Operating income for the company's Early Development segment rose 33.3 per cent to $51.5m (€36.0m), on revenue growth of 24.3 per cent year on year to $207.9m. Operating margin also expanded 1.7 percentage points to 24.8 per cent during the quarter. The company's Late-Stage Development segment saw revenue grow 15.6 per cent to $203.1m, driven again by strong performances in clinical development and central laboratory services. For the period, operating income remained flat at $32.6m compared to the fourth quarter of the prior year, and operating margin shrunk 2.6 percentage points to 16.0 per cent. The firm said that its Late-Stage Development margins were impacted by "an issue within a large clinical development study", reportedly the issue was unexpected costs. The business as a whole saw its revenues climb to $411.0m, up by 19.8 per cent from the comparable 2006 quarter, while operating profit jumped 18.9 per cent to $61.0m, as did pre-tax profit, hitting $62.6m. Despite this, operating profit slipped a fraction (0.2 points) to 14.8 per cent, brought down by the late-stage contract issues. Meanwhile, the contract research organisation (CRO) also improved its back office efficiencies, freeing up cash by decreasing its days sales outstanding (DSO) to 36, from 49 in the comparable 2006 quarter - the lowest level in more than five years. However, for this year, Covance indicated it would be making "significant expenditures" on improvements to its information technology infrastructure, as well as on its new preclinical facility in Arizona, and cash flow is expected to decelerate as a result. Covance broke ground on the 300,000-square-foot site in July last year, although construction has marred by ongoing objections from some members of the local community who are resisting the CRO's plans to build the facility for various reasons.