<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1997
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 0-29100
PREMIER RESEARCH WORLDWIDE, LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-3264604
- ------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
124 South 15th Street
Philadelphia, PA 19102
- ------------------------------- --------------------------------
(Address of principal (Zip Code)
executive offices)
215-972-0420
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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. __x__ Yes _____ No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The number of shares of Common Stock, $.01 par value, outstanding as of October
31, 1997, was 6,938,400.
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD AND SUBSIDIARIES
INDEX
-----
Page
----
Part I. Financial Information
Item 1. Financial Statements
Condensed consolidated balance sheets -- September 30, 1997
(unaudited) and December 31, 1996 3
Condensed consolidated statements of operations (unaudited) --
Three months and nine months ended September 30, 1997 and 1996 4
Condensed consolidated statements of cash flows --
Nine months ended September 30, 1997 (unaudited) and 1996 5
Notes to condensed consolidated financial statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds
Item 6. Exhibits and Reports on Form 8-K
a.) Exhibits
11 Computation of Net Income per Common Share
27 Financial Data Schedule
b.) Reports on Form 8-K
None
Signatures
2
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
---------------------- ---------------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash & cash equivalents $16,248 $1,498
Marketable securities 15,722 -
Accounts receivable, net 3,062 2,837
Prepaid expenses and other 557 386
Deferred income taxes 106 106
------- ------
Total current assets 35,695 4,827
Property and equipment, net 1,287 732
DLB investment 1,000 --
Deferred income taxes and other 1,006 189
------- ------
$38,988 $5,748
======= ======
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 558 $ 831
Accrued expenses 732 664
Accrued income taxes - 106
Payable to UM Holdings Ltd. for income taxes - 485
Deferred revenue 1,779 1,146
------- ------
Total current liabilities 3,069 3,232
------- ------
Stockholders' equity:
Common stock, $.01 par value, 15,000,000 shares
authorized, 6,938,400 and 4,402,000 shares issued and
outstanding, respectively 69 44
Additional paid-in capital 36,408 2,273
Retained earnings (accumulated deficit) (558) 199
------- ------
Total stockholders' equity 35,919 2,516
------- ------
$38,988 $5,748
======= ======
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1997 Sept. 30, 1996
-------------- -------------- -------------- --------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $2,941 $4,568 $10,142 $11,754
Less-Reimbursed costs (291) (122) (583) (147)
------ ------ ------- -------
Net revenues 2,650 4,446 9,559 11,607
Costs and expenses:
Direct costs 1,599 1,743 4,668 4,615
Selling, general and administrative 2,396 1,867 6,956 5,070
Depreciation and amortization 154 165 440 556
------ ------ ------- -------
Total costs and expenses 4,149 3,775 12,064 10,241
------ ------ ------- -------
Income (loss) from operations (1,499) 671 (2,505) 1,366
Other income, net 372 - 1,051 -
------ ------ ------- --------
Income (loss) before income taxes and minority interest (1,127) 671 (1,454) 1,366
Minority interest in limited liability company's loss - 95 - 303
------ ------ ------- -------
Income (loss) before income taxes (1,127) 766 (1,454) 1,669
Income taxes provision (benefit) (507) 330 (697) 719
------ ------ ------- -------
Net income (loss) $ (620) $ 436 $ (757) $ 950
====== ====== ======= =======
Net income (loss) per share $(0.09) $ (0.11)
====== =======
Weighted average shares outstanding 6,938 6,632
====== =======
Pro forma net income per share (Note 4)
Income before income taxes & minority interest 671 1,366
Pro forma income tax provision 282 596
------ -------
Pro forma net income $ 389 $ 770
====== =======
Pro forma net income per share $ 0.08 $ 0.15
====== =======
Shares used in computing pro forma net income per share 5,003 4,998
====== =======
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended
Sept. 30, 1997 Sept. 30, 1996
-------------- --------------
(unaudited)
<S> <C> <C>
Operating activities:
Net income (loss) $ (757) $ 950
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 440 556
Minority interest in limited liability company's loss - (303)
Deferred income taxes (853) (43)
Gain on sale of equipment - (2)
Changes in assets and liabilities:
Accounts receivable (225) (864)
Prepaid expenses and other (171) 119
Accounts payable (273) 130
Accrued expenses 68 114
Accrued income taxes (106) 269
Payable to UM Holdings Ltd. for income taxes (485) 447
Deferred revenues 633 (45)
-------- -------
Net cash provided by (used in) operating activities (1,729) 1,328
-------- -------
Investing activities:
Purchases of property and equipment (958) (178)
DLB investment (1,000) -
Proceeds from sales of property and equipment - 34
Net purchases of marketable securities (15,722) -
-------- -------
Net cash used in investing activities (17,680) (144)
-------- -------
Financing activities:
Net proceeds from the issuance of common stock 34,159 -
Net distributions to UM Holdings Ltd. - (687)
-------- -------
Net cash provided by (used in) financing activities 34,159 (687)
Net increase in cash and cash equivalents 14,750 497
Cash and cash equivalents, beginning of period 1,498 33
-------- -------
Cash and cash equivalents, end of period $ 16,248 $ 530
======== =======
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for fair presentation have
been included. Operating results for the nine-month period ended September 30,
1997, are not necessarily indicative of the results that may be expected for the
year ended December 31, 1997. For further information, refer to the audited
consolidated financial statements and footnotes thereto included in the
Company's S-1 registration statement filed with the Securities and Exchange
Commission as part of its initial public offering on February 3, 1997.
Note 2. Net Income (Loss) per Share
Net income (loss) per share is calculated based on the weighted average shares
outstanding during the periods presented. Due to the net losses for the periods
in 1997, common stock equivalents, consisting of common stock options, were not
included as they are anti-dilutive.
Note 3. New Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings Per Share."
SFAS No. 128 is designed to improve the earnings per share information provided
in financial statements by simplifying the existing computational guidelines,
revising the disclosure requirements and increasing comparability of earnings
per share data on an international basis. This pronouncement is effective for
periods beginning after December 15, 1997, and is not expected to have a
material impact on the Company's reported earnings per share.
Note 4. Pro Forma Net Income Per Share
For the period ended September 30, 1996, the Company's historical stockholders'
equity and net income does not reflect the conversion of the minority interest
in Premier Research LLC into Common Stock of the Company upon the closing of the
Company's initial public offering in February 1997. Accordingly, historical net
income per share is not considered meaningful and has not been presented.
Pro forma net income excludes the minority interest in the limited liability
company's income or loss. The shares used in computing pro forma net income per
share include the effect of the minority interest conversion as if the
conversion occurred on January 1, 1996. In addition, the shares used in
computing pro forma net income per share also include the dilutive effect of
common stock equivalents outstanding during the periods, consisting of common
stock options, using the treasury stock method.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations Overview
The Company is a clinical research organization providing a broad range of
integrated product development services on a global basis to its clients in the
pharmaceutical, biotechnology and medical device industries. The Company's
services include centralized core laboratory testing, clinical trial management,
clinical data management, biostatistical analysis, Phase I clinical research,
health care economics and outcomes research and regulatory affairs services.
The Company's centralized core laboratory contracts are on a fee-for-service
basis and generally have terms from one month to two years. A portion of the
Company's fee typically is paid upon contract execution as a non-refundable
up-front payment, with the remaining amounts billed monthly. Clinical research
service contracts are generally fixed priced, with certain variable components,
and range in duration from a few months to two years. A portion of the Company's
fee typically is paid upon contract execution as a non-refundable up-front
payment, with the balance billed in accordance with contract terms. The
Company's contracts generally may be terminated with or without cause on 30 to
90 days notice. Clients terminate or delay contracts for a variety of reasons,
including, among others, the failure of products being tested to satisfy safety
or efficacy requirements; unexpected or undesirable clinical results of the
product; the client's decision to forego a particular study; insufficient
patient enrollment or investigator recruitment; and production problems
resulting in shortages of required clinical supplies.
Revenues from core laboratory service contracts generally are recognized on a
per procedure basis as the work is performed. Revenues from clinical research
service contracts generally are recognized on a percentage of completion basis
as work is performed. For the three months and nine months ended September 30,
1997, the core laboratory services revenues represented 59.4% and 55.5%,
respectively, of total net revenues. The Company regularly subcontracts with
third-party investigators in connection with clinical trials and with other
third-party providers for specialized services. These and other reimbursable
costs are paid by the Company and reimbursed by clients and in accordance with
industry practice, are included in revenues. Since reimbursed costs may vary
significantly from contract to contract and are not meaningful for analyzing
trends in revenues, they are included in gross revenues but excluded from net
revenues. Consistent with industry practice, the Company considers net revenues
its primary measure of growth. The Company has had, and expects to continue to
have, certain clients from which at least 10% of the Company's overall revenue
is generated. The Company believes that such concentration of business is not
uncommon in the clinical research industry.
Results of Operations
Three months ended September 30, 1997 compared to three months ended September
30, 1996
Net revenue decreased $1,796,000, or 40.4%, to $2,650,000 for the three months
ended September 30, 1997, compared to the three months ended September 30, 1996.
This decrease was primarily due to core laboratory revenues for the three months
ended September 30, 1997, being $1,718,000 less than the three months ended
September 30, 1996. Core laboratory revenues decreased as several material ECG
contracts which were ongoing in 1996, were completed in early 1997, with a low
level of new ECG contracts in 1997. Partially offsetting the core laboratory
revenue decrease were increased clinical trial management revenues of $231,000,
over the three months ended September 30, 1996. The clinical trial management
revenue growth was attributable to the Company's increased service capabilities
developed during the last year.
Direct costs decreased $144,000, or 8.3%, to $1,599,000 for the three months
ended September 30, 1997, compared to the three months ended September 30, 1996.
For the quarter ended September 30, 1996, the Company paid ECG reading analysis
fees of $490,000 to a professional corporation owned by Joel Morganroth, MD, the
Company's President and Chief Executive Officer. The Company and Dr. Morganroth
have entered into new employment and consulting agreements effective January 1,
1997; under these agreements Dr. Morganroth no longer receives ECG reading fees.
Offsetting this decrease, were increases in salary and related expenses for
clinical research services for the three months ended September 30, 1997,
compared to the three months ended September 30, 1996, to support the increased
level of operations. The Company increased the clinical trials and data
management staff to support additional service capabilities. Direct costs as a
percentage of net revenues increased to 60.4% for the three months ended
September 30, 1997, from 39.3% for the three months ended September 30, 1996,
because clinical research revenues have higher associated direct costs.
7
<PAGE>
Selling, general and administrative expenses increased $529,000, or 28.4%, to
$2,396,000 for the three months ended September 30, 1997, compared to the three
months ended September 30, 1996. Salaries and related benefits increased
$338,000 for the third quarter of 1997 due to the Company's decision to double
the sales staff and increase clinical trial and data management personnel. In
addition to the increased sales force, non-salary related sales expenses
increased by $100,000 for the quarter ended September 30, 1997, over September
30, 1996, and accounting and legal increased $83,000 for the quarter ended
September 30, 1997, compared to September 30, 1996.
Depreciation and amortization expense decreased $11,000, or 6.7%, to $154,000
for the quarter ended September 30, 1997, compared to the quarter ended
September 30, 1996.
Other income of $372,000 for the three months ended September 30, 1997, resulted
primarily from the interest income on cash, cash equivalents and marketable
securities as a result of the net proceeds of the Company's initial public
offering in February 1997.
The Company's effective tax rate was a 45.0% benefit for the three months ended
September 30, 1997, versus a 43.1% provision for the three months ended
September 30, 1996. The difference was due to the effects of the loss from
operations and investments in tax exempt securities in 1997.
Nine months ended September 30, 1997 compared to nine months ended September 30,
1996
Net revenue decreased $2,048,000, or 17.6%, to $9,559,000 for the nine months
ended September 30, 1997, compared to the nine months ended September 30, 1996.
This decrease was primarily due to core laboratory revenues for the nine months
ended September 30, 1997, being $4,202,000 less than the nine months ended
September 30, 1996. Core laboratory revenues decreased as several material ECG
contracts which were ongoing in 1996, were completed in early 1997, with a low
level of new ECG contracts in 1997. Offsetting the core laboratory revenue
decrease were increased Phase I and clinical trial and data management revenues
of $952,000 and $1,205,000, respectively, over the nine months ended September
30, 1996. The increase in Phase I revenues was the result of several large
contracts that were conducted increasing the utilization of the facility and
services rendered. The clinical trial and data management revenue growth was
attributable to the Company's increased service capabilities developed during
the last year.
Direct costs increased $53,000, or 1.1%, to $4,668,000 for the nine months ended
September 30, 1997, compared to the nine months ended September 30, 1996. For
the nine months ended September 30, 1996, the Company paid ECG reading analysis
fees of $1,513,000 to a professional corporation owned by Joel Morganroth, MD,
the Company's President and Chief Executive Officer. The Company and Dr.
Morganroth have entered into new employment and consulting agreements effective
January 1, 1997; under these agreements Dr. Morganroth no longer receives ECG
reading fees. Offsetting this decrease, were increases in Phase I direct
expenses and salary and related expenses in clinical research services. Phase I
direct expenses increased $603,000 for the nine months ended September 30, 1997,
compared to the nine months ended September 30, 1996, to support the increased
level of operations. For the nine months ended September 30, 1997, the Company
increased the clinical trials and data management staff to support additional
service capabilities. Direct costs as a percentage of net revenues increased to
48.9% for the nine months ended September 30, 1997, from 39.8% for the nine
months ended September 30, 1996.
Selling, general and administrative expenses increased $1,886,000, or 37.2%, to
$6,956,000 for the nine months ended September 30, 1997, compared to the nine
months ended September 30, 1996. This increase is primarily the result of
initiating new sales and marketing campaigns and related expenses, doubling the
sales staff, increased commitment to developing the Company's proprietary
software systems, and additional personnel costs associated with expanding
service capabilities. Selling, general and administrative expenses as a
percentage of net revenues increased to 72.8% for the nine months ended
September 30, 1997, from 43.7% for the nine months ended September 30, 1996.
Depreciation and amortization expense decreased $116,000, or 20.9%, to $440,000
for the nine months ended September 30, 1997, compared to the nine months ended
September 30, 1996. The decrease is primarily the result of equipment for the
Phase I facility and clinical laboratory purchased in prior years becoming fully
depreciated in 1997, and the Company's decision to move development of
information technology to personal computers and server-based computer system
from the more expensive VAX systems.
8
<PAGE>
Other income of $1,051,000 for the nine months ended September 30, 1997,
resulted from the interest income on cash, cash equivalents and marketable
securities as a result of the net proceeds of the Company's initial public
offering in February 1997.
The Company's effective tax rate was a 47.9% benefit for the nine months ended
September 30, 1997, versus a 43.1% provision for the nine months ended September
30, 1996. The difference was due to the loss from operations in 1997 and
investments in tax exempt securities in 1997.
Liquidity and Capital Resources
As of September 30, 1997, the Company had $16.2 million of cash and cash
equivalents and $15.7 million invested in marketable securities. The Company has
historically funded its operations and growth with cash flow from operations. In
February 1997, the Company completed an initial public offering of its common
stock. Proceeds of the offering, after expenses, were approximately $34.2
million.
During the nine months ended September 30, 1997, the Company used cash in
operating activities of $1.7 million, verses cash provided of $1.3 million in
the same period of the prior year. The decrease in operating cash flows is
primarily due to an operating loss and changes in working capital accounts.
Capital expenditures totaled $1 million in the first nine months of 1997. Net
proceeds from the Company's initial public offering totaled $34.2 million. The
Company used $15.7 million to acquire marketable securities.
The Company has a line of credit arrangement totaling $3 million with First
Union National Bank. At September 30, 1997, the Company had no borrowings under
the line of credit.
The Company expects existing cash and cash equivalents, marketable securities,
cash flow from operations, and the borrowings under its line of credit will be
sufficient to meet its foreseeable cash needs for at least the next two years.
Although the Company presently is not a party to any acquisition agreements or
similar arrangements, other than DLB systems (see below) there may be
acquisitions or other growth opportunities that require additional external
financing, and the Company may from time to time seek to obtain additional funds
from the public or private issuances of equity or debt securities. There can be
no assurances that such financings will be available on terms acceptable to the
Company.
DLB Systems
On June 30, 1997, the Company acquired a 14% equity position in a clinical trial
software and service developer, DLB Systems, a subsidiary of Safeguard
Scientifics, Inc. As part of the transaction, the Company had been granted the
option, expiring March 31, 1998, to purchase all of the assets of DLB Systems.
The Company exercised its option on October 14, 1997, and consummated the
acquisition effective October 31, 1997. The cash portion of the purchase price
in this acquisition of $6.5 million was satisfied by use of internal funds. See
the Company's Report on Form 8-K dated, November 12, 1997 for additional
information on this acquisition.
Inflation
The Company believes the effects of inflation generally do not have a material
adverse effect on its results of operations or financial condition.
Cautionary Statement for Forward Looking Information
Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations set forth above may constitute forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements involve a number of risks and uncertainties
such as competitive factors, technological development, market demand, and the
Company's ability to obtain new contracts and accurately estimate net revenues
due to variability in size, scope and duration of projects, and internal issues
of the sponsoring client. Further information on potential factors that could
affect the Company's financial results can be found in the Company's
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission.
9
<PAGE>
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds
Use of Proceeds - The following information is provided with respect to the
Company's initial public offering of its Common Stock.
(1) Effective Date of Securities Act Registration Statement: February 3, 1997
Registration No.: 333-17001
(2) Offering date: February 4, 1997
(3) Not applicable
(4) (i) The offering terminated after all shares registered were sold.
(ii) Managing Underwriters: Montgomery Securities
Furman Selz
Genesis Merchant Group
(iii) Class of securities registered: Common Stock
<TABLE>
<CAPTION>
(iv) Account of Company Account of Selling Shareholder
------------------ ------------------------------
<S> <C> <C>
Amount Registered 2,000,000 common stock 750,000 common stock
Aggregate Price of
Amount Registered $34,000,000 $12,750,000
Amount sold: 2,206,250 common stock 956,250 common stock
Aggregate Offering
Price of Amount Sold $37,506,250 $16,256,250
</TABLE>
(v) Expenses of offering for account of the Company
Underwriting Discount & Commissions: $2,625,437
Other expenses: $671,755
Total expenses: $3,297,192
(A) There, were no direct of indirect payments to directors,
officers, general partners of the issuer or their associates;
to persons owning ten (10) percent or more of common stock of
PRWW.
(B) All of the above payments were direct or indirect payments to
others not described in clause (A).
(vi) Net offering proceeds to the Company: $34,209,057
(vii) Use of proceeds as of September 30, 1997:
Investment: $1,000,000
Purchase of equipment: $960,243
Working capital: $986,682
Temporary investments (consisting
of short term, investment grade securities) $31,262,132
<PAGE>
(A) There were no direct of indirect payments to directors,
officers, general partners of the issuer or their associates;
to persons owning ten (10) percent or more of common stock of
PRWW.
(B) All of the above payments were direct or indirect payments to
others not described in clause (A).
(viii) The use of proceeds is consistent with the Prospectus.
Item 6. Exhibits and Reports on Form 8-K
a.) Exhibits
11 Computation of Net Income per Common Share
27 Financial Data Schedule
b.) Reports on Form 8-K
None
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.
PREMIER RESEARCH WORLDWIDE, LTD
(Registrant)
Date: November 14, 1997 By: /s/ Joel Morganroth
------------------------
Joel Morganroth, MD
President and Chief
Executive Officer
Date: November 14, 1997 By: /s/ Fred M. Powell
------------------------
Fred M. Powell
Chief Financial Officer
(Principal Financial and
Accounting Officer)
10
<PAGE>
EXHIBIT 11
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net loss $ (620) $(757)
====== =====
Average shares outstanding 6,938 6,632
Net effect of dilutive stock options-based on
treasury stock method using average market price - -
------ -----
Weighted average share 6,938 6,632
====== =====
Net loss per common share $(0.09) $(0.11)
====== ======
Pro forma net income $389 $ 770
==== ======
Pro forma weighted average shares assuming the conversion of the 5,003 4,998
minority interest in the limited liability company into Common Stock ===== =====
of the Company as if it had converted as of January 1, 1996 instead of
at the closing of the initial public offering.
Pro forma net income per common share $0.08 $ 0.15
===== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 16,248
<SECURITIES> 15,722
<RECEIVABLES> 3,199
<ALLOWANCES> (137)
<INVENTORY> 0
<CURRENT-ASSETS> 35,695
<PP&E> 7,494
<DEPRECIATION> 6,209
<TOTAL-ASSETS> 38,988
<CURRENT-LIABILITIES> 3,069
<BONDS> 0
0
0
<COMMON> 69
<OTHER-SE> 35,850
<TOTAL-LIABILITY-AND-EQUITY> 38,988
<SALES> 2,650
<TOTAL-REVENUES> 2,650
<CGS> 0
<TOTAL-COSTS> 4,149
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,127)
<INCOME-TAX> (507)
<INCOME-CONTINUING> (620)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (620)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
