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SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

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

For the Quarterly Period Ended June 30, 2003

Commission file number 000-23520

Quintiles Transnational Corp.

(919) 998-2000

N/A

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

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     x Yes     o No

      The number of shares of Common Stock, $.01 par value, outstanding as of June 30, 2003 was 118,501,009.

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INDEX

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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

The accompanying notes are an integral part of these condensed consolidated statements.

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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

The accompanying notes are an integral part of these condensed consolidated statements.

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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

The accompanying notes are an integral part of these condensed consolidated statements.

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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

1.     Basis of Presentation

      The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six-month period ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. For further information, refer to the Consolidated Financial Statements and Notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2002 of Quintiles Transnational Corp. (the “Company”), as amended.

      The balance sheet at December 31, 2002 has been derived from the audited consolidated financial statements of the Company. Certain amounts in the 2002 financial statements have been reclassed or modified to conform with the 2003 financial statement presentation.

      The Company has elected to follow Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations in accounting for its employee stock options because the alternative fair value accounting provided for under Statement of Financial Accounting Standard (“SFAS”) No. 123, “Accounting for Stock-Based Compensation”, as amended by SFAS No. 148, requires use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, because the exercise price of the Company’s employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized.

      Pro forma information regarding net income and net income per share is required by SFAS No. 123, as amended by SFAS No. 148, and has been determined as if the Company had accounted for its employee stock options under the fair value method of SFAS No. 123. The per share weighted-average fair value of stock options granted during the three months ended June 30, 2003 and 2002 was $4.33 and $4.04 per share, respectively, on the date of grant using the Black-Scholes option pricing model with the following assumptions:

      The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are freely transferable. All available option pricing models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options and changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not provide a reliable single measure of the fair value of its employee stock options. The Company suspended its employee stock purchase plan effective April 2003 due to the pending transaction with Pharma Services Holding, Inc. (“Pharma Services”).

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The Company’s pro forma information follows (in thousands, except for net income per share information):