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Covance's CEO Discusses Q4 2011 Results - Earnings Call Transcript

The second component is a charge of $12.1 million or $0.20 per share which recognized an impairment in the carrying value of an equity investment and the supplier of Research Products. Finally, in the quarter, we recognized a gain of approximately $0.03 per share of unfavorable income tax development.

My commentary which follows will focus on the results excluding the impact of these items. Now on the results. Net revenue for the fourth quarter was $532 million, an increase of 8.3% over the fourth quarter of last year, or 7.3% on a constant currency basis. Sequentially, a strong U.S. dollar led to a $12.4 million headwind in FX, which is the primary driver of the $10.8 million sequential decline in net revenue.

For the full year, net revenue was $2.1 billion, which is up 8.8% year-on-year or 5.4% on a constant currency. Operating income on a GAAP basis in the fourth quarter was $39 million and on a pro-forma basis was $57.9 million.

Pro-forma operating margin this quarter was 10.9%, which was up 50 basis points sequentially and 130 basis points year-on-year. On a full-year basis, operating income was $180.6 million and on a GAAP basis was $215.3 million on a pro forma basis.

Fourth quarter EPS on a GAAP basis was $0.35 per share and on a pro-forma basis, was $0.73 per share. Full-year GAAP was $2.16 and pro-forma was $2.70. The pro-forma effective tax rate for the quarter was 22.4%, consistent with last quarter, and we currently expect our full-year 2012 tax rate to be approximately in this range. Excluding the impact of any one-time items or settlements or resolutions for the various tax authorities in the jurisdictions in which we operate.

Now please turn to Slide 5. In the fourth quarter, Early Development contributed 44% of net revenue, in Late Stage, 56%. In the fourth quarter, 52% of our revenue came from the U.S., 14% from Switzerland, 12% from the U.K., 9% from countries in eurozone and the remaining 13% from the rest of the world.

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