of Shares Outstanding - Diluted                                            168,924,000          167,915,000
                                                                                     ===================  ==================
<FN>

See accompanying notes to the condensed consolidated financial statements (unaudited)
</FN>
</TABLE>
<PAGE>


IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(Dollar amounts in thousands)
<TABLE>
                                                                                                 Three Months Ended
                                                                                                      June 30,
                                                                                              -------------------------
<S>                                                                                      <C>                     <C>

                                                                                         1998                    1997
                                                                                 ---------------------     -----------------

Net Income                                                                                $   22,640           $   60,055


Other Comprehensive Income/(Loss), net of tax:

   Foreign Currency Translation Adjustments                                                 (10,499)              (13,649)

   Unrealized Gains on Securities:
     Unrealized  Holding Gains Arising  During the Period (Net of tax expense of
     ($1,690) and ($1,604) in 1998 and 1997,
      respectively)                                                                           4,478                 4,392
                                                                                 ---------------------     -----------------
   Net Unrealized Gains                                                                       4,478                 4,392

                                                                                 ---------------------     -----------------
Other Comprehensive Loss                                                                     (6,021)               (9,257)
                                                                                 ---------------------     -----------------

Comprehensive Income                                                                     $   16,619            $   50,798
                                                                                 =====================     =================

                                                                                                  Six Months Ended
                                                                                                      June 30,
                                                                                              -------------------------

                                                                                         1998                    1997
                                                                                 ---------------------     -----------------

Net Income                                                                                $   82,727           $  112,960


Other Comprehensive Income/(Loss), net of tax:

   Foreign Currency Translation Adjustments                                                  (9,596)              (42,484)

   Unrealized Gains/(Losses) on Securities:
     Unrealized  Holding  Gains/(Losses)  Arising  During the Period (Net of tax
     (expense)/benefit of ($1,717) and $785 in 1998 and 1997,
      respectively)                                                                           4,549                (2,197)
     Less: Reclassification Adjustment for Realized Gains included in Net
     Income (net of tax benefit of $2,910 in 1998)                                            (7,710)                   0
                                                                                 ---------------------     -----------------
   Net Unrealized Losses                                                                     (3,161)               (2,197)

                                                                                 ---------------------     -----------------
Other Comprehensive Loss                                                                    (12,757)              (44,681)
                                                                                 ---------------------     -----------------

Comprehensive Income                                                                     $   69,970            $   68,279
                                                                                 =====================     =================

</TABLE>






<PAGE>


IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)
(Dollar amounts in thousands)

<TABLE>
<S>                                                                          <C>                      <C>

                                                                             June 30,                 December 31,
                                                                               1998                       1997
                                                                        -------------------       --------------------
Assets

Current Assets
   Cash and Cash Equivalents                                                     $ 702,550                  $ 312,442
   Accounts Receivable-Net                                                         261,267                    251,623
   Other Current Assets                                                             72,678                     65,692
                                                                        -------------------       -------------------
       Total Current Assets                                                      1,036,495                    629,757
                                                                        -------------------       --------------------

Investment in Gartner Group                                                        228,674                    195,695
Marketable Securities and Other Investments                                        109,708                    109,712
Property, Plant and Equipment-Net                                                  175,304                    178,533
Other Assets-Net
   Computer Software                                                               132,927                     99,175
   Goodwill                                                                        245,836                     87,430
   Other Assets                                                                     80,924                     79,009
                                                                        -------------------       --------------------
       Total Other Assets-Net                                                      459,687                    265,614
                                                                        -------------------       --------------------
Net Assets from Discontinued Operations                                                  0                    122,778
                                                                        -------------------       --------------------
Total Assets                                                            $        2,009,868          $       1,502,089
                                                                        ===================       ====================

Liabilities and Shareholders' Equity

Current Liabilities
   Accounts and Notes Payable                                                $      46,659                $    44,441
   Accrued and Other Current Liabilities                                           249,927                    189,384
   Accrued Income Taxes                                                             60,235                     52,696
   Deferred Revenues                                                               130,068                    110,768
                                                                        -------------------       --------------------
       Total Current Liabilities                                                   486,889                    397,289
Postretirement and Postemployment Benefits                                          43,539                     38,082
Deferred Income Taxes                                                              102,646                     92,153
Minority Interests                                                                 112,063                    101,209
Other Liabilities                                                                   81,773                     71,786
                                                                        -------------------       --------------------

Total Liabilities                                                                  826,910                    700,519
                                                                        -------------------       --------------------

Shareholders' Equity                                                             1,182,958                    801,570
                                                                        -------------------       --------------------

Total Liabilities and Shareholders' Equity                              $        2,009,868        $         1,502,089
                                                                        ===================       ====================

<FN>

See  accompanying  notes to the  condensed  consolidated  financial
statements (unaudited).

</FN>
</TABLE>





<PAGE>



<TABLE>


IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands)
                                                                                              Six Months Ended
                                                                                                   June 30,

                                                                                         ------------------------------
<S>                                                                                        <C>              <C>

                                                                                            1998            1997
                                                                                         ------------ -----------------
Cash Flows from Operating Activities:
Net Income                                                                                $ 82,727         $ 112,960
Less Income from Discontinued Operations                                                   (42,093)          (39,522)
                                                                                         ------------ -----------------
Income from Continuing Operations                                                           40,634            73,438
Reconciliation of Net Income to Net Cash
  Provided by Operating Activities:
    Depreciation and Amortization                                                           43,201            49,035
    Gains on Issuance of Subsidiary Stock                                                  (12,777)
    Gains from Sale of Investments, Net                                                    (10,415)           (5,436)
    Write-off of Purchased in Process Research & Development                                21,900                  0
    Postemployment Benefit Payments                                                         (2,083)           (4,059)
    Non-recurring Payments                                                                  (1,910)           (2,750)
    Net Decrease (Increase) in Accounts Receivable                                           3,696           (11,626)
    Net Increase in Deferred Revenues                                                       16,673            34,024
    Gartner Group Equity Income, Net of Taxes                                              (19,600)          (17,760)
    Gain from Stock Sale by Gartner                                                         (13,379)               0
    Minority Interest Expense                                                                4,183               712
    Deferred Income Taxes                                                                    7,889             5,869
    Net Increase (Decrease) in Accrued Income Taxes                                          8,916           (13,261)
    Net (Increase) in Other Working Capital Items                                            (8,569)         (21,246)
-----------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                                                   78,359            86,940
-----------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Payments for Acquisitions of Businesses                                                     (2,938)                0

Cash of Companies Acquired in Stock Purchases                                                9,480                 0
Proceeds from Sale of Investments                                                           23,165             7,004
Capital Expenditures                                                                       (13,561)          (21,990)
Additions to Computer Software                                                             (21,060)          (19,992)
Additions to Other Assets                                                                  (13,829)          (10,936)
Increase in Investments                                                                    (12,604)          (14,349)
Other                                                                                       12,031            13,946
-----------------------------------------------------------------------------------------------------------------------
Net Cash (Used in) Investing Activities                                                    (19,316)          (46,317)
-----------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Payments for Purchase of Treasury Shares                                                    (7,809)         (204,564)
Proceeds from Exercise of  Stock Options                                                    43,232             4,345
Proceeds from Issuance of Subsidiary Stock                                                  27,128                 0
Payments of Dividends                                                                       (9,813)          (10,092)
Employee Stock Purchase Plan                                                                 2,607                 0
Proceeds from Debt assumed by Nielsen Media Research                                        300,000                0
Minority Interest Financing                                                                       0          100,000
Other                                                                                         (199)             (490)
-----------------------------------------------------------------------------------------------------------------------
Net Cash Provided by / (Used in) Financing Activities                                      355,146          (110,801)
-----------------------------------------------------------------------------------------------------------------------
Change of Gartner Group to Equity Basis                                                          0          (123,697)
Effect of Exchange Rate Changes on Cash and Cash Equivalents                                (6,908)           (5,073)
Cash Flow from Discontinued Operations                                                     (17,173)           23,360
-----------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents                                           390,108          (175,588)
Cash and Cash Equivalents, Beginning of Period                                             312,442           422,963
----------------------------------------------------------------------------------------------------- -----------------
Cash and Cash Equivalents, End of Period                                                  $702,550         $ 247,375
=======================================================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest                                                   $   412          $     581
Cash paid during the period for income taxes                                              $ 49,324          $  45,830
Non-Cash Investing Activities:
Stock Issued in Connection with Walsh and Chinametrik Acquisitions                        $168,937          $       0

<FN>

See  accompanying  notes  to the  condensed  consolidated  financial  statements
(unaudited).
</FN>
</TABLE>


<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
Dollar amounts in thousands

Note 1. Interim Consolidated Financial Statements

The accompanying  unaudited condensed financial statements have been prepared in
accordance  with  generally  accepted  accounting  principles  for  the  interim
financial  information and Article 10 of Regulation S-X under the Securities and
Exchange Act of 1934, as amended. The condensed 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") on
the Form 8K/A-2 filed July 22, 1998.  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 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 with the 1998 presentation.

Note 2. Restatement of Interim Financial Statements

The Company's  Form 10-Q/A as of and for the three and six months ended June 30,
1998 has been filed for the  restatement  of the value  initially  allocated  to
acquired   in-process   research  and  development   projects  relating  to  the
acquisition of Walsh International Inc. The amount originally recorded was based
on the  Company's  application  of the then general  methods of  allocating  the
purchase price and the  determination  of in-process  research and  development.
Since that date,  however,  the SEC has revised the approach for such valuation.
The  estimate  for the  one-time  charges for  acquired in process  research and
development projects for the initial filing was $57,000,  which has subsequently
been reduced to $21,900.  In  addition,  based on a third party  appraiser,  the
Company  allocated  $29,000 to existing core  technology  representing  computer
software  that  is  currently  in  use,   which  is  amortized   over  5  years.
Approximately  $156,557 is recorde as the excess of the purchase  price over the
fair value of  identifiable  assets,  (goodwill),  which is being amortized on a
straight-line  basis over 15 years. The restatement  does not affect  previously
reported  net cash flows for the  periods.  The effect of this  reallocation  on
previously reported condensed consolidated
financial  statements  as of and for the three and six month  periods ended June
30, 1998 is as follows:

<TABLE>

                                                             Three months                       Six months
                                                         ended June 30, 1998               ended June 30, 1998
<S>                                                 <C>               <C>              <C>              <C>    
Statement of Operations:                            As Previously                       As Previously    
                                                        reported       As restated          reported      As restated
In-process Research and Development                     $  57,000         $  21,900        $  57,000        $  21,900
Net Income/ (loss)                                      $(12,460)         $  22,640        $  47,627        $  82,727
(Loss)/Earnings per common share - Basic               $   (0.08)        $     0.14       $     0.29       $     0.51
Earnings per common share - Diluted                    $   (0.07)        $     0.13       $     0.28       $     0.49
</TABLE>
<TABLE>

                            
                                                             June 30, 1998
<S>                                                   <C>              <C>
                                                      As Previously   
Balance Sheet                                            reported       As restated
Computer Software                                       $ 103,927          $132,927
Other Assets                                            $  92,540          $ 80,924
Goodwill                                                 $219,420          $245,836

</TABLE>



<PAGE>

IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
Dollar amounts in thousands

Note 3. Basis of Presentation

This  document  relates  to IMS  Health.  The  Common  Stock of IMS  Health  was
distributed by Cognizant  Corporation  ("Cognizant") to its shareholders on June
30, 1998.  Simultaneously with the distribution ("The Distribution"),  Cognizant
changed its name to Nielsen Media Research,  Inc.  ("Nielsen  Media  Research").
Notwithstanding  the legal form of the distribution,  whereby Cognizant spun off
IMS Health,  for  accounting  purposes the  transaction  is accounted  for as if
Cognizant  spun off Nielsen  Media  Research  and IMS Health has been deemed the
"accounting  successor" to Cognizant.  The separation  created IMS Health as the
premier  global  provider of  information  solutions to the  pharmaceutical  and
healthcare  industries,  and established an independent  Nielsen Media Research,
the leader in electronic audience measurement  services.  IMS Health consists of
IMS   ("IMS"),   Erisco,   Inc.   ("Erisco"),   Enterprises   Associates,   Inc.
("Enterprises"),  Cognizant Technology  Solutions  Corporation ("CTS"), SSJ K.K.
("Super  Systems  Japan"),  and an equity  investment  in  Gartner  Group,  Inc.
("Gartner").

Cognizant  received a favorable  ruling from the Internal  Revenue  Service with
respect to the tax-free  treatment of the  transaction in May 1998.  Cognizant's
Board of  Directors  on June  15,  1998  approved  the  final  plan,  terms  and
conditions relating to the separation of the company including distribution, tax
allocation,  employee benefits and other agreements and authorized management to
execute the plan of distribution.  The Board of Directors declared a dividend to
shareholders  of record as of the close of business on June 25, 1998  consisting
of one share of IMS  Health  Common  Stock for each  share of  Cognizant  Common
Stock. The Distribution was effective June 30, 1998.

Pursuant to Accounting  Principles Board ("APB") No. 30,  "Reporting the Results
of Operations--Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions," the
consolidated  financial  statements  of the Company  have been  reclassified  to
reflect Nielsen Media Research as discontinued operations.

In connection with the Distribution, Cognizant borrowed $300 million on June 24,
1998,  which  was used to repay  existing  intercompany  liabilities.  This debt
remained the  obligation of Nielsen Media  Research  following the spin-off.  In
connection with the Distribution,  Cognizant  contributed to IMS Health all cash
in  Cognizant's  accounts  other than (i) cash  required by  Cognizant  (renamed
Nielsen Media Research) to satisfy certain  specified  obligations and (ii) such
additional  cash as was necessary for the net  borrowings of Cognizant  (renamed
Nielsen Media Research) to equal $300 million as of the Distribution.

Prior  to the  Distribution,  Cognizant  and IMS  Health  entered  into  certain
agreements that will govern the relationship  between Nielsen Media Research and
IMS Health subsequent to the Distribution 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 to be shared if certain amounts are
exceeded.


<PAGE>

IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
Dollar amounts in thousands

Note 3. Basis of Presentation (continued)

Following the Distribution,  IMS Health does not have any ownership  interest in
Nielsen Media  Research  (other than 800,000  shares of Nielsen  Media  Research
Common  Stock  which IMS Health  owns as a result of  Cognizant  Stock held by a
subsidiary of IMS Health and which IMS Health intends to sell).

The  Consolidated  Financial  Statements  have been restated to present  Nielsen
Media Research as  discontinued  operations and reflect the  Distribution  which
occurred at June 30, 1998.  Summarized  data for  discontinued  operations is as
follows (dollar amounts in thousands):

<TABLE>

Results of Operations                                   (Unaudited)                     (Unaudited)
                                                Three Months Ended June 30,      Six Months Ended June 30,
<S>                                             <C>              <C>              <C>             <C>
                                              -------------------------------- ------------------------------
                                                       1998              1997          1998        1997
                                              -------------- ----------------- ------------- ----------------

Operating Revenue                                $   97,932        $   87,184    $  193,996       $  173,455
Income Before Provision for Income Taxes
                                                     29,048            27,355        57,980           53,640
                                              ============== ================= ============= ================
Income from Discontinued Operations, Net of
Income Taxes                                     $   21,088        $   19,988    $   42,093       $   39,522
                                              ============== ================= ============= ================

</TABLE>

Net Assets of Discontinued Operations
                                             December 31, 1997
                                           ----------------------

Current Assets                                        $   64,655
Property Plant & Equipment                                55,050
Computer Software                                         43,093
Deferred Charges                                          16,299
Other Assets                                              21,112
Current Liabilities                                     (43,921)
Other Liabilities                                       (33,510)
                                           ======================
Net Assets of Discontinued Operations                 $  122,778
                                           ======================

Note 4. Investments

In the third  quarter of 1997,  the  Company's  voting  interest in Gartner fell
below 50% as a result of the  exercise  of Gartner  employee  stock  options and
employee stock purchases.  Accordingly,  effective  January 1, 1997, the Company
has  deconsolidated  Gartner and is accounting for its ownership  interest under
the equity basis.

The  Company  recognizes  as income  any gains or losses  related to the sale or
issuance of stock by a consolidated  subsidiary or a company accounted for under
the equity basis ("SAB 51 Gain").  In the second quarter of 1998,  proceeds from
the issuance of shares to Gartner employees,  including associated tax benefits,
increased  Gartner's  equity by $14,147  and  reduced  the  Company's  ownership
interest  by less than 1% to 46.9% at June 30,  1998.  Accordingly,  the Company
recognized a pre-tax unrealized gain on Gartner stock of $5,392 corresponding to
the net increase in the value of its underlying investment in Gartner.



<PAGE>

IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
Dollar amounts in thousands

Note 5. Public Offering of a Subsidiary

CTS effected an initial public  offering ("the CTS IPO") of 2,917,000  shares of
Class A Common Stock, par value $0.01 per share, of CTS (3,354,550 including the
underwriters'  over-allotment  option granted by Cognizant) on June 19, 1998. Of
such shares,  2,500,000  were offered by CTS and 417,000  shares were offered by
Cognizant.  Of the total proceeds,  CTS used approximately $6.5 million to repay
intercompany debt owed to Cognizant. Cognizant's interest in CTS was transferred
to the  Company in the  Distribution.  After  completion  of the  offering,  the
Company  holds  66.7%  of the  outstanding  stock of CTS and  accordingly,  will
continue  to  consolidate  CTS  results  within its  financial  statements.  Any
minority  interest is captured on the  Statement  of  Financial  Position in the
minority interest line. The transaction (other than the  over-allotment  option)
closed on June 24, 1998 and  resulted  in a gain of  $12,777,  which is a SAB 51
gain,   representing  the  Company's  portion  due  to  the  Distribution.   The
underwriters  over-allotment  option was exercised during the third quarter. The
Company  expects to recognize a gain from this sale  resulting in a reduction of
its  ownership  to 61.9%.  CTS's  Class A Common  Stock is listed on the  NASDAQ
National Market under the symbol "CTSH".

Note 6. Acquisitions

On June 24, 1998 Cognizant acquired Walsh  International,  Inc.  ("Walsh"). The
total  purchase price of the  acquisition  was $193,748,  including  $167,148 of
common  stock,  $9,521 of stock  options  to be issued  and  $17,079  of accrued
acquisition  and  integration  costs.  Under  terms  of  the  Walsh  acquisition
agreement,  Walsh  shareholders  received .3041 shares of Cognizant common stock
per Walsh share (or, based on a Cognizant share price of $51.792,  consideration
of approximately $167,148).  Walsh had 10,612,628 shares outstanding.  Cognizant
issued 3,227,300 shares from treasury stock to consummate the Walsh acquisition.
The direct  acquisition  and  integration  costs consist of severance of $4,876,
lease terminations of $2,569, and other direct acquisition and integration costs
of $9,634.  These direct  acquisition and  integration  costs are incremental to
other  costs and 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 Walsh  employees) and certain  contractual  cancellation  costs
(such as Walsh leases).  Approximately $156,557 is recorded as the excess of the
purchase  price ove the fair value of the  identifiable  net assets  (goodwill),
which is being amortized on a straight-line basis over 15 years.

Purchase Price Allocation

The  Company  made  allocations  of the  aggregate  purchase  price to  acquired
in-process  research and development  ("IPR&D")  amounting to $21,900 related to
the Walsh acquisition.

The  Securities  and Exchange  Commission  (the "SEC")  recently  issued revised
guidance  with  respect to  allocations  of IPR&D  projects in  connection  with
acquisitions.  In accordance with this guidance,  the amount  allocated to IPR&D
reflects  the  relative   value  and   contribution   of  the  acquired   IPR&D.
Consideration was given to the project's stage of completion,  the complexity of
the  work  completed  to  date,  the  difficulty  of  completing  the  remaining
development,  costs  already  incurred  and the  projected  cost to complete the
projects.

<PAGE>

IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
Dollar amounts in thousands

Note 6. Acquisitions - (continued)

In addition, based on a third party independent appraiser, the Company allocated
$29,000 to existing core technology  representing computer software that will be
used, which is being amoritzed over 5 years.

The  preliminary  allocation of the Company's  aggregate  purchase  price to the
tangible and identifiable  intangible assets acquired and liabilities assumed in
connection with the acquisition was based primarily on independent appraisals of
estimates of fair value. The allocation is summarized as follows:


                 In-process R&D write-off                        $   21,900
                 Net liabilities assumed                             (5,009)
                 Software/Core technology                            29,000
                 Deferred taxes                                      (8,700)
                 Goodwill                                           156,557
                 -------------------------------------------- ----------------
                 Total Purchase Price                            $  193,748
                 -------------------------------------------- ----------------

The Company does not believe that the current purchase price allocation, related
to the  Walsh  acquisition  will  differ  significantly  from  this  preliminary
purchase price allocation.

At the date of the  acquisition,  the  development of the IPR&D projects had not
yet  reached  technological  feasibility  and  had no  alternative  future  use.
Accordingly, these costs were expensed as of the acquisition date.

The impact of the acquisition on results of operations,  other than the one-time
charges and the IPR&D write-offs,  had it occurred January 1, 1998 or 1997 would
be immaterial.

Note 7. Investment Partnership

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 limited
partnership   interests.   For  financial   reporting   purposes,   the  assets,
liabilities,  results  of  operations  and  cash  flows of the  partnership  are
included in the Company's  consolidated financial statements because the Company
and its subsidiaries  maintain a controlling  (84%) interest in the partnership.
The  third-parties'  investments in this  partnership  are reflected in minority
interests.

Note 8. Litigation

The  Company  and  its  subsidiaries  are  involved  in  legal  proceedings  and
litigation  arising  in the  ordinary  course of  business.  In the  opinion  of
management,  the outcome of such current legal  proceedings and  litigation,  if
decided adversely, could have a material effect on quarterly or annual operating
results or cash flows when resolved in a future period.  However, in the opinion
of  management,   these  matters  will  not  materially   affect  the  Company's
consolidated financial position.

<PAGE>

IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
Dollar amounts in thousands

Note 8. Litigation (continued)

In addition,  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 the Dun & Bradstreet Corporation ("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.

On 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.

In light of the potentially  significant  liabilities which could arise from the
IRI  Action  and in order to  facilitate  the  distribution  by D&B of shares of
Cognizant and ACNielsen in 1996, D&B, ACNielsen  Corporation  ("ACNielsen";  the
parent company of A.C. Nielsen Company) 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


<PAGE>



IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
Dollar amounts in thousands

Note 8. Litigation (continued)

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.

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

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.

Note 9. 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 changing foreign exchange rates. The Company's
objective is to reduce earnings and cash flow volatility associated with foreign
exchange  rate changes to allow  management  to focus its  attention on its core
business activities. Accordingly the Company enters into various contracts which
change in value as  foreign  exchange  rates  change to  protect  the value of a
portion  of   committed   and   anticipated   foreign   currency   revenues  and
non-functional currency assets and liabilities. By policy, the Company maintains
hedge  coverage  between  minimum and  maximum  percentages  of its  anticipated
foreign  exchange  exposures  over the next year.  The gains and losses on these
hedges offset changes in the value of the related exposures.

It is the Company's policy to enter into foreign currency  transactions  only to
the extent  necessary to meet its  objectives as stated above.  The Company does
not enter into foreign currency transactions for speculative purposes.

The Company uses  forward  contracts  and  purchased  currency  options to hedge
committed and anticipated foreign currency denominated  revenues,  respectively.
The principal  currencies hedged are the Japanese yen, Swiss franc,  German mark
and  Italian   lira.   The  Company  also  uses   forward   contracts  to  hedge
non-functional currency assets and liabilities.




<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
Dollar amounts in thousands

Note 9. Financial Instruments with Off-Balance-Sheet Risk (continued)

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.  At May 31, 1998,  the notional  amount  hedged was
$112,000. In addition, at May 31, 1998, IMS had approximately $63,000 in foreign
exchange forward  contracts  outstanding  with various  expiration dates through
November 1998.  Gains and losses on contracts  hedging  non-functional  currency
assets and  liabilities  are not deferred and are included in current  income in
other income/expense--net.

Note 10. Adoption of Statements of Financial Accounting Standards

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standard ("SFAS") No. 133,  "Accounting for Derivative
Instruments  and Hedging  Activities".  SFAS No. 133 is effective for all fiscal
quarters for all fiscal years beginning after June 15, 1999 (January 1, 2000 for
the Company).  SFAS No. 133 requires that all derivative instruments be recorded
on the  balance  sheet  at  their  fair  value.  Changes  in the  fair  value of
derivatives are recorded each period in current earnings or other  comprehensive
income,  depending  on whether a  derivative  is  designated  as part of a hedge
transaction and, if it is, the type of hedge  transaction.  For fair-value hedge
transactions in which the Company is hedging changes in an asset's, liability's,
or firm  commitment's  fair value,  changes in the fair value of the  derivative
instrument  will  generally be offset in the income  statement by changes in the
hedged item's fair value. For cash-flow hedge transactions, in which the Company
is hedging  the  variability  of cash flows  related to a  variable-rate  asset,
liability,  or a  forecasted  transaction,  changes  in the  fair  value  of the
derivative  instrument will be reported in other comprehensive income. The gains
and losses on the derivative instrument that are reported in other comprehensive
income will be  reclassified  as earnings in the periods in which  earnings  are
impacted  by  the  variability  of  the  cash  flows  of the  hedged  item.  The
ineffective portion of all hedges will be recognized in current period earnings.
Management  has not  evaluated  the  effects  of this  change  on the  Company's
financial statements.

Note 11. Operations by Business Segment

In 1997, the Company adopted Statement of Financial  Accounting Standard No. 131
"Disclosures  About  Segments  of an  Enterprise  and Related  Information".  As
required,  the Company has  restated  prior period  segment  results in order to
conform to the new statement.  The Company,  operating globally in approximately
80 countries,  delivers  information,  software and related services principally
through the strategic business segments referenced below.

IMS is the leading global provider of market  information  and  decision-support
services to the  pharmaceutical  and  healthcare  industries.  Emerging  Markets
includes  Erisco,  a  leading  supplier  of  software-based  administrative  and
analytical  solutions to the managed care industry;  CTS, a provider of software
applications and development services and Year 2000 and Eurocurrency  compliance
services;  Super Systems  Japan,  a marketer of financial  application  software
products to the Japanese market; Enterprises, the Company's venture capital unit
focused on investments  in emerging  healthcare  businesses;  and Pilot Software
Inc.("Pilot"), which was sold as of July 31, 1997.


<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
Dollar amounts in thousands

Note 11. Operations by Business Segment (continued)


The  accounting  policies  of these  reportable  segments  are the same as those
described for the consolidated  entity. The Company evaluates the performance of
its operating segments based on revenue and operating income.


<TABLE>


Period Ended June 30, 1998                                Three Months                                   Six Months 
<S>                                              <C>        <C>             <C>             <C>          <C>             <C>

                                             ------------ -------------- ------------    ------------ --------------- ------------
                                                 IMS        Emerging        Total            IMS         Emerging        Total
                                                           Markets (1)                                  Markets (1)
                                             ------------ -------------- ------------    ------------ --------------- ------------
Operating Revenue                               $249,422        $21,074     $270,496        $472,823         $38,641     $511,464
Segment Operating Income (2)                     $28,186         $1,685      $29,871         $59,112          $2,587      $61,699
General Corporate Expenses (3)                                              $(43,783)                                    $(56,883)
nterest Income (4)                                $2,270            $48      $2,318           $4,400             $80      $4,480
Interest Expense (5)                               $(196)                     $(196)           $(380)                      $(380)
Non-Operating Income/(Expense) - Net
   Gartner Equity Income                                                     $17,320                                      $32,894
   Gain on Gartner Stock   (SAB 51)                                           $5,392                                      $13,379
   Gains from Dispositions - Net                                $12,777      $12,777                         $23,192      $23,192
   Other Expense - Net                                                         $(40)                                       $(890)
                                            ------------ --------------- ------------     ------------ -------------- ------------
Income from Continuing Operations
Before Provision for Income Taxes                                            $23,659                                     $77,491
Provision for Income Taxes                                                  $(22,107)                                   $(36,857)
                                            ------------ --------------- ------------     ------------ -------------- ------------
Income from Continuing Operations                                             $1,552                                      $40,634
Income from Discontinued Operations,
 Net of Income Taxes                                                         $21,088                                      $42,093
-------------------------------------------- ------------ -------------- ------------    ------------ --------------- ------------
Net Income                                                                   $22,640                                      $82,727
-------------------------------------------- ------------ -------------- ------------    ------------ --------------- ------------
</TABLE>

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

Period Ended June 30, 1997                                 Three Months                                  Six Months
--------------------------
<S>                                           <C>          <C>             <C>              <C>          <C>            <C>

                                           --- ---------------------------------- --    -- ------------------------------------
                                                IMS         Emerging        Total            IMS        Emerging        Total
                                                           Markets (1)                                 Markets (1)
                                            ------------- -------------- ------------    ------------ -------------- ------------
Operating Revenue                               $229,364        $21,712     $251,076        $439,186        $41,195     $480,381
Segment Operating Income/(Loss)                  $56,356       $(9,912)      $46,444         $93,672      $(18,720)      $74,952
General Corporate Expenses                                                  $(7,089)                                   $(13,989)
Interest Income (4)                                 $785          $(51)         $734          $1,882            $10       $1,892
Interest Expense (5)                              $(141)          $115         $(26)          $(362)          $(14)       $(376)
Non-Operating Income/(Expense) - Net
   Gartner Equity Income                                                     $15,137                                     $30,671
   Gains from Dispositions - Net                                                                             $5,436       $5,436
    Other (Expense)/Income  - Net                                             $(504)                                      $1,085
                                           -------------------------------------------   ---------- ------------- ----------------
Income from Continuing Operations
Before Provision for Income Taxes                                            $54,696                                     $99,671
Provision for Income Taxes                                                  $(14,629)                                   $(26,233)
                                            ------------ -------------- --------------    ---------------------------------------
Income from Continuing Operations                                            $40,067                                     $73,438
Income from Discontinued Operations,
 Net of  Income Taxes                                                        $19,988                                     $39,522
------------------------------------------- ------------- -------------- ------------    ------------ -------------- ------------
Net Income                                                                   $60,055                                    $112,960
------------------------------------------- ------------- -------------- ------------    ------------ -------------- ------------
</TABLE>

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


<PAGE>



IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
Dollar amounts in thousands

Note 11. Operations by Business Segment (continued)

         Notes to Operations by Business Segments:

         (1) Excludes  intersegment  sales in 1998 of $4,173, and $7,907 for the
 three and six month  periods  presented,  respectively.  Excludes  intersegment
 sales in 1997 of  $3,267,  and  $5,754  for the  three  and six  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) Segment operating income in 1998 includes a one-time in-process research and
 development  write-off  of $21,900  for both the three and six  months  periods
 presented.
(3)  General  Corporate   Expenses  in  1998  include  charges  related  to  the
Distribution  of  $30,125  and  $35,025  for the  three  and six  month  periods
presented, respectively. In addition, General Corporate Expenses in 1998 include
one-time  Walsh  acquisition  costs of  $5,000  for both the three and six month
periods  presented.  (4) Interest  income in 1998 excludes  amounts  recorded at
corporate  of $2,453 and $4,389 for the three and six month  periods  presented,
respectively.  Interest income in 1997 excludes amounts recorded at corporate of
$932 and $3,384 for the three and six month periods presented, respectively. (5)
Interest  expense in 1998 excludes  amounts recorded at corporate of $16 and $32
for the three and six month periods presented, respectively. Interest expense in
1997 excludes  amounts  recorded at corporate of $105 and $205 for the three and
six month periods presented, respectively.

Note 12. Comprehensive Income

In June 1997, the FASB issued SFAS No. 130,  "Reporting  Comprehensive  Income",
which  requires  that  changes in  comprehensive  income be shown in a financial
statement  that is  displayed  with  the  same  prominence  as  other  financial
statements.  This  statement,  which the Company adopted in the first quarter of
1998,  establishes  standards for reporting and displaying  comprehensive income
and its components in a full set of general purpose financial statements.  Where
applicable,  earlier  periods have been restated to conform to the standards set
forth in SFAS No.  130.  The  Company's  Comprehensive  Income  consists  of net
income,   foreign  currency  translation   adjustments  and  unrealized  holding
gains/(losses)   on  securities  (see  Condensed   Consolidated   Statements  of
Comprehensive Income).

<TABLE>

Accumulated  balances  of  Cumulative  Translation  Adjustments  and  Unrealized
Gains/(Losses) on Investments, as of June 30, 1998 are as follows:
<S>                                        <C>                <C>                       <C>   
                                           Cumulative         Unrealized                  Total Other
                                          Translation       Gains/(Losses)               Comprehensive
                                           Adjustment       on Investments      (1)          Items
                                        ----------------- -------------------- ------ ---------------------
Balance December 31, 1997                      $(76,771)              $32,650                    $(44,121)
Current Period Change                            (9,596)              (3,161)                     (12,757)
======================================= ================= ==================== ====== =====================
Balance June 30, 1998                          $(86,367)              $29,489                    $(56,878)
======================================= ================= ==================== ====== =====================
<FN>

(1) Current period change is principally due to the sale of Enterprises' investments in Aspect Development, Inc. and
Pegasus Systems Inc.
</FN>

</TABLE>


<PAGE>


IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
Dollar amounts in thousands

Note 13. Subsequent Event

On July 22, 1998, the Company announced the signing of an agreement in principle
to  acquire  the  non-U.S.  assets of  Pharmaceutical  Marketing  Services  Inc.
("PMSI"),  which provides  information services to pharmaceutical and healthcare
companies in the U.S.,  Europe and Japan. The agreement  supersedes the previous
agreement  dated  March 23,  1998.  PMSI  will  remain  an  independent  company
retaining PMSI Scott-Levin and all of its non-operating  assets. The transaction
which  closed on August 5, 1998,  is expected to be tax-free to PMSI.  Under the
terms of the agreement  PMSI received  approximately  1.2 million  shares of IMS
Health common stock,  valued at approximately  $75,000.  It is expected that the
Company will incur an in-process  research and development charge as a result of
this transaction.


<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 document  relates to IMS Health  Incorporated  ("IMS  Health").  The Common
stock of IMS Health was distributed by Cognizant  Corporation  ("Cognizant")  to
its shareholders on June 30, 1998.  Simultaneously  with the distribution  ("the
Distribution")  Cognizant  changed  its name to  Nielsen  Media  Research,  Inc.
("Nielsen Media Research").  Notwithstanding the legal form of the distribution,
whereby Cognizant spun off IMS Health,  for accounting  purposes the transaction
is accounted for as if Cognizant spun off Nielsen Media  Research,  Inc. and IMS
Health has been deemed the "accounting  successor" to Cognizant.  The separation
created IMS Health as the premier global  provider of  information  solutions to
the  pharmaceutical  and healthcare  industries,  and established an independent
Nielsen Media Research,  the leader in electronic audience measurement services.
IMS  Health  consists  of IMS  ("IMS"),  Erisco,  Inc.  ("Erisco"),  Enterprises
Associates,  Inc.  ("Enterprises"),  Cognizant Technology Solutions  Corporation
("CTS"),  SSJ K.K. ("Super Systems Japan"),  and an equity investment in Gartner
Group, Inc. ("Gartner").

Cognizant  received a favorable  ruling from the Internal  Revenue  Service with
respect to the tax-free  treatment of the  transaction in May 1998.  Cognizant's
Board of  Directors  on June  15,  1998  approved  the  final  plan,  terms  and
conditions relating to the separation of the company including distribution, tax
allocation,  employee benefits and other agreements and authorized management to
execute the plan of distribution.  The Board of Directors declared a dividend to
shareholders  of record as of the close of business on June 25, 1998  consisting
of one share of IMS  Health  Common  Stock for each  share of  Cognizant  Common
Stock. The Distribution was effective June 30, 1998.

Pursuant to Accounting  Principles Board ("APB") No. 30,  "Reporting the Results
of Operations--Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions," the
consolidated  financial  statements  of the Company  have been  reclassified  to
reflect Nielsen Media Research as discontinued operations.

In connection with the Distribution, Cognizant borrowed $300 million on June 24,
1998,  which  was used to repay  existing  intercompany  liabilities.  This debt
remained the  obligation  of Nielsen Media  Research  following the spin off. In
connection with the Distribution,  Cognizant  contributed to IMS Health all cash
in  Cognizant's  accounts  other than (i) cash  required by  Cognizant  (renamed
Nielsen Media Research) to satisfy certain  specified  obligations and (ii) such
additional  cash as was necessary for the net  borrowings of Cognizant  (renamed
Nielsen Media Research) to equal $300 million as of the Distribution.

Prior  to the  Distribution,  Cognizant  and IMS  Health  entered  into  certain
agreements that will govern the relationship  between Nielsen Media Research and
IMS Health subsequent to the Distribution 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 to be shared if certain amounts are
exceeded.





<PAGE>


IMS HEALTH INCORPORATED

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

Following the Distribution,  IMS Health does not have any ownership  interest in
Nielsen Media  Research  (other than 800,000  shares of Nielsen  Media  Research
Common Stock which IMS Health will own as a result of Cognizant  Stock held by a
subsidiary of IMS Health and which IMS Health intends to sell).

Acquisition

On June 24, 1998 Cognizant  acquired Walsh  International,  Inc.  ("Walsh"). The
total  purchase price of the  acquisition  was $193,748,  including  $167,148 of
common  stock,  $9,521 of stock  options  to be issued  and  $17,079  of accrued
acquisition  and  integration  costs.  Under  terms  of  the  Walsh  acquisition
agreement,  Walsh  shareholders  received .3041 shares of Cognizant  Corporation
common stock per Walsh share (or,  based on a Cognizant  share price of $51.792,
consideration  of   approximately   $167,148).   Walsh  had  10,612,628   shares
outstanding. Cognizant issued 3,227,300 shares from treasury stock to consummate
the Walsh  acquisition.  The direct acquisition and integration costs consist of
severance of $4,876,  lease  terminations of $2,569 and other direct acquisition
and integration costs of $9,634.  These direct acquisition and integration costs
are  incremental  to other  costs and 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 Walsh  employees)  and certain  contractual
costs (such as Walsh leases).  Approximately  $156,557 is 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

The  Company  made  allocations  of the  aggregate  purchase  price to  acquired
in-process  research and development  ("IPR&D")  amounting to $21,900 related to
the Walsh acquisition.

The  Securities  and Exchange  Commission  (the "SEC")  recently  issued revised
guidance  with  respect to  allocations  of IPR&D  projects in  connection  with
acquisitions.  In accordance with this guidance,  the amount  allocated to IPR&D
reflects  the  relative   value  and   contribution   of  the  acquired   IPR&D.
Consideration was given to the project's stage of completion,  the complexity of
the  work  completed  to  date,  the  difficulty  of  completing  the  remaining
development,  costs  already  incurred  and the  projected  cost to complete the
projects.

The  preliminary  allocation of the Company's  aggregate  purchase  price to the
tangible and identifiable  intangible assets acquired and liabilities assumed in
connection with the acquisition was based primarily on independent appraisals of
estimates of fair value. The allocation is summarized as follows:

                 In-process R&D write-off                    $   21,900
                 Net liabilities assumed                         (5,009)
                 Software/Core technology                        29,000
                 Deferred taxes                                  (8,700)
                 Goodwill                                       156,557
                 ------------------------------------------ ----------------
                 Total Purchase Price                        $  193,748
                 ----------------------------------------- ----------------

The Company does not believe that the current purchase price allocation, related
to the Walsh  acquisition,  will  differ  significantly  from this  preliminary
purchase price allocation.

<PAGE>

IMS HEALTH INCORPORATED

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

 The impact of the acquisition on results of operations, other than the one-time
charges and the charge for in-process research and development,  had it occurred
January 1, 1998 or 1997 would be immaterial.

At the date of the  acquisition,  the  development of the IPR&D projects had not
yet  reached  technological  feasibility  and  had no  alternative  future  use.
Accordingly, these costs were expensed as of the acquisition date.

The projects identified as IPR&D at Walsh include enhancement of Walsh's Windows
based sales management  information  system,  enhancement of its  pharmaceutical
marketing database and development of a next-stage integrated and enhanced sales
management  information  system.  These projects were  identified as underway at
Walsh and, at the date of the acquisition,  would require  additional  effort to
establish  technological  feasibility.  In  addition,  based  on a  third  party
independent appraiser, the Company allocated $29,000 to existing core technology
representing  computer  software  that is  currently  in  use,  which  is  being
amoritzed over 5 years.

The amounts  assigned to the IPR&D projects were determined by first  estimating
the degree of  completion  of each project and the potential net cash flows from
such  projects  after  commercial  introduction.  The  potential  net cash flows
include  reductions  reflecting  the  necessary  investment in fixed and working
capital and other  collateral  assets,  which  include  core  technology,  where
appropriate  and a fair return on those  assets.  A portion of the potential net
cash flows for each project was then attributed to the effort already  completed
by  Walsh,  based  upon the  estimated  degree  of  completion.  The  attributed
potential net cash flows for each project were discounted to present value using
a risk-adjusted discount rate.

The discount rates utilized to value the IPR&D projects  ranged from 17% to 30%.
Such discount  rates took into account the industry risk for the Walsh  business
acquired (as  evidenced  by the  calculated  weighted  average cost of capital),
technology  development risk associated with completing the in-process projects,
and  market  and  commercial   risk   associated   with   introducing   the  new
products/technology.  The  implied  weighted  average  cost of  capital  for the
different Walsh projects ranged from 12% to 15%.

The degree of completion represents the extent to which the different in-process
projects are complete,  as of the  acquisition  date. The completion  percentage
ranged from 53% to 87% for projects at Walsh.  In the opinion of management  IMS
Health is on target to begin realizing the benefits from these various  projects
through product introductions at launch dates ranging from early 1999 to January
2000.

The Company believes that the assumptions used,  including the revenue forecasts
and margin analysis,  are reasonable.  No assurance can be given,  however, that
the underlying assumptions used to estimate expected project sales,  development
costs or profitability, or events associated

<PAGE>

IMS HEALTH INCORPORATED

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

with such  projects,  will  transpire as estimated.  For these  reasons,  actual
results may vary from the projected results.

Management  expects to continue  supporting these IPR&D efforts and believes the
Company has a reasonable  chance of successfully  completing the IPR&D programs.
However,  there is risk associated with the completion of the IPR&D projects and
the Company  cannot be assured that any will meet with either  technological  or
commercial success.

If none of these  IPR&D  projects  are  successfully  developed  the  sales  and
profitability  of the Company may be adversely  affected in future periods.  The
failure of any particular  individual  project  in-process  would not materially
impact the Company's financial  condition,  results of operations or cash flows.
Operating  results are subject to uncertain  market events and risks,  which are
beyond  the  Company's  control,  such  as  trends  in  technology,   government
regulations,  market size and growth, and product  introduction or other actions
by competitors.

Public Offering of a Subsidiary

CTS effected an initial public  offering (`the CTS IPO") of 2,917,000  shares of
Class A Common Stock, par value $0.01 per share, of CTS (3,354,550 including the
underwriters'  over-allotment  option granted by Cognizant) on June 19, 1998. Of
such shares,  2,500,000  were offered by CTS and 417,000  shares were offered by
Cognizant.  Of the total proceeds,  CTS used approximately $6.5 million to repay
intercompany debt owed to Cognizant. Cognizant's interest in CTS was transferred
to the  Company in the  Distribution.  After  completion  of the  offering,  the
Company  holds  66.7%  of the  outstanding  stock of CTS and  accordingly,  will
continue  to  consolidate  CTS  results  within its  financial  statements.  Any
minority  interest is captured on the  Statement  of  Financial  Position in the
minority interest line. The transaction (other than the  over-allotment  option)
closed on June 24, 1998 and  resulted  in a gain of  $12,777,  which is a SAB 51
gain,   representing  the  Company's  portion  due  to  the  Distribution.   The
underwriter's  over-allotment option was exercised during the third quarter. The
Company  expects to recognize a gain from the sale,  which reduces  ownership to
61.9%.  CTS's Class A Common Stock is listed on the NASDAQ National Market under
the symbol "CTSH".

In September 1997, the Company's  voting interest in Gartner fell below 50% as a
result of the exercise of Gartner  employee  stock  options and  employee  stock
purchases.   Accordingly,   effective   January  1,  1997,   the   Company   has
deconsolidated Gartner (the "Gartner Deconsolidation") and is accounting for its
ownership interest under the equity basis.

Operations

Revenue for the second  quarter  increased by 7.7% to $270,496 from $251,076 for
the second quarter of the prior year.  Consolidated first-half revenue increased
6.5% to $511,464 from  $480,381 for the  comparable  period a year ago.  Revenue
growth  for the  quarter  and the  first-half  was held down by the  absence  of
revenues from Pilot Software Inc. ("Pilot") since its divestiture and the impact
of a stronger U.S.  dollar.  Adjusting  for these items,  revenue for the second
quarter and first half of 1998 increased by 14.2% and 14.4%, respectively.  This
increase  reflected  double-digit  constant dollar revenue growth at IMS, Erisco
and CTS. The impact of a stronger  U.S.  dollar  decreased  reported  revenue by
approximately 3% in the second quarter and 4% for the first-half,  including the
impact of gains related to the Company's hedging strategy.

Operating  losses for the second  quarter were  ($13,912),  a decrease of 135.4%
from  operating  income of  $39,355  for the second  quarter of the prior  year.
Operating  losses in the second  quarter  include  Year 2000  costs of  $12,330;
charges related to the Distribution of $30,125;  and an in-process  research and
development  write-off of $21,900 and one-time  charge of $5,000  related to the
Walsh acquisition.


<PAGE>


IMS HEALTH INCORPORATED

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

Consolidated  first-half  operating  income was $4,816, a decrease of 92.1% from
operating  income of $60,963 for the  comparable  period a year ago.  First-half
operating  losses  include  Year 2000 costs of $22,301;  charges  related to the
Distribution of $35,025; and a research and development write-off of $21,900 and
one-time charge of $5,000 related to the Walsh acquisition.

Adjusting  for these items and the impact of a stronger U.S.  dollar,  operating
income for the second  quarter and the first-half of 1998 increased by 54.0% and
59.7%,  respectively.  Adjusted  operating income growth outpaced revenue growth
primarily due to the absence of Pilot  operating  losses since its  divestiture.
The impact of a stronger U.S. dollar decreased  adjusted operating income growth
by approximately 13% in the second quarter and 14% for the first-half, including
the impact of gains related to the Company's hedging strategy.

Non-operating  income-net  for the second  quarter  was  $37,571  compared  with
$15,341 for the second  quarter of the prior year.  This  increase is  primarily
related to realizing  gains in 1998 related to the CTS IPO gain of $12,777,  and
recording a pre-tax unrealized gain on Gartner stock of $5,392  corresponding to
the net increase in the value of the  Company's  investment  in Gartner ("SAB 51
Gain").

Non-operating  income-net for the  first-half was $72,675  compared with $38,708
for the  comparable  period a year ago.  This  increase is primarily  related to
realizing  higher  gains  in 1998 on the  sale of  Enterprises'  investments  of
$10,415  compared  with 1997 gains of $5,436,  the CTS IPO gain of $12,777,  and
recording a pre-tax SAB 51 gain on Gartner stock of $13,379 corresponding to the
net  increase in the value of the  Company's  investment  in Gartner ; partially
offset by recording,  within Gartner equity  income,  the Company's  share of an
in-process research and development write-off at Gartner of $2,998.

The  Company's  effective  tax rate was 93.4% for the  second  quarter  of 1998,
compared  with an effective  tax rate of 26.8% in the  comparable  period of the
prior  year.  The second  quarter  1998  effective  tax rate was  impacted  by a
one-time spin-related charge of $30,125 and a research and development write-off
of $21,900 and one-time charge of $5,000 related to the Walsh acquisition. These
items did not give rise to a tax benefit.  Excluding these items,  the Company's
effective tax rate was 27.4% for the second quarter of 1998.

The Company's  effective tax rate was 47.6% for the first-half of 1998, compared
with an effective tax rate of 26.3% in the comparable  period of the prior year.
Excluding the charges related to the Distribution and a research and development
write-off and one-time  charge related to the Walsh  acquisition,  the effective
tax rate from operations for the first-half of 1998 was 27.4%.

Income  from  continuing  operations  in the second  quarter of 1998 was $1,552,
compared with income from continuing operations of $40,067 in the second quarter
of the prior year, a decrease of 96.1%.  Excluding the  after-tax  impact of the
SAB 51  Gain,  CTS IPO  gain,  Year  2000  costs,  the  charges  related  to the
Distribution and the in-process research and development  write-off and one-time
charges  related to the Walsh  acquisition,  income from  continuing  operations
increased 35.6% to $54,338 in 1998.



<PAGE>


IMS HEALTH INCORPORATED

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


Income  from  continuing  operations  for the  first-half  of 1998 was  $40,634,
compared with $73,438 in the  first-half of the prior year, a decrease of 44.7%.
Excluding  the  after-tax   impact  of  gains   associated   with   Enterprises'
investments,  the SAB 51 Gain,  the CTS IPO gain,  Year 2000 costs,  the charges
related  to  the  Distribution  and  the  in-process  research  and  development
write-off and one-time  charges  related to the Walsh  acquisition,  income from
continuing operations increased 34.0% to $93,034 in 1998.

Income from discontinued operations net of income taxes in the second quarter of
1998 was $21,088, compared with $19,988 in the second quarter of the prior year.
Income from  discontinued  operations  net of income taxes in the  first-half of
1998 was $42,093,  compared  with $39,522 in the  first-half  of the prior year.
Income from  discontinued  operations net of income taxes represents the results
of Nielsen Media Research.

The Company's net income for the second quarter of 1998 was $22,640,  a decrease
of 62.3 % from net income of $60,055  in the second  quarter of the prior  year.
Excluding the after-tax  impact of Year 2000 costs,  the charges  related to the
Distribution,  the in-process research and development  write-off,  the one-time
acquisition  costs,  the SAB 51 Gain,  and the CTS IPO gain,  net income for the
quarter increased 25.6%.

The Company's net income for the first-half of 1998  decreased  26.8% to $82,727
from  $112,960 in the  first-half  of the prior year.  Excluding  the  after-tax
impact  of Year  2000  costs,  the  charges  related  to the  Distribution,  the
in-process research and development  write-off,  the one time acquisition costs,
the SAB 51 Gain, gains associated with Enterprises' investments, and the CTS IPO
gain, net income for the quarter increased 24.1%.

Basic  earnings per share from  continuing  operations in the second  quarter of
1998 was $0.01,  a  decrease  of 95.8%  from  earnings  per share of $.24 in the
second  quarter  of the  prior  year.  Excluding  the  after-tax  impact  of the
previously  identified  one-time items, basic earnings per share for the quarter
increased 37.5%.

Basic  earnings per share from  continuing  operations in the first-half of 1998
decreased  43.2%  to  $0.25  from  $.44 in the  first-half  of the  prior  year.
Excluding the after-tax  impact of the  previously  identified  one-time  items,
basic earnings per share for the quarter increased 39.0%.

Results by Business Segment

As discussed in Note 10, in 1997 the Company  adopted SFAS No. 131  "Disclosures
About Segments of an Enterprise and Related  Information"  which changes the way
public companies report information about segments. As required, the Company has
restated the prior period in order to conform to the 1998 presentation.

IMS is the leading global provider of market  information  and  decision-support
services to the  pharmaceutical and healthcare  industries.  IMS revenue for the
second  quarter of 1998  increased  8.7% to $249,422 from $229,364 in the second
quarter of the prior year. Adjusting for the impact



<PAGE>


IMS HEALTH INCORPORATED

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

Results by Business Segment -(continued)

of a stronger  U.S.  dollar,  revenue for the second  quarter 1998  increased by
11.6%.  IMS  revenue  growth  benefited  from  strong  performance  of its sales
management  products in North America,  and from  increased  usage of the Global
Services Midas database by international  pharmaceutical companies.  Income from
IMS for the second quarter was $28,186,  a decrease of 50% from operating income
of $56,356 in the second  quarter  of the prior  year.  Operating  income in the
second  quarter of 1998  includes  $12,330  of costs  related to Year 2000 and a
research and  development  write-off of $21,900.  Excluding  these costs and the
impact of a stronger U.S.  dollar,  operating  income for the second  quarter of
1998 increased 17.4%.

IMS revenue for the  first-half of 1998 increased 7.7% to $472,823 from $439,186
in the first-half of the prior year. Adjusting for the impact of a stronger U.S.
dollar,  revenue for the  first-half of 1998  increased by 12.1%.  IMS operating
income for the first-half of 1998 decreased 36.9% to $59,112 from $93,672 in the
first-half  of the  prior  year.  Operating  income  in the  first-half  of 1998
includes  $22,301 of costs  related to Year 2000 and a research and  development
write-off of $21,900.  Excluding  these costs and the impact of a stronger  U.S.
dollar, operating income for the first-half of 1998 increased 17.3%.

Emerging  Markets   includes  Erisco,  a  leading  supplier  of   software-based
administrative  and analytical  solutions to the managed care  industry;  CTS, a
provider of software  applications  and  development  services and Year 2000 and
Eurocurrency  compliance services;  Super Systems Japan, a marketer of financial
application software products to the Japanese market; Enterprises, the Company's
venture capital unit, focused on investments in emerging healthcare  businesses;
and Pilot which was sold as of July 31, 1997.

Emerging  Markets  revenue  for the  second  quarter of 1998  decreased  2.9% to
$21,074 from $21,712 in the second quarter of the prior year.  This decrease was
primarily  due to the  absence of  revenues  from Pilot  since its  divestiture.
Excluding the effect of Pilot and the impact of a stronger U.S. dollar,  revenue
for the second quarter of 1998 increased  56.9%,  primarily due to strong growth
at CTS and Erisco.  Emerging Markets  operating income for the second quarter of
1998  increased to $1,685 from an operating loss of $9,912 in the second quarter
of the prior year. This increase was primarily due to the absence of losses from
Pilot since its divestiture.

Emerging  Markets  revenue for the  first-half of 1998 decreased 6.2% to $38,641
from $41,195 in the  first-half  of the prior year.  This decrease was primarily
due to the absence of revenues from Pilot since its  divestiture.  Excluding the
effect of Pilot and the  impact  of a  stronger  U.S.  dollar,  revenue  for the
first-half of 1998 increased 54.1%.

Emerging Markets operating income for the first-half of 1998 increased to $2,587
from an  operating  loss of $18,720 in the first  half of the prior  year.  This
increase  was  primarily  due to the  absence  of losses  from  Pilot  since its
divestiture.


<PAGE>


IMS HEALTH INCORPORATED

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


Condensed Consolidated Statement of Cash Flows
Six Months Ended June 30, 1998 and 1997

Net cash  provided by operating  activities  totaled  $78,359 for the six months
ended June 30, 1998 compared with $86,940 for the comparable period in 1997. The
decrease  of $8,581  principally  reflects  lower net income in 1998 and a lower
increase in deferred revenues  ($17,351).  These decreases were partially offset
by a decrease in accounts  receivable  in 1998 compared with an increase in 1997
($15,322),  an increase in accrued income taxes in 1998 compared with a decrease
in  1997  ($22,177),  and a  lower  increase  in  Other  Working  Capital  items
($12,677).

Net cash (used in) investing activities totaled ($19,316) for 1998 compared with
($46,317)  for the  comparable  period  in 1997.  The  decrease  in cash used of
$27,001 is  principally  due to higher  proceeds from the sale of investments in
1998 as compared with 1997 ($16,161) and cash from  companies  acquired in stock
purchases ($9,480).

Net cash provided by / (used in) financing  activities  totaled $355,146 for the
six months  ended June 30, 1998  compared  with  ($110,801)  for the  comparable
period in 1997.  The  increase  in cash  provided  by  financing  activities  of
$465,947 was  primarily  due to proceeds  from the debt assumed by Nielsen Media
Research  ($300,000),  lower cash  payments for the purchase of treasury  shares
($196,755),  higher  proceeds  from  the  exercise  of  stock  options  in  1998
($43,232),  as  compared  with  1997  ($4,345)  and  proceeds  from  the CTS IPO
($27,128).  These  increases  were  partially  offset by the absence of minority
interest financing in 1998 ($100,000).


Changes in Financial Position at June 30, 1998 Compared to December 31, 1997

Cash & Cash Equivalents increased to $702,550 at June 30, 1998, from $312,442 at
December 31,  1997,  primarily  reflecting  the  proceeds  from bank  borrowings
assumed  by  Nielsen  Media  Research  ($300,000),  proceeds  from  the  sale of
investments  ($23,165),  proceeds  from the CTS IPO  ($27,128) and proceeds from
exercise of stock options ($43,232).

Investment  in Gartner  Group  increased  to  $228,674  at June 30,  1998,  from
$195,695 at December 31, 1997,  reflecting  equity income-net of taxes ($19,600)
and a gain on the sale of Gartner stock ($13,379).

Goodwill  increased to $245,836 at June 30,  1998,  from $87,430 at December 31,
1997, primarily reflecting the Walsh acquisition ($156,557).

Assets from  Discontinued  Operations  decreased  to $0 at June 30,  1998,  from
$122,778  at  December  31,  1997,  due to the  distribution  of  Nielsen  Media
Research.

Accrued Income Taxes increased to $60,235 at June 30, 1998, from $52,696 at
December 31, 1997,  primarily  reflecting a higher tax provision in 1998.


<PAGE>


IMS HEALTH INCORPORATED

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

Changes in Financial Position at June 30, 1998 Compared to December 31, 1997
(continued)

Deferred  Revenue  increased  to $130,068  at June 30,  1998,  from  $110,768 at
December 31, 1997, primarily reflecting higher sales at IMS and the inclusion of
Walsh.

Shareholders'  Equity increased to $1,182,958 at June 30, 1998, from $801,570 at
December 31, 1997, primarily reflecting the issuance of stock in connection with
acquisitions ($168,937),  the proceeds of bank borrowings net of the dividend of
Nielsen Media Research's net liability  ($112,000),  net income  ($82,727),  and
proceeds from stock option exercises  ($43,232).  These increases were partially
offset  by  cash  dividends  paid  ($9,813),  currency  translation  adjustments
($9,596) and treasury share repurchases (7,809).


Adoption of Statements of Financial Accounting Standards

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standard ("SFAS") No. 133,  "Accounting for Derivative
Instruments  and  Hedging  Activities".  SFAS 133 is  effective  for all  fiscal
quarters for all fiscal years beginning after June 15, 1999 (January 1, 2000 for
the Company).  SFAS 133 requires that all derivative  instruments be recorded on
the balance sheet at their fair value.  Changes in the fair value of derivatives
are  recorded  each period in current  earnings or other  comprehensive  income,
depending on whether a derivative is  designated as part of a hedge  transaction
and, if it is, the type of hedge transaction.  For fair-value hedge transactions
in which the  Company is hedging  changes in an  asset's,  liability's,  or firm
commitment's fair value, changes in the fair value of the derivative  instrument
will generally be offset in the income statement by changes in the hedged item's
fair value.  For cash-flow hedge  transactions,  in which the Company is hedging
the variability of cash flows related to a variable-rate asset,  liability, or a
forecasted  transaction,  changes in the fair value of the derivative instrument
will be  reported  in other  comprehensive  income.  The gains and losses on the
derivative  instrument that are reported in other  comprehensive  income will be
reclassified  as earnings in the periods in which  earnings  are impacted by the
variability of the cash flows of the hedged item. The ineffective portion of all
hedges  will be  recognized  in  current  period  earnings.  Management  has not
evaluated the effects of this change on the Company's financial statements.


<PAGE>


IMS HEALTH INCORPORATED

PART II.  OTHER INFORMATION

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

    (a) Exhibits:

    10   Material Contracts:
     .1  Distribution Agreement between Cognizant and IMS Health Incorporated
         dated as of  June 30, 1998.
     .2  Tax Allocation Agreement between Cognizant and IMS Health Incorporated
         dated as of  June 30, 1998.
     .3  Employee Benefits Agreement between Cognizant Corporation and
         IMS Health Incorporated dated as of  June 30, 1998.
     .4  Amended and Restated Transition Services Agreement between The Dun &
         Bradstreet Corporation, The New Dun & Bradstreet Corporation, 
         Cognizant Corporation, IMS Health Incorporated, ACNielsen Corporation
         and Gartner Group, Inc. dated as of  June 30, 1998.
     .5  Undertaking of IMS Health Incorporated dated as of  June 29, 1998.
     .6  Distribution   Agreement  among  Cognizant   Corporation,   The  Dun  &
         Bradstreet  Corporation and ACNielsen  Corporation  dated as of October
         28, 1996  (incorporated  by reference  to Exhibit  10.1 to  Cognizant's
         Annual Report on Form 10-K for the year ended December 31, 1996,  filed
         March 27, 1997, file number 001-12275).
     .7  Tax  Allocation  Agreement  among  Cognizant  Corporation,  The  Dun  &
         Bradstreet  Corporation and ACNielsen  Corporation  dated as of October
         28, 1996  (incorporated  by reference  to Exhibit  10.2 to  Cognizant's
         Annual Report on Form 10-K for the year ended December 31, 1996,  filed
         March 27, 1997, file number 001-12275).
     .8  Employee  Benefits  Agreement  among Cognizant  Corporation,  The Dun &
         Bradstreet  Corporation and ACNielsen  Corporation  dated as of October
         28, 1996  (incorporated  by reference  to Exhibit  10.3 to  Cognizant's
         Annual Report on Form 10-K for the year ended December 31, 1996,  filed
         March 27, 1997, file number 001-12275).
     .9  Indemnity and Joint Defense Agreement among Cognizant Corporation,  The
         Dun & Bradstreet  Corporation  and  ACNielsen  Corporation  dated as of
         October  28,  1996  (incorporated  by  reference  to  Exhibit  10.4  to
         Cognizant's  Annual Report on Form 10-K for the year ended December 31,
         1996, filed March 27, 1997, file number 001-12275).
     .10 TAM  Master  Agreement  between  Cognizant  Corporation  and  ACNielsen
         Corporation dated as of October 28, 1996  (incorporated by reference to
         Exhibit  10.5 to  Cognizant's  Annual  Report on Form 10-K for the year
         ended December 31, 1996, filed March 27, 1997, file number 001-12275).

    27   Financial Data Schedules.

    (b) Reports on 8-K:
          A report on Form 8-K was filed on June 30,  1998 to report  under Item
         5, Other Events,  pursuant to Accounting  Principles  Board ("APB") No.
         30,  "Reporting  the  Results of  Operations--Reporting  the effects of
         Disposal of a Segment of a  Business,  and  Extraordinary,  Unusual and
         Infrequently  Occurring Events and Transactions;  and Item 7, Financial
         Statements  to  present  the  consolidated   financial  statements  and
         associated  notes  of  the  Company  to  reflect  Nielsen  Media  as  a
         discontinued operation.
          A report on Form 8-K/A was filed on June 30, 1998 to report under Item
         5, Other Events, and Item 7, Financial Statements
          A report on Form  8-K/A-1 was filed on July 23,  1998 to report  under
         Item 5, Other Events, and Item 7, Financial Statements
          A report on Form  8-K/A-2 was filed on July 23,  1998 to report  under
         Item 5, Other Events, and Item 7, Financial Statements


<PAGE>


                                                       SIGNATURE


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: February 24, 1999