<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10Q
____x____ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934. For the quarterly period ended December 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
-----------
MEGABIOS CORP.
(Exact name of registrant as specified in its charter)
Delaware 94-3156660
- ----------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
863A Mitten Rd., Burlingame, CA 94010
- ----------------------------------- ------------------------------------
(Address of principal offices) (Zip Code)
650-697-1900
- -----------------------------------
(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.
Yes x No
----------- -----------
The number of outstanding shares of the registrant's Common Stock , $.001 par
value, was 12,681,501 as of December 31, 1997.
<PAGE>
MEGABIOS CORP.
INDEX
PART I: FINANCIAL INFORMATION
Page
Item 1: Condensed Balance Sheets ..................................... 3
Condensed Statements of Operations............................ 4
Condensed Statements of Cashflows ............................ 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 and Use of Proceeds .................... 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 ............................. 13
Signatures ................................................... 14
Exhibit Index ................................................ 15
<PAGE>
PART I FINANCIAL INFORMATION
ITEM I FINANCIAL STATEMENTS
MEGABIOS CORP.
CONDENSED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
------------ --------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $33,624 $ 9,044
Short-term investments 19,589 15,225
Other receivables 521 238
Prepaid expenses and other current assets 471 390
-------- --------
Total current assets 54,205 24,897
-------- --------
Property and equipment, net 5,342 4,733
Other receivables 24 27
Deposits and other assets 38 321
-------- --------
$59,609 $29,978
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 470 $ 694
Accrued compensation 216 170
Accrued construction-in-progress - 249
Other accrued liabilities 127 35
Deferred revenue 394 887
Current portion of long-term debt 1,099 1,233
-------- --------
Total current liabilities 2,306 3,268
Long-term debt 1,993 1,487
Commitments
Stockholders' equity:
Preferred stock - 44,700
Common stock 13 1,410
Additional paid-in capital 78,375 -
Deferred compensation, net of amortization (1,248) (679)
Unrealized gains on available-for-sale securities 1 -
Accumulated deficit (21,831) (20,208)
-------- --------
Total stockholders' equity 55,310 25,223
-------- --------
$59,609 $29,978
-------- --------
-------- --------
</TABLE>
See accompanying notes
Page 3 of 16
<PAGE>
MEGABIOS CORP.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
----------------------- --------------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Collaborative research and development revenue $ 2,466 $ 1,512 $ 4,753 $ 2,983
Operating expenses:
Research and development 3,157 1,868 5,915 3,739
General and administrative 752 444 1,427 1,016
--------- --------- --------- ---------
Total operating expenses 3,909 2,312 7,342 4,755
--------- --------- --------- ---------
Loss from operations (1,443) (800) (2,589) (1,772)
Interest income 777 171 1,175 234
Interest expense (111) (98) (209) (196)
--------- --------- --------- ---------
Net loss $ (777) $ (727) $ (1,623) $ (1,734)
--------- --------- --------- ---------
--------- --------- --------- ---------
Basic and diluted loss per share $ (0.06) $ (0.18) $ (0.22) $ (0.44)
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used in computing basic and diluted net
loss per share 12,400 3,973 7,517 3,971
--------- --------- --------- ---------
--------- --------- --------- ---------
Pro forma net loss per share (Note 3) $ (0.08) $ (0.15) $ (0.18)
--------- --------- ---------
--------- --------- ---------
Shares used in computing pro forma net loss per
share (Note 3) 9,461 11,107 9,459
--------- --------- ---------
--------- --------- ---------
</TABLE>
See accompanying notes
Page 4 of 16
<PAGE>
MEGABIOS CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six months ended
December 31,
----------------------
1997 1996
---------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,623) $ (1,734)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation 886 608
Amortization of deferred compensation 168 -
Changes in operating assets and liabilities:
Other receivables (280) (113)
Prepaid expenses and other assets (81) 93
Deferred revenues (493) 625
Accounts payable (224) (140)
Accrued liabilities (111) (14)
--------- --------
Net cash used in operating activities (1,758) (675)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (1,495) (221)
Deposits and other assets 283 (6)
Purchases of short-term investments (14,563) -
Maturities of short-term investments 10,200 -
--------- --------
Net cash used in investing activities (5,575) (227)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 682 384
Payments on long-term debt (310) (548)
Proceeds from issuance of convertible preferred stock, net - 9,986
Proceeds from issuance of common stock, net 31,541 8
--------- --------
Net cash provided by financing activities 31,913 9,830
--------- --------
Net increase in cash and cash equivalents 24,580 8,928
Cash and cash equivalents, beginning of period 9,044 5,253
--------- --------
Cash and cash equivalents, end of period $ 33,624 $ 14,181
--------- ---------
--------- ---------
Supplemental disclosure of cash flow information
Interest paid $ 208 $ 195
--------- ---------
--------- ---------
</TABLE>
See accompanying notes
Page 5 of 16
<PAGE>
MEGABIOS CORP.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed financial statements are unaudited and have
been prepared by Megabios Corp. (the "Company") in accordance with the rules
and regulations of the Securities and Exchange Commission for interim
financial information and in accordance with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Certain information and footnote
disclosures normally included in the Company's annual financial statements as
required by generally accepted accounting principles have been condensed or
omitted. The interim financial statements, in the opinion of management,
reflect all adjustments (consisting of normal recurring accruals) necessary
for a fair statement of the results for the interim periods ended
December 31, 1997 and 1996. The balance sheet at June 30, 1997 is derived
from the audited financial statements at that date but does not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements.
The results of operations for the interim periods are not necessarily
indicative of the results of operations to be expected for the fiscal year,
although the Company expects to incur a substantial loss for the year ended
June 30, 1998. These interim financial statements should be read in
conjunction with the audited financial statements for the year ended June 30,
1997, which are contained in the Company's Registration Statement on Form S-1
(No. 333-32593) dated September 15, 1997 filed with the Securities and
Exchange Commission.
2. REVENUE RECOGNITION
Revenue related to collaborative research agreements with the Company's
corporate partners is recognized over the related funding periods for each
contract. The Company is required to perform research and development
activities as specified in each respective agreement on a best-efforts basis.
The Company is reimbursed based on the costs associated with the number of
full time equivalent employees working on each specific contract.
3. NET LOSS PER COMMON SHARE
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share",
which modifies the way in which earnings per share are calculated and
disclosed. The Company adopted SFAS 128 in the quarter ended December 31,
1997. Loss per share amounts for all periods presented prior to December 31,
1997 have been restated to conform with the requirements of SFAS 128. The
adoption of SFAS 128 did not have a material impact on the Company's earnings
per share calculation for all periods presented.
Page 6 of 16
<PAGE>
"Basic" net loss per share (as defined by SFAS 128) is computed using
the weighted average number of common shares outstanding less those shares
outstanding subject to continued vesting. As the Company reported a loss for
all periods presented, there is no difference between basic and diluted net
loss per share amounts as prescribed by SFAS 128. Common equivalent shares
are excluded from the computation as their effect is antidilutive, except
that, pursuant to the Securities and Exchange Commission ("SEC") Staff
Accounting Bulletins, common and common equivalent shares (stock options and
convertible preferred stock) issued during the 12-month period prior to the
filing of a registration statement in connection with the Company's initial
public offering at prices below the public offering price of $12.00 have been
included in the calculations as if they were outstanding for all periods
presented through June 30, 1997 (using the treasury stock method for stock
options at the estimated public offering price and the "if-converted" method
for convertible preferred stock).
Pro forma net loss per share for the three months ended December 31,
1996 and the six month periods ended December 31, 1997 and 1996 has been
computed as described above and also gives effect to the conversion of
convertible preferred shares not included above that automatically converted
upon completion of the Company's initial public offering (using the "if
converted" method) from original date of issuance.
4. PUBLIC OFFERING OF COMMON STOCK
On September 15, 1997, the Company completed an initial public offering
of 2,500,000 shares of its common stock at $12.00 per share. On September 29,
1997, the underwriters of the initial public offering exercised their
over-allotment option and purchased an additional 375,000 shares at $12.00
per share. The Company anticipates using the net proceeds of $31.4 million
(after deducting underwriters discounts and offering expenses) to fund
research and development programs, leasehold improvements to its facility,
capital equipment purchases, working capital and general corporate purposes.
Concurrent with the Company's initial public offering, all shares of
preferred stock then outstanding were converted into common stock.
5. DISCONTINUATION OF AGREEMENT WITH PFIZER
In May 1996, the Company entered into a four-year collaborative research
agreement, as well as a license and royalty agreement, with Pfizer Inc
("Pfizer") to develop a gene-based therapeutic for the treatment of solid
tumors via angiogenesis inhibition. Under the terms of the agreement, Pfizer
could, at its option, terminate the program after June 1998 upon six months
prior notice to the Company. In December 1997, Pfizer decided to discontinue
the program. Under the terms of the program, Pfizer will continue to fund the
program through May 1998.
Page 7 of 16
<PAGE>
ITEM II.
MEGABIOS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial
Condition and Results of Operations contains forward-looking statements which
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth under "Risk Factors" in
the Company's Registration Statement on Form S-1, File no. 333-32593, filed
September 15, 1997.
The Company develops proprietary gene delivery systems and provides
preclinical development expertise to create gene-based therapeutics designed
for the treatment or prevention of genetic and acquired diseases. The Company
has developed several in vivo, non-viral gene delivery systems to address a
number of potential therapeutic applications using a variety of therapeutic
genes. The Company's clinical development and commercialization strategy is
to enter into corporate partnerships with pharmaceutical and biotechnology
companies. The Company has established corporate partnerships with Glaxo
Wellcome plc ("Glaxo Wellcome"), Pfizer Inc ("Pfizer") and Eli Lilly and
Company ("Lilly"). In December 1997, Pfizer decided to discontinue its
research and development program to develop gene-based therapeutics to treat
cancer via angiogenesis inhibition. Under the terms of the agreement, Pfizer
is required to terminate the agreement with six months notice and will
continue funding the program through May 1998. Megabios will continue to
advance the program and is actively seeking a new corporate partner. The
corporate partnerships with Glaxo Wellcome and Lilly are ongoing.
To date, substantially all revenue has been generated by collaborative
research and development agreements from corporate partners, and no revenue
has been generated from product sales. Under its corporate partnerships the
Company receives research and development funding on a quarterly basis in
advance of payment of associated research and development costs. The Company
expects that future revenue will be derived in the short-term from research
and development agreements and milestone payments and in the long-term from
royalties on product sales.
The Company has incurred significant losses since inception and expects
to incur substantial losses for the foreseeable future, primarily due to the
expansion of its research and development programs and because the Company
does not expect to generate revenues from the sale of products in the
foreseeable future, if at all. The Company expects that operating results
will fluctuate from quarter to quarter and that such fluctuations may be
substantial. As of December 31, 1997, the Company's accumulated deficit was
approximately $21.8 million.
Page 8 of 16
<PAGE>
The Company uses computer software programs and operating systems in its
operations, including applications used in financial business systems and
various administrative functions. To the extent that these software
applications contain source code that is unable to appropriately interpret
the upcoming calendar year 2000, some level of modification, a possible
replacement of such source code or applications will be necessary. The
Company is still analyzing its software applications and, to the extent they
are not fully year 2000 compliant, the costs necessary to update software or
potential systems interruptions may have a material adverse effect on the
Company's business, financial condition and results of operations.
RESULTS OF OPERATIONS
The Company's revenue from corporate partnerships for the three and six
months ended December 31, 1997 increased to $2.5 million and $4.8 million,
respectively, compared to $1.5 million and $3.0 million for the corresponding
periods in 1996. The 1997 revenue was attributable to amounts earned for
research and development performed under the Company's corporate partnerships
with Pfizer and Lilly. The 1996 revenue was primarily attributable to amounts
earned for research and development performed under the Company's corporate
partnerships with Glaxo Wellcome and Pfizer. No revenues from milestones or
royalties from product sales have been earned under any corporate partnership
to date.
Research and development expenses for the three and six months ended
December 31, 1997 increased to $3.2 million and $5.9 million, respectively,
compared to $1.9 million and $3.7 million for the corresponding periods in
1996. The increase was primarily attributable to increases in personnel and
payroll expenses, increased purchases of laboratory supplies and materials,
increased depreciation from additional equipment and leasehold improvements
and the increased use of consultants and other services to support the
Company's increased research and development activities. The Company expects
research and development expenses to increase as the Company continues to
expand its research and development programs.
General and administrative expenses for the three and six months ended
December 31, 1997 increased to $752,000 and $1.4 million, respectively,
compared to $443,000 and $1.0 million for the corresponding periods in 1996.
The increase was primarily attributable to increased consulting, legal,
professional, insurance, treasury costs, travel and expenses associated with
increased business development activities and corporate expenses associated
with being a publicly traded company. The Company expects general and
administrative expenses to increase due to business development activities
and to expenses incurred as a publicly-traded company.
Page 9 of 16
<PAGE>
Interest income for the three and six months ended December 31, 1997
increased to $777,000 and $1.2 million, respectively, compared to $171,000
and $234,000 for the corresponding periods in 1996. The increase in interest
income resulted from the increase in average cash and investment balances
primarily as a result of the proceeds from the Company's recent private
financings and its initial public offering. Interest expense for the three
and six months ended December 31, 1997 increased to $111,000 and $209,000,
respectively compared to $98,000 and $196,000 for the corresponding periods
in 1996. The increase in interest expense resulted from higher outstanding
balances on an equipment financing line of credit.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception primarily
through the sale of equity securities, research and development funding
provided under corporate partnerships and equipment and leasehold improvement
financing. The Company's near-term operating requirements include increased
research and development expenditures associated with the expansion of its
research and development programs. The Company's capital spending program
includes planned leasehold improvements to the Company's facilities and the
purchase of capital equipment to be used primarily in the Company's pilot
manufacturing facility. The Company expects to finance these cash needs with
its existing cash and investments, together with interest thereon, future
payments to be received under its existing corporate partnerships, and
facilities and equipment financing.
Net cash used in the Company's operations increased to $1.8 million for
the six months ended December 31, 1997 from $675,000 for the same period in
1996. The increase was primarily due to an increase in research and
development activities. The Company's capital expenditures for the six
months ended December 31, 1997 were $1.5 million and $221,000 for the same
period in 1996.
As of December 31, 1997, the Company had $53.2 million in cash, cash
equivalents and short-term investments compared to $24.3 million as of
June 30, 1997.
On September 15, 1997, the Company completed its initial public offering
of 2,500,000 shares of common stock at $12.00 per share. In addition, on
September 29, 1997, the Company's underwriters exercised their over-allotment
option and purchased an additional 375,000 shares of the Company's common
stock at $12.00 per share. The combined net proceeds raised from the offering
were approximately $31.4 million.
Page 10 of 16
<PAGE>
The Company anticipates that its existing resources available, committed
funding from existing corporate partnerships, lines of credit and projected
interest income, will enable the Company to maintain its current and planned
operations through fiscal 1999. However, there can be no assurance that the
Company will not require additional funding prior to such time. The
Company's future capital requirements will depend on many factors, including
scientific progress in its research and development programs, the size and
complexity of such programs, the scope and results of preclinical studies and
clinical trials, the ability of the Company to establish and maintain
corporate partnerships, the time and costs involved in obtaining regulatory
approvals, the time and costs involved in filing, prosecuting and enforcing
patent claims, competing technological and market developments, the cost of
manufacturing preclinical and clinical materials and other factors not within
the Company's control. The Company is seeking additional collaborative
agreements with corporate partners and may seek additional funding through
public or private equity or debt financings. There can be no assurance,
however, that any such agreements will be entered into or that they will
reduce the Company's funding requirements or that additional funding will be
available. The Company expects that additional equity or debt financings will
be required to fund its operations. There can be no assurance that additional
financing to meet the Company's funding requirements will be available on
acceptable terms or at all.
If additional funds are raised by issuing equity securities, substantial
dilution to existing stockholders may result. Insufficient funds may require
the Company to delay, scale back or eliminate some or all of its research or
development programs or to relinquish greater or all rights to products at an
earlier stage of development or on less favorable terms than the Company
would otherwise seek to obtain, which could materially adversely affect the
Company's business, financial condition and results of operations.
Page 11 of 16
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS:
The effective date of the Company's registration statement on Form
S-1, filed under the Securities Act of 1933 (No. 333-32593), was
September 15, 1997 (the "Registration Statement"). The class of
securities registered was Common Stock. The offering commenced on
September 15, 1997 and all securities were sold in the offering. The
managing underwriters for the offering were NationsBanc Montgomery
Securities, Inc. and Hambrecht & Quist LLC.
Pursuant to the Registration Statement, the Company sold 2,875,000
shares of its Common Stock for an aggregate offering price of
$34,500,000.
The Company incurred expenses of approximately $3.1 million of which
$2.4 million represented underwriting discounts and commissions and
$700,000 represented other expenses. All such expenses were direct or
indirect payments to others. The net offering proceeds to the Company
after total expenses was $31.4 million.
The Company has not used any of the net proceeds from the offering.
All net proceeds have been invested in cash, cash equivalents and
short-term investments. The use of the proceeds from the offering
does not represent a material change in the use of the proceeds
described in the prospectus.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None
ITEM 5. OTHER INFORMATION:
None
Page 12 of 16
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
a. Exhibits
11.1 Computation of Net Loss Per Share.
27 Financial Data Schedule (Exhibit 27 is submitted as an
exhibit only in the electronic format of this Quarterly
Report on Form 10-Q submitted to the Securities and
Exchange Commission).
b. Reports on Form 8-K
None
Page 13 of 16
<PAGE>
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.
Megabios Corp.
Date: February 6, 1998 /s/ Patrick G. Enright
------------------
Patrick G. Enright
CFO and Senior Vice President
(Principal Financial and Accounting
Officer)
Page 14 of 16
<PAGE>
MEGABIOS CORP.
EXHIBIT INDEX
Page
11.1 Statement Re: Computation of Earnings Per Share 16
27 Financial Data Schedule (Exhibit 27 is submitted
as an exhibit only in the electronic format of this
Quarterly Report on Form 10-Q submitted to the
Securities and Exchange Commission).
Page 15 of 16
<PAGE>
Exhibit 11
MEGABIOS CORP.
STATEMENT RE CALCULATION OF NET LOSS PER SHARE
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
------------------- ------------------
1997 1996 1997 1996
------- ------ ------- -------
<S> <C> <C> <C> <C>
Net loss $ (777) $ (727) $(1,623) $(1,734)
------- ------ ------- -------
------- ------ ------- -------
Weighted average shares of common stock outstanding: 12,400 970 7,517 968
Shares related to staff accounting bulletin topic 4D:
Stock options - 336 - 336
Preferred stock - 2,667 - 2,667
------- ------ ------- -------
Shares used in computing basic and diluted net loss per
share: 12,400 3,973 7,517 3,971
------- ------ ------- -------
------- ------ ------- -------
Basic and diluted loss per share $ (0.06) $(0.18) $ (0.22) $ (0.44)
------- ------ ------- -------
------- ------ ------- -------
Calculation of shares outstanding for computing
pro forma net loss per share:
Shares used in computing basic and diluted net loss
per share 12,400 3,973 7,517 3,971
Adjustment to reflect the effect of the assumed
conversion of preferred stock from the date
of issuance - 5,488 3,590 5,488
------- ------ ------- -------
Shares used in computing pro forma net loss per share 12,400 9,461 11,107 9,459
------- ------ ------- -------
------- ------ ------- -------
Pro forma net loss per share $ (0.06) $(0.08) $ (0.15) $ (0.18)
------- ------ ------- -------
------- ------ ------- -------
</TABLE>
Page 16 of 16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 33,624
<SECURITIES> 19,589
<RECEIVABLES> 521
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 54,205
<PP&E> 9,403
<DEPRECIATION> 4,061
<TOTAL-ASSETS> 59,609
<CURRENT-LIABILITIES> 2,306
<BONDS> 0
0
0
<COMMON> 78,388
<OTHER-SE> (23,078)
<TOTAL-LIABILITY-AND-EQUITY> 59,609
<SALES> 0
<TOTAL-REVENUES> 2,466
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,909
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 111
<INCOME-PRETAX> (777)
<INCOME-TAX> 0
<INCOME-CONTINUING> (777)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (777)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
