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As Of Filer Filing As/For/On Docs:Pgs Issuer Agent 11/02/06 Covance Inc 10-Q 9/30/06 5:116 Merrill Corp-MD/FA
Document/Exhibit Description Pages Size 1: 10-Q Quarterly Report Pursuant to Sections 13 or 15(D) HTML 535K 2: EX-31.1 Certification per Sarbanes-Oxley Act (Section 302) HTML 11K 3: EX-31.2 Certification per Sarbanes-Oxley Act (Section 302) HTML 11K 4: EX-32.1 Certification per Sarbanes-Oxley Act (Section 906) HTML 8K 5: EX-32.2 Certification per Sarbanes-Oxley Act (Section 906) HTML 8K
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2006
or
o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 1-12213
COVANCE
INC.
(Exact name of Registrant as specified in its Charter)
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22-3265977 |
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(State of Incorporation) |
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(I.R.S. Employer Identification No.) |
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210 Carnegie Center, Princeton, New Jersey |
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08540 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (609) 452-4440
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 (the “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 o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as described in Rule 12b-2 of the Exchange Act).
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Large Accelerated Filer x |
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Accelerated Filer o |
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Non-Accelerated Filer o |
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
YES o NO x
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of October 20, 2006, the Registrant had 63,985,593 shares of Common Stock outstanding.
Covance
Inc.
Form 10-Q For the Quarterly Period Ended September 30, 2006
INDEX
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Page |
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Part I. Financial Information |
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Item 1. Financial Statements (Unaudited) |
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Consolidated Balance Sheets—September 30, 2006 and December 31, 2005 |
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2 |
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Consolidated Statements of Income—Three and Nine Months ended September 30, 2006 and 2005 |
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3 |
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Consolidated Statements of Cash Flows—Nine Months ended September 30, 2006 and 2005 |
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4 |
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5 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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19 |
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30 |
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30 |
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31 |
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35 |
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36 |
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1
COVANCE
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2006 AND DECEMBER 31, 2005
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(Dollars in thousands) |
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September 30, |
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2005 |
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(UNAUDITED) |
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Assets |
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Current Assets: |
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Cash and cash equivalents |
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$ |
210,080 |
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$ |
160,717 |
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Accounts receivable |
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212,802 |
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206,098 |
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Unbilled services |
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95,661 |
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88,297 |
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Inventory |
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44,794 |
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40,293 |
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Deferred income taxes |
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5,468 |
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2,062 |
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Prepaid expenses and other current assets |
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62,278 |
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49,243 |
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Total Current Assets |
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631,083 |
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546,710 |
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Property and equipment, net |
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455,753 |
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410,665 |
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Goodwill, net |
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119,730 |
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61,262 |
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Other assets |
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47,463 |
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37,966 |
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Total Assets |
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$ |
1,254,029 |
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$ |
1,056,603 |
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Liabilities and Stockholders’ Equity |
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Current Liabilities: |
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Accounts payable |
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$ |
27,824 |
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$ |
26,975 |
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Accrued payroll and benefits |
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75,270 |
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64,226 |
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Accrued expenses and other current liabilities |
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50,693 |
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48,298 |
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Unearned revenue |
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100,991 |
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96,987 |
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Income taxes payable |
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19,573 |
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16,242 |
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Total Current Liabilities |
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274,351 |
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252,728 |
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Deferred income taxes |
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41,696 |
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45,545 |
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Other liabilities |
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31,145 |
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26,559 |
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Total Liabilities |
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347,192 |
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324,832 |
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Commitments and Contingent Liabilities |
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Stockholders’ Equity: |
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Preferred Stock — Par value $1.00 per share; 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2006 and December 31, 2005 |
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¾ |
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¾ |
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Common Stock - Par value $0.01 per share; 140,000,000 shares authorized; 73,099,123 and 71,813,112 shares issued and outstanding, including those held in treasury, at September 30, 2006 and December 31, 2005, respectively |
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731 |
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718 |
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Paid-in capital |
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412,499 |
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350,678 |
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Retained earnings |
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719,496 |
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612,811 |
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Accumulated
other comprehensive income — |
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28,619 |
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13,367 |
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Treasury stock at cost (9,152,637 and 9,002,620 shares at September 30, 2006 and December 31, 2005, respectively) |
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(254,508 |
) |
(245,803 |
) |
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Total Stockholders’ Equity |
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906,837 |
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731,771 |
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Total Liabilities and Stockholders’ Equity |
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$ |
1,254,029 |
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$ |
1,056,603 |
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The accompanying notes are an integral part of these consolidated financial statements.
2
COVANCE
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(UNAUDITED)
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Three Months Ended |
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Nine Months Ended |
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(Dollars in thousands, except per share data) |
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September 30 |
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September 30 |
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2006 |
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2005 |
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2006 |
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2005 |
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Net revenues |
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$ |
341,478 |
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$ |
295,368 |
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$ |
997,227 |
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$ |
870,596 |
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Reimbursable out-of-pockets |
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14,681 |
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11,759 |
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49,744 |
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36,726 |
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Total revenues |
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356,159 |
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307,127 |
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1,046,971 |
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907,322 |
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Cost and expenses: |
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Cost of revenue (excluding depreciation and amortization) |
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223,662 |
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194,823 |
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660,045 |
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577,309 |
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Reimbursed out-of-pocket expenses |
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14,681 |
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11,759 |
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49,744 |
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36,726 |
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Selling, general and administrative |
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54,196 |
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44,673 |
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153,794 |
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131,299 |
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Depreciation and amortization |
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14,584 |
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11,758 |
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41,468 |
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35,092 |
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Total costs and expenses |
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307,123 |
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263,013 |
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905,051 |
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780,426 |
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Income from operations |
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49,036 |
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44,114 |
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141,920 |
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126,896 |
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Other (income) expense, net: |
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Interest income |
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(1,749 |
) |
(809 |
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(5,371 |
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(2,975 |
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Interest expense |
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56 |
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86 |
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183 |
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265 |
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Foreign exchange transaction (gain) loss, net |
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(95 |
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(2 |
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(28 |
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949 |
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Other income, net |
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(1,788 |
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(725 |
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(5,216 |
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(1,761 |
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Income before taxes and equity investee earnings |
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50,824 |
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44,839 |
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147,136 |
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128,657 |
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Taxes on income |
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12,726 |
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13,685 |
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41,389 |
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39,444 |
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Equity investee earnings |
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178 |
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78 |
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938 |
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433 |
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Net income |
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$ |
38,276 |
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$ |
31,232 |
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$ |
106,685 |
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$ |
89,646 |
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Basic earnings per share |
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$ |
0.60 |
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$ |
0.50 |
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$ |
1.68 |
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$ |
1.43 |
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Weighted average shares outstanding - basic |
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63,827,555 |
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62,498,313 |
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63,542,002 |
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62,586,651 |
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Diluted earnings per share |
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$ |
0.59 |
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$ |
0.49 |
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$ |
1.65 |
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$ |
1.41 |
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Weighted average shares outstanding — diluted |
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64,965,380 |
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63,696,805 |
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64,758,456 |
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63,757,590 |
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The accompanying notes are an integral part of these consolidated financial statements.