<PAGE> 1
SOMATOGEN, INC.
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
March 31, 1997.
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
0-19423
SOMATOGEN, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-0991858
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2545 Central Ave., Boulder, CO 80301
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 440-9988
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.001 par value
(Title of Class)
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 / /
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock $.001 par value 20,812,543
Class Outstanding at May 9, 1997
Somatogen and the Somatogen logo are tradenames of Somatogen, Inc.
Optro(TM) is a trademark of Somatogen, Inc. All other brand names or
trademarks appearing in this 10-Q are the property of their respective
holders.
<PAGE> 2
SOMATOGEN, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Consolidated Balance Sheet -
March 31, 1997 and June 30, 1996...................... 3-4
Consolidated Statement of Operations-
for the three and nine-month periods ended March 31, 1997
and 1996 and the period from July 10, 1985 (inception) to
March 31, 1997........................................ 5
Consolidated Statement of Cash Flows -
for the nine-month periods ended March 31, 1997 and
1996 and the period from July 10, 1985 (inception) to
March 31, 1997........................................ 6-7
Notes to Consolidated Financial Statements................ 8
Management's Discussion and Analysis of Financial Condition
and Results of Operations............................. 9-13
PART II. OTHER INFORMATION............................... 14
SIGNATURES.................................................. 15
<PAGE> 3
SOMATOGEN, INC.
PART I Financial Information
(A Corporation in the Development Stage)
CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
ASSETS March 31, June 30,
1997 1996
----------- ----------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents ........................ $17,522 $29,541
Short-term investments............................ 24,109 24,735
Receivable from Lilly............................. 7,435 1,852
Other receivables................................. 502 1,013
Prepaid expenses and other current assets......... 220 444
------- -------
Total current assets........................ 49,788 57,585
Property and equipment, at cost, net of
accumulated depreciation and amortization....... 4,030 4,042
Assets held for sale.................................. 6,025 6,446
Other assets.......................................... 1,292 1,088
------- -------
$61,135 $69,161
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................. $ 1,637 $ 1,826
Accrued payroll................................... 965 801
Payable to Lilly.................................. 944 2,454
Other accrued liabilities......................... 472 603
Current portion of long-term debt
and capital lease obligations.................. -- 162
------- -------
Total current liabilities..................... 4,018 5,846
Capital lease obligations, less current portion....... -- 11
------- -------
Total liabilities..................................... 4,018 5,857
------- -------
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE> 4
SOMATOGEN, INC.
PART I Financial Information
(A Corporation in the Development Stage)
CONSOLIDATED BALANCE SHEET (continued)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
----------- ----------
(unaudited)
<S> <C> <C>
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value, 10,000,000 shares
authorized at March 31, 1997,
no shares issued or outstanding............... -- --
Common stock, $.001 par value; 35,000,000 shares
authorized, 20,810,211 and 20,684,970 shares
issued and outstanding at March 31, 1997 and
June 30, 1996, respectively................... 21 21
Additional paid-in capital........................ 205,414 204,518
Deficit accumulated during the development stage.. (148,122) (140,948)
Deferred compensation related to grant of options. (196) (287)
-------- --------
Total stockholders' equity.................... 57,117 63,304
-------- --------
$ 61,135 $ 69,161
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE> 5
SOMATOGEN, INC.
(A Corporation in the Development Stage)
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three-months ended Nine-months ended Period From
March 31, March 31, July 10, 1995
-------------------- -------------------- (inception) to
1997 1996 1997 1996 March 31, 1997
---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C>
Revenue:
Technology disclosure and license fees... $ -- $ -- $ -- $ -- $ 4,904
Research and development grants
and contracts........................ -- -- -- -- 1,684
-------- --------- --------- --------- --------
Total revenue.................... -- -- -- -- 6,588
-------- --------- --------- --------- --------
Operating expenses:
Research and development................. 5,247 5,199 15,448 14,559 116,700
Reimbursements from Lilly................ (1,540) (1,548) (4,524) (4,081) (14,696)
Reimbursements to Lilly.................. 376 1,497 1,411 2,137 4,761
-------- --------- --------- --------- --------
Research and development, net............ 4,083 5,148 12,335 12,615 106,765
General, administrative and marketing.... 923 1,043 2,732 3,029 30,499
Writedown of manufacturing
facility assets...................... -- -- -- -- 29,194
-------- --------- --------- --------- --------
Total operating expenses......... 5,006 6,191 15,067 15,644 166,458
-------- --------- --------- --------- --------
Operating loss........................... (5,006) (6,191) (15,067) (15,644) (159,870)
Interest and other income, net........... 6,573 807 7,893 2,501 16,666
-------- --------- --------- --------- --------
Income (loss) from continuing operations. 1,567 (5,384) (7,174) (13,143) (143,204)
Discontinued operations:
Loss from operations of subsidiary....... -- -- -- -- (1,225)
Gain on sale of subsidiary............... -- -- -- -- 300
-------- --------- --------- -------- --------
Net income (loss)........................ $ 1,567 $ (5,384) $ (7,174) $(13,143) $(144,129)
======== ========= ========= ======== ========
Net income (loss) per share.............. $ 0.07 $ (0.26) $ (0.35) $ (0.66)
======== ========= ========= ========
Shares used in calculating
per share data 21,049,000 20,630,000 20,743,000 19,977,000
========== ========== ========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE> 6
SOMATOGEN, INC.
(A Corporation in the Development Stage)
CONSOLIDATED STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(In thousands - unaudited)
<TABLE>
<CAPTION>
Period from
Nine-months ended July 10, 1985
March 31, (inception) to
1997 1996 March 31, 1997
---- ---- --------------
<S> <C> <C> <C>
Cash flows provided by (used in) operating activities:
Net loss............................................... $ (7,174) $(13,143) $(144,129)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization...................... 1,224 1,523 15,991
Stock compensation expense......................... 231 250 1,193
Writedown of manufacturing facility assets......... -- -- 29,194
Changes in assets and liabilities:
Receivables........................................ (5,072) (707) (7,775)
Prepaid expenses and other current assets.......... 224 188 (195)
Accounts payable and accrued liabilities........... (1,666) 2,144 4,169
Other, net......................................... -- (9) 328
-------- -------- --------
Net cash used in operating activities............ (12,233) (9,754) (101,224)
-------- -------- --------
Cash flows provided by (used in) investing activities:
Purchase of short-term investments..................... (52,338) (64,357) (301,299)
Proceeds from sale of short-term investments........... 52,964 42,461 277,190
Purchases of property and equipment.................... (1,131) (1,192) (23,386)
Proceeds from sale of property and equipment........... 433 595 3,211
Additions to construction-in-progress.................. -- -- (18,956)
Other.................................................. (297) (331) (9,183)
-------- -------- ---------
Net cash used in investing activities.............. (369) (22,824) (72,423)
-------- -------- --------
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE> 7
SOMATOGEN, INC.
(A Corporation in the Development Stage)
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
Increase (Decrease) in Cash and Cash Equivalents
(In thousands - unaudited)
<TABLE>
<CAPTION>
Period from
Nine-months ended July 10, 1985
March 31, (inception) to
1997 1996 March 31, 1997
---- ---- --------------
<S> <C> <C> <C>
Cash flows provided by (used in) financing activities:
Payments of capital lease obligations and long-
term debt.......................................... (173) (890) (10,467)
Net proceeds from issuance of stock and warrants....... 756 33,273 198,117
Other.................................................. -- -- 3,519
------- ------- -------
Net cash provided by financing activities.............. 583 32,383 191,169
------- ------- -------
Net increase (decrease) in cash and cash equivalent........ (12,019) (195) 17,522
Cash and cash equivalents at beginning of period........... 29,541 26,376 --
------- ------- -------
Cash and cash equivalents at end of period................. $17,522 $26,181 $17,522
======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid for interest................................. $ 16 $ 98 $ 2,396
Capital lease obligations incurred for purchase
of property and equipment.......................... -- -- 5,318
Equipment deposits transferred to net
property, plant and equipment...................... -- -- 3,423
Net property, plant and equipment transferred
to assets held for sale............................ -- -- 5,329
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE> 8
SOMATOGEN, INC.
(A Corporation in the Development Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
Note 1--STATEMENT OF ACCOUNTING PRESENTATION
In the opinion of the Company, the accompanying unaudited
consolidated financial statements include all adjustments (consisting
only of normal recurring accruals) necessary to fairly state the
Company's consolidated financial position as of March 31, 1997 and the
consolidated results of operations and of cash flows for the three and
nine-month periods ended March 31, 1997 and 1996, and for the period
from July 10, 1985 (inception) to March 31, 1997. The accompanying
consolidated financial statements should be read in conjunction with
the consolidated financial statements included in the Company's Annual
Report on Form 10-K for the year ended June 30, 1996. The information set
forth in the accompanying consolidated balance sheet as of June 30,
1996, has been derived from the audited consolidated balance sheet
included in the Company's Annual Report on Form 10-K for the year ended
June 30, 1996.
Interim results are not necessarily indicative of the results for
the full year.
Note 2--STRATEGIC ALLIANCE AND RESEARCH AND DEVELOPMENT ARRANGEMENT
In June 1994, the Company entered into a global strategic alliance
(the "Alliance") with Eli Lilly and Company ("Lilly") to co-develop
Somatogen's lead human hemoglobin product, Optro. In March 1997, the
Company received notice of Lilly's decision to discontinue their co-
development of Optro. The termination is effective May 20, 1997.
The terms of the Alliance provides that Somatogen and Lilly share
certain clinical development and process improvement costs through the
date of the termination. Additionally, under the terms of the
Alliance, Lilly is obligated to make a one-time termination payment of
$6,000,000 and loan Somatogen $8,000,000 which would be payable in five
years.
Pharmacia & Upjohn, Inc. have the marketing rights to Optro in
Scandinavia under its 1991 agreement with Somatogen.
Note 3--NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed based upon the weighted
average number of common shares and common equivalent shares
outstanding. Common equivalent shares from stock options and warrants
are included in the per share calculations where the effect of their
inclusion would be dilutive.
<PAGE> 9
SOMATOGEN, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Except for the historical information contained herein, the
following discussion contains forward-looking statements that involve
risks and uncertainties. The Company's actual results could differ
materially from those discussed here. Factors that could cause or
contribute to such differences include, but are not limited to, those
discussed in this section, those discussed in the Company's Annual
Report on Form 10-K for the year ended June 30, 1996, and those
discussed in the Company's Registration Statement on Form S-3 as
declared effective on October 12, 1995.
RESULTS OF OPERATIONS
- ---------------------
Revenue
The Company did not recognize any revenue for the three or
nine-month periods ended March 31, 1997 or 1996.
Operating Expenses
Total operating expenses decreased by 19% to $5,006,000 during the
quarter ended March 31, 1997 from $6,191,000 for the comparable period
in the previous fiscal year. For the nine-month period ended March 31,
1997, total operating expenses decreased by 4% to $15,067,000 from
$15,644,000 for the comparable period in the previous fiscal year.
Net research and development expense for the quarter ended
March 31, 1997 decreased by 21% to $4,083,000 from $5,148,000 for
the comparable period in the previous fiscal year. The Company's
net research and development expense decreased by 2% for the nine-
month period ended March 31, 1997 to $12,335,000 from $12,615,000
for the comparable period in fiscal 1996.
Excluding Lilly reimbursements, research and development expense
for the quarter ended March 31, 1997 increased by 1% to $5,247,000 from
$5,199,000 for the comparable period in the previous fiscal year and for
the nine-month period ended March 31, 1997, research and development
expense increased by 6% to $15,448,000 from $14,559,000 for the
comparable period in the previous fiscal year. These increases were
primarily a result of increased process and product development
expenditures, including clinical trials.
<PAGE> 10
SOMATOGEN, INC.
For the quarter ended March 31, 1997, reimbursements from Lilly
decreased to $1,540,000 from $1,548,000 for the comparable period in the
previous fiscal year. For the nine-month period ended March 31, 1997,
reimbursements from Lilly increased by 11% to $4,524,000 from $4,081,000
for the comparable period in the previous fiscal year. The increase was
primarily the result of an amendment to the Alliance which provided that
certain process improvement expenditures would be reimbursable beginning
January 1, 1996, and was partially offset by a decrease in reimbursable
clinical development expenditures.
Reimbursements to Lilly during the three-month period ended
March 31, 1997 decreased by 75% to $376,000 from $1,497,000 for the
comparable period in the previous fiscal year. This decrease was primarily
due to lower reimbursable process improvement expenditures,
which were partially offset by higher reimbursable clinical
expenditures. For the nine-month period ended March 31, 1997,
reimbursements to Lilly decreased by 34% to $1,411,000 from $2,137,000
for the comparable period in the previous fiscal year. This decrease
was primarily a result of lower reimbursable process improvement
expenditures.
Based on Lilly's decision to terminate the Alliance, costs
previously shared with Lilly will be borne by the Company. These costs,
as well as increased costs related to the scope of Optro clinical trials
and next generation product development, will be offset by expense
reductions resulting from the Company's reprioritization of projects and
associated staff reduction. The expense savings resulting from the
Company's staff reduction will not be realized until the beginning of
the next fiscal year at which time expenses are not projected to
increase significantly until completion of clinical trials currently in
progress.
General, administrative and marketing expense decreased by 12% to
$923,000 for the quarter ended March 31, 1997 from $1,043,000 for the
comparable quarter in the previous fiscal year. This decrease was
primarily a result of lower expenses incurred related to the disposal
of certain assets held for sale. For the nine-month period ended
March 31, 1997, general, administrative and marketing expense decreased
10% to $2,732,000 from $3,029,000 for the comparable period in fiscal
1996. This decrease was primarily due to lower expenses incurred
related to the disposal of certain assets held for sale, combined with
a decrease in commercial development expenditures.
<PAGE> 11
SOMATOGEN, INC.
Interest and Other Income, Net
Interest and other income increased to $6,573,000 for the quarter
ended March 31, 1997 from $807,000 for the quarter ended March 31, 1996
and to $7,893,000 for the nine-month period ended March 31, 1997 from
$2,501,000 for the comparable period in fiscal 1996. The increases in
interest and other income were primarily a result of the $6,000,000
Lilly termination obligation, net of decreases in interest income
due to lower average investment balances.
Net Income (Loss)
Net income for the quarter ended March 31, 1997 was $1,567,000
(or $0.07 per share) compared to a net loss of $5,384,000 (or $0.26 per
share) for the same period in fiscal 1996. For the nine-month periods
ended March 31, 1997 and 1996, the net loss totaled $7,174,000 (or $0.35
per share) and $13,143,000 (or $0.66 per share), respectively.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Somatogen's operations to-date have consumed substantial amounts
of cash. Excluding the $6,000,000 Lilly termination payment, it is
expected that negative cash flow from operations will increase during
the remainder of fiscal 1997 and in future years when compared to the
level experienced during the three and nine-month periods ended
March 31, 1997. Such increases are expected as clinical trials for
Optro increase in scope, additional product and process improvement
costs are incurred and as preclinical and clinical studies of new
products are undertaken. Additionally, beginning May 20, 1997, certain
clinical and process improvement expenditures which were shared historically
with Lilly under the Alliance will be funded solely by the
Company. Somatogen will need to raise significant additional funds in
order to fund the Company's future operations and capital expenditures
prior to commercialization of the Company's products.
The Company has relied primarily on public and private offerings
of equity and cost sharing and equity investments pursuant to the
Alliance to fund its operations and upon equipment leasing arrangements
to finance the acquisition of capital equipment for the Company's
laboratory and pilot manufacturing facilities.
<PAGE> 12
SOMATOGEN, INC.
At March 31, 1997 the Company had cash, cash equivalents and
short-term investments of $41,631,000. The Company's cash, cash
equivalents and short-term investments decreased approximately
$12,645,000 during the nine-month period ended March 31, 1997. This
decrease was primarily a result of the use of cash for operations.
In response to Lilly's decision to discontinue its co-development
of Optro, the Company reviewed and reprioritized its projects and
implemented a restructuring plan which included a staff reduction.
The Company believes that capital resources existing at March 31,
1997, including the Lilly termination receivable of $6,000,000 and
loan of $8,000,000, will be adequate to meet its needs through at
least fiscal 1999.
In September 1992, the Company commenced construction of a
clinical manufacturing facility. The Company had also acquired land
for, and begun the design of, a larger commercial manufacturing
facility. In conjunction with entering into the Alliance, an
evaluation of the Company's future manufacturing requirements was
completed and construction of the clinical manufacturing facility was
discontinued. During the fourth quarter of fiscal 1994, the Company
recognized a non-recurring charge, which was principally non-cash,
associated with the writedown of its clinical and commercial
manufacturing assets of $29,200,000.
Land and building related to manufacturing facilities and the
related manufacturing equipment aggregating $6,025,000 are classified
in Somatogen's balance sheet as assets held for sale. During the
nine-month period ended March 31, 1997, the Company realized
$421,000 in proceeds from the sale of clinical manufacturing
assets. The Company believes the aggregate carrying value of all
assets held for sale approximates the assets' net realizable value;
however, the Company continues to monitor estimated realizable values
on a quarterly basis. There can be no assurances that the Company
will realize the aggregate carrying value of assets held for sale.
Proceeds from such asset sales are being used for general corporate
purposes.
The Company historically has leased a significant portion of the
equipment used in its laboratory and pilot manufacturing facilities. As
of March 31, 1997 the Company had aggregate future operating lease
obligations of approximately $3,041,000. The Company spent $1,131,000
during the nine-month period ended March 31, 1997 for the purchase of
capital equipment and leasehold improvements.
<PAGE> 13
SOMATOGEN, INC.
The Company's near-term operating requirements include increased
research and development expenditures, including costs related to
clinical trials and new product development and manufacturing. The
Company's capital spending program includes purchases of additional
equipment for its research and development laboratories and pilot
manufacturing facility. In subsequent fiscal years, the Company's
operating requirements are expected to include continuing increases
in research and development funding to cover the costs of
manufacturing process improvements, expanded clinical trials, new
product development, expenditures associated with commercial
manufacturing, as well as general, administrative, marketing and
distribution expenses.
In order to meet its long-term financing requirements, the
Company may pursue a number of financing alternatives, including
public and/or private offerings of securities and strategic alliances.
However, there can be no assurance that the Company will be able to
raise additional financing from any of such sources, or that any
additional funding which may become available to the Company will be
on acceptable terms. The Company's ability to raise additional
financing may be dependent on many factors beyond the Company's
control, including the state of the capital markets and the rate of
progress of the Company's clinical trials. Any additional financing
that the Company may be able to obtain could result in substantial
dilution to existing stockholders. If adequate funds are not
available, the Company will be required to significantly curtail
operations. Any such action could impact the Company's research and
development programs, including the Company's clinical trial program.
Any of these events could adversely affect the Company's ability to
commercialize its products.
Cash requirements for the Company may vary materially from those
now planned due to results of research and development, results of
clinical testing, changes in focus and direction of the Company's
research and development programs, manufacturing processes, competitive
and technological advances, the FDA regulatory process, changes in the
Company's marketing and distribution strategy and other factors.
<PAGE> 14
SOMATOGEN, INC.
PART II. OTHER INFORMATION
Item 6.--Exhibits and Reports on Form 8-K
a) Exhibits
(11.1) Computation of Net Income (Loss) Per Share
(27.1) Financial Data Schedule
b) Reports on Form 8-K
None
<PAGE> 15
SOMATOGEN, INC.
SIGNATURES
The financial information furnished herein has not been audited
by independent auditors; however, in the opinion of management all
adjustments necessary for a fair presentation for the three and nine-
month periods ended March 31, 1997 and 1996, have been included.
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.
Date: May 14, 1997 SOMATOGEN, INC.
Andre de Bruin
-------------------------
Chairman, President and Chief
Executive Officer
(Authorized Signatory)
Timothy D. Hoogheem
-------------------------
Senior Vice President Finance and
Administration, Chief Financial
Officer and Treasurer
(Principal Financial Officer)
Conrad A. McCarty
-------------------------
Corporate Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF MARCH 31,
1997 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE AND
NINE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 17,522
<SECURITIES> 24,109
<RECEIVABLES> 7,937
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 49,788
<PP&E> 18,008
<DEPRECIATION> 13,978
<TOTAL-ASSETS> 61,135
<CURRENT-LIABILITIES> 4,018
<BONDS> 0
<COMMON> 21
0
0
<OTHER-SE> 57,096
<TOTAL-LIABILITY-AND-EQUITY> 61,135
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,335
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15
<INCOME-PRETAX> (7,174)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,174)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,174)
<EPS-PRIMARY> (0.35)
<EPS-DILUTED> 0
</TABLE>
SOMATOGEN, INC.
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average common shares
outstanding 20,800 20,630 20,743 19,977
Dilution effect of outstanding options
and warrants (as determined
under the treasury stock method) 249 -- -- --
------- ------- ------- --------
Weighted average number of common
shares and equivalents
outstanding 21,049 20,630 20,743 19,977
======= ======= ======= ========
Net income (loss) $ 1,567 $(5,384) $(7,174) $(13,143)
======= ======= ======= ========
Net income (loss) per common and
common equivalent share $ 0.07 $ (0.26) $ (0.35) $ (0.66)
======= ======= ======= ========
</TABLE>
(1) Fully diluted net income per share is the same as primary net income
per share
(2) Common stock equivalents are only included when the effect of their
inclusion would be dilutive.
