<PAGE> 1
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 March 31, 1997
or
[ ] TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to ______________________
Commission File Number: 0-27488
INCYTE PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 94-3136539
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
</TABLE>
3174 Porter Drive
Palo Alto, California 94304
(Address of principal executive offices)
(415) 855-0555
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
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
The number of outstanding shares of the registrant's Common Stock, $0.001 par
value, was 10,481,541 as of April 30, 1997.
Page 1 of 14
Exhibit Index on Page 14
<PAGE> 2
INCYTE PHARMACEUTICALS, INC.
INDEX
PART I: FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ITEM 1. Financial Statements - Unaudited
Condensed Consolidated Balance Sheets - March 31, 1997 and
December 31, 1996...........................................................3
Condensed Consolidated Statements of Operations - three month
periods ended March 31, 1997 and 1996.......................................4
Condensed Consolidated Statements of Cash Flows - three months ended
March 31, 1997 and 1996.....................................................5
Notes to Condensed Financial Statements.....................................6
ITEM 2. Management's discussion and analysis of financial condition
and results of operations...................................................8
PART II: OTHER INFORMATION
ITEM 1. Legal Proceedings..........................................................12
ITEM 2. Changes in Securities......................................................12
ITEM 3. Defaults Upon Senior Securities............................................12
ITEM 4. Submission of Matters to a Vote of Security Holders........................12
ITEM 5. Other Information..........................................................12
ITEM 6. Exhibits and Reports on Form 8-K...........................................12
Signatures.................................................................13
Exhibit Index..............................................................14
</TABLE>
Page 2 of 14
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INCYTE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
--------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,008 $ 7,628
Marketable securities - available-for-sale 30,539 30,622
Accounts receivable 8,678 2,469
Prepaid expenses and other current assets 2,597 2,456
-------- --------
Total current assets 49,822 43,175
Property and equipment, net 25,346 22,936
Deposits and other assets 4,441 765
-------- --------
Total assets $ 79,609 $ 66,876
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,953 $ 4,670
Accrued liabilities 2,923 1,507
Deferred revenue 25,946 14,878
Current portion of capital lease obligations and notes payable 49 73
-------- --------
Total current liabilities 32,871 21,128
Noncurrent portion of capital lease obligations and notes payable 28 37
Noncurrent portion of accrued rent 452 464
Stockholders' equity:
Capital stock 10 10
Additional paid-in capital 81,923 81,832
Unrealized gains (losses) on securities available-for-sale (134) (73)
Accumulated deficit (35,541) (36,522)
-------- --------
Total stockholders' equity 46,258 45,247
-------- --------
Total liabilities and stockholders' equity $ 79,609 $ 66,876
======== ========
</TABLE>
See accompanying notes
Page 3 of 14
<PAGE> 4
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INCYTE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
1997 1996*
-------- --------
<S> <C> <C>
Revenue $ 17,859 $ 6,274
Costs and expenses
Research and development 14,730 7,745
Selling, general and administrative 2,574 1,245
-------- --------
Total costs and expenses 17,304 8,990
Income (loss) from operations 555 (2,716)
Interest and other income, net 478 678
-------- --------
Income (loss) before income taxes 1,033 (2,038)
Provision for income taxes (52) -
-------- --------
Net income (loss) $ 981 $ (2,038)
======== ========
Net income (loss) per share $ 0.09 $ (0.20)
======== ========
Shares used in computing net income (loss) per share 11,453 10,034
======== ========
</TABLE>
*Restated to reflect combined results and financial position of Incyte and
Genome Systems.
See accompanying notes
Page 4 of 14
<PAGE> 5
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INCYTE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
1997 1996
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 981 $ (2,038)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 2,238 1,036
Changes in certain assets and liabilities:
Accounts receivable (6,209) 7,169
Prepaid expenses and other assets (3,817) (766)
Accounts payable (717) (24)
Accrued liabilities 1,404 735
Deferred revenue 11,068 5,525
-------- --------
Total adjustments 3,967 13,675
-------- --------
Net cash provided by operating activities 4,948 11,637
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,625) (3,821)
Purchases of securities - available-for-sale (4,511) (11,181)
Sale of securities - available-for-sale 4,510 -
Maturity of securities - available-for-sale - 5,078
-------- --------
Net cash used in investing activities (4,626) (9,924)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of common stock 91 394
Principal payments on capital lease obligations (33) (20)
-------- --------
Net cash provided by financing activities 58 374
-------- --------
Net increase in cash and cash equivalents 380 2,087
Cash and cash equivalents at beginning of the period 7,628 10,548
-------- --------
Cash and cash equivalents at end of the period $ 8,008 $ 12,635
======== ========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Interest paid $ 5 $ 4
======== ========
</TABLE>
See accompanying notes
Page 5 of 14
<PAGE> 6
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INCYTE PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
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. The condensed balance sheet as of March 31, 1997, statements of
operations for the three months ended March 31, 1997 and 1996 and the statements
of cash flows for the three months ended March 31, 1997 and 1996 are unaudited,
but include all adjustments (consisting of normal recurring adjustments) which
the Company considers necessary for a fair presentation of the financial
position, operating results and cash flows for the periods presented. The
condensed consolidated financial statements include the accounts of its
wholly-owned subsidiaries. In July 1996, all of the outstanding shares of Genome
Systems, Inc. ("Genome Systems") were acquired by the Company in a business
combination accounted for as a pooling-of-interests. Accordingly, all prior
financial data have been restated to represent the combined financial results of
the previously separate entities (Note 4). Although the Company believes that
the disclosures in these financial statements are adequate to make the
information presented not misleading, certain information and footnote
information normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
Results for any interim period are not necessarily indicative of results for any
future interim period or for the entire year. The accompanying financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
2. REVENUE RECOGNITION
The Company recognizes revenue for database collaboration agreements evenly over
the term of the agreement. Revenue is deferred for fees received before earned.
Revenues from custom orders, such as satellite databases, are recognized upon
shipment. Revenues from reagents and genomic screening products are recognized
when shipped, and revenues from genomic screening services are recognized upon
completion.
3. NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed using the weighted average number of
shares of common stock outstanding and dilutive common equivalent shares. For
the comparative quarter of 1996, common
Page 6 of 14
<PAGE> 7
equivalent shares from stock options and warrants are excluded from the
computation as their effect is antidilutive.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The Company expects that there will be no
material impact on the earnings per share for the quarters ended March 31, 1997
and 1996.
4. BUSINESS COMBINATIONS
In July 1996, the Company issued 204,073 shares of common stock in exchange for
all of the capital stock of Genome Systems, Inc., a privately held genomics
company in St. Louis, Missouri. Genome Systems provides genomic research
products and technical support services to scientists to assist them in the
identification and isolation of novel genes. The merger has been accounted for
as a pooling of interests and, accordingly, the Company's financial statements
and financial data have been restated to include the accounts and operations of
Genome Systems for all periods presented.
The table below presents the separate results of operations for Genome Systems
for the period prior to the merger (in thousands):
<TABLE>
<CAPTION>
Genome
Incyte Systems Combined
------ ------- --------
<S> <C> <C> <C>
Three months ended March 31, 1996
Revenue $ 5,583 $691 $ 6,274
Net income (loss) (2,058) 20 (2,038)
</TABLE>
In August 1996, the Company acquired all the common stock of Combion Inc., a
privately held microarray technology company in Pasadena, California, for 73,171
shares of common stock. The acquisition was accounted for as a purchase
transaction, therefore, Combion's results of operations have been included in
the consolidated results of operations since the date of acquisition.
Page 7 of 14
<PAGE> 8
PART I - FINANCIAL INFORMATION
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations as of March 31, 1997 and for the three month periods ended
March 31, 1997 and 1996 should be read in conjunction with the Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996 and with the section of the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 entitled "Item 1. Business - Factors That May
Affect Results".
When used in this discussion, the word "expects" and similar
expressions are intended to identify forward-looking statements. Such
statements, which include statements as to expected expenditure levels and the
adequacy of capital resources, are subject to risks and uncertainties that could
cause actual results to differ materially from those projected. These risks and
uncertainties include, but are not limited to, the ability of the Company to
obtain and retain customers; competition from other entities; early termination
of a database subscription agreement or failure to renew an agreement upon
expiration; the ability to successfully integrate the operations of recent
business combinations; the cost of accessing technologies developed by other
companies; uncertainty as to the scope of coverage, enforceability or commercial
protection from patents that issue on gene sequences and other genetic
information; and the matters discussed in Item 1 of the Company's Form 10-K for
the year ended December 31, 1996 under the caption "Business -- Factors That May
Affect Results". These forward looking statements speak only as of the date
hereof. The Company expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements contained
herein to reflect any change in the Company's expectations with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based.
OVERVIEW
Incyte Pharmaceuticals, Inc. (the "Company") designs, develops and
markets genomic databases, products, software tools and genomic reagents and
services. The Company's database products and services integrate bioinformatics
software with proprietary and, when appropriate, publicly available genetic
information to create information-based tools marketed to the pharmaceutical and
biotechnology industries on a non-exclusive basis for use in drug discovery and
development. In building its genomic databases, the Company utilizes
high-throughput, computer-aided gene sequencing and analysis technologies to
identify and characterize the expressed genes of the human genome as well as
certain animal, plant and microbial genomes. During the quarter ended March 31,
1997, the Company announced three new database collaborations. Additionally,
since the beginning of the year, two collaborators extended the term of their
respective database collaboration agreements which were originally scheduled to
expire at the end of 1997 and 1998.
In July 1996, the Company issued shares of its Common Stock in
exchange for all of the outstanding shares of Genome Systems, Inc. ("Genome
Systems"), a genomics service company in St. Louis, Missouri. The transaction
has been accounted for as a pooling of interests, and the consolidated
Page 8 of 14
<PAGE> 9
financial statements discussed herein and all historical financial information
have been restated to reflect the combined operations of both companies.
Revenues recognized by the Company are predominately related to
database collaboration agreements and consist primarily of nonexclusive
database access fees. Revenues also include the sales of genomic screening
products and services and fees for custom or "satellite" database services. The
Company's database collaboration agreements also provide for future milestone
payments and royalties from the sale of products derived from proprietary
information obtained through the databases. There can be no assurance that any
database collaborator will ever generate products from information contained
within the databases and thus that the Company will ever receive milestone
payments or royalties. There can be no assurance that any of the Company's
database collaboration agreements will be renewed upon expiration, typically
after a term of three years, or will not be terminated earlier if the Company
breaches any material provision of any database collaboration agreement.
The Company has incurred annual operating losses since inception.
While the Company reported net income in this quarter, there can be no
assurance that the Company can maintain profitability. There can also be no
assurance that the Company will be able to sustain significant annual revenues
by obtaining new customers and retaining existing customers for the Company's
database and genomics products and services, or that given the significant
investment in new product development, marketing, sales and customer service
currently planned by the Company in 1997 and beyond, the revenue generated will
be adequate to fund the Company's operating expenses. In particular, one of the
Company's first database collaboration agreements is scheduled to expire at the
end of 1997 and it is not known if the agreement will be renewed, and if
renewed, under what terms. The loss of any database collaborator could have a
material adverse effect on the Company's business, financial condition and
results of operations.
The Company's operating results may fluctuate significantly from
quarter to quarter as a result of a variety of factors, including changes in the
demand for the Company's products and services, the pricing of database access
to database collaborators, and the introduction of competitive databases or
services by others. In particular, the Company has a limited ability to control
the timing of database installations due to the lengthy sales cycle required for
the Company's database products, the time required to complete custom orders can
vary and the growing investment in external research and development alliances
could result in significant quarterly expense fluctuations due to the payment of
milestones, license fees or research payments. The need for continued investment
in development of the Company's databases and related products and services and
for extensive ongoing customer support capabilities results in significant fixed
expenses. The Company believes that quarterly comparisons of its financial
results will not necessarily be meaningful and should not be relied upon as an
indication of future performance.
The two business combinations completed in 1996, Genome Systems and
Combion, Inc. ("Combion"), are accompanied by risks commonly encountered in
business combinations of companies. Such risks include, among other things,
fluctuations in the Company's quarterly and annual operating results due to the
costs and expenses of acquiring and integrating new businesses or technologies,
the difficulty and expense of assimilating the operations and personnel of the
combined or acquired businesses, the potential disruption of the Company's
ongoing business and diversion of management time and attention, the inability
to successfully integrate or to complete the development and application of
acquired technology and the potential failure to achieve anticipated financial,
operating and strategic benefits from such acquisitions and difficulties in
establishing and maintaining uniform standards, controls, procedures and
policies.
Page 9 of 14
<PAGE> 10
RESULTS OF OPERATIONS
Revenues for the three months ended March 31, 1997 increased to
$17.9 million compared to $6.3 million for the corresponding period in 1996.
Revenues resulted primarily from database access fees and to a much lesser
extent from genomic screening products and services and custom satellite
database services. The increase in revenues in comparable quarters was primarily
due to an increase in the number of database collaboration agreements.
Total costs and expenses for the three months ended March 31, 1997
were $17.3 million compared to $9.0 million for the same period of 1996.
Research and development expenses accounted for 84% of the increase and
selling, general and administrative expenses represented 16% of the increase
from period to period. Total costs and expenses are expected to increase in the
foreseeable future due to continued investment in new product development and
data production, obligations under existing and future research and development
alliances, and increased investment in marketing, sales and customer services.
The magnitude of the Company's operating expenses will largely be a function of
the Company's ability to secure new collaborators for its database products and
services. However, if the Company does not obtain additional collaborators in a
timely manner, it may not be able to adjust significantly its level of
expenditures in any such period, which could have an adverse effect on the
Company's operating results.
Research and development expenses increased to $14.7 million for the
three months ended March 31, 1997 compared to $7.7 million for the same period
in 1996. The increase from 1996 to 1997 was primarily attributable to the
increase in the production of gene sequence and mapping information, increased
bioinformatics and database development efforts, costs related to intellectual
property protection and expenses related to continuing operations at Combion and
expanding operations at Genome Systems. The Company expects research and
development spending to increase over the next few years as the Company
continues to broaden its gene sequence production operations, pursue the
development of new database products and services, invest in new technologies
and invest in the continued protection of its intellectual property.
Selling, general and administrative expenses increased to $2.6
million for the three months ended March 31, 1997 compared to $1.2 million for
the same period in 1996. The increase is due primarily to growth in marketing,
sales and customer services and additional administrative personnel required to
support growth of the Company. The Company expects that selling, general and
administrative expenses will increase throughout 1997 due to continued growth in
marketing, sales and customer support, as well as expanding operations.
Interest and other income, net decreased to $0.5 million for the
three months ended March 31, 1997 from $0.7 million for the same period in 1996
primarily as the result of reduced interest income from lower average cash
balances.
The estimated effective annual income tax rate for the first quarter
of 1997 is 5% which represents the provision of federal and state alternative
minimum taxes after utilization of net operating loss carryforwards. No
provisions have been recorded prior to this quarter as the Company incurred
annual net operating losses.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Company had $38.5 million in cash, cash
equivalents and marketable securities, compared to $38.3 million as of December
31, 1996. Cash provided by operations was largely offset by investments in
capital equipment, research and development alliances and facilities
improvements. The Company has classified all of its cash, cash equivalents and
marketable securities - available-for-sale as short-term, as the Company may
not hold its
Page 10 of 14
<PAGE> 11
investments until maturity in order to take advantage of favorable market
conditions. Available cash is invested in accordance with the Company's
investment policy's primary objectives of liquidity, safety of principal and
diversity of investments.
Net cash provided by operating activities was $4.9 million for the
three months ended March 31, 1997, as compared to net cash provided by operating
activities of $11.6 million for the three months ended March 31, 1996. The
decrease in net cash provided by operating activities resulted primarily from
increased accounts receivable and prepaid expenses and other assets in 1997
partially offset by increased deferred revenue and the change from net loss to
net income. Net cash generated by operating activities may in the future
fluctuate significantly from quarter to quarter due to periodic large
prepayments by database collaborators. The Company's investing activities, other
than purchases and maturities of short-term investments, have consisted of
capital expenditures, which totaled $4.6 million for the three months ended
March 31, 1997 as compared to $3.8 million for the three months ended March 31,
1996. The increase was primarily due to purchases of computer hardware required
to support existing and developing database modules and, to a lesser extent, lab
equipment and tenant improvements on the Company's facilities. Net cash provided
by financing activities was $58,000 and $374,000 for the three months ended
March 31, 1997 and 1996, respectively. The decrease was primarily due to reduced
proceeds from the exercise of stock options.
The Company expects its cash requirements to increase throughout
1997 as it increases its investment in data-processing-related computer hardware
in order to support its existing and new database products, continues to seek
access to technologies through alliances, license agreements and/or
acquisitions, and addresses its needs for larger facilities and/or improvements
in existing facilities. The Company expects to continue to fund future
operations with revenues from genomic database products and services in addition
to using its current cash, cash equivalents and investments when necessary. The
Company expects these resources will satisfy the Company's projected working
capital and capital expenditure requirements at least for the next twelve
months. However, the Company can offer no assurance that the Company will be
able to obtain additional collaborators for the Company's databases or that such
database products and services will produce revenues, which together with the
Company's cash, cash equivalents and marketable securities, will be adequate to
fund the Company's operating expenses. The Company's cash requirements depend on
numerous factors, including the ability of the Company to attract and retain
collaborators for its databases and genomic products and services; the Company's
research and development activities; competing technological and market
developments; the cost of filing, prosecuting, defending and enforcing patent
claims and other intellectual property rights; the purchase of additional
capital equipment, including capital equipment necessary to insure that the
Company's sequencing operation remains competitive; and costs associated with
the integration of new operations assumed through mergers and acquisitions.
There can be no assurance that additional funding, if necessary, will be
available on favorable terms, if at all.
Page 11 of 14
<PAGE> 12
INCYTE PHARMACEUTICALS, INC.
PART II: OTHER INFORMATION
ITEM 1. Legal Proceedings
Not Applicable
ITEM 2. Changes in Securities
None
ITEM 3. Defaults upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K.
a) Exhibits
See Exhibit Index on Page 14
b) Reports on Form 8-K
None
Page 12 of 14
<PAGE> 13
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.
INCYTE PHARMACEUTICALS, INC.
Date: May 12, 1997 By: /s/ Roy A. Whitfield
---------------------------------
Roy A. Whitfield
Chief Executive Officer
Date: May 12, 1997 By: /s/ Denise M. Gilbert
--------------------------------
Denise M. Gilbert
Executive Vice President and
Chief Financial Officer
Page 13 of 14
<PAGE> 14
INCYTE PHARMACEUTICALS, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
11.1 Statement Re: Computation of Earnings Per Share
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 11.1
INCYTE PHARMACEUTICALS, INC.
STATEMENT RE COMPUTATION OF LOSS PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1997 1996
------ ------
Primary Earnings Per Share
- --------------------------
<S> <C> <C>
Weighted average common shares outstanding
during the period 10,455 10,034
Adjustment for dilutive effect of outstanding
stock options 998 -
------ ------
Weighted average common and common
equivalent shares used for primary earnings
(loss) per share 11,453 10,034
====== ======
Net income (loss) 981 (2,038)
====== ======
Net income (loss) per share $0.09 ($0.20)
====== ======
Fully Diluted Earnings Per Share
- --------------------------------
Weighted average common shares outstanding
during the period 10,455 10,034
Adjustment for dilutive effect of outstanding
stock options 998 -
------ ------
Weighted average common and common
equivalent shares used for fully diluted earnings
(loss) per share 11,453 10,034
====== ======
Net income (loss) 981 (2,038)
====== ======
Net income (loss) per share $0.09 ($0.20)
====== ======
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Item 1 of
Form 10-Q for the period ended March 31, 1997 and is qualified in its entirety
by reference to such 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 8,008
<SECURITIES> 30,539
<RECEIVABLES> 8,678
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 49,822
<PP&E> 37,172
<DEPRECIATION> 11,826
<TOTAL-ASSETS> 79,609
<CURRENT-LIABILITIES> 32,871
<BONDS> 0
0
0
<COMMON> 10
<OTHER-SE> 46,248
<TOTAL-LIABILITY-AND-EQUITY> 79,609
<SALES> 0
<TOTAL-REVENUES> 17,859
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,730
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,033
<INCOME-TAX> 52
<INCOME-CONTINUING> 981
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 981
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
