COVANCE RAISES EARNINGS TARGETS
Increases Pro Forma EPS Estimates to $0.14/Share for 2Q and $0.56-$0.58/share for FY 2001, Reflecting Strengthening Market and Deleveraging Benefits |
|
Princeton, N.J., June 28, 2001 — Covance Inc. (NYSE: CVD) today announced it expects pro forma earnings of approximately $0.14/diluted share for the second quarter ending June 30, 2001 and $0.56-$0.58 for the full year 2001. Pro forma amounts exclude results from the divested packaging and biomanufacturing businesses and other non-recurring items, and include a significant reduction in interest expense.
"Covance's earnings for the second quarter and full year of 2001 are expected to exceed current estimates as a result of a strengthening market for our services, and the benefits realized by successfully completing our strategic divestitures and deleveraging. With our divestiture strategy complete and debt substantially reduced, we are now focusing on our technology initiatives to obtain greater efficiencies, including a reorganization of our Nexigent subsidiary," said Chris Kuebler, Chairman and CEO.
The Nexigent reorganization will include integrating newly developed clinical trials service offerings into Covance's core businesses and a reduction in Nexigent's infrastructure, which is primarily related to maintaining a separate business unit. Nexigent's current service offerings — site activation, study feasibility, electronic data capture, and web-based central laboratory data access — will continue to be marketed by Covance's core business units. Nexigent will narrow its focus and maintain a small group of technology and business experts to review new drug development technologies and explore licensing opportunities and alliances in this area.
As a result of this reorganization, Covance expects to record a one-time pre-tax restructuring charge of approximately $7 million to $8 million in the second quarter of 2001, reflecting asset write-offs and the elimination of approximately 30 redundant Nexigent positions. Annual pre-tax savings are estimated to be approximately $4 million.
On June 15, Covance completed the sale of its biomanufacturing operation. Net proceeds from the sale were used to reduce Covance debt by $95 million and the biomanufacturing subsidiary's debt by $10 million. As of June 30, 2001, Covance's debt on the balance sheet is expected to be $25 million.
In the second quarter of 2001, Covance expects to report a net loss on the sale of businesses of approximately $7 million, primarily as a result of the biomanufacturing sale. This loss combined with a first quarter $39 million gain from the sale of packaging, will result in a $32 million net gain on sale of businesses for the six months ended June 30, 2001.
Today, Covance replaced its existing bank revolving credit facility with a new 3-year, $150 million bank facility. Bank demand to participate in the facility was strong and the syndication was oversubscribed. Covance believes cash from operations and the $150 million facility will be more than sufficient to meet future capital investment needs.
Pro forma earnings per diluted share, excluding packaging, biomanufacturing, and other special items, were $0.13 per share for the first quarter of 2001 and $0.45 for the full year 2000.
The Company will hold a second quarter interim conference call and webcast on June 29, 2001 at 9 am EDT. Please call 913-981-5508 or log on to our website at www.covance.com to participate. A corresponding slideshow is also available on our website. Conference call replay will be available until Tuesday, July 3rd 8 pm EDT. Replay number is 719-457-0820, confirmation code 626175.
Covance, with headquarters in Princeton, New Jersey, is one of the world's largest and most comprehensive drug development services companies with 2000 pro forma revenues of $737 million, operations currently in 17 countries, and approximately 7,000 employees worldwide. Information on Covance products and services, recent press releases and SEC filings can be obtained through the website in the About Covance area.
Statements contained in this press release, which are not historical facts, such as statements about prospective earnings, savings, revenue, 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, the Company's ability to continue to attract and retain qualified personnel, the fixed price nature of contracts or the loss of large contracts, the success of the Nexigent reorganization and the realization of savings therefrom, and other factors described in the Company's filings with the Securities and Exchange Commission. |
|
|
