Medco Research, Inc.
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, 1998.
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 Commission file number 1-9771
MEDCO RESEARCH, INC.
--------------------
(Exact name of registrant as specified in its charter)
Delaware 95-3318451
------------------------------- ----------
(State or other Jurisdiction of (I.R.S. Identification No.)
Employer incorporation or
organization)
85 T W Alexander Drive,
-----------------------
Research Triangle Park, North Carolina 27709
-------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(919) 549-8117
--------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock American Stock Exchange
------------ -----------------------
(Title of Class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (b) 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
------- -------
Indicate the number of shares outstanding of common stock, as of the
latest practical date 10,434,132 as of October 30, 1998.
Pursuant to the Securities Exchange Act of 1934 Release 15502 and Rule
240.03 (b), the pages of this document have been numbered sequentially. The
total pages contained herein are 14.
<PAGE>
Medco Research, Inc.
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
<CAPTION>
September 30, December 31,
1998 1997*
-------------------------------------------------
(in thousands, except share data) (Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $3,927 $2,726
Investments held to maturity 17,852 14,273
Accounts and notes receivable:
Royalties 6,368 6,004
Other 158 245
Accrued interest income 667 563
Prepaid expenses and other 323 504
-------------------------------------------------
Total current assets 29,295 24,315
Investments held to maturity 29,598 23,530
Property and equipment, at cost, net of accumulated depreciation and
amortization 191 244
Patent, trademark and distribution rights, at cost, net of
accumulated amortization 1,787 1,524
-------------------------------------------------
Total assets $60,871 $49,613
=================================================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $1,623 $2,379
Accrued royalties 1,101 1,301
Accrued compensation 318 476
-------------------------------------------------
Total current liabilities 3,042 4,156
Deferred royalty payments - 451
Other long-term liabilities 200 350
-------------------------------------------------
Total liabilities 3,242 4,957
Stockholders' equity:
Common stock, no par value, authorized 40,000,000
shares; shares issued of 11,266,332 and
11,182,832 at September 30, 1998 and December 31,
1997, respectively; shares outstanding of
10,597,332 and 10,513,832 at September 30, 1998
and December 31, 1997, respectively. 53,384 52,513
Accumulated earnings (deficit) 10,921 (1,181)
Cost of stock held in treasury, 669,000 shares at
September 30, 1998 and December 31, 1997 (6,676) (6,676)
-------------------------------------------------
Total stockholders' equity 57,629 44,656
-------------------------------------------------
Commitments and contingencies
=================================================
Total liabilities and stockholders' equity $60,871 $49,613
=================================================
See accompanying notes to consolidated financial statements.
*Abstracted from audited year-end financial statements.
2
<PAGE>
Medco Research, Inc.
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------------------------------------------------------------------
September 30, September 30, September 30, September 30,
(in thousands, except per share data) 1998 1997 1998 1997
--------------------------------------------------------------------------------------
Royalty revenue $6,426 $5,050 $19,191 $14,217
Royalty expense 1,063 679 3,246 2,264
--------------------------------------------------------------------------------------
Gross margin 5,363 4,371 15,945 11,953
--------------------------------------------------------------------------------------
Operating expenses:
Research & development costs 1,379 1,533 6,942 5,204
General and administrative expenses 635 464 1,832 1,842
--------------------------------------------------------------------------------------
2,014 1,997 8,774 7,046
--------------------------------------------------------------------------------------
Operating income 3,349 2,374 7,171 4,907
Other income:
Interest income 722 533 1,995 1,531
Other income -- 390 4,000 690
--------------------------------------------------------------------------------------
Income before taxes 4,071 3,297 13,166 7,128
Provision for income taxes 362 133 1,064 259
--------------------------------------------------------------------------------------
Net income $ 3,709 $ 3,164 $ 12,102 $ 6,869
======================================================================================
Basic earnings per share $ 0.35 $ 0.30 $ 1.15 $ 0.65
======================================================================================
Diluted earnings per share $ 0.34 $ 0.30 $ 1.11 $ 0.65
======================================================================================
Weighted average shares outstanding 10,586 10,489 10,554 10,560
======================================================================================
Weighted average shares outstanding
assuming dilution 10,982 10,566 10,894 10,591
======================================================================================
See accompanying notes to consolidated financial statements.
3
<PAGE>
Medco Research, Inc.
Consolidated Statements of Stockholders' Equity
(Unaudited)
NINE MONTHS ENDED SEPTEMBER 30, 1998
(in thousands, except share data)
<CAPTION>
Common Stock
------------------------------------
Accumulated Cost of Stock
Number of earnings held in
shares Amount (deficit) Treasury Total
-----------------------------------------------------------------------------------------------
Balance at
December 31, 1997 10,514 $52,513 $(1,181) $(6,676) $44,656
Stock options
exercised 83 871 - - 871
Net income - - 12,102 - 12,102
-----------------------------------------------------------------------------------------------
Balance at
September 30, 1998 10,597 $53,384 $10,921 $(6,676) $57,629
===============================================================================================
See accompanying notes to consolidated financial statements.
4
<PAGE>
Medco Research, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
NINE MONTHS ENDED
------------------------------------------------
September 30, September 30,
1998 1997
------------------------------------------------
(in thousands)
Operating activities:
Net income $12,102 $ 6,869
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation of property and equipment 72 109
Amortization of patent, trademark and
distribution rights 450 419
Loss on sale of equipment -- 11
Net amortization of investment discount (276) 211
Changes in operating assets and liabilities:
Accounts receivable (277) 54
Prepaid expenses (140) 13
Accounts payable and accrued expenses (415) 337
Accrued royalty expense (199) (597)
Accrued interest income (104) (8)
Deferred asset 321 124
Deferred revenue -- (548)
Deferred royalty payments (1,101) (756)
------------------------------------------------
Net cash provided by operating activities $10,433 $6,238
------------------------------------------------
(Continued)
5
<PAGE>
Medco Research, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
NINE MONTHS ENDED
------------------------------------------------
September 30, September 30,
1998 1997
------------------------------------------------
(in thousands)
Investing activities:
Purchase of securities held to maturity (34,293) (17,422)
Maturity of securities held to maturity 24,922 7,500
Purchases of property and equipment (19) (51)
Proceeds from sales of equipment -- 2
Purchases of patent and license (713) (1,732)
------------------------------------------------
Net cash used in investing activities (10,103) (11,703)
------------------------------------------------
Financing activities:
Net proceeds from exercise of stock options 871 --
Purchase of stock held in treasury -- (2,353)
------------------------------------------------
Net cash provided by (used in) financing
activities 871 (2,353)
------------------------------------------------
Increase (decrease) in cash and cash equivalents 1,201 (7,818)
Cash and cash equivalents at beginning of period 2,726 9,107
------------------------------------------------
Cash and cash equivalents at end of period $3,927 $1,289
================================================
See accompanying notes to consolidated financial statements.
</TABLE>
6
<PAGE>
Medco Research, Inc.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
General
The accompanying interim financial statements have been prepared by Medco
Research, Inc. (the "Company") in accordance with generally accepted accounting
principles. Certain disclosures and information normally included in financial
statements have been condensed or omitted. In the opinion of the management of
the Company, these financial statements contain all adjustments (all of a
recurring nature) necessary for a fair presentation for the interim periods and
are prepared on a basis consistent with the Company's Annual Report on Form
10-K. These statements should be read in conjunction with the financial
statements and notes included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Adoption of New Accounting Pronouncements
The Company adopted Statement of Financial Accounting Standards No. 130
"Reporting Comprehensive Income" ("SFAS No. 130") for its fiscal year ending
December 31, 1998. SFAS No. 130 requires the Company to display an amount
representing the total comprehensive income for the period in a financial
statement which is displayed with the same prominence as other financial
statements. The Company has no items of other comprehensive income in any period
presented and therefore is not required to report comprehensive income.
Earnings per Share
The Company adopted Statement of Financial Accounting Standards No. 128 ("SFAS
No. 128"), "Earnings Per Share," on December 31, 1997. Under SFAS No. 128, the
Company is required to report both basic and diluted earnings per share. Basic
earnings per share is computed using the weighted average number of common
shares outstanding during a period. Diluted earnings per share is computed using
the weighted average number of common shares and dilutive common share
equivalents, primarily stock options, outstanding during a period. All prior
period data has been restated to conform to the provisions of SFAS No. 128.
The net income used for both basic and dilutive earnings per share for each of
the periods ended September 30, 1998 and 1997 was the same. The following is a
reconciliation of the weighted average number of common shares and common share
equivalents used to determine diluted earnings per share for each of the periods
ended September 30, 1998 and 1997:
8
<PAGE>
Medco Research, Inc.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
-------------- ---------------- -------------- ----------------
1998 1997 1998 1997
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Basic-weighted average shares outstanding 10,586 10,489 10,554 10,560
Net effect of dilutive stock options
based on treasury stock method 396 77 340 31
============== ================ ============== ================
Weighted average shares assuming dilution 10,982 10,566 10,894 10,591
============== ================ ============== ================
</TABLE>
Equity
The Company adopted a Shareholder Rights Plan on April 2, 1998. The plan
provides for a dividend distribution of rights to purchase shares of the common
stock of the Company, exercisable upon the occurrence of certain events.
Patents
On March 30, 1998, Fujisawa USA, Inc. secured additional intellectual property
rights for intravenous adenosine in cardiac imaging and its potential new use as
a cardioprotectant in various acute ischemic settings. The Company paid and
capitalized its 50% share of a one-time up-front fee and will amortize this fee
over the life of the patents. The Company is also obligated to pay its 50% share
of an Adenoscan royalty to this third party.
Contingency
There are no material legal proceedings pending against the Company. However, on
October 3, 1997, Richard A. Wilson, Debra A. Angello, and Paul S. Angello
("Plaintiffs") filed a complaint against Fujisawa, USA, Inc. in the United
States District Court, District of Oregon, alleging that Fujisawa's sale of
Adenoscan in the United States induces, or contributes to, the infringement of
plaintiffs' U.S. Patent No. 4,824,660 ("the `660 patent"), entitled "Method of
Determining the Viability of Tissue in an Organism" which the Patent Office
issued on April 25, 1989. According to plaintiffs, the `660 patent claims a
specific technique for more reliably locating viable or nonviable regions of
heart tissue, namely using an adenosine triphosphate repleting agent such as
ribose or adenosine as an adjunct to radioactive isotope (e.g., thallium-201)
myocardial perfusion scintigraphy, where regions of heart tissue in which the
scan images show no radioactivity indicate the presence of nonviable heart
tissue. In its Answer and Counterclaim, Fujisawa denied that it infringed any of
the claims of the `660 patent and alleged that the `660 patent was invalid.
Fujisawa further alleged that plaintiffs' claims of patent infringement were
barred by the doctrines of laches and estoppel. In its Counterclaim, Fujisawa
requested a declaratory judgment that it did not infringe the claims of the `660
patent and that such patent is invalid.
This action is in the discovery stage. Fujisawa has advised the Company that
Fujisawa intends to vigorously defend this action and believes it has no merit.
Under the terms of its Adenoscan exclusive license agreement with Fujisawa, the
Company will reimburse Fujisawa for 50% of the cost of defending this action.
The Company also believes the action has no merit. The Company has long been
aware of the `660 patent, and as part of its normal operating procedures the
Company has received the written opinions of separate patent counsel that the
manufacture and sale of Adenoscan for use in myocardial imaging does not
infringe any valid claim of the `660 patent. The Company disclosed its receipt
of its patent counsel non-infringement opinion in its 1993 Form 10-K Report.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Third Quarter and Nine Months of 1998 Compared to Third Quarter and Nine Months
of 1997
Net Revenues. The Company's third quarter and first nine months of 1998 royalty
revenues increased from $5.050 million and $14.217 million to $6.426 million and
$19.191 million, an increase of 27% and 35%, respectively, due to continued year
over year increases in unit sales of Adenoscan by Fujisawa, the Company's North
American licensee. Substantially all of the royalty revenue of the Company is
generated by Fujisawa Healthcare, Inc. from its sales of Adenoscan and Adenocard
in the United States and Canada.
Gross Margin. The Company's third quarter and first nine months of 1998 gross
margin from adenosine revenues increased from $4.371 million and $11.953 million
to $5.363 million and $15.945 million, an increase of 23% and 33%, respectively,
due to the shift in the product sales mix to Adenoscan. Royalty expense for the
third quarter and first nine months from adenosine sales increased from $.679
million and $2.264 million to $1.063 million and $3.246 million, an increase of
57% and 43%, respectively, due to the payment of an Adenoscan royalty to a third
party relating to the procurement of additional intellectual property rights for
intravenous adenosine.
Operating Expenses. The Company's third quarter and first nine months of 1998
total operating expenses increased from $1.997 million and $7.046 million to
$2.014 million and $8.774 million, an increase of 1% and 25%, respectively.
Research and development expenditures were $1.379 million and $6.942 million for
the third quarter and first nine months, a decrease of 10% and increase of 33%,
respectively, compared to the prior year periods. The 33% increase for the first
nine months of 1998 was a result of the one-time charge of $2.361 million in the
second quarter pertaining to the purchase of Fujisawa's commercialization rights
and related intellectual properties for the cardioprotection application of
intravenous adenosine. General and administrative expenditures for third quarter
and the first nine months of 1998 were $.635 million and $1.832 million, an
increase of 37% and decrease of 1%, respectively, compared to the prior year
periods. The 37% increase for the third quarter of 1998 was a result of a
one-time tax refund received in the third quarter of 1997 and higher investor
relations expenditures in the third quarter of 1998.
9
<PAGE>
Medco Research, Inc.
Other Income . Interest income for third quarter and the first nine months of
1998 increased 35% and 30% over the comparable periods of 1997 primarily due to
higher investment balances. Other income for the third quarter of 1998 decreased
$.390 million versus prior year. Other income for the first nine months of 1998
increased to $4 million as compared to $.690 million in the same period of the
prior year as a result of the recognition of a $4 million fee received from
Fujisawa Healthcare, Inc. in consideration for the transfer of NDA's and
manufacturing rights for Adenocard and Adenoscan to Fujisawa Healthcare, Inc.
Earnings Per Share. In the third quarter and first nine months of 1998, the
Company had net income of $3.709 million and $12.102 million or $0.34 and $1.11
diluted earnings per share compared to $3.164 million and $6.869 million or
$0.30 and $0.65 diluted earnings per share for the same prior year period.
Weighted average common shares and common share equivalents outstanding for
third quarter and the first nine months of 1998 were 10.982 million and 10.894
million, respectively, versus 10.566 million and 10.591 million for the
comparable periods of the prior year.
FINANCIAL CONDITION
As of September 30, 1998, the Company had total cash and investments of $51.377
million, made up of $3.927 million of cash and cash equivalents and $47.450
million of investments in U.S. Treasury Notes, debt securities of various
federal governmental agencies, and high quality corporate debt securities. The
Company's working capital as of September 30, 1998 was $26.253 million, compared
to $20.159 million as of December 31, 1997.
Included in liabilities at September 30, 1998 is a current accrued liability of
$.350 million relating to the balance of the Company's guaranteed royalty
obligation to Abbott Laboratories pursuant to the terms of the Company's
settlement of litigation relating to the manufacturing and marketing rights to
Adenoscan. The Company expects the remaining guaranteed royalty obligation to
Abbott Laboratories to be paid by the fourth quarter of 1998.
The actual income tax expense for the third quarter 1998 differs from the
"expected" amount (computed by applying the statutory federal income tax rate of
34% to the earnings before income taxes) due to the utilization of net operating
loss carryforwards and research and development credit carryforwards for which a
full valuation allowance was previously recorded.
The Company recognized a full valuation allowance for its estimated deferred tax
asset at September 30, 1998 due to the uncertainty surrounding timing of
partnering arrangements and the uncertainty surrounding the ultimate cost of the
research, clinical trials and other development of pharmaceutical products that
potentially could adversely affect future operations and profit levels.
The Company will not generate revenues from its other products unless and until
it or its licensees receive marketing clearance from the FDA and appropriate
governmental agencies in other countries. The Company cannot predict the timing
of any potential marketing clearance nor can assurances be given that the FDA or
such agencies will approve any of the Company's products. For the near term the
Company expects to receive substantially all of its royalty revenues from sales
of its products in the U.S. by Fujisawa USA.
10
<PAGE>
Medco Research, Inc.
IMPACT OF INFLATION
Although it is difficult to predict the impact of inflation on costs and
revenues of the Company in connection with the Company's products, the Company
does not anticipate that inflation will materially impact its costs of operation
or the profitability of its products when marketed.
IMPACT OF YEAR 2000
Readiness
The Year 2000 ("Y2K") issue results from programmers using two digits to
indicate the century value in date fields. This affects older software and
embedded systems. The team that the Company assembled to address the Y2K issue
brings to bear knowledge from all areas of the Company.
The Team has categorized the Y2K issue into three parts: internal business
systems software; internal non-business software/embedded systems; and external
vendors. The Company's reliance on an outsourcing philosophy, which encourages
the use of partnering agreements with third parties to accomplish many business
functions, eases the Y2K issue as the Company does not have a large number of
internal business systems applications or embedded systems. However, given that
the Company receives substantially all of its royalty revenues from Fujisawa
Healthcare, Inc., the Y2K issue is still a threat and is being given full
attention by the Company especially in assessing the Company's third party
relationships.
Internal Business Systems
The Company does not rely on custom developed solutions for its business
systems. The software that it uses is mass-produced and has been inventoried.
The providers have advised the Company that it has been made Y2K compliant
through normal manufacturer upgrades and updates to the software. Accordingly,
all software is either Y2K compliant or is due to be replaced in the normal
course of business by January 1, 1999.
Internal Non-Business Software/Embedded Systems
All internal non-business software and embedded systems have been inventoried.
The providers have been queried regarding Y2K compliance. At this time all
software and systems are either Y2K compliant or due to be replaced in the
normal course of business by January 1, 1999.
External Vendors
The Company is in the process of submitting questionnaires to all of the
Company's third party vendors, including without limitation, Fujisawa
Healthcare, Inc., the Company's licensees and clinical research partners of
their Y2K compliance. The Company expects to have completed this phase along
with assessing risks relating to third party relationships by April 1, 1999.
Costs
The costs of addressing the Y2K issue are not expected to be material to the
operation of the Company. The costs of software and hardware inventories are
currently being absorbed in the normal course of business. The Company
anticipates incurring less than $2,000 for mailing and reviewing Y2K status
reports for external vendors. The costs anticipated by the Company to replace or
upgrade software or hardware are not being accelerated due to Y2K compliance.
11
<PAGE>
Medco Research, Inc.
Risks
At this stage of its assessment, the Company does not anticipate that Y2K issues
will materially impact any of its operations, including research and
development, manufacturing, supply and distribution and financial control. All
internal systems are expected to be operational at the Century Date Change
(CDC). However, due to the large number of the Company's vendors (including
utility companies and governmental bodies) and their reliance, in turn, on other
vendors (including hospitals and distributors), it is impossible for the impact
of the CDC to be fully known. The Company is unable to determine at this time
whether it will be materially impacted by unknown factors beyond the Company's
control affecting third parties or their vendors including royalties the Company
receives from Fujisawa Healthcare, Inc. The Company's Y2K plan is expected to
significantly reduce the Company's level of uncertainty about Y2K issues and, in
particular, about Y2K compliance and readiness of its material vendors. The
Company believes that, with the completion of the Plan as scheduled, the
possibility of significant interruptions of normal operations should be reduced.
Contingency Plans
Contingency plans will be developed on a vendor-by-vendor basis if deemed
necessary following the Company's assessment of (1) the vendors' Y2K readiness
and (2) the risk of business interruption to the Company. The Company expects to
have any such plans in place by June 1, 1999.
Disclaimer
The discussion of the Company's efforts and management's expectations relating
to the Year 2000 are forward-looking statements. The Company's ability to
achieve Y2K compliance, to verify external vendors' Y2K compliance, and the
costs associated with those activities are subject to change as the Company's
Y2K plan is implemented. Completion of the plan is dependent on the Company's
ability to discover and correct the potential Y2K sensitive problems which could
have a serious impact on operations and the ability of third party vendors to
bring their systems into Y2K compliance.
CAUTIONARY STATEMENT
The Company operates in a highly competitive environment that involves a number
of risks, some of which are beyond the Company's control. The following
statement highlights some of these risks.
Statements contained in Management's Discussion and Analysis of Financial
Conditions and Results of Operations which are not historical facts are forward
looking statements under the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Although the Company believes the expectations
reflected in such forward looking statements are based on reasonable
assumptions, it can give no assurance that its expectations will be attained.
Forward looking statements involve known and unknown risks that could cause the
Company's actual results to differ materially from expected results. Factors
that could cause actual results to differ materially from the Company's
expectations include, among others, the high cost and uncertainty of the
research, clinical trials and other development activities involving
pharmaceutical products; the unpredictability of the duration and results of
regulatory review of New Drug Applications; the possible impairment of, or
inability to obtain, intellectual property rights and the cost of obtaining such
rights from third parties; intense competition; the uncertainty of obtaining,
and the Company's dependence on, third parties to manufacture and sell its
products; results of pending or future litigation and other risk factors
detailed from time to time in the Company's Securities and Exchange Commission
filings.
12
<PAGE>
Medco Research, Inc.
Part II: OTHER INFORMATION
Item 1. Legal Proceedings
Incorporated herein by reference is the contingency described in the Notes to
the Financial Statements set forth in Item 1 of Part I of this Report, set forth
on pages 8 and 9 hereof.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
None.
b. Reports on Form 8-K:
None.
13
<PAGE>
Medco Research, Inc.
SIGNATURES
Pursuant to 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.
Medco Research, Inc.
Date: November 9, 1998 By: /s/ Roger D. Blevins
- ---------------------- ------------------------------
Roger D. Blevins, Pharm.D.
President and
Chief Executive Officer
Date: November 9, 1998 By: /s/ Glenn C. Andrews
- ---------------------- ------------------------------
Glenn C. Andrews
Chief Financial Officer
Date: November 9, 1998 By: /s/ Adam C. Derbyshire
- ---------------------- ------------------------------
Adam C. Derbyshire
Corporate Controller
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 3,927
<SECURITIES> 17,852
<RECEIVABLES> 7,516
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,295
<PP&E> 718
<DEPRECIATION> 527
<TOTAL-ASSETS> 60,871
<CURRENT-LIABILITIES> 3,042
<BONDS> 0
<COMMON> 53,384
0
0
<OTHER-SE> 4,245
<TOTAL-LIABILITY-AND-EQUITY> 60,871
<SALES> 0
<TOTAL-REVENUES> 25,186
<CGS> 0
<TOTAL-COSTS> 12,020
<OTHER-EXPENSES> 12,020
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 13,166
<INCOME-TAX> 1,064
<INCOME-CONTINUING> 12,102
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,102
<EPS-PRIMARY> 1.15
<EPS-DILUTED> 1.11
</TABLE>
