Financial Exhibits follow
COVANCE INC.
UNAUDITED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(Dollars in thousands, except per share data)
Three Months Ended March 31
PRO FORMA(*)
2001 2000
Net revenues $ 208,582 $ 195,609
Reimbursable out-of-pockets 9,700 9,947
Total revenues 218,282 205,556
Costs and expenses:
Cost of revenue 148,059 141,448
Reimbursed out-of-pocket expenses 9,700 9,947
Selling, general & administrative 31,265 29,211
Depreciation and amortization 10,106 9,932
Total 199,130 190,538
Income from operations 19,152 15,018
Other expense, net:
Interest expense, net 318 1,021
Foreign exchange transaction gain, net (144) (24)
Other expense, net 174 997
Income before taxes 18,978 14,021
Taxes on income 7,200 5,408
Net income $ 11,778 $ 8,613
Basic earnings per share $ 0.20 $ 0.15
Weighted average shares outstanding 60,280,237 58,036,599
- basic
Diluted earnings per share $ 0.19 $ 0.15
Weighted average shares outstanding 61,705,813 59,096,725
- diluted
* 2001 adjusted to exclude results of divested businesses (including
reduced interest expense from the application of the net sales proceeds
to outstanding debt and gain on sale). 2001 also has been adjusted to
exclude the amortization of goodwill in accordance with SFAS No. 142.
See supplemental schedule for details.
COVANCE INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2002 and DECEMBER 31, 2001
(Dollars in thousands)
March 31 December 31
2002 2001
(UNAUDITED)
ASSETS
Cash & cash equivalents $ 34,403 $ 35,404
Accounts receivable, net 158,559 167,840
Unbilled services 43,570 40,895
Inventory 33,738 36,131
Deferred income taxes 13,771 13,445
Prepaid expenses and other current assets 38,745 30,778
Total Current Assets 322,786 324,493
Property and equipment, net 224,384 228,092
Goodwill, net 54,066 54,038
Other assets 5,060 5,405
Total Assets $ 606,296 $ 612,028
LIABILITIES and STOCKHOLDERS' EQUITY
Accounts payable $ 17,186 $ 21,134
Accrued payroll and benefits 39,305 45,902
Accrued expenses and other current liabilities 39,387 40,296
Unearned revenue 118,314 116,712
Income taxes payable 6,669 2,739
Total Current Liabilities 220,861 226,783
Long-term debt - 15,000
Deferred income taxes 11,685 11,613
Other liabilities 13,930 13,687
Total Liabilities 246,476 267,083
Common stock 622 619
Paid-in capital 126,898 122,217
Retained earnings 267,104 255,326
Cumulative translation adjustment (13,762) (12,310)
Treasury stock (21,042) (20,907)
Total Stockholders' Equity 359,820 344,945
Total Liabilities and Stockholders' Equity $ 606,296 $ 612,028
COVANCE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(Dollars in thousands)
(UNAUDITED)
Three Months Ended March 31
2002 2001
Cash flows from operating activities:
Net income $ 11,778 $ 31,825
Adjustments to reconcile net income to net cash provided by
operating activities:
Gain on sale of business - (39,233)
Depreciation and amortization 10,106 13,619
Stock issued under employee benefit and 2,647 2,295
stock compensation plans
Deferred income tax provision (254) (1,731)
Other 135 872
Changes in operating assets and liabilities, net of businesses sold:
Accounts receivable 9,281 (3,122)
Unbilled services (2,675) 1,768
Inventory 2,393 (1,325)
Accounts payable (3,948) 164
Accrued liabilities (7,506) (12,861)
Unearned revenue 1,602 10,167
Income taxes payable 3,930 18,083
Other assets and liabilities, net (7,692) (3,879)
Net cash provided by operating activities 19,797 16,642
Cash flows from investing activities:
Proceeds from sale of business - 137,500
Capital expenditures (7,688) (14,296)
Other, net (12) 7
Net cash provided by (used in) investing activities (7,700) 123,211
Cash flows from financing activities:
Net repayments under revolving credit facilities (15,000) (104,000)
Repayments of debt - (18,723)
Stock issued under employee stock purchase and option plans 2,037 799
Purchase of treasury stock (135) (86)
Net cash used in financing activities (13,098) (122,010)
Net change in cash and cash equivalents (1,001) 17,843
Cash and cash equivalents, beginning of period 35,404 7,191
Cash and cash equivalents, end of period $ 34,403 $ 25,034
COVANCE INC.
UNAUDITED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(Dollars in thousands, except per share data)
Three Months Ended March 31
2002 2001
Net revenues $ 208,582 $ 228,658
Reimbursable out-of-pockets 9,700 9,947
Total revenues 218,282 238,605
Costs and expenses:
Cost of revenue 148,059 166,516
Reimbursed out-of-pocket expenses 9,700 9,947
Selling, general and administrative 31,265 32,297
Depreciation and amortization 10,106 13,619
Total 199,130 222,379
Income from operations 19,152 16,226
Other (income) expense, net:
Interest expense, net 318 4,215
Foreign exchange transaction gain, net (144) (6)
Gain on sale of business - (39,233)
Other (income) expense, net 174 (35,024)
Income before taxes 18,978 51,250
Taxes on income 7,200 19,425
Net income $ 11,778 $ 31,825
Basic earnings per share $ 0.20 $ 0.55
Weighted average shares outstanding 60,280,237 58,036,599
- basic
Diluted earnings per share $ 0.19 $ 0.54
Weighted average shares outstanding 61,705,813 59,096,725
- diluted
COVANCE INC.
Supplemental Schedule
RECONCILIATION OF GAAP TO PRO FORMA INCOME STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2001
(Dollars in thousands, except per share data)
(UNAUDITED)
Pro Forma Adjustments to Remove
As Goodwill Pro Forma
Reported Packaging Bio Gain on Sales Amortization Results
Three Months Ended March 31, 2001
Net revenues $228,658 $(11,439) $(21,610) n/a n/a $195,609
Income from operations 16,226 (3,807) 1,718 n/a 881 15,018
Income before taxes 51,250 (2,580) 3,703 (39,233) 881 14,021
Taxes on income 19,425 (762) 1,481 (14,908) 172 5,408
Net income 31,825 (1,818) 2,222 (24,325) 709 8,613
Diluted earnings per share $0.54 $(0.03) $0.04 $(0.41) $0.01 $0.15
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