Covance Reports Second Quarter Net Revenue of $592 Million, Pro Forma EPS of $0.78 and Record Adjusted Net Orders of $776 Million -- Raises FY2013 Pro Forma EPS Target to $3.10 to $3.20 --

PRINCETON, N.J., July 30, 2013 /PRNewswire/ -- Covance Inc. (NYSE: CVD) today reported results for its second quarter ended June 30, 2013.  Net revenue was $592.3 million, representing 9.1% growth from the second quarter of 2012's GAAP result of $542.8 million, and 10.0% growth from the second quarter of 2012's pro forma result of $538.5 million.  On a GAAP basis, the company reported earnings of $0.72 per diluted share in the second quarter.  Excluding charges associated with restructuring and other cost reduction actions totaling $6.0 million and a gain on the sale of an equity investment of $0.7 million, the company reported earnings per diluted share of $0.78, up 19.9% over the pro forma earnings of $0.65 for the second quarter of 2012. 

"Accelerated revenue growth in central laboratories was the primary driver of better-than-expected consolidated results in the second quarter, including pro forma revenue growth of 10%, operating margin of 9.7%, and EPS growth of 20% to $0.78," said Joe Herring, Chairman and Chief Executive Officer. "Strong commercial performance, led by clinical development, delivered record adjusted net orders of $776 million in the quarter. These orders result in an adjusted net book-to-bill of 1.31 to 1.  

"Late-Stage Development second quarter revenue grew 17% year-on-year to $378 million and pro forma operating margins were 21.4%, up 30 basis points from a year ago despite increased spending on strategic IT projects.  Better-than-expected kit volumes in central laboratories drove both year-over-year revenue growth of 22% and operating margin expansion.  Clinical development grew revenue 13% year-on-year and delivered record adjusted net orders.

"In Early Development, revenue of $215 million was flat from last year's pro forma result as strong revenue growth in nutritional chemistry and clinical pharmacology and a return to growth in toxicology were offset by declines in discovery support services and pharmaceutical chemistry services. Pro forma operating margin increased 260 basis points year-on-year, largely as a result of our 2012 restructuring actions, and 160 basis points from the first quarter primarily from sequential growth in toxicology that carried strong incremental earnings.

"As we look ahead to the remainder of the year, we are increasing our pro forma diluted earnings per share target to the range of $3.10 to $3.20 (excluding gains on sale, costs associated with our ongoing restructuring activities, and assuming foreign exchange rates remain at June 30, 2013 levels), versus our previous expectation of $3.00 to $3.20, and we continue to expect revenue growth in the high-single digit range.  We expect sequential increases in earnings per share of approximately two cents in each of the third and fourth quarters."

Consolidated Results

($ in millions except EPS)

2Q13

2Q12

Change

YTD13

YTD12

Change

Total Revenues

$644.0

$585.0


$1,278.3

$1,158.9


Less: Reimbursable Out-of-Pockets 

$51.7

$42.2


$105.8

$85.3


Net Revenues

$592.3

$542.8

9.1%

$1,172.5

$1,073.6

9.2%

Operating Income (Loss)

$51.5

($3.9)

n/c

$99.8

$42.2

136.4%

   Operating Margin

8.7%

(0.7%)


8.5%

3.9%


Net Income (Loss)

$41.0

($12.7)

n/c

$89.2

$23.0

287.4%

Earnings (Loss) per Share

$0.72

($0.23)

n/c

$1.58

$0.40

292.8%

Revenue from facilities closed in 2012**

-

$4.3


-

$4.3


Net Revenue, continuing ops*

$592.3

$538.5

10.0%

$1,172.5

$1,069.3

9.6%

Restructuring Costs

($6.0)

($9.7)


($12.2)

($9.7)


Loss from facilities closed in 2012**

-

($3.8)


-

($3.8)


Impairment of Goodwill & Inventory

-

($38.7)


-

($38.7)


Operating Income, excluding items*

$57.5

$48.3

19.1%

$ 111.9

$94.4

18.6%

  Operating Margin, excluding items*

9.7%

9.0%


9.5%

8.8%


Gain on Sale of Investments

$0.7

-


$16.4

-


Impairment of Equity Investment

-

($7.4)


-

($7.4)


Net Income, excluding items*

$44.5

$36.3

22.4%

$86.8

$72.0

20.5%

Diluted EPS, excluding items*

$0.78

$0.65

19.9%

$1.53

$1.25

22.4%


* See attached pro forma income statements for reconciliation of 2013 and 2012 GAAP to pro forma amounts.
** Facilities closed in 2012 include Chandler, Honolulu, and Basel.

Operating Segment Results

Early Development

($ in millions)

2Q13

2Q12

Change

YTD13

YTD12

Change

Net Revenues

$214.6

$219.7

(2.3%)

$421.9

$431.4

(2.2%)

Operating Income (Loss)

$21.9

($33.1)

n/c

$38.4

($21.8)

n/c

Operating Margin

10.2%

(15.1%)


9.1%

(5.1%)


Revenue from facilities closed in 2012**

-

$4.3


-

$4.3


Net Revenue, continuing ops

$214.6

$215.4

(0.4%)

$421.9

$427.1

(1.2%)

Restructuring Costs

($2.3)

($9.2)


($5.9)

($9.2)


Loss from facilities closed in 2012**

-

($3.8)


-

($3.8)


Impairment of Goodwill & Inventory

-

($38.7)


-

($38.7)


Operating Income, excluding items

$24.2

$18.7

29.8%

$44.3

$30.0

47.9%

Operating Margin, excluding items

11.3%

8.7%


10.5%

7.0%



** Facilities closed in 2012 include Chandler, Honolulu, and Basel.

The Early Development segment includes preclinical toxicology, analytical chemistry, clinical pharmacology, discovery support, and research products.  Net revenues in the second quarter of 2013 were $214.6 million, compared to $219.7 million on a GAAP basis and $215.4 million on a pro forma basis in the second quarter of last year. Last year's pro forma revenue excluded $4.3 million in revenue from the three sites closed by the end of 2012. On a pro forma basis, net revenue declined 0.4%, including a 60 basis point foreign exchange headwind, as growth in nutritional chemistry, clinical pharmacology, and toxicology were offset by declines in discovery support and pharmaceutical chemistry. Sequentially, revenue increased by $7.3 million from the first quarter as growth in toxicology, nutritional chemistry and clinical pharmacology more than offset declines in discovery support services and research products.

GAAP operating income in the second quarter of 2013 was $21.9 million, and included $2.3 million in costs associated with our ongoing restructuring actions versus an operating loss of $33.1 million in the second quarter of 2012, which included losses at facilities closed in 2012 of $3.8 million, restructuring costs of $9.2 million and other charges of $38.7 million.  Pro forma operating income, excluding these costs, was $24.2 million in the second quarter of this year, a 29.8% increase from the $18.7 million reported in the second quarter of 2012.  Pro forma operating margins expanded 260 basis points year-over-year and 160 basis points sequentially.  The year-over-year increase was led primarily by our restructuring actions while the sequential increase was led by growth and increased profitability in toxicology.  

Late-Stage Development             

($ in millions)

2Q13

2Q12

Change

YTD13

YTD12

Change

Net Revenues

$377.7

$323.1

16.9%

$750.6

$642.3

16.9%

Operating Income

$79.5

$68.0

16.9%

$162.4

$140.5

15.7%

Operating Margin

21.0%

21.1%


21.6%

21.9%


Restructuring Costs

($1.4)

($0.2)


($3.3)

($0.2)


Operating Income, excluding items

$80.9

$68.2

18.6%

$165.7

$140.7

17.8%

Operating Margin, excluding items

21.4%

21.1%


22.1%

21.9%


The Late-Stage Development segment includes central laboratory, Phase IIb-IV clinical development, and market access services.  Net revenues for the second quarter of 2013 grew 16.9% year-on-year to $377.7 million, a sequential increase of $4.8 million from the first quarter level. In the quarter, foreign exchange negatively impacted revenue growth by 20 basis points. Year-over-year growth was driven by increases of 22% in central laboratories and 13% in clinical development.

Operating income for the second quarter was $79.5 million on a GAAP basis and included $1.4 million in costs associated with our ongoing restructuring actions. On a pro forma basis, operating income was $80.9 million, up 18.6% year-over-year. Pro Forma operating income declined $4.0 million sequentially due to a planned increase in spending on our strategic IT projects as well as mix across the segment's service offerings. Pro forma operating margins were 21.4% for the second quarter of 2013, versus 21.1% in the second quarter of 2012 and 22.8% last quarter. The year-on-year increase in profitability was driven by operating leverage in central laboratories, which more than offset increased spending on strategic IT projects.

Corporate Information

During the quarter ended June 30, 2013 the company received an additional $0.7 million in contingent consideration in connection with the 2012 sale of its investment in Caprion Proteomics Inc., which has been excluded from pro forma earnings. 

The company reported second quarter adjusted net orders of $776 million. Backlog at June 30, 2013 was $6.73 billion compared to $6.61 billion at March 31, 2013 and $6.23 billion at June 30, 2012. Foreign exchange contributed $27 million to backlog on a sequential basis. 

Corporate expenses totaled $49.9 million in the second quarter of 2013 (including $2.3 million in restructuring costs) compared to $51.3 million last quarter (including $0.7 million in restructuring costs) and $38.9 million in the second quarter of 2012 (including $0.3 million in restructuring costs). The largest driver of the year-over-year increase in corporate expenses is spending on our strategic IT initiatives followed by higher incentive compensation expenses related to stronger-than-budgeted business performance.  Sequentially, the decline was driven by lower expenses in a number of areas, which offset increased spending on our strategic IT initiatives.

Cash and cash equivalents at June 30, 2013 were $446 million compared to $430 million at March 31, 2013 and $398 million at June 30, 2012.  Debt outstanding remained at $325 million.

Net Days Sales Outstanding (DSO) were 48 days at June 30, 2013 compared to 41 days at March 31, 2013 and 35 days at June 30, 2012.

Free cash flow (defined as operating cash flow less capital expenditures) for the second quarter of 2013 was $13 million, consisting of operating cash flow of $51 million less capital expenditures of $38 million.  Free cash flow year-to-date was negative $71 million, consisting of operating cash flow of negative $3 million less capital expenditures of $68 million.   In 2013, we continue to expect free cash flow to be at least $125 million, net of capital expenditures of approximately $160 million.  The free cash flow target for 2013 assumes net DSO at 40 days at December 31, 2013.

The Company's investor conference call will be webcast on July 31 at 9:00 am ET.  Management's commentary and presentation slides will be available through www.covance.com.  

Covance, with headquarters in Princeton, New Jersey, is one of the world's largest and most comprehensive drug development services companies with annual revenues greater than $2.2 billion, global operations in more than 30 countries, and more than 12,000 employees worldwide.  Information on Covance's products and services, recent press releases, and SEC filings can be obtained through its website at www.covance.com.

Statements contained in this press release, which are not historical facts, such as statements about prospective earnings, savings, revenue, operations, revenue and earnings growth and other financial results are forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  All such forward-looking statements including the statements contained herein regarding anticipated trends in the Company's business are based largely on management's expectations and are subject to and qualified by risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.  These risks and uncertainties include, without limitation, competitive factors, outsourcing trends in the pharmaceutical industry, levels of industry research and development spending, the Company's ability to continue to attract and retain qualified personnel, the fixed price nature of contracts or the loss or delay of large studies, risks associated with acquisitions and investments, the Company's ability to increase order volume, the pace of translation of orders into revenue in late-stage development services, testing mix and geographic mix of kit receipts in central laboratories,  fluctuations in currency exchange rates, the realization of savings from the Company's announced restructuring actions, the cost and pace of completion of our information technology projects and the realization of benefits therefrom,  and other factors described in the Company's filings with the Securities and Exchange Commission including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.  The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

Financial Exhibits Follow

COVANCE INC.











CONSOLIDATED INCOME STATEMENTS











FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2013 AND 2012











(Dollars in thousands, except per share data)











(UNAUDITED)












Three Months Ended June 30


Six Months Ended June 30



2013


2012


2013


2012









Net revenues

$     592,298


$     542,782


$ 1,172,497


$ 1,073,623


Reimbursable out-of-pocket expenses

51,678


42,263


105,814


85,330


     Total revenues

643,976


585,045


1,278,311


1,158,953











Costs and expenses:









  Cost of revenue

419,115


408,198


830,459


784,658


  Reimbursable out-of-pocket expenses

51,678


42,263


105,814


85,330


  Selling, general and administrative

90,177


90,601


179,396


171,630


  Depreciation and amortization

31,496


29,953


62,881


57,183


  Goodwill impairment charge

-


17,959


-


17,959


        Total costs and expenses

592,466

(a)

588,974

(c)

1,178,550

(b)

1,116,760

(c)










Income (loss) from operations

51,510

(a)

(3,929)

(c)

99,761

(b)

42,193

(c)










Other (income) expense, net:









  Interest expense, net

1,004


940


1,875


1,433


  Foreign exchange transaction loss, net

694


792


1,029


1,020


  Gain on sale of investments

(707)


-


(16,400)


-


  Impairment of equity investment

-


7,373


-


7,373


  Loss on sale of business

-


169


-


169


        Other (income) expense, net

991

(a)

9,274

(c)

(13,496)

(b)

9,995

(c)










Income (loss) before taxes and equity investee results

50,519

(a)

(13,203)

(c)

113,257

(b)

32,198

(c)










Tax expense (benefit)

9,525

(a)

(607)

(c)

24,097

(b)

9,200

(c)










Equity investee (loss) earnings

-


(81)


-


17











Net income (loss) 

$       40,994

(a)

$     (12,677)

(c)

$       89,160

(b)

$       23,015

(c)










Basic earnings (loss) per share

$           0.75

(a)

$          (0.23)

(c)

$           1.64

(b)

$           0.41

(c)










Weighted average shares outstanding - basic

54,662,093


54,184,966


54,434,563


55,965,410











Diluted earnings (loss) per share

$           0.72

(a)

$          (0.23)

(c)

$           1.58

(b)

$           0.40

(c)










Weighted average shares outstanding - diluted

56,880,115


54,184,966


56,598,936


57,456,154




















(a)  Three months ended June 30, 2013 includes, as applicable, $6,013 in charges associated with restructuring

       and other cost reduction actions ($3,942 net of tax), and $707 gain on sale of investment ($460 net of tax).

(b)  Six months ended June 30, 2013 includes, as applicable, $12,183 in charges associated with restructuring

       and other cost reduction actions ($8,289 net of tax), and $16,400 gain on sale of investments ($10,654 net of tax).

(c)  Three and six months ended June 30, 2012 includes, as applicable, $9,667 in restructuring costs

       ($6,530 net of tax), $20,781 in inventory impairment charges ($14,391 net of tax), $17,959 of goodwill

       impairment charges ($17,959 net of tax), $7,373 of impairment of equity investment ($7,373 net of tax) and

       $3,815 in losses at sites in wind-down ($2,746 net of tax).



















Excluding the impact of charges associated with restructuring and other cost reduction actions, gain on sale of investments, impairment charges and losses at sites in wind-down, as applicable:










Income from operations

$       57,523


$       48,293


$     111,944


$       94,415











Taxes on income

$       11,349


$         9,989


$       22,245


$       19,796











Net income 

$       44,476


$       36,322


$       86,795


$       72,014











Basic earnings per share

$           0.81


$           0.67


$           1.59


$           1.29











Diluted earnings per share

$           0.78


$           0.65


$           1.53


$           1.25











 

 

COVANCE INC.






CONSOLIDATED BALANCE SHEETS






JUNE 30, 2013 and DECEMBER 31, 2012






(Dollars in thousands)













June 30


December 31



2013


2012



(UNAUDITED)



ASSETS




Current Assets:





Cash & cash equivalents

$        445,600


$       492,824


Accounts receivable, net

396,653


339,558


Unbilled services

154,345


136,878


Inventory

47,947


49,270


Deferred income taxes

47,953


44,903


Income taxes receivable

261


3,642


Prepaid expenses and other current assets

219,481


167,629


    Total Current Assets

1,312,240


1,234,704






Property and equipment, net

880,953


891,319

Goodwill

109,820


109,820

Other assets

38,261


52,499


    Total Assets

$     2,341,274


$    2,288,342






LIABILITIES and STOCKHOLDERS' EQUITY




Current Liabilities:





Accounts payable

$          52,742


$         34,430


Accrued payroll and benefits

119,889


144,681


Accrued expenses and other current liabilities

107,008


127,686


Unearned revenue

241,681


255,776


Short-term debt 

325,000


320,000


    Total Current Liabilities

846,320


882,573






Deferred income taxes

20,760


27,912

Other liabilities

74,167


70,665


    Total Liabilities

941,247


981,150






Stockholders' Equity:





Common stock

804


791


Paid-in capital

806,993


744,114


Retained earnings

1,689,786


1,600,626


Accumulated other comprehensive (loss) income

(3,579)


28,520


Treasury stock

(1,093,977)


(1,066,859)


    Total Stockholders' Equity

1,400,027


1,307,192


    Total Liabilities and Stockholders'  Equity

$     2,341,274


$    2,288,342

 

COVANCE INC.





CONSOLIDATED STATEMENTS OF CASH FLOWS





FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND 2012





(Dollars in thousands)





(UNAUDITED)






Six Months Ended June 30






2013


2012

Cash flows from operating activities:




  Net income

$    89,160


$    23,015

  Adjustments to reconcile net income to net cash (used in) provided by




    operating activities:




    Depreciation and amortization

62,881


57,183

    Non-cash impairment charges

-


44,610

    Non-cash compensation expense associated with employee benefit




       and stock compensation plans

19,311


19,422

    Deferred income tax benefit

(5,712)


(15,507)

    Gain on sale of investments

(16,400)


-

    Loss on sale of business

-


169

    Loss on disposal of property and equipment

375


432

    Equity investee earnings

-


(17)

    Changes in operating assets and liabilities, net of business sold:




       Accounts receivable

(57,095)


(2,143)

       Unbilled services

(17,467)


(20,704)

       Inventory

1,323


8,948

       Accounts payable

18,312


6,401

       Accrued liabilities

(45,470)


(26,023)

       Unearned revenue

(14,095)


36,442

       Income taxes

6,736


(5,028)

       Other assets and liabilities, net

(44,441)


(45,124)

Net cash (used in) provided by operating activities

(2,582)


82,076





Cash flows from investing activities:




  Capital expenditures

(68,433)


(69,343)

  Proceeds from sale of investments

17,781


-

  Other, net

394


990

Net cash used in investing activities

(50,258)


(68,353)





Cash flows from financing activities:




  Net borrowings under revolving credit facility

5,000


300,000

  Stock issued under option plans

40,226


3,522

  Purchase of treasury stock

(27,118)


(302,099)

Net cash provided by financing activities

18,108


1,423

Effect of exchange rate changes on cash

(12,492)


(6,421)

Net change in cash and cash equivalents

(47,224)


8,725





Cash and cash equivalents, beginning of period

492,824


389,103





Cash and cash equivalents, end of period

$ 445,600


$ 397,828





 

COVANCE INC.









GAAP to Pro Forma Reconciliation









Q2 2013









(Dollars in thousands, except per share data)









(UNAUDITED)












Adjustments



GAAP


 Restructuring

and Other Cost

Reduction

Activities (1)


Other
Items (2)


Pro Forma









Net revenues

$     592,298






$     592,298

Reimbursable out-of-pocket expenses

51,678






51,678

     Total revenues

643,976


-


-


643,976









Costs and expenses:








  Cost of revenue

419,115






419,115

  Reimbursable out-of-pocket expenses

51,678






51,678

  Selling, general and administrative

90,177


(5,428)




84,749

  Depreciation and amortization

31,496


(585)




30,911

        Total costs and expenses

592,466


(6,013)


-


586,453









Income from operations

51,510


6,013


-


57,523









Other (income) expense, net:








  Interest expense, net

1,004






1,004

  Foreign exchange transaction loss, net

694






694

  Gain on sale of investment

(707)




707


-

        Other (income) expense, net

991


-


707


1,698









Income before taxes

50,519


6,013


(707)


55,825









Taxes on income

9,525


2,071


(247)


11,349









Net income 

$       40,994


$                   3,942


$           (460)


$       44,476









Basic earnings per share

$           0.75


$                     0.07


$          (0.01)


$           0.81









Weighted average shares outstanding - basic

54,662,093


54,662,093


54,662,093


54,662,093









Diluted earnings per share

$           0.72


$                     0.07


$          (0.01)


$           0.78









Weighted average shares outstanding - diluted

56,880,115


56,880,115


56,880,115


56,880,115

















(1) Represents costs incurred to better align capacity to preclinical market demand and reduce

      overall cost structure.

(2) Represents gain on sale of investment.






 

COVANCE INC.













GAAP to Pro Forma Reconciliation













Q2 2012













(Dollars in thousands, except per share data)













(UNAUDITED)
















Adjustments




GAAP


 Restructuring
Activities (1)


Other
Charges (2)


Operating

Results at

Sites in Wind-

Down (3)


Inclusion of

Common Stock

Equivalents in

Diluted EPS

Computation(4)


Pro Forma













Net revenues

$     542,782






$           (4,289)




$     538,493

Reimbursable out-of-pocket expenses

42,263










42,263

     Total revenues

585,045


-


-


(4,289)


-


580,756













Costs and expenses:












  Cost of revenue

408,198




(20,781)


(6,939)




380,478

  Reimbursable out-of-pocket expenses

42,263










42,263

  Selling, general and administrative

90,601


(8,458)




(222)




81,921

  Depreciation and amortization

29,953


(1,209)




(943)




27,801

  Goodwill impairment charge

17,959




(17,959)






-

        Total costs and expenses

588,974


(9,667)


(38,740)


(8,104)


-


532,463













(Loss) income from operations

(3,929)


9,667


38,740


3,815


-


48,293













Other expense, net:












  Interest expense, net

940










940

  Foreign exchange transaction loss, net

792










792

  Impairment of equity investment

7,373




(7,373)






-

  Loss on sale of business

169








-


169

        Other expense, net

9,274


-


(7,373)


-


-


1,901













(Loss) income before taxes and equity investee earnings

(13,203)


9,667


46,113


3,815


-


46,392













Tax (benefit) expense

(607)


3,137


6,390


1,069


-


9,989













Equity investee (loss) earnings

(81)










(81)













Net (loss) income 

$     (12,677)


$             6,530


$      39,723


$             2,746


$                        -


$       36,322













Basic (loss) earnings per share

$         (0.23)


$               0.12


$          0.73


$               0.05




$           0.67













Weighted average shares outstanding - basic

54,184,966


54,184,966


54,184,966


54,184,966




54,184,966













Diluted (loss) earnings per share

$         (0.23)


$               0.12


$          0.73


$               0.05


$                (0.02)


$           0.65













Weighted average shares outstanding - diluted

54,184,966


54,184,966


54,184,966


54,184,966


1,500,115

(4)

55,685,081

























(1) Represents costs incurred to better align capacity to preclinical market demand and reduce

      cost structure.

(2) Consists of inventory impairment ($20,781), goodwill impairment ($17,959) and impairment of

      equity investment ($7,373).





(3) Represents results of operations at sites where wind-down activities have commenced.




(4) Reflects inclusion of impact of common stock equivalents in computation of diluted earnings

      per share as GAAP loss transitions to Pro Forma income.















 

COVANCE INC.









GAAP to Pro Forma Reconciliation









YTD Q2 2013









(Dollars in thousands, except per share data)









(UNAUDITED)












Adjustments



GAAP


 Restructuring

and Other Cost

Reduction

 Activities (1)


Other
Items (2)


Pro Forma









Net revenues

$ 1,172,497






$ 1,172,497

Reimbursable out-of-pocket expenses

105,814






105,814

     Total revenues

1,278,311


-


-


1,278,311









Costs and expenses:








  Cost of revenue

830,459






830,459

  Reimbursable out-of-pocket expenses

105,814






105,814

  Selling, general and administrative

179,396


(10,101)




169,295

  Depreciation and amortization

62,881


(2,082)




60,799

        Total costs and expenses

1,178,550


(12,183)


-


1,166,367









Income from operations

99,761


12,183


-


111,944









Other (income) expense, net:








  Interest expense, net

1,875






1,875

  Foreign exchange transaction loss, net

1,029






1,029

  Gain on sale of investments

(16,400)




16,400


-

        Other (income) expense, net

(13,496)


-


16,400


2,904









Income before taxes

113,257


12,183


(16,400)


109,040









Taxes on income

24,097


3,894


(5,746)


22,245









Net income 

$      89,160


$               8,289


$    (10,654)


$     86,795









Basic earnings per share

$          1.64


$                 0.15


$        (0.20)


$         1.59









Weighted average shares outstanding - basic

54,434,563


54,434,563


54,434,563


54,434,563









Diluted earnings per share

$          1.58


$                 0.15


$        (0.19)


$         1.53









Weighted average shares outstanding - diluted

56,598,936


56,598,936


56,598,936


56,598,936

















(1) Represents costs incurred to better align capacity to preclinical market demand and reduce overall

      cost structure.

(2) Represents gain on sale of investments.

 

COVANCE INC.















GAAP to Pro Forma Reconciliation















YTD Q2 2012















(Dollars in thousands, except per share data)















(UNAUDITED)


















Adjustments





GAAP


 Restructuring

Activities (1)


Other
Charges (2)


Operating

Results at

Sites in Wind-

Down (3)


Pro Forma















Net revenues

$ 1,073,623






$             (4,289)


$ 1,069,334



Reimbursable out-of-pocket expenses

85,330








85,330



     Total revenues

1,158,953


-


-


(4,289)


1,154,664















Costs and expenses:












  Cost of revenue

784,658




(20,781)


(6,939)


756,938



  Reimbursable out-of-pocket expenses

85,330








85,330



  Selling, general and administrative

171,630


(8,458)




(222)


162,950



  Depreciation and amortization

57,183


(1,209)




(943)


55,031



  Goodwill impairment charge

17,959




(17,959)




-



        Total costs and expenses

1,116,760


(9,667)


(38,740)


(8,104)


1,060,249















(Loss) income from operations

42,193


9,667


38,740


3,815


94,415















Other expense, net:












  Interest expense, net

1,433








1,433



  Foreign exchange transaction loss, net

1,020








1,020



  Impairment of equity investment

7,373




(7,373)




-



  Loss on sale of business

169








169



        Other expense, net

9,995


-


(7,373)


-


2,622















Income before taxes and equity investee earnings

32,198


9,667


46,113


3,815


91,793















Tax (benefit) expense

9,200


3,137


6,390


1,069


19,796















Equity investee (loss) earnings

17








17















Net income 

$       23,015


$             6,530


$       39,723


$               2,746


$       72,014















Basic earnings per share

$           0.41


$               0.12


$           0.71


$                 0.05


$           1.29















Weighted average shares outstanding - basic

55,965,410


55,965,410


55,965,410


55,965,410


55,965,410















Diluted earnings per share

$           0.40


$               0.11


$           0.69


$                 0.05


$           1.25















Weighted average shares outstanding - diluted

57,456,154


57,456,154


57,456,154


57,456,154


57,456,154



























(1) Represents costs incurred to better align capacity to preclinical market demand and reduce cost

      structure.

(2) Consists of inventory impairment ($20,781), goodwill impairment ($17,959) and impairment of

      equity investment ($7,373).





(3) Represents results of operations at sites where wind-down activities have commenced.





SOURCE Covance Inc.



RELATED LINKS
http://www.covance.com

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.