Financial Exhibits follow
COVANCE INC.
PROFORMA UNAUDITED INCOME STATEMENTS - EXCLUDING SPECIAL ITEMS
FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2001 AND 2000
(Dollars in thousands, except per share data)
Three Months Ended December 31 Year Ended December 31
2001 2000(*) 2001(*) 2000(*)
Net revenues $ 204,404 $ 188,372 $ 800,265 $ 737,276
Costs and expenses:
Cost of revenue 144,443 139,011 574,070 530,295
Selling, general and administrative 32,502 29,866 122,733 116,454
Depreciation and amortization 11,104 10,499 42,951 42,167
Total 188,049 179,376 739,754 688,916
Income from operations 16,355 8,996 60,511 48,360
Other expense, net:
Interest expense, net 15 1,449 2,158 3,247
Other expense 311 500 245 574
Other expense, net 326 1,949 2,403 3,821
Income before taxes 16,029 7,047 58,108 44,539
Taxes on income 6,254 3,382 22,939 18,579
Net income $ 9,775 $ 3,665 $ 35,169 $ 25,960
Basic earnings per share $ 0.16 $ 0.06 $ 0.60 $ 0.45
Weighted average shares outstanding 59,660,187 57,788,481 58,903,095 57,424,403
- basic
Diluted earnings per share $ 0.16 $ 0.06 $ 0.58 $ 0.45
Weighted average shares outstanding 61,243,038 57,819,347 60,430,060 57,492,384
- diluted
* Adjusted to exclude results of Packaging and Biomanufacturing in all periods presented,
including reduced interest expense from the application of the net sales proceeds to
outstanding debt, the gain/(loss) on the sale of these businesses in 2001, and the
restructuring charges recorded in both years. See supplemental schedule for details.
COVANCE INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 and 2000
(Dollars in thousands)
PROFORMA (*)
December 31 December 31 December 31
2001 2000 2000
(UNAUDITED)
ASSETS
Cash & cash equivalents $ 35,404 $ 7,191 $ 11,327
Accounts receivable, net 167,840 168,006 137,469
Unbilled services 40,895 66,135 44,102
Inventory 36,131 30,963 27,522
Deferred income taxes 13,445 32,696 28,614
Prepaid expenses and other current assets 30,778 48,021 46,243
Total Current Assets 324,493 353,012 295,277
Property and equipment, net 228,092 331,689 205,033
Goodwill, net 54,038 81,327 57,669
Other assets 5,405 5,063 2,969
Total Assets $ 612,028 $ 771,091 $ 560,948
LIABILITIES and STOCKHOLDERS' EQUITY
Accounts payable $ 21,134 $ 28,312 $ 22,563
Accrued payroll and benefits 45,902 44,167 39,067
Accrued expenses and other current liabilities 40,296 45,720 46,691
Unearned revenue 116,712 96,085 87,475
Current portion of long-term debt - 1,499 -
Short-term debt - 234,000 39,000
Income taxes payable 2,739 1,939 (2,019)
Total Current Liabilities 226,783 451,722 232,777
Long-term debt 15,000 17,224 -
Deferred income taxes 11,613 20,943 24,054
Other liabilities 13,687 15,451 15,304
Total Liabilities 267,083 505,340 272,135
Common stock 619 598 598
Paid-in capital 122,217 92,572 92,572
Retained earnings 255,326 207,426 228,180
Cumulative translation adjustment (12,310) (14,938) (12,630)
Treasury stock (20,907) (19,907) (19,907)
Total Stockholders' Equity 344,945 265,751 288,813
Total Liabilities and Stockholders' Equity $ 612,028 $ 771,091 $ 560,948
* December 31, 2000 proforma consolidated balance sheet gives effect to the
divestitures of Packaging and Biomanufacturing as if they occurred on December 31, 2000.
COVANCE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(Dollars in thousands)
Year Ended December 31
PROFORMA(*)
2001 2000 2001
Cash flows from operating activities:
Net income $ 47,900 $ 15,236 $ 27,146
Adjustments to reconcile net income to net cash provided by
operating activities:
Gain on sale of businesses (30,803) - -
Depreciation and amortization 47,719 54,200 42,951
Restructuring charge, net of cash paid 7,287 2,351 7,287
Stock issued under employee benefit 12,509 3,291 12,509
and stock compensation plans
Deferred income tax provision 1,164 (9,443) 2,728
Other 1,399 1,087 1,399
Changes in operating assets and liabilities, net of businesses sold:
Accounts receivable (25,798) (28,326) (30,371)
Unbilled services 746 (13,488) 3,207
Inventory (8,542) (4,489) (8,609)
Accounts payable (4,020) 2,597 (1,429)
Accrued liabilities (9,555) 13,080 (216)
Unearned revenue 25,627 20,554 29,237
Income taxes payable 2,334 (2,449) 4,758
Other assets and liabilities, net (1,184) (5,448) 12,079
Net cash provided by operating activities 66,783 48,753 102,676
Cash flows from investing activities:
Proceeds from sale of businesses 251,059 - -
Capital expenditures (78,136) (95,833) (70,829)
Contingent purchase price paid in connection - (909) -
with prior acquisitions
Other, net 73 1,208 73
Net cash provided by (used in) investing activities 172,996 (95,534) (70,756)
Cash flows from financing activities:
Net (repayments) borrowings under revolving (209,000) 34,000 (24,000)
credit facilities
Repayments of debt (18,723) (9,071) -
Stock issued under employee stock purchase 16,303 3,928 16,303
and option plans
Purchase of treasury stock (146) (329) (146)
Net cash (used in) provided by financing activities (211,566) 28,528 (7,843)
Net change in cash and cash equivalents 28,213 (18,253) 24,077
Cash and cash equivalents, beginning of period 7,191 25,444 11,327
Cash and cash equivalents, end of period $ 35,404 $ 7,191 $ 35,404
* Proforma cash flow for the year ended December 31, 2001 was computed as if the
divestitures of Packaging and Biomanufacturing had occurred in 2000 (i.e., it is intended
to reflect the cash flow of Covance's continuing operations for 2001).
COVANCE INC.
INCOME STATEMENTS - INCLUDING SPECIAL ITEMS
FOR THE THREE MONTHS AND YEARS ENDED DECEMBER, 2001 AND 2000
(Dollars in thousands, except per share data)
Three Months Ended December 31 Year Ended December 31
2001 2000 2001 2000
Net revenues $204,404 $231,396 $855,877 $868,087
Costs and expenses:
Cost of revenue 144,443 166,989 618,119 625,595
Selling, general and administrative 32,502 33,668 127,211 131,158
Depreciation and amortization 11,104 13,602 47,719 54,200
Restructuring charge - (1,275) 8,178 12,514
Total 188,049 212,984 801,227 823,467
Income from operations 16,355 18,412 54,650 44,620
Other (income) expense, net:
Interest expense, net 15 5,939 6,848 19,051
Other expense 311 560 263 598
Gain on sale of businesses - - (30,803) -
Other expense (income), net 326 6,499 (23,692) 19,649
Income before taxes 16,029 11,913 78,342 24,971
Taxes on income 6,254 4,688 30,442 9,735
Net income $9,775 $7,225 $47,900 $15,236
Basic earnings per share $0.16 $0.13 $0.81 $0.27
Weighted average shares outstanding 59,660,187 57,788,481 58,903,095 57,424,403
- basic
Diluted earnings per share $0.16 $0.12 $0.79 $0.27
Weighted average shares outstanding 61,243,038 57,819,347 60,430,060 57,492,384
- diluted
COVANCE INC.
Supplemental Schedule
RECONCILIATION OF GAAP TO PRO FORMA INCOME STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
AND THE THREE MONTHS ENDED DECEMBER 31, 2000
(Dollars in thousands, except per share data)
(UNAUDITED)
Pro Forma Adjustments
As Remove Remove Remove Net Remove Pro Forma
Reported Packaging Bio Gain on Sales Restructuring Results
Year Ended December 31, 2001
Net revenues $855,877 $(11,439) $(44,173) $ - $ - $800,265
Income from operations 54,650 (3,806) 1,489 - 8,178 60,511
Net income 47,900 (1,817) 3,016 (18,915) 4,985 35,169
Diluted earnings per share $0.79 $(0.03) $0.05 $(0.31) $0.08 $0.58
Year Ended December 31, 2000
Net revenues $868,087 $(67,841) $(62,970) n/a $ - $737,276
Income from operations 44,620 (19,292) 10,518 n/a 12,514 48,360
Net income 15,236 (8,465) 11,556 n/a 7,633 25,960
Diluted earnings per share $0.27 $(0.15) $0.20 n/a $0.13 $0.45
Three Months Ended December 31, 2000
Net revenues $231,396 $(21,214) $(21,810) n/a $ - $188,372
Income from operations 18,412 (7,660) (481) n/a (1,275) 8,996
Net income 7,225 (3,787) 1,005 n/a (778) 3,665
Diluted earnings per share $0.12 $(0.07) $0.02 n/a $(0.01) $0.06
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