Covance Reports Fourth Quarter Revenue of $492 Million, GAAP EPS of $0.45, and Pro Forma EPS of $0.56
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Issues 2011 Pro Forma EPS Range of $2.50 to $2.90 -
Download presentation.
PRINCETON, N.J., Jan. 26, 2011 /PRNewswire via COMTEX/ -- Covance Inc. (NYSE: CVD) today reported GAAP earnings for its fourth quarter ended December 31, 2010 of $0.45 per diluted share. Included in fourth quarter results is $0.22 per diluted share in costs from the previously-announced fourth quarter restructuring actions, partially offset by a gain of $0.11 per diluted share from favorable income tax resolutions in the quarter. Excluding these items, earnings per diluted share were $0.56 in the quarter. For the full-year, earnings per diluted share were $1.06 on a GAAP basis, inclusive of $1.15 per diluted share non-cash impairment charge incurred in the third quarter, $0.21 per diluted share in costs associated with restructuring charges incurred in the fourth quarter, partially offset by a gain of $0.27 per diluted share from favorable income tax resolutions during the year. Excluding these items, full-year earnings per diluted share were $2.15.
"During a challenging 2010, we made progress on a number of fronts, including entering into a comprehensive strategic alliance with sanofi-aventis (which helped drive annual backlog growth of 27%), significantly lowering our cost structure, and delivering full-year net revenue growth of 3.1%," said Joe Herring, Chairman and Chief Executive Officer. "In the fourth quarter, on a sequential basis, revenue grew 3.0% to $492 million and operating margin (after excluding $18.4 million from the fourth quarter restructuring actions) expanded 70 basis points to 9.6%. Early Development's revenue increased $14 million sequentially and pro forma operating margin grew 130 basis points sequentially to 12.0% reflecting two months of results from our new Porcheville, France and Alnwick, UK sites and modest improvement in toxicology from the depressed third quarter level. As expected, Late-Stage Development revenues and pro forma operating margins were essentially flat with the third quarter levels.
"On the commercial front, solid fourth quarter business awards in Late-Stage Development led to adjusted net orders of $603 million, representing an adjusted book-to-bill ratio of 1.23 to 1. Also signed in the fourth quarter, but not included in our adjusted net orders (consistent with our practice), was a $125 million expansion and extension of an existing dedicated space toxicology agreement from a top ten pharmaceutical client.
"In the first quarter of 2011, we expect a slight increase in net revenues from the fourth quarter level, largely from higher levels of business under our alliance with sanofi-aventis. First quarter pro forma earnings per share are expected to be in the range of $0.56 to $0.59, as incremental earnings from higher revenue levels, incremental sequential savings from the fourth quarter restructuring, and a full quarter impact of the share repurchase are expected to be offset by an expense increase of approximately $0.05 per share for incentive compensation accruals returning to normalized levels, and also by increased operating losses related to the transition of services from Vienna, Virginia to Greenfield, Indiana. Looking to the full-year 2011, Covance expects single digit percentage revenue growth and pro forma earnings per share to be in the range of $2.50 to $2.90 per diluted share, excluding costs associated with ongoing restructuring activities. This range assumes no new strategic alliances with clients and foreign exchange rates remain at year-end 2010 levels."
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Consolidated Results |
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($ in millions except EPS) |
4Q10 |
4Q09 |
Change |
FY2010 |
FY2009 |
Change |
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Total Revenues |
$519.5 |
$507.3 |
|
$2,038.5 |
$1,962.6 |
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Less: Reimbursable Out-of-Pockets |
$28.0 |
$22.2 |
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$112.9 |
$95.0 |
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Net Revenues |
$491.5 |
$485.1 |
1.3% |
$1,925.6 |
$1,867.6 |
3.1 % |
|
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Operating Income |
$28.9 |
$54.9 |
(47.4)% |
$47.5 |
$228.6 |
(79.2)% |
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Operating Margin % |
5.9% |
11.3% |
|
2.5% |
12.2% |
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Net Income |
$28.4 |
$ 41.5 |
(31.7)% |
$68.3 |
$175.9 |
(61.2)% |
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Diluted EPS |
$0.45 |
$ 0.64 |
(29.7)% |
$1.06 |
$ 2.73 |
(61.3)% |
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Impairment charge* |
- |
- |
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$(119.2) |
- |
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Restructuring Costs* |
$(18.4) |
- |
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$(18.4) |
- |
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Operating Income, excluding items* |
$47.2 |
$54.9 |
(13.9)% |
$185.1 |
$228.6 |
(19.0)% |
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Operating Margin %, ex items* |
9.6% |
11.3% |
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9.6% |
12.2% |
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Favorable Income Tax Items* |
$6.9 |
- |
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$17.3 |
$2.1 |
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Gain on Sale, net of tax* |
- |
- |
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- |
$6.3 |
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Net Income, excluding items* |
$35.1 |
$41.5 |
(15.4)% |
$138.6 |
$167.5 |
(17.3)% |
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Diluted EPS, excluding items* |
$0.56 |
$0.64 |
(13.0)% |
$2.15 |
$2.60 |
(17.5)% |
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* See attached pro forma income statement for reconciliation of GAAP to Pro Forma amounts. |
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Operating Segment Results
Early Development |
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($ in millions) |
4Q10 |
4Q09 |
Change |
FY2010 |
FY2009 |
Change |
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Net Revenues |
$220.6 |
$203.1 |
8.6% |
$840.3 |
$ 791.8 |
6.1% |
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Operating Income (Loss) |
$21.1 |
$ 23.1 |
(8.3)% |
$(32.0) |
$ 99.7 |
(132.1)% |
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Operating Margin % |
9.6% |
11.3% |
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(3.8)% |
12.6% |
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Q4 Restructuring |
$(5.4) |
- |
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$(5.4) |
- |
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Q2 Cost Actions |
- |
- |
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$(8.0) |
- |
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Impairment charge |
- |
- |
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$(119.2) |
- |
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Pro Forma Operating Income |
$ 26.6 |
$23.1 |
15.2% |
$100.7 |
$ 99.7 |
1.0% |
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Pro Forma OM% |
12.0% |
11.3% |
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12.0% |
12.6% |
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The Company's Early Development segment includes preclinical toxicology, analytical chemistry, clinical pharmacology services, discovery support, and research products. Early Development net revenues for the fourth quarter of 2010 were $220.6 million compared to $203.1 million in the fourth quarter of 2009 and $206.5 million last quarter. The sequential increase in revenue was primarily driven by the inclusion of two full months of results from our Alnwick and Porcheville sites as well as from modest improvement in our toxicology services in the fourth quarter. Full year 2010 net revenues increased 6.1% to $840.3 million compared to $791.8 million in 2009.
Operating income for the fourth quarter was $21.1 million and included $5.4 million in costs associated with our fourth quarter restructuring actions. Operating income, excluding these costs, was $26.6 million, compared to $22.0 million last quarter and $23.1 million in the fourth quarter of last year. Operating margins for the fourth quarter, excluding the fourth quarter restructuring actions, were 12.0% compared to 10.7% last quarter and 11.3% in the fourth quarter of 2009. Sequentially, the expansion in operating margins was driven by results from our Alnwick and Porcheville sites, and modest improvement in toxicology services, partially offset by a decline in clinical pharmacology profitability, which was again impacted by study delays. Full year operating margins were 12.0% compared to 12.6% in the prior year.
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Late-Stage Development |
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($ in millions) |
4Q10 |
4Q09 |
Change |
FY2010 |
FY2009 |
Change |
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Net Revenues |
$ 270.9 |
$281.9 |
(3.9)% |
$1,085.3 |
$1,075.8 |
0.9% |
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Operating Income |
$ 47.6 |
$ 63.8 |
(25.4)% |
$225.5 |
$254.5 |
(11.4)% |
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Operating Margin % |
17.6% |
22.6% |
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20.8% |
23.7% |
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Q4 Restructuring |
$ (7.1) |
- |
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$(7.1) |
- |
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Q2 Cost Actions |
- |
- |
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$(0.2) |
- |
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Pro Forma Operating Income |
$ 54.7 |
$ 63.8 |
(14.2)% |
$232.8 |
$ 254.5 |
(8.5)% |
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Pro Forma OM% |
20.2% |
22.6% |
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21.5% |
23.7% |
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The Late-Stage Development segment includes central laboratory, Phase II-III clinical development, and commercialization services (periapproval and market access services). Late-Stage Development net revenues for the fourth quarter of 2010 were, as expected, essentially flat from last quarter at $270.9 million, a decline of 3.9% year-on-year. Late-Stage Development services are being negatively impacted by a longer duration between the time a project is awarded and revenue generation begins, a higher level of project scope reductions and cancellations in 2010, and a shifting mix of central lab tests performed and kits returned. For the full year 2010, net revenues grew 0.9% to $1,085.3 million compared to $1,075.8 million in 2009.
Operating income for the fourth quarter was $47.6 million and included $7.1 million in costs associated with our fourth quarter restructuring actions. Operating income, excluding these costs, was $54.7 million, compared to $55.2 million last quarter and $63.8 million in the fourth quarter of the prior year. Pro forma operating margins were 20.2% for the fourth quarter of 2010 compared to 20.4% last quarter and 22.6% in the fourth quarter of last year. Late-stage margins continue to be impacted by the longer time period between project award and commencement of revenue, higher levels of project scope reductions and cancellations, and the testing mix and geographic mix of kit receipts in central laboratories. Full year pro forma operating margins were 21.5% compared to 23.7% in the prior year.
Corporate Information
The Company's backlog at December 31, 2010 grew 27.3% year-over-year to $6.2 billion compared to $6.0 billion at September 30, 2010 and $4.87 billion at December 31, 2009. Foreign exchange positively impacted sequential backlog growth by $12 million. Adjusted net orders (net orders adjusted for contracts with minimum volume commitments) were $603 million in the fourth quarter of 2010.
Corporate expenses totaled $39.9 million in the fourth quarter of 2010 compared to $33.4 million last quarter and $32.0 million in the fourth quarter of last year. Fourth quarter corporate expenses included $5.8 million in costs associated with our recently announced restructuring actions. We expect corporate expenses as a percent of revenue, excluding severance and other restructuring costs, to trend lower during 2011 as the savings from the planned restructuring actions are realized.
Cash and cash equivalents at December 31, 2010 were $377 million compared to $389 million at September 30, 2010 and $289 million at December 31, 2009. During the fourth quarter, the Company spent $250 million to repurchase shares of its outstanding common stock and has $133 million in debt outstanding resulting from borrowings related to the accelerated share repurchase.
Free cash flow (defined as operating cash flow less capital expenditures) for the fourth quarter of 2010 was $119 million, consisting of operating cash flow of $145 million less capital expenditures of $26 million. Free cash flow in 2010 was $208 million, consisting of operating cash flow of $334 million less capital expenditures of $126 million. In 2011, we expect free cash flow to be approximately $100 million, consisting of operating cash flow of approximately $240 million less capital expenditures of approximately $140 million. The free cash flow target for 2011 assumes net Days Sales Outstanding (DSO) of approximately 40 days.
Net Days Sales Outstanding (DSO) were 31 days at December 31, 2010 compared to 45 days at September 30, 2010 and 40 days at December 31, 2009.
Taxes in the fourth quarter included a benefit of $6.9 million, primarily as a result of the favorable resolution of an income tax matter. The tax rate for the quarter excluding this benefit and the tax benefit associated with the fourth quarter restructuring costs was 23.0%.
The Company's investor conference call will be webcast on January 27 at 9:00 am ET. Management's commentary and presentation slides will be available through http://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 $1.9 billion, global operations in more than 25 countries, and more than 10,000 employees worldwide. Information on Covance's products and services, recent press releases, and SEC filings can be obtained through its website at http://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, 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
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COVANCE INC. |
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CONSOLIDATED INCOME STATEMENTS |
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FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2010 AND 2009 |
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(Dollars in thousands, except per share data) |
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Three Months Ended December 31 |
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Years Ended December 31 |
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2010 |
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2009 |
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2010 |
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2009 |
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(UNAUDITED) |
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Net revenues |
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$ 491,513 |
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$ 485,065 |
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$ 1,925,630 |
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$ 1,867,634 |
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Reimbursable out-of-pocket expenses |
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27,942 |
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22,263 |
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112,843 |
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94,992 |
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Total revenues |
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519,455 |
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507,328 |
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2,038,473 |
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1,962,626 |
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Costs and expenses: |
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Cost of revenue |
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346,924 |
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337,896 |
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1,348,498 |
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1,277,142 |
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Reimbursable out-of-pocket expenses |
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27,942 |
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22,263 |
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112,843 |
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94,992 |
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Selling, general and administrative |
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89,810 |
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67,544 |
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307,386 |
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270,593 |
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Depreciation and amortization |
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25,919 |
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24,753 |
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103,024 |
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91,289 |
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Asset impairment charges |
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- |
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- |
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119,229 |
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- |
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Total costs and expenses |
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490,595 |
(a) |
452,456 |
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1,990,980 |
(b) |
1,734,016 |
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Income from operations |
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28,860 |
(a) |
54,872 |
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47,493 |
(b) |
228,610 |
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Other expense (income), net: |
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Interest expense (income), net |
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430 |
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(57) |
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52 |
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201 |
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Foreign exchange transaction loss, net |
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1,054 |
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353 |
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3,649 |
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245 |
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Gain on sale of businesses |
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- |
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- |
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- |
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(9,681) |
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Other expense (income), net |
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1,484 |
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296 |
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3,701 |
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(9,235) |
(c) |
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Income before taxes and equity investee earnings |
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27,376 |
(a) |
54,576 |
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43,792 |
(b) |
237,845 |
(c) |
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Tax (benefit) expense |
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(1,121) |
(a) |
13,820 |
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(23,655) |
(b) |
62,870 |
(c) |
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Equity investee (loss) earnings |
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(119) |
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779 |
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807 |
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907 |
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Net income |
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$ 28,378 |
(a) |
$ 41,535 |
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$ 68,254 |
(b) |
$ 175,882 |
(c) |
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Basic earnings per share |
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$ 0.46 |
(a) |
$ 0.65 |
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$ 1.08 |
(b) |
$ 2.76 |
(c) |
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Weighted average shares outstanding - basic |
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61,390,965 |
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63,968,682 |
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63,043,561 |
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63,818,717 |
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Diluted earnings per share |
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$ 0.45 |
(a) |
$ 0.64 |
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$ 1.06 |
(b) |
$ 2.73 |
(c) |
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Weighted average shares outstanding - diluted |
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62,703,690 |
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64,541,063 |
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64,472,326 |
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64,341,084 |
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(a) Includes $18,362 in restructuring costs ($13,688 net of tax) and $6,946 in favorable income tax items during the three months ended December 31, 2010. |
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(b) Includes asset impairment charges ($119,229) and restructuring costs ($18,362) totaling $137,591 ($87,610 net of tax) and favorable income tax items |
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totaling $17,298 during the year ended December 31, 2010. |
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(c) Includes a $9,026 gain on sale of Interactive Voice & Web Response Services ($5,867 net of tax) and a $655 gain on sale of Cardiac Safety |
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Services ($426 net of tax) and favorable income tax items totaling $2,072 during the year ended December 31, 2009. |
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Excluding the impact of the asset impairment charges, restructuring charges, favorable income tax items and gain on sale of businesses: |
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Income before taxes and equity investee earnings |
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$ 45,738 |
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$ 54,576 |
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$ 181,383 |
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$ 228,164 |
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Taxes on income |
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$ 10,499 |
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$ 13,820 |
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$ 43,624 |
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$ 61,554 |
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Net income |
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$ 35,120 |
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$ 41,535 |
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$ 138,566 |
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$ 167,517 |
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Basic earnings per share |
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$ 0.57 |
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$ 0.65 |
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$ 2.20 |
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$ 2.62 |
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Diluted earnings per share |
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$ 0.56 |
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$ 0.64 |
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$ 2.15 |
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$ 2.60 |
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COVANCE INC. |
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CONSOLIDATED BALANCE SHEETS |
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DECEMBER 31, 2010 and 2009 |
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(Dollars in thousands) |
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December 31 |
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December 31 |
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2010 |
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2009 |
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ASSETS |
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Current Assets: |
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Cash & cash equivalents |
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$ 377,223 |
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$ 289,469 |
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Accounts receivable, net |
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261,160 |
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285,119 |
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Unbilled services |
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90,729 |
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97,279 |
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Inventory |
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82,924 |
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80,926 |
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Deferred income taxes |
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35,648 |
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31,512 |
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Prepaid expenses and other current assets |
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98,127 |
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93,367 |
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Total Current Assets |
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945,811 |
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877,672 |
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Property and equipment, net |
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843,983 |
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921,995 |
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Goodwill, net |
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127,653 |
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127,653 |
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Other assets |
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48,095 |
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47,624 |
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Total Assets |
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$ 1,965,542 |
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$ 1,974,944 |
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LIABILITIES and STOCKHOLDERS' EQUITY |
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Current Liabilities: |
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Accounts payable |
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$ 34,079 |
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$ 36,834 |
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Accrued payroll and benefits |
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107,572 |
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111,365 |
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Accrued expenses and other current liabilities |
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97,395 |
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73,383 |
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Unearned revenue |
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186,301 |
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166,890 |
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Short-term debt and current portion of long-term debt |
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45,000 |
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- |
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Income taxes payable |
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28,827 |
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14,272 |
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Total Current Liabilities |
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499,174 |
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402,744 |
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Long-term debt |
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87,500 |
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- |
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Deferred income taxes |
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30,531 |
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98,945 |
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Other liabilities |
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68,516 |
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62,251 |
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Total Liabilities |
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685,721 |
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563,940 |
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Stockholders' Equity: |
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|
|
|
Common stock |
|
774 |
|
764 |
|
|
Paid-in capital |
|
639,341 |
|
587,995 |
|
|
Retained earnings |
|
1,373,705 |
|
1,305,451 |
|
|
Accumulated other comprehensive income (loss) |
|
277 |
|
(5,281) |
|
|
Treasury stock |
|
(734,276) |
|
(477,925) |
|
|
Total Stockholders' Equity |
|
1,279,821 |
|
1,411,004 |
|
|
Total Liabilities and Stockholders' Equity |
|
$ 1,965,542 |
|
$ 1,974,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COVANCE INC. |
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
|
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 |
|
|
|
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31 |
|
|
|
|
|
|
|
2010 |
|
2009 |
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net income |
|
$ 68,254 |
|
$ 175,882 |
|
|
Adjustments to reconcile net income to net cash provided by |
|
|
|
|
|
|
operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
103,024 |
|
91,289 |
|
|
Asset impairment charges |
|
119,229 |
|
- |
|
|
Non-cash compensation expense associated with employee benefit |
|
|
|
|
|
|
and stock compensation plans |
|
32,289 |
|
26,949 |
|
|
Deferred income tax (benefit) provision |
|
(71,661) |
|
33,030 |
|
|
Gain on sale of businesses |
|
- |
|
(9,681) |
|
|
Loss on disposal of property and equipment |
|
1,487 |
|
998 |
|
|
Equity investee earnings |
|
(807) |
|
(907) |
|
|
Changes in operating assets and liabilities, net of businesses |
|
|
|
|
|
|
acquired and sold: |
|
|
|
|
|
|
Accounts receivable |
|
23,959 |
|
(54,937) |
|
|
Unbilled services |
|
6,550 |
|
15,724 |
|
|
Inventory |
|
(1,998) |
|
(12,720) |
|
|
Accounts payable |
|
(2,755) |
|
(5,163) |
|
|
Accrued liabilities |
|
20,097 |
|
(8,072) |
|
|
Unearned revenue |
|
19,411 |
|
4,174 |
|
|
Income taxes payable |
|
14,797 |
|
(1,176) |
|
|
Other assets and liabilities, net |
|
2,547 |
|
3,699 |
|
|
Net cash provided by operating activities |
|
334,423 |
|
259,089 |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
Capital expenditures |
|
(126,278) |
|
(131,079) |
|
|
Acquisition of businesses, net of cash acquired |
|
(20,994) |
|
(28,096) |
|
|
Proceeds from sale of businesses |
|
- |
|
10,373 |
|
|
Other, net |
|
47 |
|
29 |
|
|
Net cash used in investing activities |
|
(147,225) |
|
(148,773) |
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
Net borrowings (repayments) under revolving credit facility |
|
35,000 |
|
(50,000) |
|
|
Borrowings under long-term debt |
|
100,000 |
|
- |
|
|
Repayments under long-term debt |
|
(2,500) |
|
- |
|
|
Stock issued under employee stock purchase and option plans |
|
18,825 |
|
10,682 |
|
|
Purchase of treasury stock |
|
(256,351) |
|
(4,828) |
|
|
Payment of debt assumed upon acquisition of business |
|
- |
|
(5,431) |
|
|
Net cash used in financing activities |
|
(105,026) |
|
(49,577) |
|
|
Effect of exchange rate changes on cash |
|
5,582 |
|
7,396 |
|
|
Net change in cash and cash equivalents |
|
87,754 |
|
68,135 |
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period |
|
289,469 |
|
221,334 |
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ 377,223 |
|
$ 289,469 |
|
|
|
|
|
|
|
COVANCE INC. |
|
|
|
|
|
|
|
|
|
|
GAAP to Pro Forma Reconciliation |
|
|
|
|
|
|
|
|
|
|
Q4 2010 |
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
GAAP |
|
Fourth Quarter Restructuring Activities (1) |
|
Income Tax Items (2) |
|
Pro Forma |
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
$ 491,513 |
|
|
|
|
|
$ 491,513 |
|
|
Reimbursable out-of-pocket expenses |
27,942 |
|
|
|
|
|
27,942 |
|
|
Total revenues |
519,455 |
|
- |
|
- |
|
519,455 |
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
Cost of revenue |
346,924 |
|
|
|
|
|
346,924 |
|
|
Reimbursable out-of-pocket expenses |
27,942 |
|
|
|
|
|
27,942 |
|
|
Selling, general and administrative |
89,810 |
|
(18,092) |
|
|
|
71,718 |
|
|
Depreciation and amortization |
25,919 |
|
(270) |
|
|
|
25,649 |
|
|
Asset impairment charges |
- |
|
|
|
|
|
- |
|
|
Total costs and expenses |
490,595 |
|
(18,362) |
|
- |
|
472,233 |
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
28,860 |
|
18,362 |
|
- |
|
47,222 |
|
|
|
|
|
|
|
|
|
|
|
Other expense (income), net: |
|
|
|
|
|
|
|
|
|
Interest expense (income), net |
430 |
|
|
|
|
|
430 |
|
|
Foreign exchange transaction loss, net |
1,054 |
|
|
|
|
|
1,054 |
|
|
Gain on sale of businesses |
- |
|
|
|
|
|
- |
|
|
Other expense (income), net |
1,484 |
|
- |
|
- |
|
1,484 |
|
|
|
|
|
|
|
|
|
|
|
Income before taxes and equity investee earnings |
27,376 |
|
18,362 |
|
- |
|
45,738 |
|
|
|
|
|
|
|
|
|
|
|
Tax (benefit) expense |
(1,121) |
|
4,674 |
|
6,946 |
|
10,499 |
|
|
|
|
|
|
|
|
|
|
|
Equity investee (loss) earnings |
(119) |
|
|
|
|
|
(119) |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ 28,378 |
|
$ 13,688 |
|
$ (6,946) |
|
$ 35,120 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ 0.46 |
|
$ 0.22 |
|
$ (0.11) |
|
$ 0.57 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic |
61,390,965 |
|
61,390,965 |
|
61,390,965 |
|
61,390,965 |
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
$ 0.45 |
|
$ 0.22 |
|
$ (0.11) |
|
$ 0.56 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - diluted |
62,703,690 |
|
62,703,690 |
|
62,703,690 |
|
62,703,690 |
|
|
|
|
(1) Represents costs incurred in connection with capacity rationalization and cost reduction actions. |
|
|
(2) Represents favorable resolutions of income tax matters during the three months ended December 31, 2010. |
|
|
|
|
|
|
|
|
|
|
COVANCE INC. |
|
|
|
|
|
|
|
|
|
|
GAAP to Pro Forma Reconciliation |
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
GAAP |
|
Asset Impairment and Restructuring Activities (1) |
|
Income Tax Items (2) |
|
Pro Forma |
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
$ 1,925,630 |
|
|
|
|
|
$ 1,925,630 |
|
|
Reimbursable out-of-pocket expenses |
112,843 |
|
|
|
|
|
112,843 |
|
|
Total revenues |
2,038,473 |
|
- |
|
- |
|
2,038,473 |
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
Cost of revenue |
1,348,498 |
|
|
|
|
|
1,348,498 |
|
|
Reimbursable out-of-pocket expenses |
112,843 |
|
|
|
|
|
112,843 |
|
|
Selling, general and administrative |
307,386 |
|
(18,092) |
|
|
|
289,294 |
|
|
Depreciation and amortization |
103,024 |
|
(270) |
|
|
|
102,754 |
|
|
Asset impairment charges |
119,229 |
|
(119,229) |
|
|
|
- |
|
|
Total costs and expenses |
1,990,980 |
|
(137,591) |
|
- |
|
1,853,389 |
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
47,493 |
|
137,591 |
|
- |
|
185,084 |
|
|
|
|
|
|
|
|
|
|
|
Other expense (income), net: |
|
|
|
|
|
|
|
|
|
Interest expense (income), net |
52 |
|
|
|
|
|
52 |
|
|
Foreign exchange transaction loss, net |
3,649 |
|
|
|
|
|
3,649 |
|
|
Gain on sale of businesses |
- |
|
|
|
|
|
- |
|
|
Other expense (income), net |
3,701 |
|
- |
|
- |
|
3,701 |
|
|
|
|
|
|
|
|
|
|
|
Income before taxes and equity investee earnings |
43,792 |
|
137,591 |
|
- |
|
181,383 |
|
|
|
|
|
|
|
|
|
|
|
Tax (benefit) expense |
(23,655) |
|
49,981 |
|
17,298 |
|
43,624 |
|
|
|
|
|
|
|
|
|
|
|
Equity investee earnings |
807 |
|
|
|
|
|
807 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ 68,254 |
|
$ 87,610 |
|
$ (17,298) |
|
$ 138,566 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ 1.08 |
|
$ 1.39 |
|
$ (0.27) |
|
$ 2.20 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic |
63,043,561 |
|
63,043,561 |
|
63,043,561 |
|
63,043,561 |
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
$ 1.06 |
|
$ 1.36 |
|
$ (0.27) |
|
$ 2.15 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - diluted |
64,472,326 |
|
64,472,326 |
|
64,472,326 |
|
64,472,326 |
|
|
|
|
(1) Represents third quarter asset impairment charges totaling $119,229 and fourth quarter restructuring costs totaling $18,362. |
|
|
(2) Represents favorable resolutions of income tax matters during the year ended December 31, 2010. |
|
|
|
|
|
|
|
|
|
|
COVANCE INC. |
|
|
|
|
|
|
|
|
|
|
GAAP to Pro Forma Reconciliation |
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
GAAP |
|
Income Tax Items (1) |
|
Gain on Sale of Businesses (2) |
|
Pro Forma |
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
$ 1,867,634 |
|
|
|
|
|
$ 1,867,634 |
|
|
Reimbursable out-of-pocket expenses |
94,992 |
|
|
|
|
|
94,992 |
|
|
Total revenues |
1,962,626 |
|
- |
|
- |
|
1,962,626 |
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
Cost of revenue |
1,277,142 |
|
|
|
|
|
1,277,142 |
|
|
Reimbursable out-of-pocket expenses |
94,992 |
|
|
|
|
|
94,992 |
|
|
Selling, general and administrative |
270,593 |
|
|
|
|
|
270,593 |
|
|
Depreciation and amortization |
91,289 |
|
|
|
|
|
91,289 |
|
|
Asset impairment charges |
- |
|
|
|
|
|
- |
|
|
Total costs and expenses |
1,734,016 |
|
- |
|
- |
|
1,734,016 |
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
228,610 |
|
- |
|
- |
|
228,610 |
|
|
|
|
|
|
|
|
|
|
|
Other expense (income), net: |
|
|
|
|
|
|
|
|
|
Interest expense (income), net |
201 |
|
|
|
|
|
201 |
|
|
Foreign exchange transaction loss, net |
245 |
|
|
|
|
|
245 |
|
|
Gain on sale of businesses |
(9,681) |
|
|
|
9,681 |
|
- |
|
|
Other expense (income), net |
(9,235) |
|
- |
|
9,681 |
|
446 |
|
|
|
|
|
|
|
|
|
|
|
Income before taxes and equity investee earnings |
237,845 |
|
- |
|
(9,681) |
|
228,164 |
|
|
|
|
|
|
|
|
|
|
|
Tax expense |
62,870 |
|
2,072 |
|
(3,388) |
|
61,554 |
|
|
|
|
|
|
|
|
|
|
|
Equity investee earnings |
907 |
|
|
|
|
|
907 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ 175,882 |
|
$ (2,072) |
|
$ (6,293) |
|
$ 167,517 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ 2.76 |
|
$ (0.03) |
|
$ (0.10) |
|
$ 2.62 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic |
63,818,717 |
|
63,818,717 |
|
63,818,717 |
|
63,818,717 |
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
$ 2.73 |
|
$ (0.03) |
|
$ (0.10) |
|
$ 2.60 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - diluted |
64,341,084 |
|
64,341,084 |
|
64,341,084 |
|
64,341,084 |
|
|
|
|
(1) Represents favorable resolutions of income tax matters during the year ended December 31, 2009. |
|
|
(2) Includes a $9,026 gain on sale of Interactive Voice & Web Response Services ($5,867 net of tax) and a $655 gain on sale of Cardiac Safety Services ($426 net of tax). |
|
|
|
|
|
|
|
|
|
SOURCE Covance Inc.
|
|