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Covance, Inc. (NYSE:CVD) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.
Organic Margin Assumption
Robert Jones – Goldman Sachs: Just want to dig into the operating margin assumptions for the segments relative to guidance. On the Late-Stage specifically if we start with that 21.3% you did in the fourth quarter, could you just remind us how much of the IT spend hits Late-Stage expense versus corporate? Then outside of that incremental IT spend how are you thinking about the organic margin assumption for 2013.
Alison A. Cornell – Corporate VP and CFO: Bob, this is Alison. Before we go the question, I wanted to clarify a number that I reported as I was going through. For full year revenue growth on a constant exchange rate basis, our growth was 5.4%, not 4.5% as I had indicated. So, let me just talk a bit about the guidance, starting in at Late-Stage. So, with Late-Stage roughly we would come in at 21% due to the increase of IT spend in 2013 as well as Q4 favorable mix in central labs returning to more normal levels. So that’s how I would think about Late-Stage. We ended the year at 21.3% and (actually hit a) full year of 21.3% but would look at roughly 21% again due to the increase of IT spend in 2013 and then the favorable mix in central labs returning to the more normal levels. From an Early Development perspective, we’d look to come and stay above the 2012 result of 9.6%, but below the fourth quarter level of 12%. So, it’s something in the 11% range due to Q1 seasonality. Again, I’m speaking to the midpoint here. So, there’s several ways to get to the midpoint, this is just one way. Then from a corporate perspective, due to IT spend we see corporate moving closer to 8% of revenue in 2013 versus the 7.5% that we saw in 2012. As Joe had mentioned, keep in mind that these assumptions are at the midpoint of the range only. To get to the higher end of range, we might see a mix of tests in central labs more in line with the second half of 2012 for example, or some growth in Early Development. The lower end of the range would likely be characterized by decline in Early, and perhaps unusually large cancellations in Late-Stage.
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