UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission File Number: 1-12213
COVANCE INC.
(Exact name of Registrant as specified in its Charter)
Delaware 22-3265977
(State of Incorporation) (I.R.S. Employer Identification No.)
210 Carnegie Center, Princeton, New Jersey 08540
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (609) 452-4400
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange
Title of each Class on which Registered
---------------------------- -----------------------
Common Stock, $.01 Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of April 30, 1997, the Registrant had 57,274,382 shares of Common Stock
outstanding.
<PAGE>
Covance Inc.
Form 10-Q For the Quarterly Period Ended March 31, 1997
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets--March 31, 1997 and December 31, 1996............................ 3
Consolidated Statements of Income--Three Months ended March 31, 1997 and 1996................ 4
Consolidated Statements of Cash Flows--Three Months ended March 31, 1997 and 1996............ 5
Notes to Consolidated Financial Statements.................................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................... 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K...................................................... 12
Signature Page................................................................................. 13
</TABLE>
2
<PAGE>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
COVANCE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
(Dollars in thousands) March 31, December 31,
1997 1996
__________ ____________
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents............................................. $ 20,960 $ 25,416
Accounts receivable, net.............................................. 90,928 93,700
Unbilled services..................................................... 39,827 39,313
Inventory............................................................. 16,742 16,410
Deferred income taxes................................................. 17,498 17,529
Prepaid expenses and other assets..................................... 22,217 25,526
________ ________
Total Current Assets................................................ 208,172 217,894
Property and equipment, net........................................... 170,830 167,809
Goodwill, net......................................................... 52,696 53,271
Other assets.......................................................... 11,538 12,073
________ ________
Total Assets........................................................ $443,236 $451,047
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable...................................................... $ 22,715 $ 26,652
Accrued payroll and benefits.......................................... 26,531 28,212
Accrued expenses and other liabilities................................ 32,478 35,840
Unearned revenue...................................................... 55,308 57,794
Short-term debt....................................................... 4,000 --
Income taxes payable.................................................. 7,470 3,450
________ ________
Total Current Liabilities........................................... 148,502 151,948
Long-term debt.......................................................... 157,000 163,000
Deferred income taxes................................................... 9,977 9,957
Other liabilities....................................................... 13,301 15,438
________ ________
Total Liabilities................................................... 328,780 340,343
________ ________
Commitments and Contingent Liabilities
Stockholders' Equity:
Common Stock - Par value $0.01 per share; 140,000,000 shares authorized;
57,063,644 shares issued and outstanding at
March 31, 1997 and December 31, 1996............................ 571 571
Paid-in capital....................................................... 48,970 48,970
Retained earnings..................................................... 66,637 58,010
Cumulative translation adjustment..................................... (1,722) 3,153
________ ________
Total Stockholders' Equity.......................................... 114,456 110,704
________ ________
Total Liabilities and Stockholders' Equity........................ $443,236 $451,047
======== ========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
3
<PAGE>
COVANCE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
______________________
(Dollars in thousands, except per share data) 1997 1996
________ ________
<S> <C> <C>
Net revenues................................. $ 135,723 $ 108,697
Cost and expenses
Cost of revenue.......................... 90,825 71,427
Selling, general and administrative
expenses............................... 20,651 17,398
Depreciation and amortization............ 7,108 5,834
________ ________
Total................................ 118,584 94,659
________ ________
Income from operations....................... 17,139 14,038
________ ________
Other expense, net
Interest expense, net.................... 2,015 1,108
Other.................................... 474 48
________ ________
Other expense, net................... 2,489 1,156
________ ________
Income before taxes and equity investee
earnings................................. 14,650 12,882
Taxes on income.............................. 6,153 5,619
Equity investee gain......................... (130) (44)
________ ________
Net income................................... $ 8,627 $ 7,307
======== ========
Earnings per share........................... $ 0.15 $ 0.13
Weighted average shares outstanding.......... 57,063,644 57,063,644
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
4
<PAGE>
COVANCE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31
___________________________
(Dollars in thousands) 1997 1996
_______ _______
<S> <C> <C>
Cash flows from operating activities
Net income....................................................... $ 8,627 $ 7,307
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization................................ 7,108 5,834
Deferred income tax provision................................ 51 (269)
Related party charges........................................ -- 562
Other........................................................ (42) 71
Changes in operating assets and liabilities, net of
effects of acquisitions
Accounts receivable.......................................... 2,772 5,245
Unbilled services............................................ (514) (5,813)
Inventory.................................................... (332) (647)
Accounts payable............................................. (3,937) (4,413)
Accrued liabilities.......................................... (5,043) 1,437
Unearned revenue............................................. (2,486) 10,138
Income taxes payable......................................... 4,020 4,072
Other assets and liabilities, net............................ 1,771 2,372
_______ _______
Net cash provided by operating activities........................ 11,995 25,896
_______ _______
Cash flows from investing activities
Capital expenditures......................................... (14,502) (4,951)
Acquisition of businesses, net of cash acquired.............. -- (14,890)
Other, net................................................... 51 122
_______ _______
Net cash used in investing activities............................ (14,451) (19,719)
_______ _______
Cash flows from financing activities
Repayments of long-term debt................................. (6,000) --
Proceeds from short-term debt................................ 4,000 --
Due to Corning Incorporated and affiliates................... -- 3,312
_______ _______
Net cash (used in) provided by financing activities.............. (2,000) 3,312
_______ _______
Net change in cash and cash equivalents.......................... (4,456) 9,489
Cash and cash equivalents, beginning of period................... 25,416 8,068
_______ _______
Cash and cash equivalents, end of period......................... $ 20,960 $ 17,557
======= =======
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
5
<PAGE>
COVANCE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1997
1. Basis of Presentation
The accompanying unaudited consolidated financial statements reflect all
adjustments of a normal recurring nature, which are, in the opinion of
management, necessary for a fair statement of the results of operations for the
interim periods presented. The consolidated financial statements have been
compiled without audit and are subject to such year-end adjustments as may be
considered appropriate and should be read in conjunction with the historical
consolidated financial statements of Covance Inc. and subsidiaries ("Covance")
for the years ended December 31, 1996, 1995 and 1994 included in the Annual
Report on Form 10-K for the fiscal year ended December 31, 1996. Operating
results for the three months ended March 31, 1997 are not necessarily indicative
of the results to be expected for the year ending December 31, 1997.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of these unaudited consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
Earnings Per Share
Earnings per share is computed by dividing net income by the weighted
average number of shares outstanding. Earnings per share has been presented for
the three months ended March 31, 1996 based upon the number of Covance shares
issued and outstanding as a result of the December 1996 spin-off from Corning.
Common stock equivalents are not included in the earnings per share computation
because they do not result in material dilution.
3. Acquisitions
In March 1996, Covance acquired all of the assets and substantially all of
the liabilities of Health Technology Associates, Inc. ("HTA", now known as
Covance Health Economics and Outcomes Services, Inc.) for an initial cash
payment of approximately $14.9 million in a transaction accounted for as a
purchase business combination. In accordance with the terms of the asset
purchase agreement, Covance is contingently obligated to pay up to an additional
$17.0 million in contingent purchase price if HTA achieves certain established
earnings targets during the three year period ending March 1999.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the unaudited
Consolidated Financial Statements and related Notes thereto of Covance included
herein, and the Consolidated Financial Statements and related Notes thereto
included in the Annual Report on Form 10-K for the fiscal year ended December
31, 1996.
Overview
Covance is a leading contract research organization ("CRO") providing a
wide range of integrated product development services on a worldwide basis to
the biotechnology, pharmaceutical and medical device industries. In addition,
and to a lesser extent, Covance provides services such as health economics for
managed care organizations, hospitals and health care provider networks, and
early development and laboratory testing services to the chemical, agrochemical
and food industries. The foregoing services can be broadly classified into six
lines of business: preclinical, biomanufacturing, clinical and periapproval,
central laboratory, clinical packaging, and health economics. These six lines of
business can be further categorized as non-clinical (preclinical and
biomanufacturing) and clinical (clinical and periapproval, central laboratory,
clinical packaging and health economics). Covance believes it is one of the
largest biopharmaceutical CROs, based on 1996 annual net revenue, and one of
only a few that are capable of providing comprehensive global product
development services. Covance offers its clients high quality services designed
to reduce product development time, allowing them to introduce their products
into the marketplace faster and, thus, maximize the period of marketing
exclusivity and monetary return on their investments. Additionally, Covance's
comprehensive services and broad experience provide clients with a variable cost
alternative to fixed cost internal development capabilities.
The businesses that today constitute Covance were acquired by Corning
Incorporated ("Corning"), starting in 1987, as part of a strategy to create a
global, integrated and full service product development company. In keeping with
this strategy, during the period 1994 through the present, Covance has purchased
the remaining interest in a jointly owned company, acquired a significant
minority interest in a complementary service business, acquired three new
businesses and formed a major new business venture. Specifically, in April 1994,
Covance acquired the remaining interest in SciCor S.A., a provider of central
laboratory testing services based in Switzerland. The transaction was accounted
for as a purchase business combination. In October 1994, Covance acquired a
significant minority equity position in Bio-Imaging Technologies, Inc.
("Bio-Imaging"), which uses proprietary imaging technology to quantify the
diagnostic and therapeutic effectiveness of experimental drugs and devices.
Covance expanded its offering of value added product development services in
January 1995 with the acquisition of National Packaging Systems, Inc., a leading
clinical packaging company. The transaction was accounted for as a purchase
business combination. In February 1995, Covance formed Covance Biotechnology
Services Inc., a majority-owned company which will enable Covance to engage in
biomanufacturing. In recognition of the rapid changes in the biopharmaceutical
industry's marketplace, particularly the need for the industry to further
demonstrate the benefits and cost effectiveness of their products to payors,
Covance purchased in March 1996 all the assets and substantially all of the
liabilities of Health Technology Associates, Inc. ("HTA"), a
7
<PAGE>
leading health economics company, in a transaction accounted for as a purchase
business combination. In October 1996, Covance expanded its clinical packaging
capabilities to Europe with the purchase of Swiss based CRS Pacamed AG (now
known as Covance Pharmaceutical Packaging Services AG). In addition, Covance
acquired a 91,000 square foot facility in Horsham, England, which will be used,
among other things, to provide clinical packaging services in Europe.
A substantial amount of Covance's net revenues are earned under contracts,
which generally range in duration from a few months to two years. Revenue from
these contracts is recognized as costs are incurred on the basis of the
relationship between costs incurred and estimated total costs. Typically,
Covance's contracts in the preclinical, central laboratory, clinical packaging
and health economics areas are fixed price or fee-for-service and in the
clinical and periapproval areas are fee-for-service with a cap. To a lesser
extent, some of the contracts in the clinical and periapproval areas are fixed
price or fee-for-service without a cap. The contracts may contain provisions for
renegotiation for cost overruns arising from changes in the scope of work.
Renegotiated amounts are included in net revenues when earned and realization is
assured. In some cases, for multi-year contracts involving preclinical and
clinical and periapproval trials, a portion of the contract fee is paid at the
time the trial is initiated, with performance-based installments payable over
the contract duration, in some cases on a milestone achievement basis. Covance
routinely subcontracts with independent physician investigators in connection
with multi-site clinical trials. Investigator fees are not reflected in net
revenues or expenses since such fees are granted by customers on a "pass-thru
basis" without risk or reward to Covance. While most contracts are terminable
either immediately or upon notice by the client, they typically require payment
of expenses to wind down a study and fees earned to date, and, in some cases, a
termination fee or a payment of some portion of the fees or profit that could
have been earned under the contract if it had not been terminated early.
Covance's cost of revenue includes appropriate amounts necessary to
complete the net revenues and earnings process and includes direct labor and
related benefit charges, other direct costs and allocable expenses (including
indirect labor, facility charges and information technology costs). These costs,
as a percentage of net revenues, tend to fluctuate from one period to another
(generally within a range of up to 2% in either direction) principally as a
result of changes in labor utilization and the mix of service offerings
involving hundreds of studies conducted during any period of time. Accordingly,
changes in cost of revenue as a percentage of net revenues plus or minus 2% are
expected from one period to another.
Quarterly Results
Covance's quarterly operating results are subject to variation, and are
expected to continue to be subject to variation, as a result of factors such as
delays in initiating or completing significant preclinical and clinical and
periapproval trials, termination of preclinical and clinical and periapproval
trials, acquisitions and exchange rate fluctuations. Delays and terminations of
studies or trials are often the result of actions taken by clients or regulatory
authorities and are not typically controllable by Covance. Since a large amount
of Covance's operating costs are relatively fixed while revenue is subject to
fluctuation, minor variations in the commencement, progress or completion of
preclinical and clinical and periapproval trials may cause significant
variations in quarterly operating results.
8
<PAGE>
Results of Operations
Three Months Ended March 31, 1997 Compared with Three Months Ended March 31,
1996.
Net revenues increased 24.9% to $135.7 million for the three months ended
March 31, 1997 from $108.7 million for the corresponding 1996 period. Excluding
the impact of 1996 acquisitions, growth in net revenues was 17.8%. Net revenues
from Covance's combined clinical lines of business, excluding the health
economics and Swiss packaging businesses acquired in 1996, grew in excess of
20%, benefiting from the continuing trend in outsourcing of clinical development
activities, while net revenues from Covance's combined non-clinical operations
grew approximately 10%.
Cost of revenue increased 27.2% to $90.8 million for the three months ended
March 31, 1997 from $71.4 million for the corresponding 1996 period as a result
of the increase in net revenues. Cost of revenue, as a percentage of net
revenues, increased to 66.9% for the three months ended March 31, 1997 from
65.7% for the corresponding 1996 period. This increase is primarily attributable
to Covance's biomanufacturing business. During the first eleven months of 1996,
all costs incurred by Covance's biomanufacturing business were of an
administrative nature as the facility was being prepared for revenue producing
operations (which began in December 1996). Now that the biomanufacturing
business has begun generating revenue, many expenses have shifted from
administrative to cost of revenue.
Overall, selling, general and administrative expense, which consists
primarily of administrative payroll and related benefit charges, advertising and
promotional expenses, administrative travel and allocable expenses (facility
charges and information technology costs), increased 18.7% to $20.7 million for
the three months ended March 31, 1997 from $17.4 million for the corresponding
1996 period. As a percentage of net revenues, selling, general and
administrative expense decreased to 15.2% for the three months ended March 31,
1997 from 16.0% for the corresponding 1996 period. The decrease in selling,
general and administrative expense as a percentage of net revenues is a result
of two factors. First, the shift in expenses in Covance's biomanufacturing
business, as discussed above, accounts for a 0.5% reduction in selling, general
and administrative expense as a percentage of net revenues for the three months
ended March 31, 1997 compared to the three months ended March 31, 1996. Second,
as a wholly-owned business of Corning, certain administrative activities were
historically performed on Covance's behalf by Corning. Charges incurred for
these services totaled $3.4 million in 1996, of which $0.9 million or 0.8% of
net revenues was charged by Corning during the three months ended March 31,
1996. While these charges are no longer incurred as a result of Covance's
spin-off from Corning, they have been partially replaced by internal costs as
additional resources continue to be added to perform the services previously
provided by Corning as well as to perform functions new to Covance as a separate
publicly traded company.
Depreciation and amortization increased 21.8% to $7.1 million or 5.2% of
net revenues for the three months ended March 31, 1997 from $5.8 million or 5.4%
of net revenues for the corresponding 1996 period as the growth in net revenues
outpaced the increase in these non-cash charges.
Income from operations increased $3.1 million or 22.1% to $17.1 million for
the three months ended March 31, 1997 from $14.0 million for the corresponding
1996 period. As a
9
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percentage of net revenues, income from operations decreased to 12.6% for the
three months ended March 31, 1997 from 12.9% for the corresponding 1996 period
as a result of the increase in cost of revenue.
Other expense, net, increased $1.3 million to $2.5 million for three months
ended March 31, 1997 from $1.2 million for the corresponding 1996 period. This
increase is a result of an increase in interest expense of $0.9 million,
relating principally to 1996 acquisition activity, higher levels of capital
spending and a general increase in working capital, and an increase in foreign
exchange transaction losses of $0.4 million.
Covance's effective tax rate for the three months ended March 31, 1997
decreased to 42.0% from 43.6% for the corresponding 1996 period. Since Covance
operates on a global basis, its effective tax rate is subject to variation from
period to period as the geographic distribution of its pre-tax earnings changes.
Net income increased $1.3 million or 18.1% to $8.6 million for the three
months ended March 31, 1997 from $7.3 million for the corresponding 1996 period.
Liquidity and Capital Resources
Covance's primary cash needs on both a short and long-term basis are for
capital expenditures, expansion of services, possible future acquisitions,
geographic expansion, working capital and other general corporate purposes.
Covance's management believes that its long-term revolving credit facility will
provide it with sufficient financial flexibility and liquidity on both a short
and a long-term basis to fund, as required, capital expenditures, potential
future acquisitions and other longer-term growth opportunities. At March 31,
1997, there was $157.0 million of outstanding borrowings under Covance's
long-term revolving credit facility.
During the three months ended March 31, 1997, Covance's operations provided
net cash of $12.0 million compared to $25.9 million for the corresponding 1996
period. Cash flows from net earnings adjusted for non-cash activity provided
$15.7 million for the three months ended March 31, 1997, up $2.2 million or
16.6% from the corresponding 1996 period. The change in net operating assets
used $3.7 million during the three months ended March 31, 1997, primarily as a
result of a reduction in accounts payable, accrued liabilities and unearned
revenue, whereas this net change provided $12.4 million in cash during the first
three months of 1996, primarily due to an increase in unearned revenue of $10.1
million during that period.
Working capital was $59.7 million at March 31, 1997, a reduction of $6.3
million from December 31, 1996. Aggregate accounts receivable and unbilled
services at March 31, 1997 of $130.8 million were down $2.2 million from the
December 31, 1996 level of $133.0 million. Covance's ratio of current assets to
current liabilities was 1.40 at March 31, 1997 and 1.43 at December 31, 1996.
Investing activities for the three months ended March 31, 1997 used $14.5
million compared to $19.7 million for the corresponding 1996 period, as the 1996
period included $14.9 million in acquisition spending. Capital spending for the
first three months of 1997 totaled $14.5 million, primarily for outfitting of
new facilities, purchase of new equipment, maintenance and upgrade of
10
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existing equipment and computer equipment and software for newly hired
employees, compared to $5.0 million for the corresponding 1996 period.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings Per Share ("SFAS 128"), which simplifies and supersedes
existing standards found in APB Opinion No. 15. This Statement specifies the
computation, presentation and disclosure requirements for earnings per share for
entities with publicly held common stock. SFAS 128 replaces the presentation of
primary earnings per share with a presentation of basic earnings per share, and
for entities with a complex capital structure, requires the additional
presentation of diluted earnings per share on the face of the income statement.
Basic earnings per share is computed by dividing income available to common
stockholders by the weighted average number of shares outstanding during the
period. The computation of diluted earnings per share is similar to the
computation of basic earnings per share, except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the dilutive potential common shares had been issued. This
Statement shall be effective for financial statements for both interim and
annual periods ending after December 15, 1997. Earlier application is not
permitted; however 1997 interim period earnings per share amounts will be
restated to reflect the adoption of SFAS 128, as of the beginning of the year,
in accordance with the requirements of this Statement.
Pursuant to SEC Staff Accounting Bulletin No. 74, Covance has computed
basic and diluted earnings per share on a pro forma basis for the three months
ended March 31, 1997 to both be $0.15 per share. In computing diluted earnings
per share, the denominator was increased by approximately 190,000 shares,
representing the dilution of stock options outstanding at March 31, 1997.
Foreign Currency
Contracts between Covance's foreign subsidiaries and its clients are
frequently denominated in currencies other than the applicable subsidiary's
local currency. Accordingly, payments received for services rendered under such
contracts are denominated in a currency different than the currency used for the
payment of the subsidiary's expenses. Therefore, the subsidiary's net revenues,
expenses and earnings are affected by fluctuations in exchange rates. In
addition, Covance's consolidated financial statements are denominated in U.S.
dollars and, accordingly, changes in exchange rates between the applicable
foreign currency and the U.S. dollar will affect the reported amount of such
subsidiary's financial results in U.S. dollars for purposes of reporting
Covance's consolidated financial results. Translation adjustments are reported
as a separate section of stockholder's equity. To date, such adjustments have
not been material to Covance's financial statements.
Taxes
Since Covance conducts operations on a global basis, Covance's effective
tax rate has and will continue to depend upon the geographic distribution of its
pretax earnings among locations with varying tax rates. Covance's profits are
further impacted by changes in the tax rates of the various jurisdictions. In
particular, as the geographic mix of Covance's pre-tax earnings among various
tax jurisdictions changes, Covance's effective tax rate may vary from period to
period.
11
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(1) Exhibit 27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
none
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COVANCE INC.
Dated: May 8, 1997 By: /s/ Christopher A. Kuebler
---------------------------
Christopher A. Kuebler
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Christopher A. Kuebler
- --------------------------
Christopher A. Kuebler Chairman of the Board, President May 8, 1997
and Chief Executive Officer
(Principal Executive Officer)
/s/ Charles C. Harwood, Jr.
- ---------------------------
Charles C. Harwood, Jr. Corporate Senior Vice President May 8, 1997
and Chief Financial Officer
(Principal Financial Officer)
/s/ Michael Giannetto
- ---------------------------
Michael Giannetto Vice President and Controller May 8, 1997
(Principal Accounting Officer)
</TABLE>
13
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
27 Financial Data Schedule (for SEC use only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Covance
consolidated financial statements for the three months ended March 31, 1997
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001023131
<NAME> Covance Inc.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 20,960,000
<SECURITIES> 0
<RECEIVABLES> 130,755,000
<ALLOWANCES> 0
<INVENTORY> 16,742,000
<CURRENT-ASSETS> 208,172,000
<PP&E> 314,144,000
<DEPRECIATION> 143,314,000
<TOTAL-ASSETS> 443,236,000
<CURRENT-LIABILITIES> 148,502,000
<BONDS> 0
0
0
<COMMON> 571,000
<OTHER-SE> 113,885,000
<TOTAL-LIABILITY-AND-EQUITY> 443,236,000
<SALES> 0
<TOTAL-REVENUES> 135,723,000
<CGS> 90,825,000
<TOTAL-COSTS> 118,584,000
<OTHER-EXPENSES> 474,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,015,000
<INCOME-PRETAX> 14,650,000
<INCOME-TAX> 6,153,000
<INCOME-CONTINUING> 8,627,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,627,000
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0
</TABLE>
