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 Other Pro Forma Items (2) and Other Cost Reduction Activities (1) --- 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 Other Operating Inclusion of Pro Forma Activities (1) Charges (2) Results at Common Stock Sites in Wind- Equivalents in Down (3) Diluted EPS Computation(4) --- 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 Other Pro Forma Items (2) and Other Cost Reduction Activities (1) --- 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 Other Operating Pro Forma Charges (2) Activities (1) Results at Sites in Wind- Down (3) 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.