Covance Reports Third Quarter Pro Forma Net Revenue Of $542 Million, Pro Forma EPS Of $0.72 And Adjusted Net Orders Of $701

Covance Reports Third Quarter Pro Forma Net Revenue Of $542 Million, Pro Forma
             EPS Of $0.72 And Adjusted Net Orders Of $701 Million

-- FY2012 Pro Forma EPS Target now $2.65 to $2.70 versus previous range of
$2.50 to $2.70 --

PR Newswire

PRINCETON, N.J., Nov. 5, 2012

PRINCETON, N.J., Nov. 5, 2012 /PRNewswire/ --Covance Inc. (NYSE: CVD) today
reported results for its third quarter ended September 30, 2012. On a GAAP
basis, net revenue was $545 million. Excluding revenue from facilities in
wind-down, pro forma net revenue was $542 million. On a GAAP basis, the
company reported earnings of $0.69 per diluted share in the third quarter.
Excluding losses from facilities in wind-down, restructuring costs and other
charges and favorable income tax developments during the quarter, the company
reported earnings per diluted share of $0.72.

"Third quarter pro forma earnings were better than expected, increasing $0.07
sequentially, due to significantly improved profitability in toxicology
coupled with continued strong performances in clinical development and central
laboratories. Our performance this quarter demonstrates the leverage in our
scalable business model when commercial success is combined with our lower
cost infrastructure," said Joe Herring, Chairman and Chief Executive Officer.
"On the sales front, clinical development and central laboratories continued
to deliver strong new orders, driving adjusted net orders of $701 million and
an adjusted book-to-bill of 1.29 to 1. We continue to have significant
pending proposals. In addition, our strategic information technology projects
continue to progress on-time and on-budget.

"Late-Stage Development revenues grew 6.9% year-on-year, or 13.1% on a
constant currency basis. Revenue growth was led by 18% growth in clinical
development and continued year-on-year and sequential growth in central
laboratories, which more than offset a decline in our market access services.
Pro forma operating margins increased 70 basis points year-on-year to 20.0%,
but declined as expected from the second quarter level on increased spending
on strategic IT projects, continued hiring in clinical development, and lower
profitability in market access services, all of which offset sequential
operating margin expansion in central laboratories.

"In Early Development, pro forma revenue and earnings improved sequentially
for the second consecutive quarter. Pro forma net revenues increased $2.4
million sequentially to $217.8 million, and pro forma operating margin
increased 370 basis points sequentially to 12.4% as stronger performance in
toxicology coupled with a faster than expected ramp in savings from our cost
reduction actions more than offset weaker performance in clinical
pharmacology. 

"On a consolidated basis, we expect pro forma revenue in the fourth quarter to
be up slightly from the third quarter level and pro forma EPS to be
approximately $0.70, reflecting the impact of increased IT spending on
Late-Stage Development tools as well as the corporate data center initiative.
When combining our fourth quarter projection with our third quarter results,
we are narrowing our full-year pro forma EPS target to the high-end of our
previous range, or $2.65 to $2.70 (excluding impairment charges, restructuring
and other costs, losses from facilities in wind-down, favorable income tax
developments and using September 30 foreign exchange rates)."

Consolidated Results

($ in millions except   3Q12     3Q11    Change   YTD12     YTD11     Change
EPS)
Total Revenues          $597.6   $578.9           $1,756.6  $1,654.1
Less: Reimbursable      $52.8    $35.6            $138.2    $90.6
Out-of-Pockets
Net Revenues            $544.8   $543.3  0.3%     $1,618.4  $1,563.5  3.5%
Operating Income        $30.6    $51.0   (40.0%)  $72.8     $141.7    (48.6%)
 Operating Margin     5.6%     9.4%             4.5%      9.1%
Net Income              $37.8    $40.7   (7.0%)   $60.8     $111.0    (45.2%)
Earnings per Share      $0.69    $0.67   2.5%     $1.07     $1.82     (41.0%)
Revenue from facilities $2.9     -                $7.3      -
in wind-down**
Net Revenue, continuing $541.9   $543.3  (0.3%)   $1,611.2  $1,563.5  3.1%
ops*
Restructuring Costs and ($18.1)  ($5.3)           ($66.5)   ($15.7)
other charges
Loss from facilities in ($2.6)   -                ($6.4)    -
wind-down**
Operating Income,       $51.3    $56.3   (8.9%)   $145.7    $157.4    (7.4%)
excluding items*
 Operating Margin,     9.5%     10.4%            9.0%      10.1%
excluding items*
Impairment of Equity    -        -                ($7.4)    -
Investment
Gain on Sale of         $1.5     -                $1.5      -
Investment
Favorable Income Tax    $11.5    $0.7             $11.5     $0.7
Developments
Net Income, excluding   $39.6    $43.4   (8.7%)   $111.6    $120.5    (7.3%)
items*
Diluted EPS, excluding  $0.72    $0.71   0.7%     $1.97     $1.97     (0.2%)
items*
* See attached pro forma income statement for reconciliation of 2012 & 2011
GAAP to pro forma amounts.

** Facilities in wind-down include Chandler, Honolulu and Basel.



Operating Segment Results

Early Development

($ in millions)                 3Q12    3Q11   Change  YTD12   YTD11  Change
Net Revenues                    $220.7  $240.2 (8.1%)  $652.1  $696.1 (6.3%)
Operating Income (Loss)         $7.1    $33.2  (78.6%) ($14.7) $87.7  (116.8%)
Operating Margin                3.2%    13.8%          (2.3%)  12.6%
Revenue from facilities in      $2.9    -              $7.3    -
wind-down**
Net Revenue, continuing ops     $217.8  $240.2 (9.3%)  $644.8  $696.1 (7.4%)
Restructuring Costs and other   ($17.2) ($1.9)         ($65.1) ($6.7)
charges
Loss from facilities in         ($2.6)  -              ($6.4)  -
wind-down**
Operating Income, excluding     $26.9   $35.0  (23.2%) $56.9   $94.4  (39.8%)
items
Operating Margin, excluding     12.4%   14.6%          8.8%    13.6%
items
** Facilities in wind-down include Chandler, Honolulu and Basel.



The Early Development segment includes preclinical toxicology, analytical
chemistry, clinical pharmacology, discovery support, and research products.
Net revenues in the third quarter of 2012 declined 8.1% year-on-year on a GAAP
basis to $220.7 million and 9.3% on a pro forma basis to $217.8 million, due
to the following: declines in toxicology services, research products, and
clinical pharmacology; the impact of the sale of environmental services (which
had contributed approximately $2.0 million in quarterly revenue); and the
inclusion of the Chandler, Honolulu and Basel sites in last year's results. In
the quarter, foreign exchange was a 90 basis point year-on-year headwind.
Sequentially, pro forma revenues increased $2.4 million as an increase in
toxicology revenues more than offset a decline in clinical pharmacology.

GAAP operating income in the third quarter of 2012 was $7.1 million, and
included $17.2 million in costs associated with our restructuring actions and
$2.6 million in losses at locations in wind-down. GAAP operating income for
the third quarter of 2011 was $33.2 million, and included $1.9 million in
restructuring costs. Pro forma operating income, excluding these items, was
$26.9 million in the third quarter of this year, up from $18.7 million last
quarter, and compared to $35.0 million in the third quarter of last year. Pro
forma operating margins were 12.4% for the third quarter of this year, up from
8.7% last quarter and compared to 14.6% in the third quarter of 2011.
Sequentially, pro forma operating income increased primarily due to a
significant increase in North American toxicology profitability. 

Late-Stage Development

($ in millions)                   3Q12   3Q11   Change YTD12  YTD11  Change
Net Revenues                      $324.1 $303.0 6.9%   $966.3 $867.4 11.4%
Operating Income                  $64.4  $56.3  14.5%  $204.9 $168.1 21.9%
Operating Margin                  19.9%  18.6%         21.2%  19.4%
Restructuring Costs               ($0.4) ($2.1)        ($0.6) ($3.7)
Operating Income, excluding items $64.8  $58.4  11.1%  $205.5 $171.8 19.6%
Operating Margin, excluding items 20.0%  19.3%         21.3%  19.8%



The Late-Stage Development segment includes central laboratory, Phase IIb-IV
clinical development, and market access services. Net revenues for the third
quarter of 2012 grew 6.9% year-on-year to $324.1 million. In the quarter,
foreign exchange negatively impacted year-on-year revenue growth by 620 basis
points. Growth was driven by the continued strong performance in clinical
development, which offset a decline in market access revenue. Central
laboratory, which grew revenue 2.3% year-on-year on a reported basis and 10.7%
on a constant currency basis, had an increase in kit volumes for the fourth
consecutive quarter.

Operating income for the third quarter was $64.4 million on a GAAP basis or
$64.8 million on a pro forma basis. This compares to $56.3 million on a GAAP
basis and $58.4 million on a pro forma basis in the third quarter of the prior
year and to $68.2 million on a pro forma basis last quarter. Pro forma
operating margins were 20.0% for the third quarter of 2012 compared to pro
forma operating margins of 21.1% last quarter and 19.3% in the third quarter
of last year. The year-on-year increase in profitability was driven by both
clinical development and central laboratories, while the sequential decrease
primarily resulted from increased spending on strategic IT projects, lower
profitability in market access services, and increased hiring and staff costs
in clinical development.

Corporate Information

The company reported third quarter adjusted net orders of $701 million.
Backlog at September 30, 2012 was $6.37 billion compared to $6.23 billion at
June 30, 2012 and $6.08 billion at September 30, 2011. Foreign exchange
favorably impacted backlog sequentially by $69 million.

Corporate expenses totaled $40.9 million in the third quarter of 2012
(including $0.5 million in restructuring costs) compared to $38.9 million last
quarter (including $0.3 million in restructuring costs) and $38.4 million in
the third quarter of last year (including $1.4 million in restructuring
costs). We expect corporate expenses, excluding restructuring costs, to
increase in the fourth quarter as spending ramps on the corporate data center
consolidation component of our strategic IT spending. However, in order to
support longer-term earnings growth, we expanded our cost reduction actions in
the third quarter to include corporate and functional support spending.

Cash and cash equivalents at September 30, 2012 were $441 million compared to
$398 million at June 30, 2012 and $400 million at September 30, 2011. Debt
outstanding is now $340 million, originating from borrowings related to our
share repurchase program. Covance repurchased $20 million of shares
outstanding within the third quarter.

Free cash flow (defined as operating cash flow less capital expenditures) for
the third quarter of 2012 was $35 million, consisting of operating cash flow
of $71 million less capital expenditures of $36 million. Free cash flow
year-to-date was $48 million, consisting of operating cash flow of $153
million less capital expenditures of $105 million.

Net Days Sales Outstanding (DSO) were 38 days at September 30, 2012 compared
to 35 days at June 30, 2012 and 38 days at September 30, 2011.

The Company's investor conference call will be webcast on November 6 at 9:00
am ET. Management's commentary and presentation slides will be available
through 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 $2 billion, global operations in more than 30 countries,
and 11,500 employees worldwide. Information on Covance's products and
services, recent press releases, and SEC filings can be obtained through its
website at 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, the realization of savings from the Company's
announced restructuring actions, the cost and pace of completion of our
information technology projects and the realization of benefits therefrom,
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

COVANCE INC.
CONSOLIDATED INCOME STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
(Dollars in thousands, except per share data)
(UNAUDITED)
                  Three Months Ended             Nine Months Ended
                  September 30                   September 30
                  2012            2011           2012           2011
Net revenues      $            $          $             $ 
                  544,818         543,254        1,618,441      1,563,460
Reimbursable
out-of-pocket     52,844          35,622         138,174        90,601
expenses
 Total        597,662         578,876        1,756,615      1,654,061
revenues
Costs and
expenses:
 Cost of         389,724         383,347        1,174,382      1,095,199
revenue
 Reimbursable
out-of-pocket     52,844          35,622         138,174        90,601
expenses
 Selling,
general and       94,401          81,292         266,031        247,292
administrative
 Depreciation    30,102          27,592         87,285         79,291
and amortization
 Goodwill
impairment        -               -              17,959         -
charge
 Total
costs and         567,071     (a) 527,853    (c) 1,683,831  (b) 1,512,383  (d)
expenses
Income from       30,591      (a) 51,023     (c) 72,784     (b) 141,678    (d)
operations
Other (income)
expense, net:
 Interest        920             343            2,353          1,640
expense, net
 Foreign
exchange          281             777            1,301          892
transaction
loss, net
 Impairment of
equity            -               -              7,373          -
investment
 Gain on sale    (1,459)         -              (1,459)        -
of investment
 Loss on sale    -               -              169            -
of business
 Other
(income)          (258)           1,120          9,737          2,532
expense, net
Income before
taxes and equity  30,849      (a) 49,903     (c) 63,047     (b) 139,146    (d)
investee results
Taxes on income   (6,971)     (a) 9,781      (c) 2,229      (b) 28,402     (d)
Equity investee   -               547            17             305
earnings
Net income       $       (a) $      (c) $      (b) $       (d)
                  37,820           40,669       60,835         111,049
Basic earnings    $          $          $          $    
per share          0.70      (a)         (c)   1.10   (b)   1.86   (d)
                                  0.68
Weighted average
shares            53,687,748      59,695,336     55,206,190     59,596,294
outstanding -
basic
Diluted earnings  $          $          $          $    
per share          0.69      (a)         (c)   1.07   (b)   1.82   (d)
                                  0.67
Weighted average
shares            55,201,552      60,926,604     56,701,280     61,093,960
outstanding -
diluted
(a) Three months ended September 30, 2012 include, as applicable, $14,072
in restructuring costs ($9,647 net of tax), $4,000 in costs associated
with the
 expected settlement of an inventory supply agreement ($2,756 net of
tax), $2,609 in losses at sites in wind-down ($1,821 net of tax), $1,459
gain on sale
 of investment ($945
net of tax) and favorable
income tax items totaling
$11,501.
(b) Nine months ended September 30, 2012 include, as applicable, $23,739 in
restructuring costs ($16,177 net of tax), $24,781 in inventory impairment
charges
 and costs associated with the expected settlement of an inventory
supply agreement ($17,147 net of tax), $17,959 of goodwill impairment
charges ($17,959
 net of tax), $7,373 of impairment of equity investment ($7,373 net
of tax), $6,424 in losses at sites in wind-down ($4,567 net of tax),
$1,459 gain on sale of
 investment ($945 net
of tax) and favorable income
tax items totaling $11,501.
(c) Three months ended September 30, 2011 include, as applicable, $5,270 in
restructuring costs ($3,392 net of tax) and favorable income tax items
totaling $700.
(d) Nine months ended September 30, 2011 include, as applicable, $15,702 in
restructuring costs ($10,106 net of tax) and favorable income tax items
totaling $700.
Excluding the impact of restructuring charges, impairment charges, costs
associated with the expected settlement of an inventory supply
agreement, losses at sites in wind-down,
gain on sale of investment and favorable tax
items:
Income from       $           $          $           $   
operations        51,272           56,293       145,687        157,380
Taxes on income   $           $          $          $    
                  10,473           12,359       30,269         34,698
Net income       $           $          $           $   
                  39,598           43,361       111,612        120,455
Basic earnings    $          $          $          $    
per share          0.74                        2.02         2.02
                                  0.73
Diluted earnings  $          $          $          $    
per share          0.72                        1.97         1.97
                                  0.71



COVANCE INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2012 and DECEMBER 31, 2011
(Dollars in thousands)
                                            September 30      December 31
                                            2012              2011
                                            (UNAUDITED)
ASSETS
Current Assets:
 Cash & cash equivalents                    $    441,372   $    389,103
 Accounts receivable, net                   321,421           312,127
 Unbilled services                          141,020           114,095
 Inventory                                  48,199            74,698
 Deferred income taxes                      54,635            52,078
 Prepaid expenses and other current assets  173,917           144,809
  Total Current Assets                   1,180,564         1,086,910
Property and equipment, net                 872,261           849,551
Goodwill                                    109,820           127,779
Other assets                                48,637            43,768
  Total Assets                           $  2,211,282     $  2,108,008
LIABILITIES and STOCKHOLDERS' EQUITY
Current Liabilities:
 Accounts payable                           $     38,958  $     36,393
 Accrued payroll and benefits               118,928           142,229
 Accrued expenses and other current         141,344           119,308
 liabilities
 Unearned revenue                           234,152           202,210
 Short-term debt                           340,000           30,000
 Income taxes payable                       6,875             6,889
  Total Current Liabilities              880,257           537,029
Deferred income taxes                       21,299            42,295
Other liabilities                           67,016            70,889
  Total Liabilities                      968,572           650,213
Stockholders' Equity:
 Common stock                               788               781
 Paid-in capital                            725,727           689,584
 Retained earnings                          1,566,729         1,505,894
 Accumulated other comprehensive income     15,004            4,622
 Treasury stock                             (1,065,538)       (743,086)
  Total Stockholders' Equity             1,242,710         1,457,795
  Total Liabilities and Stockholders'   $  2,211,282     $  2,108,008
 Equity



COVANCE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
(Dollars in thousands)
(UNAUDITED)
                                         Nine Months Ended September 30
                                         2012                2011
Cash flows from operating activities:
 Net income                             $      60,835  $     111,049
 Adjustments to reconcile net income
to net cash provided by
 operating activities:
 Depreciation and amortization        87,285              79,291
 Non-cash impairment charges          44,610              -
 Non-cash compensation expense
associated with employee benefit
 and stock compensation plans      29,774              29,305
 Deferred income tax benefit          (23,648)            (9,680)
 Gain on sale of investment           (1,459)             -
 Loss on sale of business             169                 -
 Loss on disposal of property and     674                 431
equipment
 Equity investee earnings             (17)                (305)
 Changes in operating assets and
liabilities, net of businesses sold
 and acquired:
 Accounts receivable               (10,404)            (23,396)
 Unbilled services                 (27,561)            (31,601)
 Inventory                         9,115               839
 Accounts payable                  2,565               6,184
 Accrued liabilities               (1,396)             31,505
 Unearned revenue                  33,374              (4,688)
 Income taxes payable              568                 (13,988)
 Other assets and liabilities,     (51,581)            (33,992)
net
Net cash provided by operating           152,903             140,954
activities
Cash flows from investing activities:
 Capital expenditures                   (105,199)           (86,289)
 Proceeds from sale of investment       4,682               -
 Other, net                             1,006               (210)
Net cash used in investing activities    (99,511)            (86,499)
Cash flows from financing activities:
 Net borrowings under revolving credit  310,000             55,000
facility
 Repayments under long-term debt        -                   (97,500)
 Stock issued under employee stock      5,794               8,465
purchase and option plans
 Purchase of treasury stock             (322,452)           (7,731)
Net cash used in financing activities    (6,658)             (41,766)
Effect of exchange rate changes on cash  5,535               9,783
Net change in cash and cash equivalents  52,269              22,472
Cash and cash equivalents, beginning of  389,103             377,223
period
Cash and cash equivalents, end of        $     441,372   $     399,695
period



COVANCE INC.
GAAP to Pro Forma Reconciliation
Q3 2012
(Dollars in thousands, except per share data)
(UNAUDITED)
                           Adjustments
                                                       Operating
                           Restructuring  Other       Results at  Income Tax
               GAAP        Activities      Items ^(2)  Sites in    Items ^(4)  Pro Forma
                           ^(1)                        Wind-Down
                                                       ^(3)
Net revenues   $                                     $                   $  
               544,818                                 (2,967)                541,851
Reimbursable
out-of-pocket  52,844                                                          52,844
expenses
 Total     597,662     -               -           (2,967)     -           594,695
revenues
Costs and
expenses:
 Cost of      389,724                     (4,000)     (4,544)                 381,180
revenue
 Reimbursable
out-of-pocket  52,844                                                          52,844
expenses
 Selling,
general and    94,401      (12,989)                    (162)                   81,250
administrative
 Depreciation
and            30,102      (1,083)                     (870)                   28,149
amortization
 Goodwill
impairment     -                           -                                   -
charge
 Total
costs and      567,071     (14,072)        (4,000)     (5,576)     -           543,423
expenses
Income from    30,591      14,072          4,000       2,609       -           51,272
operations
Other (income)
expense, net:
 Interest     920                                                             920
expense, net
 Foreign
exchange       281                                                             281
transaction
loss, net
 Impairment
of equity      -                                                               -
investment
 Gain on sale (1,459)                     1,459                               -
of investment
 Loss on sale -                                                               -
of business
 Other
(income)       (258)       -               1,459       -           -           1,201
expense, net
Income before
taxes and
equity         30,849      14,072          2,541       2,609       -           50,071
investee
earnings
Taxes on       (6,971)     4,425           730         788         11,501      10,473
income
Equity
investee       -                                                               -
earnings
Net income    $        $          $       $       $        $   
               37,820      9,647           1,811     1,821    (11,501)   39,598
Basic earnings $       $         $       $       $       $    
per share       0.70     0.18             0.03     0.03     (0.21)   0.74
Weighted
average shares 53,687,748  53,687,748      53,687,748  53,687,748  53,687,748  53,687,748
outstanding -
basic
Diluted        $       $         $       $       $       $    
earnings per    0.69     0.17             0.03     0.03     (0.21)   0.72
share
Weighted
average shares 55,201,552  55,201,552      55,201,552  55,201,552  55,201,552  55,201,552
outstanding -
diluted
(1) Represents costs incurred to better align capacity to preclinical market demand and
reduce cost structure.
(2) Consists of costs associated with the expected settlement of an inventory
supply agreement ($4,000) and a gain on the sale of an investment
 $1,459.
(3) Represents results of operations at sites where
wind-down activities have commenced.
(4) Primarily represents favorable
resolutions of income tax matters.



COVANCE INC.
GAAP to Pro Forma Reconciliation
Q3 2011
(Dollars in thousands, except per share data)
(UNAUDITED)
                                    Adjustments
                      GAAP          Restructuring    Income Tax   Pro Forma
                                    Activities ^(1)  Items ^(2)
Net revenues          $                                         $  543,254
                      543,254
Reimbursable
out-of-pocket         35,622                                      35,622
expenses
 Total revenues   578,876       -                -            578,876
Costs and expenses:
 Cost of revenue     383,347                                     383,347
 Reimbursable
out-of-pocket         35,622                                      35,622
expenses
 Selling, general    81,292        (4,216)                       77,076
and administrative
 Depreciation and    27,592        (1,054)                       26,538
amortization
 Total costs   527,853       (5,270)          -            522,583
and expenses
Income from           51,023        5,270                         56,293
operations
Other expense, net:
 Interest expense,   343                                         343
net
 Foreign exchange    777                                         777
transaction loss, net
 Other         1,120         -                -            1,120
expense, net
Income before taxes
and equity investee   49,903        5,270                         55,173
earnings
Taxes on income       9,781         1,878            700          12,359
Equity investee       547                                         547
earnings
Net income            $          $           $       $   
                      40,669        3,392            (700)     43,361
Basic earnings per    $        $          $       $     
share                 0.68          0.06             (0.01)     0.73
Weighted average
shares outstanding -  59,695,336    59,695,336       59,695,336   59,695,336
basic
Diluted earnings per  $        $          $       $     
share                 0.67          0.06             (0.01)     0.71
Weighted average
shares outstanding -  60,926,604    60,926,604       60,926,604   60,926,604
diluted
(1) Represents costs incurred in connection with capacity rationalization,
streamlining operations and other cost reduction actions.
(2) Represents favorable resolutions of income tax
matters.



COVANCE INC.
GAAP to Pro Forma Reconciliation
YTD Q3 2012
(Dollars in thousands, except per share data)
(UNAUDITED)
                           Adjustments
                                                       Operating
                           Restructuring  Other       Results at  Income Tax
               GAAP        Activities      Items ^(2)  Sites in    Items ^(4)  Pro Forma
                           ^(1)                        Wind-Down
                                                       ^(3)
Net revenues   $                                     $                   $
               1,618,441                              (7,256)                1,611,185
Reimbursable
out-of-pocket  138,174                                                         138,174
expenses
 Total     1,756,615   -               -           (7,256)     -           1,749,359
revenues
Costs and
expenses:
 Cost of      1,174,382                   (24,781)    (11,483)                1,138,118
revenue
 Reimbursable
out-of-pocket  138,174                                                         138,174
expenses
 Selling,
general and    266,031     (21,446)                    (384)                   244,201
administrative
 Depreciation
and            87,285      (2,293)                     (1,813)                 83,179
amortization
 Goodwill
impairment     17,959                      (17,959)                            -
charge
 Total
costs and      1,683,831   (23,739)        (42,740)    (13,680)    -           1,603,672
expenses
Income from    72,784      23,739          42,740      6,424       -           145,687
operations
Other (income)
expense, net:
 Interest     2,353                                                           2,353
expense, net
 Foreign
exchange       1,301                                                           1,301
transaction
loss, net
 Impairment
of equity      7,373                       (7,373)                             -
investment
 Gain on sale (1,459)                     1,459                               -
of investment
 Loss on sale 169                                                             169
of business
 Other
(income)       9,737       -               (5,914)     -           -           3,823
expense, net
Income before
taxes and
equity         63,047      23,739          48,654      6,424       -           141,864
investee
earnings
Taxes on       2,229       7,562           7,120       1,857       11,501      30,269
income
Equity
investee       17                                                              17
earnings
Net income    $       $           $       $       $        $  
                60,835    16,177         41,534      4,567    (11,501)   111,612
Basic earnings $       $         $       $       $       $    
per share               0.29             0.75     0.08     (0.21)   2.02
               1.10
Weighted
average shares 55,206,190  55,206,190      55,206,190  55,206,190  55,206,190  55,206,190
outstanding -
basic
Diluted        $       $         $       $       $       $    
earnings per            0.29             0.73     0.08     (0.20)   1.97
share          1.07
Weighted
average shares 56,701,280  56,701,280      56,701,280  56,701,280  56,701,280  56,701,280
outstanding -
diluted
(1) Represents costs incurred to better align capacity to preclinical market demand and
reduce cost structure.
(2) Consists of inventory impairment and costs associated with the expected settlement of
an inventory supply agreement ($24,781), goodwill impairment ($17,959),
 impairment of equity investment
($7,373) and a gain on the sale of an
investment $1,459.
(3) Represents results of operations at sites where
wind-down activities have commenced.
(4) Primarily represents favorable
resolutions of income tax matters.



COVANCE INC.
GAAP to Pro Forma Reconciliation
YTD Q3 2011
(Dollars in thousands, except per share data)
(UNAUDITED)
                                    Adjustments
                      GAAP          Restructuring    Income Tax   Pro Forma
                                    Activities ^(1)  Items ^(2)
Net revenues          $ 1,563,460                                 $ 1,563,460
Reimbursable
out-of-pocket         90,601                                      90,601
expenses
 Total revenues   1,654,061     -                -            1,654,061
Costs and expenses:
 Cost of revenue     1,095,199                                   1,095,199
 Reimbursable
out-of-pocket         90,601                                      90,601
expenses
 Selling, general    247,292       (13,838)                      233,454
and administrative
 Depreciation and    79,291        (1,864)                       77,427
amortization
 Total costs   1,512,383     (15,702)         -            1,496,681
and expenses
Income from           141,678       15,702                        157,380
operations
Other expense, net:
 Interest expense,   1,640                                       1,640
net
 Foreign exchange    892                                         892
transaction loss, net
 Other         2,532         -                -            2,532
expense, net
Income before taxes
and equity investee   139,146       15,702                        154,848
earnings
Taxes on income       28,402        5,596            700          34,698
Equity investee       305                                         305
earnings
Net income            $           $            $       $  120,455
                      111,049       10,106           (700)
Basic earnings per    $        $          $       $     
share                 1.86          0.17             (0.01)     2.02
Weighted average
shares outstanding -  59,596,294    59,596,294       59,596,294   59,596,294
basic
Diluted earnings per  $        $          $       $     
share                 1.82          0.17             (0.01)     1.97
Weighted average
shares outstanding -  61,093,960    61,093,960       61,093,960   61,093,960
diluted
(1) Represents costs incurred in connection with capacity rationalization,
streamlining operations and other cost reduction actions.
(2) Represents favorable resolutions of income tax
matters.



SOURCE Covance Inc.

Website: http://www.covance.com
Contact: Paul Surdez, +1-609-452-4807