<PAGE>






                                  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, 1999
                                       or

[ ]   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)

               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) 452-4440


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 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 October 22, 1999, the Registrant had 58,380,554 shares of Common Stock
outstanding.




<PAGE>



                                  COVANCE INC.
           FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999

                                      INDEX
<TABLE>
<CAPTION>
                                                                                                                 PAGE
                                                                                                                 ----


     PART I. FINANCIAL INFORMATION

<S>                                                                                                              <C>
     Item 1.  Financial Statements (Unaudited)

       Consolidated Balance Sheets--September 30, 1999 and December 31, 1998...............................        3

       Consolidated Statements of Income--Three and Nine months ended September 30, 1999 and 1998..........        4

       Consolidated Statements of Cash Flows--Nine months ended September 30, 1999 and 1998................        5

       Notes to Consolidated Financial Statements.........................................................         6


     Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.......         9

     Item 3.  Quantitative and Qualitative Disclosure About Market Risk...................................        16


     PART II. OTHER INFORMATION

     Item 6.  Exhibits and Reports on Form 8-K............................................................        17



     SIGNATURE PAGE.......................................................................................        18
</TABLE>


                                                                               2
<PAGE>




                          COVANCE INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 1999 AND DECEMBER 31, 1998

<TABLE>
<CAPTION>
         (DOLLARS IN THOUSANDS)                                              SEPTEMBER 30,     DECEMBER 31,
                                                                                 1999              1998
                                                                                 -----             -----
                                                                            (UNAUDITED)
<S>                                                                             <C>               <C>
         ASSETS
         Current Assets:
             Cash and cash equivalents.................................          $ 12,398         $ 19,263
             Accounts receivable, net...................................          144,266          139,145
             Unbilled services..........................................           64,806           41,589
             Inventory..................................................           25,840           26,726
             Deferred income taxes......................................            9,814            9,671
             Prepaid expenses and other assets..........................           43,733           38,095
                                                                                 --------         --------
                Total Current Assets....................................          300,857          274,489
         Property and equipment, net....................................          290,907          237,587
         Goodwill, net..................................................           85,699           71,999
         Other assets...................................................           13,496            9,340
                                                                                 --------         --------
                Total Assets............................................         $690,959         $593,415
                                                                                 ========         ========
         LIABILITIES AND STOCKHOLDERS' EQUITY
         Current Liabilities:
             Accounts payable...........................................         $ 26,722         $ 33,381
             Accrued payroll and benefits...............................           35,137           41,505
             Accrued expenses and other liabilities.....................           52,124           39,117
             Unearned revenue...........................................           57,557           60,226
             Short-term debt............................................           13,000           13,000
             Income taxes payable.......................................            2,575            5,772
                                                                                 --------         --------
                Total Current Liabilities...............................          187,115          193,001
         Long-term debt.................................................          209,167          149,909
         Deferred income taxes..........................................           14,083           12,416
         Other liabilities..............................................           12,440           13,074
                                                                                 --------         --------
                Total Liabilities.......................................          422,805          368,400
                                                                                 --------         --------
         Commitments and Contingent Liabilities

         Stockholders' Equity:
             Common Stock - Par value $0.01 per share; 140,000,000 shares
             authorized 58,875,554 and 58,417,536 shares issued and outstanding
             at September 30, 1999 and December 31, 1998,
             respectively...............................................              589              584
             Paid-in capital............................................           92,006           75,853
             Retained earnings..........................................          179,433          146,372
             Accumulated other comprehensive income--
                   Cumulative translation adjustment....................           (3,874)           2,206
                                                                                 --------         --------
                Total Stockholders' Equity..............................          268,154          225,015
                                                                                 --------         --------
                Total Liabilities and Stockholders' Equity..............         $690,959         $593,415
                                                                                 ========         ========
</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 AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED              NINE MONTHS ENDED
                                                        SEPTEMBER 30                   SEPTEMBER 30
                                                     -------------------            -------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)       1999           1998           1999           1998
                                                -----------     ----------     ----------     ----------
<S>                                              <C>             <C>           <C>             <C>
Net revenues.................................    $  198,920      $ 182,187     $  624,612      $ 532,785

Cost and expenses:
    Cost of revenue..........................       134,643        119,366        416,979        351,433
    Selling, general and administrative......        28,912         29,058         97,106         85,395
    Depreciation and amortization............        12,243          9,488         35,035         27,066
    Restructuring charge.....................         7,719             --          7,719             --
    Merger-related costs.....................            --             --          5,249             --
                                                -----------     ----------     ----------     ----------
        Total................................       183,517        157,912        562,088        463,894
                                                -----------     ----------     ----------     ----------
Income from operations.......................        15,403         24,275         62,524         68,891
                                                -----------     ----------     ----------     ----------

Other expense, net:
    Interest expense, net....................         2,682          1,787          7,087          5,290
    Other expense............................           (22)            16             59            203
                                                -----------     ----------     ----------     ----------
        Other expense, net...................         2,660          1,803          7,146          5,493
                                                -----------     ----------     ----------     ----------
Income before taxes and equity investee
    results..................................        12,743         22,472         55,378         63,398
Taxes on income..............................         5,037          9,329         22,317         26,577
Equity investee loss.........................            --             80             --            438
                                                -----------     ----------     ----------     ----------

Net income...................................   $     7,706     $   13,063     $   33,061     $   36,383
                                                ===========     ==========     ==========     ==========



Basic earnings per share.....................      $   0.13       $   0.22        $  0.56       $   0.63

Weighted average shares outstanding - basic..    58,946,003     58,154,402     58,753,481     57,961,092


Diluted earnings per share...................       $  0.13       $   0.22        $  0.56       $   0.62

Weighted average shares outstanding - diluted    59,033,962     59,010,297     59,332,078     58,539,706
</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 NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                            NINE  MONTHS  ENDED  SEPTEMBER 30
                                                                            ---------------------------------
         (DOLLARS IN THOUSANDS)                                                1999                 1998
                                                                            ---------           --------
<S>                                                                         <C>                 <C>
         Cash flows from operating activities:
         Net income............................................             $  33,061           $ 36,383
         Adjustments to reconcile net income to net cash provided
             by operating activities:
             Depreciation and amortization.......................              35,035             27,066
             Restructuring reserve, net of cash paid.............               7,282                 --
             Stock issued under employee benefit and stock
               compensation plans................................               6,501              5,843
             Deferred income tax provision.......................               1,524              1,145
             Other...............................................                  94                454
             Changes in operating assets and liabilities:
               Accounts receivable...............................              (5,121)           (25,496)
               Unbilled services.................................             (23,217)           (16,629)
               Inventory.........................................                 886             (5,678)
               Accounts payable..................................              (6,659)             5,645
               Accrued liabilities...............................                (643)               520
               Unearned revenue..................................              (2,669)            (1,268)
               Income taxes payable..............................              (3,197)             9,534
               Other assets and liabilities, net................               (9,230)            (8,209)
                                                                            ---------           --------
         Net cash provided by operating activities...............              33,647             29,310
                                                                            ---------           --------
         Cash flows from investing activities:
             Capital expenditures................................             (90,091)           (46,037)
             Acquisition of businesses...........................             (16,830)                --
             Other, net..........................................                 635                122
                                                                            ---------           --------
         Net cash used in investing activities...................            (106,286)           (45,915)
                                                                            ---------           --------
         Cash flows from financing activities:
             Proceeds from long-term debt........................              60,000                 --
             Repayments of long-term debt........................                  --             (5,000)
             Stock issued under employee stock purchase and
               option plans......................................               5,774              5,053
                                                                            ---------           --------
         Net cash provided by financing activities...............              65,774                 53
                                                                            ---------           --------
         Net change in cash and cash equivalents.................              (6,865)           (16,552)
         Cash and cash equivalents, beginning of period..........              19,263             28,027
                                                                            ---------           --------
         Cash and cash equivalents, end of period................            $ 12,398           $ 11,475
                                                                            =========           ========
</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)
                           SEPTEMBER 30, 1999 AND 1998


1.   BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements reflect all
normal recurring adjustments 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 not been audited and are
subject to such year-end adjustments as may be considered appropriate. You
should read these consolidated financial statements together with the historical
consolidated financial statements of Covance Inc. and subsidiaries ("Covance")
for the years ended December 31, 1998, 1997 and 1996 included in the Annual
Report on Form 10-K for the fiscal year ended December 31, 1998. Operating
results for the nine months ended September 30, 1999 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1999.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     USE OF ESTIMATES

     These unaudited consolidated financial statements have been prepared in
conformity with generally accepted accounting principles. Generally accepted
accounting principles require 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.

     PREPAID EXPENSES AND OTHER ASSETS

     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-through" basis without risk or reward to Covance. Amounts receivable from
customers in connection with billed and unbilled investigator fees and
out-of-pocket pass-through costs are included in prepaid expenses and other
current assets in the accompanying Consolidated Balance Sheets and totaled $29.3
million and $27.3 million at September 30,1999 and December 31, 1998,
respectively.

     EARNINGS PER SHARE

     Earnings per share has been calculated in accordance with Financial
Accounting Standards Board ("FASB") Statement No. 128, EARNINGS PER SHARE. In
computing diluted earnings per share for the three months ended September 30,
1999 and 1998, the denominator was increased by 87,959 shares and 855,895
shares, respectively, and for the nine months ended September 30, 1999 and 1998,
the denominator was increased by 578,597 shares and 578,614 shares,
respectively, representing the dilution of stock options outstanding at
September 30, 1999 and 1998 with exercise prices less than the average market
price of Covance's Common Stock during each respective period.

     COMPREHENSIVE INCOME

     Comprehensive income has been calculated in accordance with FASB Statement
No. 130, REPORTING COMPREHENSIVE INCOME. Covance has determined total
comprehensive income to be $10.0 million and $15.9 million for the three months
ended September 30, 1999 and 1998, respectively, and $27.0 million and $38.0
million for the nine months ended September 30, 1999 and 1998, respectively.
Covance's total comprehensive income represents net income plus the change in
the cumulative translation adjustment equity account for the periods presented.

     SEGMENT REPORTING

     Covance reports information about its operating segments and related
disclosures about products, services, geographic areas and major customers in
accordance with FASB Statement No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION. See Note 7 for segment disclosure.

                                       6
<PAGE>

                          COVANCE INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
                                   (UNAUDITED)
                           SEPTEMBER 30, 1999 AND 1998

3.   SUPPLEMENTAL CASH FLOW INFORMATION

     Cash paid for interest for the nine months ended September 30, 1999 and
1998 totaled $4.8 million and $5.8 million, respectively. Cash paid for income
taxes for the nine months ended September 30, 1999 and 1998 totaled $22.0
million and $18.1 million, respectively.


4.   ACQUISITIONS

     During the nine month period ended September 30, 1999, Covance paid
approximately $16.8 million in contingent purchase price associated with two of
its 1996 acquisitions, consisting primarily of payments totaling approximately
$15.8 million in connection with its purchase of Health Technology Associates,
Inc. The goodwill associated with this acquisition aggregated $29.5 million.


5.   MERGER COSTS

     Covance entered into an Agreement and Plan of Merger as of April 28, 1999
(the "Proposed Merger") with Parexel International Corporation ("Parexel"). On
June 25, 1999, Covance and Parexel mutually agreed to terminate the Proposed
Merger. In connection with the termination, Covance and Parexel entered into a
termination agreement whereby, among other things, each party agreed to release
the other from any claims relating to the Proposed Merger and each party agreed
to bear its own expenses incurred in connection with the Proposed Merger. During
the three months ended June 30, 1999, Covance incurred one-time, out-of-pocket
transaction and integration related costs (primarily professional fees for
investment banking, attorneys, accountants and consultants) of $5.2 million
($3.1 million, net of tax) in connection with the Proposed Merger.


6.   RESTRUCTURING

     In order to improve its global competitiveness, better optimize capacity
utilization and enhance quality and service worldwide, Covance has consolidated
its regionally based Phase III clinical services under one global management
structure and formed a unified sales force for its clinical development, central
laboratory, packaging and other related clinical support services. Primarily in
connection with these actions, in the third quarter of 1999, Covance recorded a
pre-tax restructuring charge of $7.7 million ($4.6 million net of tax)
consisting primarily of $6.5 million in severance and related benefits arising
from the elimination of approximately 165 managerial and staff positions. As of
September 30, 1999 approximately $0.4 million has been paid, while the remaining
$7.3 million has been accrued and is included in accrued expenses and other
liabilities in the Consolidated Balance Sheet.


7.   SEGMENT INFORMATION

     Covance has two reportable segments: early development and late-stage
development. Early development services, which includes Covance's preclinical
and Phase I clinical service capabilities, involve evaluating a new compound for
safety and early effectiveness as well as evaluating the absorption,
distribution, metabolism and excretion of the compound in the human body. It is
at this stage that a pharmaceutical company, based on available data, will
generally decide whether to continue further development of a drug. Late-stage
development services, which include Covance's clinical development, clinical
support, biomanufacturing and product launch capabilities, are geared toward
demonstrating the clinical effectiveness of a compound in treating certain
diseases or conditions, obtaining regulatory approval and maximizing the drug's
commercial potential.




                                       7
<PAGE>




                          COVANCE INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
                                   (UNAUDITED)
                           SEPTEMBER 30, 1999 AND 1998

     The accounting policies of the reportable segments are the same as those
described in Note 2. Segment net revenues and operating income for the three and
nine months ended September 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
                                                              EARLY              LATE-STAGE
                                                           DEVELOPMENT           DEVELOPMENT              TOTAL
                                                           -----------           -----------              -----
     (DOLLARS IN THOUSANDS)
<S>                                                       <C>                    <C>               <C>
     THREE MONTHS ENDED SEPTEMBER 30, 1999
        Net revenues from external customers              $   67,971             $  130,949        $  198,920
        Operating income                                      12,068 (a)             11,054 (a)        23,122 (a)

     THREE MONTHS ENDED SEPTEMBER 30, 1998
        Net revenues from external customers                  61,362                120,825           182,187
        Operating income                                      10,035                 14,240            24,275

     NINE  MONTHS ENDED SEPTEMBER 30, 1999
        Net revenues from external customers                 202,863                421,749           624,612
        Operating income                                      31,355 (a)             44,137 (a)        75,492 (a)

     NINE  MONTHS ENDED SEPTEMBER 30, 1998
        Net revenues from external customers                 180,048                352,737           532,785
        Operating income                                      27,702                 41,189            68,891
</TABLE>


     -----------------
     (a) Excludes special charges recorded during the three and nine months
     ended September 30, 1999, as follows: (1) Third quarter restructuring
     charge totaling $7,719 ($4,631 after tax); (2) Second quarter 1999 merger
     related charge totaling $5,249 ($3,150 after tax).


8.   SUBSEQUENT EVENT

     During September 1999, the Board of Directors authorized the repurchase of
up to 5% or 3.0 million shares of Covance's outstanding common stock in open
market transactions, subject to business and market conditions and other
factors. In early October 1999, Covance repurchased a total of 495,000 shares at
a total cost of approximately $4.2 million.


                                       8
<PAGE>





ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     You should read the following discussion together with the unaudited
Covance consolidated financial statements and the accompanying notes included in
this Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.


OVERVIEW

     Covance is a leading contract research organization providing a wide range
of integrated product development services on a worldwide basis to the
pharmaceutical, biotechnology and medical device industries. In addition, and to
a lesser extent, Covance provides services such as health economics and outcomes
for managed care organizations, hospitals and other health care providers and
laboratory testing to the chemical, agrochemical and food industries. The
foregoing services comprise two segments for financial reporting purposes: early
development services (includes preclinical and Phase I clinical); and late-stage
development services (includes clinical development, clinical support,
biomanufacturing and product launch). Covance believes it is one of the largest
biopharmaceutical contract research organizations, based on 1998 annual net
revenues, and one of a few that is capable of providing comprehensive global
product development services. Covance offers its clients high quality services
designed in part to reduce product development time. This enables Covance's
customers to introduce their products into the marketplace faster and as a
result, maximize the period of market exclusivity and monetary return on their
research and development investments. Additionally, Covance's comprehensive
services and broad experience provide its customers with a variable cost
alternative to fixed cost internal development capabilities.

     Historically, a majority of Covance's net revenues have been earned under
contracts. These contracts generally range in duration from a few months to two
years. Revenue from these contracts is generally recognized under either the
percentage of completion method of accounting or as services are rendered or
products are delivered. 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 a portion of the contract fee is paid at
the time the trial is initiated. Additional payments are made based upon the
achievement of performance based milestones over the contract duration. Covance
routinely subcontracts with independent physician investigators in connection
with either single or multi-site clinical trials. Investigator fees are not
reflected in net revenues or expenses since these investigator fees are paid by
the customers to Covance on a "pass-through basis" (i.e., without risk or reward
to Covance). Most contracts are terminable either immediately or upon notice by
the client. These contracts typically require payment to Covance of expenses to
wind down a study, payment to Covance of fees earned to date, and, in some
cases, a termination fee or a payment to Covance of some portion of the fees or
profit that could have been earned by Covance under the contract if it had not
been terminated early.

     Covance segregates its recurring operating expenses among three categories:
cost of revenue; selling, general and administrative expenses; and depreciation
and amortization. Cost of revenue consists of appropriate amounts necessary to
complete the revenue and earnings process, and includes direct labor and related
benefit charges, other direct costs, and an allocation of facility charges and
information technology costs. Cost of revenue, as a percentage of net revenues,
tends and is expected to fluctuate from one period to another, generally within
a range of up to 200 basis points in either direction. This variability is
principally a result of changes in labor utilization and the mix of service
offerings involving hundreds of studies conducted during any period of time.
Selling, general and administrative expenses consist primarily of administrative
payroll and related benefit charges, advertising and promotional expenses,
administrative travel and an allocation of facility charges and information
technology costs.


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
(1) delays in initiating or completing significant drug development trials, (2)
termination of drug development trials, (3) acquisitions and (4) exchange rate
fluctuations. Delays and terminations of trials are often the result of actions
taken by Covance's customers 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 drug development trials may cause
significant variations in quarterly operating results.




                                       9
<PAGE>




RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 1998. Net revenues increased 9.2% to $198.9 million for the three months
ended September 30, 1999 from $182.2 million for the corresponding 1998 period.
Excluding the impact of acquisitions and foreign exchange rate variances between
both periods, net revenues increased 8.2%. Net revenues from Covance's
late-stage development services grew 8.4%, or 8.0% excluding the impact of
acquisitions and foreign exchange rate variances between both periods. The
slowdown in growth in the late-stage development segment was the result of a
slowdown in large clinical orders, the impact of a major contract cancellation
due to molecule performance and a significant reduction in scope of another
large program due to sponsor funding pressures. The slowdown in clinical
development was compounded by a leveling off of growth in central laboratory
services. Net revenues from Covance's more mature early development services
grew 10.8%, or 8.6% excluding the impact of acquisitions and foreign exchange
rate variances between both periods.

     Cost of revenue increased 12.8% to $134.6 million for the three months
ended September 30, 1999 from $119.4 million for the corresponding 1998 period
primarily as a result of the increase in net revenues. Cost of revenue, as a
percentage of net revenues, was 67.7% and 65.5% for the three month periods
ended September 30, 1999 and 1998, respectively. The increase in cost of revenue
as a percentage of net revenues is due to the softness in revenue discussed
above coupled with the relative fixed nature of certain costs.

     Overall, selling, general and administrative expense decreased 0.5% to
$28.9 million for the three months ended September 30, 1999 from $29.1 million
for the corresponding 1998 period. As a percentage of net revenues, selling,
general and administrative expense decreased to 14.5% for the three months ended
September 30, 1999 from 15.9% for the corresponding 1998 period. This decrease
is attributable to a reduction in certain variable administrative expenses,
including recruitment, relocation and variable compensation.

     Depreciation and amortization increased 29.0% to $12.2 million or 6.2% of
net revenues for the three months ended September 30, 1999 from $9.5 million or
5.2% of net revenues for the corresponding 1998 period, due to the goodwill
amortization associated with the November 1998 acquisitions of Berkeley Antibody
Company, Inc. and GDXI, Inc. and the contingent purchase price payments made in
1999 for two acquisitions completed in 1996, and increased depreciation expense
associated with capital expenditures.

     In order to improve its global competitiveness, better optimize capacity
utilization and enhance quality and service worldwide, Covance has consolidated
its regionally based Phase III clinical services under one global management
structure and formed a unified sales force for its clinical development, central
laboratory, packaging and other related clinical support services. Primarily in
connection with these actions, in the third quarter of 1999, Covance recorded a
pre-tax restructuring charge of $7.7 million ($4.6 million net of tax)
consisting primarily of $6.5 million in severance and related benefits arising
from the elimination of approximately 165 managerial and staff positions.
Severance payments have begun and will continue into 2000.

     Inclusive of the $7.7 million restructuring charge recorded in September
1999, income from operations decreased 36.5% to $15.4 million for the three
months ended September 30, 1999 from $24.3 million for the corresponding 1998
period. Excluding the impact of the restructuring charge, income from operations
decreased 4.7% to $23.1 million, or 11.6% of net revenues, from $24.3 million,
or 13.3% of net revenues for the corresponding 1998 period. The reduction in
operating income as a percentage of net revenues is primarily attributable to
the increase in cost of sales as a percentage of net revenues and the increase
in depreciation and amortization. Excluding the impact of the restructuring
charge, income from operations from Covance's early development segment
increased $2.1 million or 20.3% to $12.1 million for the three months ended
September 30, 1999 from $10.0 million for the corresponding 1998 period.
Excluding the impact of the restructuring charge, income from operations from
Covance's late-stage development segment declined $3.1 million or 22.4% to $11.1
million for the three months ended September 30, 1999 from $14.2 million for the
corresponding 1998 period. The reduction in late-stage development operating
income was due to the softness in clinical development and central laboratory
services discussed above.

     Other expense increased $0.9 million to $2.7 million for the three months
ended September 30, 1999 from $1.8 million for the corresponding 1998 period,
primarily due to an increase in interest expense.

     Covance's effective tax rate for the three months ended September 30, 1999
decreased to 39.5% from 41.5% for the corresponding 1998 period. Since Covance
operates on a global basis, its effective tax rate is subject to variation from
period to period due to the changes in the geographic distribution of its
pre-tax earnings.




                                       10
<PAGE>

     Inclusive of the $7.7 million after tax impact of the restructuring charge,
net income decreased 41.0% to $7.7 million for the three months ended September
30, 1999 from $13.1 million for the corresponding 1998 period. Excluding the
after tax impact of the restructuring charge, net income decreased 5.6% or $0.7
million to $12.3 million.

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1998. Net revenues increased 17.2% to $624.6 million for the nine months
ended September 30, 1999 from $532.8 million for the corresponding 1998 period.
Excluding the impact of acquisitions and foreign exchange rate variances between
both periods, net revenues increased 15.2%. Net revenues from Covance's
late-stage development services grew 19.6%, or 18.0% excluding the impact of
acquisitions and foreign exchange rate variances between both periods. The
slowdown in growth in the late-stage development segment was the result of a
slowdown in large clinical orders, the impact of a major contract cancellation
due to molecule performance and a significant reduction in scope of another
large program due to sponsor funding pressures. The slowdown in clinical
development was compounded by a leveling off of growth in central laboratory
services. Net revenues from Covance's more mature early development services
grew 12.7%, or 9.9% excluding the impact of acquisitions and foreign exchange
rate variances between both periods.

     Cost of revenue increased 18.7% to $417.0 million for the nine months ended
September 30, 1999 from $351.4 million for the corresponding 1998 period,
primarily as a result of the increase in net revenues. Cost of revenue, as a
percentage of net revenues, was 66.8% and 66.0% for the nine months ended
September 30, 1999 and 1998, respectively.

     Overall, selling, general and administrative expense increased 13.7% to
$97.1 million for the nine months ended September 30, 1999 from $85.4 million
for the corresponding 1998 period. As a percentage of net revenues, selling,
general and administrative expense was 15.5% and 16.0% for the nine months ended
September 30, 1999 and 1998, respectively. The decrease in selling, general and
administrative expense as a percentage of net revenues is a result of a
reduction in certain variable administrative expenses.

     Depreciation and amortization increased 29.4% to $35.0 million or 5.6% of
net revenues for the nine months ended September 30, 1999 from $27.1 million or
5.1% of net revenues for the corresponding 1998 period, due to the goodwill
amortization associated with the November 1998 acquisitions of Berkeley Antibody
Company, Inc. and GDXI, Inc. and the contingent purchase price payments made in
1999 for two acquisitions completed in 1996, and increased depreciation expense
associated with capital expenditures.

     In order to improve its global competitiveness, better optimize capacity
utilization and enhance quality and service worldwide, Covance has consolidated
its regionally based Phase III clinical services under one global management
structure and formed a unified sales force for its clinical development, central
laboratory, packaging and other related clinical support services. Primarily in
connection with these actions, in the third quarter of 1999, Covance recorded a
pre-tax restructuring charge of $7.7 million ($4.6 million net of tax)
consisting primarily of $6.5 million in severance and related benefits arising
from the elimination of approximately 165 managerial and staff positions.
Severance payments have begun and will continue into 2000.

     Inclusive of a $5.2 million one-time merger-related charge incurred in
connection with the termination of the proposed merger with Parexel in June
1999, and the $7.7 million restructuring charge recorded in September 1999,
income from operations decreased 9.2% to $62.5 million for the nine months ended
September 30, 1999 from $68.9 million for the corresponding 1998 period.
Excluding the impact of the one-time merger-related charge and the restructuring
charge, income from operations increased 9.6% to $75.5 million, or 12.1% of net
revenues, from $68.9 million or 12.9% of net revenues for the corresponding 1998
period. The reduction in operating income as a percentage of net revenues is
attributable to the increase in cost of sales as a percentage of net revenues
and the increase in depreciation and amortization. Excluding the impact of the
one-time merger-related charge and the restructuring charge, income from
operations from Covance's early development segment increased $3.7 million or
13.2% to $31.4 million for the nine months ended September 30, 1999 from $27.7
million for the corresponding 1998 period. Excluding the impact of the one-time
merger-related charge and the restructuring charge, income from operations from
Covance's late-stage development segment increased $2.9 million or 7.2% to $44.1
million for the nine months ended September 30, 1999 from $41.2 million for the
corresponding 1998 period. The reduction in the growth of late-stage development
operating income was due to the softness in clinical development and central
laboratory services discussed above.

     Other expense increased $1.7 million to $7.1 million for the nine months
ended September 30, 1999 from $5.5 million for the corresponding 1998 period,
due to an increase in interest expense.




                                       11
<PAGE>

     Covance's effective tax rate for the nine months ended September 30, 1999
decreased to 40.3% from 41.9% for the corresponding 1998 period. Since Covance
operates on a global basis, its effective tax rate is subject to variation from
period to period due to the changes in the geographic distribution of its
pre-tax earnings.

     Inclusive of the after tax impact of both the $5.2 million one-time
merger-related charge and the $7.7 million restructuring charge, net income
decreased 9.1% to $33.1 million for the nine months ended September 30, 1999
from $36.4 million for the corresponding 1998 period. Excluding the after tax
impact of the one-time merger-related charge and the restructuring charge, net
income increased 12.3% or $4.5 million to $40.8 million.

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.
Management believes that a combination of borrowing under its long-term
revolving credit facility, cash generated from operations and capital that
Covance believes could be made available to it from other credit sources if
required, will provide Covance with sufficient financial flexibility and ready
access to cash on both a short-term and a long-term basis to fund, as required,
capital expenditures, potential future acquisitions and other longer-term growth
opportunities. At September 30, 1999, there was $200.0 million of outstanding
borrowings and $11.3 million of outstanding letters of credit, with a remaining
availability of $38.7 million under Covance's long-term revolving credit
facility. Interest on all outstanding borrowings under Covance's long-term
revolving credit facility during the first nine months of 1999 was computed
based upon the London Interbank Offered Rate plus a margin and approximated
5.35% per annum.

     At September 30, 1999, Covance Biotechnology Services Inc. ("Covance
Biotechnology") had $3.0 million in short-term debt outstanding with the North
Carolina Biotechnology Center. This debt matures in December 1999 and is
guaranteed by Covance. In addition, Covance Biotechnology has a $10.0 million
short-term revolving credit facility with a bank, of which $10.0 million of
borrowings were outstanding as of September 30, 1999. This short-term revolving
credit facility carries interest at a rate substantially equivalent to the rate
in effect on Covance's borrowings under its long-term credit facility and is
guaranteed by Covance.

     In October 1997, a foreign subsidiary of Covance borrowed 13.5 million
Swiss Francs from a bank. This loan bears interest at a fixed rate of 2.9% per
annum and matures in October 2000. In connection with the loan, Covance provided
a letter of credit in favor of the lender which may be drawn upon in event of
default.

     During the nine months ended September 30, 1999, Covance's operations
provided net cash of $33.6 million, an increase of $4.3 million from the
corresponding 1998 period. Cash flows from net earnings adjusted for non-cash
activity provided $83.5 million for the nine months ended September 30, 1999, up
$12.6 million or 17.8% from the corresponding 1998 period. The change in net
operating assets used $49.8 million and $41.6 million in cash during the nine
months ended September 30, 1999 and 1998, respectively, primarily due to an
increase in accounts receivable and unbilled services during both periods.

     Working capital was $113.7 million at September 30, 1999, an increase of
$32.3 million from December 31, 1998. Aggregate accounts receivable and unbilled
services at September 30, 1999 of $209.1 million were up $28.3 million or 15.7%
from the December 31, 1998 level of $180.7 million. Covance's ratio of current
assets to current liabilities was 1.61 at September 30, 1999 and 1.42 at
December 31, 1998.

     Investing activities for the nine months ended September 30, 1999 used
$106.3 million compared to $45.9 million for the corresponding 1998 period.
Investing activities for the nine months ended September 30, 1999 included cash
payments of contingent purchase price totaling approximately $16.8 million in
connection with two of Covance's 1996 acquisitions. Capital spending for the
first nine months of 1999 totaled $90.1 million, primarily for outfitting of new
facilities, purchase of new equipment, upgrade of existing equipment and
computer equipment and software for newly hired employees, as well as the
purchase of Covance's new North American packaging facility, compared to $46.0
million for the corresponding 1998 period.

FOREIGN CURRENCY

     Since Covance operates on a global basis, it is exposed to various foreign
currency risks. Two specific risks arise from the nature of the contracts
Covance executes with its customers since from time to time contracts are
denominated in a currency different than the particular Covance subsidiary's
local currency. This contract currency denomination issue is generally




                                       12
<PAGE>

applicable only to a portion of the contracts executed by Covance's foreign
subsidiaries providing clinical services. The first risk occurs as revenue
recognized for services rendered is denominated in a currency different from the
currency in which the subsidiary's expenses are incurred. As a result, the
subsidiary's net revenues and resultant earnings can be affected by fluctuations
in exchange rates. Some contracts provide that currency fluctuations from the
rates in effect at the time the contract is executed are the responsibility of
the customer. Other contracts provide that currency fluctuations from the rates
in effect at the time the contract is executed up to a specified threshold
(generally plus or minus a few percentage points) are absorbed by Covance while
fluctuations in excess of the threshold are the customer's responsibility. Most
contracts do not specifically address responsibility for currency fluctuations.
Historically, fluctuations in exchange rates from those in effect at the time
contracts were executed have not had a material effect upon Covance's
consolidated financial results.

     The second risk results from the passage of time between the invoicing of
customers under these contracts and the ultimate collection of customer payments
against such invoices. Because the contract is denominated in a currency other
than the subsidiary's local currency, Covance recognizes a receivable at the
time of invoicing for the local currency equivalent of the foreign currency
invoice amount. Changes in exchange rates from the time the invoice is prepared
and payment from the customer is received will result in Covance receiving
either more or less in local currency than the local currency equivalent of the
invoice amount at the time the invoice was prepared and the receivable
established. This difference is recognized by Covance as a foreign currency
transaction gain or loss, as applicable, and is reported in other expense
(income) in Covance's Consolidated Statements of Income.

     Finally, Covance's consolidated financial statements are denominated in
U.S. dollars. Accordingly, changes in exchange rates between the applicable
foreign currency and the U.S. dollar will affect the translation of each foreign
subsidiary's financial results into U.S. dollars for purposes of reporting
Covance's consolidated financial results. The process by which each foreign
subsidiary's financial results are translated into U.S. dollars is as follows:
income statement accounts are translated at average exchange rates for the
period; balance sheet asset and liability accounts are translated at end of
period exchange rates; and equity accounts are translated at historical exchange
rates. Translation of the balance sheet in this manner affects the stockholders'
equity account, referred to as the cumulative translation adjustment account.
This account exists only in the foreign subsidiary's U.S. dollar balance sheet
and is necessary to keep the foreign balance sheet stated in U.S. dollars in
balance. To date such cumulative translation adjustments have not been material
to Covance's consolidated financial position.

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 taxing
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.

INFLATION

     While most of Covance's net revenues are earned under contracts, the
long-term contracts (those in excess of one year) generally include an inflation
or cost of living adjustment for the portion of the services to be performed
beyond one year from the contract date. As a result, Covance believes that the
effects of inflation generally do not have a material adverse effect on its
operations or financial condition.

YEAR 2000 ISSUES

     Information systems are an integral part of the services and products
Covance provides. Covance has formed a group, led by its Year 2000 Project
Director, working periodically with a steering committee of executives from
Covance and individually with members of such committee, to implement Covance's
Year 2000 assessment and remediation plan. This plan approached the Year 2000
problem from an internal, supplier and customer perspective. Presently, there
are approximately 52 full-time employee equivalents who are dedicated to the
Year 2000 project. This Year 2000 plan is being executed under the guidance of
Covance's senior management, including the Chief Executive Officer and the Board
of Directors. Specifically, the General Manager and Group President of each
applicable business location manage the Year 2000 plan at an operational level.
In addition, other executives of Covance, including the Chief Executive Officer,
the Chief Financial Officer and/or Controller and the General Counsel
periodically review each business location concerning the Year 2000 readiness of
the location. The Board of Directors also periodically reviews with Covance's
management the progress under the Year 2000 plan.

     STATE OF READINESS. The Year 2000 plan is intended to provide a
comprehensive and rigorous methodology for identifying and addressing the risks
of Year 2000 problems to Covance. Its goal is to minimize the number and
seriousness of any defects and related disruptions or problems stemming from
Year 2000 issues and to quickly repair any that do occur. Covance's Year



                                       13
<PAGE>

2000 plan has been divided into six phases: inventory, risk assessment,
evaluation, remediation, validation and implementation.

     The inventory is intended to cover all of Covance's systems and processes
that involve the use of dates, whether or not the system is deemed Year 2000
compliant, including:

-        computer related hardware;
-        computer related software;
-        internally developed systems;
-        devices, equipment and scientific instrumentation;
-        outsourced services;
-        outsourced products; and
-        client systems that Covance interacts with



     We also assess systems interrelationships to minimize the adverse effects
non-compliant data or systems could have on remediated systems. During the risk
assessment we determine the potential impact to Covance's operations because of
Year 2000 non-compliance. Specifically, the most business critical systems are
prioritized and potential material liabilities identified. Evaluation involves
determining whether a system is Year 2000 compliant. The inventory, risk
assessment and evaluation phases of the Year 2000 plan commenced in October 1997
and were substantially completed for internal systems in May 1998.

     In conjunction with the inventory, risk assessment and evaluations phases,
Covance has undertaken a company-wide and operation specific Year 2000 awareness
campaign for purposes of employee awareness and involvement. Covance believes
that employee awareness will maximize the completeness of its Year 2000
inventory and enhance the effectiveness of the Year 2000 plan generally.

     Also as part of the inventory, assessment and evaluation phases, Covance is
conducting an assessment of material third-party relationships for Year 2000
compliance. These third parties include investigational sites, utility
companies, telecommunications companies, business specific product suppliers,
such as software, animal feed and reagent suppliers or providers, transportation
companies, and payroll and benefit services companies. Important vendors,
suppliers and service providers are being requested to supply Covance with
certification that their systems are Year 2000 compliant, or to tell us that
they are not. Generally, where certification cannot be obtained, or even when
certification is obtained but the risk of disruption to Covance's business is
considered so potentially severe, Covance is investigating alternative sources
and considering stockpiling supplies to guard against potential shortages.
However, we cannot assure you that Covance's suppliers, vendors and service
providers will attain Year 2000 compliance or that suitable alternative
suppliers, vendors and service providers can be engaged. It is possible that
delays, increased costs or supplier, vendor or service provider failures could
have a material adverse impact on Covance's business, financial condition,
results of operations and cash flows, by, for example, negatively effecting
Covance's ability to meet its contractual or regulatory obligations or service
its customers.

     While Covance is taking steps to raise awareness of the Year 2000 issue
among its customers, Covance does not believe it is appropriate to require
clients to certify their Year 2000 readiness and compliance. For the fiscal year
ended December 31, 1998, Covance had no single customer which accounted for
greater than 10% of its net revenues and only one customer which accounted for
more than 5% of its net revenues. However, if a significant customer or group of
customers were adversely effected by Year 2000 related problems, Covance's
business and revenue could be reduced and a material adverse effect on our
business, financial condition, results of operations and cash flows could
result.

     Remediation is defined as the phase of the Year 2000 plan where systems are
fixed to maximize Year 2000 compliance so that they are able to properly
calculate dates without interfering with the proper operation of other
components of the system. Remediation includes the repair, replacement or
removal of non-compliant systems. Covance is presently in the process of
remediating its systems and will continue to do so, as necessary, for the
duration of the Year 2000 plan.

     In the validation phase of the Year 2000 plan, remediated systems are
required to be tested and the testing to be documented. In addition, systems
deemed compliant in the evaluation phase are required to be documented as are
vendor and



                                       14
<PAGE>

supplier systems. The validation phase has been substantially completed for
business critical systems.

     The final phase of the Year 2000 plan is the implementation phase where
remediated systems, which have undergone and completed validation, are put into
operational use and observed for interaction with other aspects and components
of systems that may or may not be related to the Year 2000 issue to ensure that
they function as intended. This phase is 98% completed for internal business
critical systems and is scheduled to be completed for business critical systems
by December 1999.

     COSTS OF YEAR 2000 PROJECT. Beginning in early 1998, Covance began to incur
costs and make expenditures related to the Year 2000 project. Covance expects to
continue to incur costs and make expenditures relating to the Year 2000 project
through the end of the year 2000. These costs and expenditures can be broadly
classified into two categories:

(1)      amounts that will be expensed as incurred. These amounts consist of
         internal payroll relating to employees newly hired or redeployed to
         work on the Year 2000 project, external consultants and the net book
         value of non-Year 2000 compliant equipment to be replaced; and

(2)      amounts that will be capitalized and depreciated over the useful lives
         of the associated assets. These amounts consist of the purchase price
         of new hardware, software and other equipment acquired to replace
         existing hardware, software and other equipment that is not Year 2000
         compliant.

     Covance currently estimates that the costs of internal payroll, external
consultants and the net book value of equipment to be replaced, amounts that
have and will be expensed as incurred, will total between $9.0 million and $10.0
million over the three year period ending December 31, 2000. Of these amounts, a
total of $1.5 million and $4.8 million has been incurred and expensed during the
three and nine month periods ended September 30, 1999, respectively, while a
total of $2.3 million was incurred and expensed during the year ended December
31, 1998.

     Covance currently estimates that the cost of new hardware, software and
other equipment to be acquired in replacement of existing non-Year 2000
compliant hardware, software and other equipment, will total between $7.1
million and $8.0 million. These amounts will be capitalized and depreciated over
the useful lives of the related assets and will primarily be incurred over the
two year period ending December 31, 1999. Of these amounts, capitalizable
expenditures totaling $0.6 million and $3.7 million have been made during the
three and nine month period ended September 30, 1999, respectively, while a
total of $1.6 million in expenditures were made during the year ended December
31, 1998.

     The primary source of funds for all costs to be incurred and expenditures
to be made is expected to be provided by Covance's operating cash flows.

     RISKS OF YEAR 2000 PROBLEMS. Worst-case scenarios resulting from Year 2000
problems deemed by Covance to be most reasonably likely include the following:

-        loss of power and other utility services which could result in
         disruption to existing and future studies generally;
-        harm to specimens and test samples used in studies and an adverse
         impact on the health and well being of the animals;
-        inability to obtain timely and sufficient supplies of reagents, lab
         ware or animal feed, which could result in the inability to perform
         existing and future laboratory and central laboratory studies and an
         adverse impact on the health and well being of the animals;
-        computer hardware, software and embedded technology failure which could
         disrupt Covance's equipment, systems and networks resulting in an
         inability to perform existing and future studies and/or an adverse
         impact on the health and well being of patients;
-        the loss of voice and data telecommunications capabilities, which could
         result in an inability for Covance to internally communicate or to
         communicate with, among others, its clients and investigational sites;
         and
-        the inability of Covance's third party investigational sites to become
         Year 2000 compliant, which could result in the loss to Covance of their
         services.

     Any one or more of these or other events could result in business slowdowns
or suspensions, subject Covance to liability for breach of contract or personal
injury and have a material adverse effect on our business, financial condition,
results of operations and cash flows could result.

     Deferrals of scheduled information technology projects as a result of the
need to remediate Year 2000 problems are not presently expected to have a
material adverse effect on Covance's business, financial condition, results of
operations and cash



                                       15
<PAGE>

flows. However, in the event the implementation of the Year
2000 plan requires greater expenditures or more qualified employees than
presently estimated or qualified information technology workers become more
difficult or expensive to attract and retain, certain significant projects may
be subject to deferral. If such deferrals occur, they may have a material
adverse effect on Covance's business, financial condition, results of operations
and cash flows.

     CONTINGENCY YEAR 2000 PLANS. Covance has developed contingency plans for
handling these critical areas in the event remediation is unsuccessful.
Contingency plans include:

-        the utilization of back-up generators for power supply;
-        identifying alternative suppliers for reagents, animal feed and other
         supplies as well as stockpiling significant quantities of such supplies
         in advance of the year 2000;
-        porting from one long distance carrier to another and utilizing cell
         phones and call access cards when available; and
-        manning interactive voice response system phones with staff and
         manually randomizing systems on paper to ensure the continued validity
         of studies.

     While the development of contingency plans has been substantially
completed, contingency plans themselves are subject to variables and
uncertainties. Therefore, we cannot assure you that Covance will correctly
anticipate the level, impact or duration of non-compliance of computer hardware,
software, systems or suppliers. We also cannot assure you that we will correctly
anticipate the vendors or service providers which may supply inaccurate
information to Covance or otherwise be unable to provide their service or
product free of defect or disruption arising from Year 2000 problems. We also
cannot assure you that our contingency plans will be adequate. Thus, there can
be no assurance that the Year 2000 problem, even after giving effect to the
implementation of applicable contingency plans, will not happen and this
occurrence could have a material adverse impact on Covance's business, financial
condition, results of operations and cash flows.

     FORWARD LOOKING STATEMENTS. STATEMENTS IN THIS MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, AS WELL AS IN CERTAIN
OTHER PARTS OF THIS QUARTERLY REPORT ON FORM 10-Q CONTAIN STATEMENTS THAT LOOK
FORWARD IN TIME. THESE STATEMENTS ARE FORWARD LOOKING STATEMENTS MADE UNDER THE
SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING PLANS, OBJECTIVES,
GOALS, STRATEGIES, FUTURE EVENTS OR PERFORMANCE, EXPECTATIONS, PREDICTIONS, AND
ASSUMPTIONS AND OTHER STATEMENTS WHICH ARE NOT STATEMENTS OF HISTORICAL FACTS.
ALL OUR FORWARD LOOKING STATEMENTS ARE BASED ON OUR CURRENT EXPECTATIONS AND MAY
BE EFFECTED BY RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY THOSE STATEMENTS. THESE RISKS AND
UNCERTAINTIES INCLUDE:

    -    COVANCE'S ABILITY TO IDENTIFY AND CORRECT ALL RELEVANT COMPUTER CODES
         AND EMBEDDED CHIPS;

    -    COVANCE'S ABILITY TO ATTRACT AND RETAIN QUALIFIED INFORMATION
         TECHNOLOGY PERSONNEL TO ADDRESS AND REMEDIATE YEAR 2000 PROBLEMS;

    -    THE AVAILABILITY OR AFFORDABILITY OF ALTERNATIVE SOURCES FOR CRITICAL
         SUPPLIES AND SERVICES;

    -    THE EFFECT OF THE YEAR 2000 PROBLEM ON COVANCE'S SUPPLIERS, CUSTOMERS
         AND OTHER THIRD PARTIES;

    -    COVANCE'S ABILITY TO ESTIMATE COSTS OF YEAR 2000 REMEDIATION AND
         PREDICT PROBLEMS AND COSTS THAT MIGHT ARISE WITH RESPECT TO YEAR 2000
         ISSUES; AND

    -    COVANCE'S ABILITY TO ADDRESS OTHER YEAR 2000 ISSUES, AND RISKS AND
         UNCERTAINTIES SET FORTH IN COVANCE'S FILINGS WITH THE SECURITIES AND
         EXCHANGE COMMISSION INCLUDING WITHOUT LIMITATION ITS ANNUAL REPORT ON
         FORM 10-K.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

See Management's Discussion and Analysis of Financial Condition and Results of
Operations




                                       16
<PAGE>




PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits:

         (1)      Exhibit 10A - Severance Agreement and Release between Covance
                  Inc. and James D. Utterback dated as of September 1, 1999.

         (2)      Exhibit 10B - Employment Agreement between Christopher A.
                  Kuebler and Covance Inc. dated as of May 13, 1999.

         (3)      Exhibit 27 - Financial Data Schedule (for SEC use only)

(b)      Reports on Form 8-K

         None



                                       17
<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: November 8,1999              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         November 8,1999
                                    and Chief Executive Officer
                                    (Principal Executive Officer)

/s/ CHARLES C. HARWOOD, JR.
-------------------------------
    Charles C. Harwood, Jr.         Corporate Senior Vice President          November 8,1999
                                    and Chief Financial Officer
                                    (Principal Financial Officer)

/s/ MICHAEL GIANNETTO
-------------------------------
    Michael Giannetto               Corporate Vice President                 November 8,1999
                                    and Controller
                                    (Principal Accounting Officer)
</TABLE>



                                       18
<PAGE>






                                  EXHIBIT INDEX

EXHIBIT      DESCRIPTION

10A      Severance Agreement and Release between Covance Inc. and James D.
         Utterback dated as of September 1, 1999.

10B      Employment Agreement between Christopher A. Kuebler and Covance Inc.
         dated as of May 13, 1999.

27       Financial Data Schedule (for SEC use only)