-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DtNUgQi55FUPcYtwVAZFdupKXNRJygcIYRG1Fk/6OfjN7/csGf8rAq6fXve5tawf NPQS6XJYE59M3UJbqSO+lw== 0000004310-00-000009.txt : 20000515 0000004310-00-000009.hdr.sgml : 20000515 ACCESSION NUMBER: 0000004310-00-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALZA CORP CENTRAL INDEX KEY: 0000004310 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 770142070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06247 FILM NUMBER: 627465 BUSINESS ADDRESS: STREET 1: 1900 CHARLESTON RD STREET 2: PO BOX 7210 CITY: MOUNTAIN VIEW STATE: CA ZIP: 94309 BUSINESS PHONE: 6504945000 MAIL ADDRESS: STREET 1: 1900 CHARLESTON RD STREET 2: PO BOX 7210 CITY: MOUNTAIN VIEW STATE: CA ZIP: 94309-7210 10-Q 1 10Q TEXT 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, 2000 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to __________ Commission File Number 1-6247 ALZA CORPORATION (Exact name of registrant as specified in its charter) Delaware 77-0142070 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1900 Charleston Road P.O. Box 7210 Mountain View, California 94039-7210 (Address of principal executive offices) Registrant's telephone number, including area code (650) 564-5000 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 ( ) Number of shares outstanding of each of the registrant's classes of common stock as of April 30, 2000: Common Stock, $.01 par value - 102,633,027 shares ALZA CORPORATION FORM 10-Q for the Quarter Ended March 31, 2000 INDEX Part I. Financial Information Item 1. Financial Statements Condensed Consolidated Statement of Income 3 Condensed Consolidated Balance Sheet 4 Condensed Consolidated Statement of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 6-11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12-24 Item 3. Quantitative and Qualitative Disclosures about Market Risk 25 Part II. Other Information Item 1. Legal Proceedings 25 Item 6. Exhibits and Reports on Form 8-K 25 Signatures 26 Exhibits PART I. FINANCIAL INFORMATION Item 1. Financial Statements ALZA CORPORATION Condensed Consolidated Statement of Operations (unaudited) (In millions, except per share amounts) Quarter Ended March 31, 2000 1999 ____________________________ Revenues Net sales $ 108.8 $ 96.2 Royalties, fees and other 67.1 58.9 Research and development 25.4 30.4 ____________________________ Total revenues 201.3 185.5 Costs and expenses Costs of products shipped 34.7 34.3 Research and development 44.8 44.1 Selling, general and administrative 72.0 55.2 Merger-related expenses - 32.6 ____________________________ Total costs and expenses 151.5 166.2 ____________________________ Operating income 49.8 19.3 Interest expense 15.4 14.9 Interest and other income (5.4) (5.0) ____________________________ Net interest and other expense 10.0 9.9 ____________________________ Income before income taxes 39.8 9.4 Provision for income taxes 12.3 5.7 ____________________________ Net income $ 27.5 $ 3.7 ============================ Earnings per share Basic $ 0.27 $ 0.04 ============================ Diluted $ 0.27 $ 0.04 ============================ Shares used in per share computation Basic 102.1 100.4 ============================ Diluted 103.7 103.2 ============================ See accompanying notes. ALZA Corporation Condensed Consolidated Balance Sheet (unaudited) (In millions) March 31, December 31, 2000 1999 _________________________ ASSETS Current assets: Cash and cash equivalents $ 102.6 $ 149.4 Short-term investments 63.9 68.0 Receivables, net 151.1 125.7 Inventories at cost: Raw materials 24.8 26.0 Work in process 16.9 10.4 Finished goods 28.2 32.6 ________________________ Total inventories 69.9 69.0 Prepaid expenses and other current assets 24.2 20.6 ________________________ Total current assets 411.7 432.7 Property, plant and equipment 573.4 563.5 Less accumulated depreciation and amortization (154.9) (145.7) ________________________ Net property, plant and equipment 418.5 417.8 Long-term investments 380.3 371.7 Deferred product acquisition costs 278.3 283.4 Cash surrender value of life insurance 173.0 148.4 Other assets 191.1 198.5 ________________________ TOTAL ASSETS $1,852.9 $1,852.5 ======================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 34.5 $ 75.9 Accrued liabilities 57.8 51.5 Current portion of long-term debt 7.5 7.5 ________________________ Total current liabilities 99.8 134.9 5% convertible subordinated debentures 495.5 495.5 5-1/4% zero coupon convertible subordinated debentures 449.5 443.7 Other long-term liabilities 81.8 86.6 Stockholders' equity: Common stock and additional paid-in capital 714.7 706.6 Accumulated other comprehensive loss (3.9) (2.8) Retained earnings (accumulated deficit) 15.5 (12.0) ________________________ Total stockholders' equity 726.3 691.8 ________________________ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,852.9 $1,852.5 ======================== See accompanying notes. ALZA CORPORATION Condensed Consolidated Statement of Cash Flows (unaudited) (In millions) Quarter March 31, 2000 1999 _____________________ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 27.5 $ 3.7 Non-cash adjustments to reconcile net income to netcash used in operating activities: Depreciation and amortization 13.2 9.6 Amortization of product acquisition payments 6.1 6.3 Interest on 5-1/4% zero coupon convertible subordinated debentures 5.8 5.6 Undistributed income from real estate joint venture (1.2) - Changes in current assets: Receivables (25.4) (17.9) Inventories (0.9) (0.8) Prepaid expenses and other current assets (3.0) - Prepaid premiums and increase in cash surrender value of life insurance (24.5) (23.5) Changes in liabilities: Accounts payable (41.4) (12.3) Accrued liabilities 6.8 11.8 Other long-term liabilities 1.8 (3.4) Asset write-down 1.9 9.5 _____________________ Total adjustments (60.8) (15.1) _____________________ Net cash used in operating activities (33.3) (11.4) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (11.9) (15.8) Product acquisition payments (1.0) (20.0) Purchases of available-for-sale securities (6.6) (64.8) Sales and maturities of available-for-sale securities 10.3 66.0 Other investing activities (4.7) (1.5) _____________________ Net cash used in investing activities (13.9) (36.1) CASH FLOWS FROM FINANCING ACTIVITIES: Issuances of common stock 6.9 12.3 Principal repayments of long-term debt, net (6.5) (6.5) Net cash provided by financing activities 0.4 5.8 _____________________ Net decrease in cash and cash equivalents (46.8) (41.7) Cash and cash equivalents at beginning of period 149.4 110.1 _____________________ Cash and cash equivalents at end of period $ 102.6 $ 68.4 ===================== See accompanying notes. ALZA CORPORATION Notes to Condensed Consolidated Financial Statements (unaudited) NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. The information as of March 31, 2000 and for the quarters ended March 31, 2000 and 1999 includes all adjustments (consisting only of normal recurring adjustments) that the management of ALZA Corporation ("ALZA") believes necessary for fair presentation of the results for the periods presented. 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 ALZA's Annual Report on Form 10-K for the year ended December 31, 1999. Comprehensive Income Total comprehensive income includes net income plus other comprehensive income, which for ALZA primarily comprises net unrealized gains or losses on available-for-sale securities. Total comprehensive income was $26.4 million and $11.6 million for the quarters ended March 31, 2000 and 1999, respectively. Other comprehensive (loss) income was $(1.1) million and $7.9 million for the quarters ended March 31, 2000 and 1999, respectively. Supplemental Disclosures of Cash Flow Information Noncash Investing and Financing Quarter Ended March 31, Activities (In millions) 2000 1999 ___________________________________________________________ Tax benefit for stock option and stock purchase plan $ 0.7 $ 2.2 Reclassification Certain amounts in the prior year's financial statements have been reclassified to conform to the 2000 presentation. New Accounting Standards In July 1999, the Financial Accounting Standards Board ("FASB") announced the delay of the effective date of Statement of Financial Accounting Standards 133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS 133") for one year, to the first quarter of 2001. SFAS 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires companies to recognize all derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting under SFAS 133. The impact of SFAS 133 on ALZA's financial position and results of operations is not expected to be material. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 summarizes the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements. ALZA is continuing to evaluate SAB 101's potential future impact on ALZA's financial position and results of operations with respect to upfront fees and milestone payments earned by ALZA under distribution agreements, agreements with client companies and certain other agreements. It is possible that under SAB 101, certain of these fees would be required to be deferred and recognized as revenue over future periods rather than immediately on a one-time basis. NOTE 2. EARNINGS PER SHARE INFORMATION Basic earnings per share is calculated by dividing net income by the weighted average common shares outstanding for the period. Diluted earnings per share is calculated by dividing net income, as adjusted, by the weighted average common shares outstanding for the period plus the dilutive effect of stock options, warrants and convertible securities. The following table sets forth the computation of ALZA's basic and diluted earnings per share: Quarter Ended March 31, (In millions, except per share amounts) 2000 1999 _________________________________________________________________ NUMERATOR: Basic Net income $ 27.5 $ 3.7 ================================================================= Diluted Net income $ 27.5 $ 3.7 ================================================================= DENOMINATOR: Basic Weighted average shares 102.1 100.4 ================================================================= Diluted Weighted average shares 102.4 100.7 Effect of dilutive securities: Employee stock options 1.3 2.5 Warrants - - _________________________________________________________________ Weighted average shares and assumed conversions 103.7 103.2 ================================================================= Basic earnings per share $ 0.27 $ 0.04 ================================================================= Diluted earnings per share $ 0.27 $ 0.04 ================================================================= Options to purchase 5.3 million shares of common stock and options and warrants to purchase 1.1 million shares of common stock were excluded from the diluted earnings per share calculation for the quarters ended March 31, 2000 and 1999, respectively, because the exercise price of the options (and warrants in 1999) was greater than the average market price of the common shares during the periods, and therefore the effect of including those options and warrants would have been anti-dilutive. Assumed conversions of ALZA's outstanding 5% convertible subordinated debentures due 2006 ("5% Debentures") and 5-1/4% zero coupon convertible subordinated debentures due 2014 ("5-1/4% Debentures") were not included in the diluted earnings per share calculation for the quarters ended March 31, 2000 and 1999 as their inclusion would have been anti-dilutive. NOTE 3. CRESCENDO PHARMACEUTICALS CORPORATION (RELATED PARTY) Under the Development Agreement between ALZA and Crescendo Pharmaceuticals Corporation ("Crescendo"), ALZA recorded product development revenues from Crescendo of $20.1 million for the quarter ended March 31, 2000, compared with $23.2 million for the quarter ended March 31, 1999. ALZA expects that Crescendo will have expended all of its available funds during the second half of 2000. Under the Technology License Agreement between ALZA and Crescendo, ALZA recorded technology fee revenues from Crescendo of $1.0 million for the quarter ended March 31, 2000, compared with $2.0 million for the quarter ended March 31, 1999, all in accordance with the terms of the agreement. ALZA has an option to acquire an exclusive, royalty-bearing license to each product developed by Crescendo under the Development Agreement. The option is exercisable on a product-by product, country-by-country, basis. In December 1998, ALZA exercised its option to obtain a worldwide license to OROS oxybutynin (marketed in the United States as Ditropan-registered trademark- XL). In consideration of the grant of the license, ALZA paid Crescendo 2.5% of net sales of the product in 1999 and will pay 3% for 2000 and 2001. Thereafter, until 15 years after the date of the first commercial sale of the product, the percentage owed to Crescendo will be based upon development costs paid by Crescendo; based upon current information this rate is expected to be between 5.5% and 6.5%. On March 3, 2000, the United States Food and Drug Administration ("FDA") approved DUROS-registered trademark- leuprolide (which ALZA has named Viadur-trademark-) for marketing in the United States. The product is the first FDA-approved product to incorporate ALZA's DUROS-registered trademark- implant technology. Also on March 3, 2000, ALZA exercised its option to obtain a worldwide license to DUROS leuprolide from Crescendo. Under the terms of the license agreement between Crescendo and ALZA, Crescendo will receive payments from ALZA based on worldwide net sales of the product. For the first three years after launch the rates will be 2.5%, 3.0% and 3.0% of net sales, respectively; thereafter the rate is expected to be between 8.5% and 9.0%. NOTE 4. MERGER-RELATED AND OTHER CHARGES On March 16, 1999, ALZA completed a merger with SEQUUS Pharmaceuticals, Inc. ("SEQUUS") by acquiring all of SEQUUS' outstanding stock in a tax-free, stock-for-stock transaction. As a result of the SEQUUS acquisition, ALZA incurred merger-related costs that consisted of merger transaction costs, exit costs and employee severance costs. Merger transaction costs consisted primarily of fees for investment bankers, attorneys and accountants, filing fees, financial printing costs and other related charges. Exit costs include costs such as cancellation of lease agreements and the write-down of SEQUUS assets that will not be used in continuing operations. The following table shows the details of the accrual for merger- related costs for the quarter ended March 31, 2000: Merger- Balance related Utilized/ at March 31, (In millions) costs Adjusted 2000 _____________________________________________________________ Merger transaction costs $ 13.2 $ 13.1 $ 0.1 Exit costs 14.3 13.1 1.2 Employee severance 5.1 5.1 - _______________________________ Total $ 32.6 $ 31.3 $ 1.3 =============================== As a result of the activities related to the termination of a merger agreement with Abbott Laboratories, Inc. ("Abbott") during 1999, ALZA incurred $13.4 million in merger-related costs. These costs included merger transaction costs, which consisted primarily of fees for investment bankers, attorneys and accountants, filing fees, financial printing costs, and other merger-related costs. The following table shows the details of the accrual for costs related to the terminated merger through the quarter ended March 31, 2000: Merger- Balance related at March 31, (In millions) costs Utilized 2000 ______________________________________________________________ Transaction costs $ 9.8 $ 9.4 $ 0.4 Other merger-related costs 3.6 3.6 - ________________________________ Total $ 13.4 $ 13.0 $ 0.4 ================================ NOTE 5. SEGMENT REPORTING ALZA has two operating segments: ALZA Pharmaceuticals, which includes sales of products directly to the pharmaceutical marketplace, research and development for products marketed by, and potential products to be marketed by, ALZA (including revenues and expenses relating to products under development with Crescendo) and certain co-promotion revenues for products co- promoted by ALZA; and ALZA Technologies, which includes research, development and manufacturing for client companies and ALZA Pharmaceuticals, and royalties and fees resulting from sales by ALZA's client companies of products developed under joint development and commercialization agreements. The "Other" category primarily comprises corporate general and administrative expenses, including finance, legal, human resources, commercial development, executive and other functions not directly attributable (or allocated) to the activities of the operating segments, as well as rental and service fee revenues. ALZA evaluates performance and allocates resources based on operating income or loss from operations (before allocation of certain general and administrative expenses, net interest expense, investment gains and losses and income taxes). ALZA does not assess segment performance or allocate resources based on a segment's total assets, and therefore ALZA's assets are not reported by segment. ALZA allocates certain long-lived assets to operating segments for purposes of allocating depreciation and amortization expense. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. ALZA accounts for intersegment sales and development revenues based upon negotiated prices. ALZA's reportable segments are strategic units that distribute products to different types of customers and provide different types of services. They are managed differently because ALZA Pharmaceuticals' sales and marketing efforts are extensive and disparate from the revenue generation process resulting from arrangements with client companies in ALZA Technologies. Additionally, ALZA Pharmaceuticals develops products for commercialization by ALZA, while ALZA Technologies develops products for commercialization by other companies and ALZA Pharmaceuticals. For the current year segment presentation certain research and development expenses, previously recorded in the ALZA Technologies segment and charged to ALZA Pharmaceuticals, were moved to the ALZA Pharmaceuticals segment as they were incurred directly by ALZA Pharmaceuticals departments. Under the prior period's segment presentation, intersegment revenues for ALZA Technologies for the quarter ended March 31, 2000 would have been $20.1 million instead of $11.5 million under the current segment presentation. Certain prior year amounts have been reclassified to conform to the current segment presentation. These amounts relate to the cost of sales of in-licensed products marketed by ALZA Pharmaceuticals, which under the current presentation are recorded in ALZA Technologies and sold to ALZA Pharmaceuticals at an intersegment transfer price. The following tables contain information about segment operating income (loss) for the quarter ended March 31, 2000 and 1999. Quarter Ended March 31, (In millions) 2000 1999 ________________________________________________________________ Revenues from external customers Net sales ALZA Pharmaceuticals $ 79.8 $ 67.9 ALZA Technologies 29.0 28.3 Royalties, fees and other ALZA Pharmaceuticals 2.4 3.1 ALZA Technologies 63.3 55.4 Other 1.4 0.4 Research and development ALZA Pharmaceuticals 20.1 23.2 ALZA Technologies 5.3 7.2 ___________________________ Total $ 201.3 $ 185.5 =========================== Intersegment revenues Net sales ALZA Pharmaceuticals $ - $ - ALZA Technologies 9.9 6.8 Research & development ALZA Pharmaceuticals 0.6 - ALZA Technologies 11.5 23.2 ___________________________ Total $ 22.0 $ 30.0 =========================== Segment operating income (loss) ALZA Pharmaceuticals $ 5.4 $ 3.9 ALZA Technologies 55.4 54.1 Other (10.9) (38.7) ___________________________ Total $ 49.8 $ 19.3 =========================== The following table contains a reconciliation of ALZA's income before taxes to that reported by segment in the tables above: Quarter Ended March 31, (In millions) 2000 1999 ________________________________________________________________ Income before taxes Total operating income for reportable segments $ 49.8 $ 19.3 Unallocated amounts: Interest income 5.4 5.0 Interest expense (15.4) (14.9) ___________________________ Income before income taxes $ 39.8 $ 9.4 =========================== NOTE 6. SUBSEQUENT EVENTS In April 2000, ALZA entered into a commercialization agreement with Bayer Corporation ("Bayer") for Viadur. Under the terms of the agreement, Bayer will have the commercial rights to Viadur in the United States through 2015. ALZA has received an upfront payment, and will receive certain milestone payments. ALZA is also receiving quarterly manufacturing, patent and trademark payments through the third quarter of 2001. Following the launch of Viadur, ALZA will receive royalty payments based on net sales of the product, as well as milestone payments when the product achieves specified sales levels. ALZA will manufacture Viadur for Bayer, for which ALZA will receive a negotiated supply price. ALZA retains the right to buy back the United States commercialization rights at the end of 2008, 2010 or 2012, in exchange for specified payments. In April 2000, ALZA sold the ALZET-registered trademark- product line to Durect Therapeutics Corporation ("Durect") in a cash sale. Also in April 2000, ALZA and Durect amended their development and commercialization agreement covering certain specified applications of ALZA's DUROS technology. Under the amended agreement ALZA granted certain ex-U.S. commercialization rights to Durect and made certain other modifications to the development and commercialization agreement in exchange for Durect common stock and warrants. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Notice Concerning Forward-Looking Statements Some of the statements made in this Form 10-Q are forward- looking in nature, including, without limitation, plans concerning the commercialization of products, statements concerning potential product sales, future costs of products shipped (and gross margins), associated sales and marketing expenses, plans concerning development of products and other statements that are not historical facts. The occurrence of the events described, and the achievement of the intended results, are subject to various risk factors that could cause ALZA's actual results to be materially different than those presented, some or all of which risks are not predictable or within ALZA's control. Many risks and uncertainties are inherent in the pharmaceutical industry; others are more specific to ALZA's business. Many of the significant risks related to ALZA's business are described in ALZA's Annual Report on Form 10-K for the year ended December 31, 1999. RESULTS OF OPERATIONS SUMMARY Quarter Ended March 31, (In millions, except per share amounts) 2000 1999 _________________________________________________________________ Revenues $ 201.3 $ 185.5 _________________________________________________________________ Operating income 49.8 19.3 _________________________________________________________________ Net income 27.5 3.7 _________________________________________________________________ Diluted earnings per share 0.27 0.04 _________________________________________________________________ ALZA's net income for the quarter ended March 31, 2000 was $27.5 million or $0.27 per diluted share compared with net income of $3.7 million or $0.04 per diluted share for the quarter ended March 31, 1999. Net income for the quarter ended March 31, 2000 included charges of $3.3 million (net of tax effect of $1.5 million), or $0.03 per diluted share, associated with the consolidation of certain research and development facilities. Net income for the quarter ended March 31, 1999 included charges related to the SEQUUS merger of $24.8 million (net of tax effect of $7.8 million), or $0.24 per share. Excluding these charges, net income for the quarters ended March 31, 2000 and 1999 were $30.8 million or $0.30 per diluted share and $28.5 million or $0.28 per diluted share, respectively. The increase in net income for the quarter ended March 31, 2000 compared to the same period in 1999 resulted primarily from the following: - Net sales increased 13% to $108.8 million for the quarter ended March 31, 2000 from $96.2 million for the quarter ended March 31, 1999. The increase in net sales resulted primarily from a 17% increase in ALZA-marketed products to $79.8 million for the quarter ended March 31, 2000 from $67.9 million for the quarter ended March 31, 1999. Contract manufacturing sales remained relatively constant for the quarter ended March 31, 2000 compared to the quarter ended March 31, 1999. - Gross margin increased to 68% for the quarter ended March 31, 2000, from 64% for the quarter ended March 31, 1999. - Royalties, fees and other revenues increased 14% to $67.1 million for the quarter ended March 31, 2000, from $58.9 million for the quarter ended March 31, 1999. Substantially offsetting these contributions to net income in for the quarter ended March 31, 2000 were the following: - Research and development revenues decreased 16% to $25.4 million for the quarter ended March 31, 2000 from $30.4 million for the quarter ended March 31, 1999. - Selling, general and administrative expenses increased 22% to $67.2 million for the quarter ended March 31, 2000, excluding the charges described above, from $55.2 million for the quarter ended March 31, 1999, excluding the charges described above. OPERATING SEGMENTS ALZA has two operating segments: ALZA Pharmaceuticals and ALZA Technologies. ALZA Pharmaceuticals markets and sells products developed by ALZA Technologies or others directly to the pharmaceutical marketplace in the United States and Canada and to distributors who sell such products outside the United States and Canada. ALZA Pharmaceuticals also conducts product development, co- promotes products with third parties, and engages ALZA Technologies and others to conduct product development and manufacture products for ALZA Pharmaceuticals. ALZA Technologies conducts research on ALZA's drug delivery technologies and products for ALZA Pharmaceuticals, Crescendo and other pharmaceutical company clients, and manufactures products for sale by ALZA Pharmaceuticals and client companies. The "Other" category primarily comprises corporate general and administrative activities and the associated costs related to finance, legal, human resources, commercial development, executive and other functions not directly attributable (or allocated) to the activities of the operating segments, as well as rental and service fee revenues. OPERATING SEGMENT SUMMARY Quarter Ended March 31, (In millions) 2000 1999 _________________________________________________________________ Revenues ALZA PHARMACEUTICALS $ 102.9 $ 94.2 ALZA TECHNOLOGIES 119.0 121.0 OTHER 1.4 0.4 _________________________________________________________________ Total segment revenues 223.3 215.6 Intersegment elimination (22.0) (30.1) _________________________________________________________________ Total revenues $ 201.3 $ 185.5 _________________________________________________________________ Operating income (loss) ALZA PHARMACEUTICALS $ 5.3 $ 3.9 ALZA TECHNOLOGIES 55.4 54.1 OTHER (10.9)(1) (38.7)(2) _________________________________________________________________ Total operating income $ 49.8 $ 19.3 _________________________________________________________________ 1 For the quarter ended March 31, 2000, the operating loss for Other includes $4.8 million of charges associated with the consolidation of certain research and development facilities. Excluding these charges, operating loss for Other would have been $6.1 million for the quarter ended March 31, 2000. 2 For the quarter ended March 31, 1999, the operating loss for Other includes merger-related expenses of $32.6 million relating to the acquisition of SEQUUS. Excluding these charges, operating loss for Other would have been $6.1 million for the quarter ended March 31, 1999. ALZA PHARMACEUTICALS Operating income increased slightly for the quarter ended March 31, 2000 compared to the quarter ended March 31, 1999, primarily due to a 9% increase in revenues and a 23% decrease in research and development expenses for the quarter ended March 31, 2000 compared to the same period for 1999, respectively. The increase in revenues was primarily due to a 17% increase in net sales of ALZA-marketed products for the quarter ended March 31, 2000 as compared to the same period for 1999, partially offset by a 13% decrease in research and development revenues for the quarter ended March 31, 2000 compared to the same period in 1999. Also offsetting the increase in revenues and decrease in research and development expenses was a 24% increase in sales and marketing expenses for the quarter ended March 31, 2000 compared to the same period for 1999. ALZA TECHNOLOGIES Operating income for the quarter ended March 31, 2000 remained relatively constant compared with operating income for the same period in 1999, primarily due to an increase in revenues from royalties, fees and other being offset by a decline in research and development revenues for the quarter ended March 31, 2000 compared to the same period in 1999. OTHER Operating loss for the quarter ended March 31, 2000 remained constant compared to the same period for 1999, in each period excluding certain charges described above. NET SALES Net Sales Quarter Ended March 31, (Dollars in millions) 2000 1999 _________________________________________________________________ ALZA PHARMACEUTICALS Ditropan-registered trademark- XL $ 32.8 $ 22.0 Ethyol-registered trademark- 13.8 8.6 Doxil-registered trademark- /Caelyx-registered trademark- 13.0 14.3 Elmiron-registered trademark- 5.0 4.9 Testoderm-registered trademark- TTS line 4.5 4.5 Mycelex-registered trademark- Troche 3.6 5.0 Other 7.1 8.6 _________________________________________________________________ Total 79.8 67.9 _________________________________________________________________ ALZA TECHNOLOGIES Contract manufacturing 29.0 28.3 Intersegment 9.9 6.8 ___________________________________________________________________ Total 38.9 35.1 ___________________________________________________________________ Intersegment eliminations (9.9) (6.8) ___________________________________________________________________ Total net sales $ 108.8 $ 96.2 ___________________________________________________________________ Total net sales as a percentage of total revenues 54% 52% ___________________________________________________________________ ALZA PHARMACEUTICALS Included in net sales of ALZA Pharmaceuticals are sales of the products marketed directly by ALZA in the United States and Canada, and sales of those products in other countries through distributors (and to a limited extent, direct sales by ALZA of Amphocil- registered trademark- (lipid-based amphotericin B) in the United Kingdom). Net sales of ALZA-marketed products increased 17% for the quarter ended March 31, 2000 compared to the same period in 1999. This increase in ALZA Pharmaceuticals net sales can be primarily attributed to a 49% and 60% increase in sales of Ditropan XL and Ethyol-registered trademark- (amifostine), respectively, for the quarter ended March 31, 2000, compared to the same period in 1999. Net sales of ALZA-marketed products can be expected to vary significantly from year to year, particularly in the first years after launch of a new product. Ditropan XL was launched in the first quarter of 1999, and Doxil-registered trademark- (doxorubicin HCl liposome injection), Ethyol, Elmiron-registered trademark- (pentosan polysulfate sodium) and Testoderm-registered trademark- TTS (testosterone) were cleared for marketing during the past few years. In June 1999, the FDA approved new indications for Ethyol and Doxil. Wholesaler stocking patterns, managed care and formulary acceptance, the introduction of competitive products, and acceptance by patients and physicians will also affect future sales of ALZA's products. ALZA TECHNOLOGIES Net sales from contract manufacturing include sales generated from contract manufacturing activities for ALZA's client companies and for ALZA Pharmaceuticals. Net sales from contract manufacturing for the quarter ended March 31, 2000 remained relatively constant compared to the same period for 1999, as ALZA experienced increases in shipments of Nicoderm- registered trademark- and NicoDerm-registered trademark- CQ- registered trademark- (nicotine transdermal system) to Aventis S.A. ("Aventis") and SmithKline Beecham p.l.c.("SB") and Duragesic-registered trademark- (fentanyl) to Janssen Pharmaceutica, Inc. (together with its affiliates, "Janssen"), which were offset by a decline in shipments of Covera-HS- registered trademark- (verapamil hydrochloride) to G.D. Searle & Co and Catapres-TTS-registered trademark- (clonidine) to Boehringer Ingelheim Pharmaceuticals, Inc. The timing and quantities of orders for products marketed by client companies are not within ALZA's control. Net sales by ALZA to client companies can be expected to fluctuate from period to period, sometimes significantly, depending on the volume, mix and timing of orders of products shipped to client companies, and in some quarters, due to the shipment of launch quantities of products to clients. GROSS MARGIN Quarter Ended March 31, Gross Margin 2000 1999 _________________________________________________________________ ALZA PHARMACEUTICALS(1) 82% 82% ALZA TECHNOLOGIES(1) 30% 22% _________________________________________________________________ Gross margin(2) 68% 64% _________________________________________________________________ (1) Includes intersegment revenues or expenses. (2) After intersegment eliminations. The increase in total gross margin for the quarter ended March 31, 2000 compared to the same periods for 1999 was due to a relative increase in shipments of higher-margin products by ALZA Technologies to client companies, as well as an increase in ALZA Pharmaceuticals sales as a percentage of total sales. ALZA expects its gross margin on net sales to increase from historical rates over the longer term, although quarter-to- quarter fluctuations, even significant ones, can be expected to continue to occur. A trend of higher gross margins may be achieved through a proportionate increase in direct sales by ALZA Pharmaceuticals in relation to sales from contract manufacturing and, to a lesser extent, increased utilization of capacity and greater operating efficiencies by ALZA Technologies. ALZA Technologies' gross margin on its contract manufacturing sales is considerably lower than ALZA Pharmaceuticals' gross margin on its sales of ALZA-marketed products. ALZA's client-funded product development agreements generally provide for a supply price that is intended to cover ALZA's costs to manufacture the product plus a small margin. ALZA also generally receives royalties on the clients' sales of the products, which are included in royalties, fees and other revenues. Sales to ALZA Pharmaceuticals are based upon negotiated prices. ROYALTIES, FEES AND OTHER REVENUES Royalties, fees and other revenues consist largely of royalties paid by client companies on products developed under joint development and commercialization agreements with ALZA and marketed by the companies. Fee revenues consist of upfront, milestone and other one-time, special or infrequent payments made under these joint development agreements, or by distributors who acquire rights to market ALZA products outside the United States and Canada, and co-promotion fees. Royalties, Fees and Other Revenues Quarter Ended March 31, (In millions) 2000 1999 _________________________________________________________________ ALZA PHARMACEUTICALS $ 2.4 $ 3.1 ALZA TECHNOLOGIES 63.3 55.4 OTHER 1.4 0.4 _________________________________________________________________ Total royalties, fees and other revenues $ 67.1 $ 58.9 _________________________________________________________________ Percentage of total revenues 33% 32% _________________________________________________________________ ALZA PHARMACEUTICALS For the quarter ended March 31, 2000, fee revenues for ALZA Pharmaceuticals included technology fees from Crescendo of $1.0 million compared to $2.0 million for the same period in 1999, as provided in the agreements between ALZA and Crescendo. Fee revenues from Crescendo are expected to end in the second half of 2000. In addition, ALZA Pharmaceuticals' royalties, fees and other revenue included co-promotion fee revenues of $1.3 million and $1.2 million for the quarters ended March 31, 2000 and 1999, respectively. ALZA TECHNOLOGIES Royalties, fees and other revenues increased 14% for the quarter ended March 31, 2000 compared to the same period in 1999 primarily due to a milestone fee payment received from Knoll Pharmaceuticals Company ("Knoll") in connection with the acceptance by the FDA of Knoll's New Drug Application ("NDA") for an OROS hydromorphone product developed by ALZA. Sales of Procardia XL-registered trademark- (nifedipine), as reported by Pfizer, decreased 22% for the quarter ended March 31, 2000 compared to the same period in 1999. Several companies have filed Abbreviated New Drug Applications ("ANDAs") with the FDA requesting clearance to market generic sustained release nifedipine products which are asserted to be bioequivalent to Procardia XL, and one company has received FDA approval of its ANDA. Pfizer has filed suit against the ANDA applicants for infringement of patent rights relating to the nifedipine active drug substance in Procardia XL. Pfizer also has filed suit against the FDA, challenging the procedural basis for the FDA's approval of the generic products, which utilize a different mechanism of extended release than the OROS technology used in Procardia XL. In March 2000, Pfizer entered into a settlement agreement with Mylan Laboratories Inc. ("Mylan"), the first applicant for a generic version of Procardia XL. The settlement resolved the litigation pending between the parties, and Mylan announced that it would commercialize a generic version of Procardia XL to be supplied by Pfizer and incorporating ALZA's OROS technology. Under its agreement with Pfizer, ALZA will receive royalties on such products. It is not possible to predict the timing and amount of the negative impact on sales of Procardia XL that will result from competition from generic sustained-release nifedipine products. RESEARCH AND DEVELOPMENT ALZA's research and development revenues generally represent reimbursement of costs, including a portion of general and administrative expenses, by clients (including Crescendo) for the development of products. Therefore, product development activities do not contribute significantly to operating results. Research and Development Revenues Quarter Ended March 31, (In millions) 2000 1999 _________________________________________________________________ ALZA PHARMACEUTICALS Crescendo $ 20.1 $ 23.2 Intersegment 0.6 - _________________________________________________________________ Total 20.7 23.2 _________________________________________________________________ ALZA TECHNOLOGIES Other clients 5.3 7.2 Intersegment 11.5 23.2 _________________________________________________________________ Total 16.8 30.4 _________________________________________________________________ Intersegment elimination (12.1) (23.2) _________________________________________________________________ Total research and development revenues $ 25.4 $ 30.4 _________________________________________________________________ Percentage of total revenues 13% 16% _________________________________________________________________ ALZA PHARMACEUTICALS ALZA Pharmaceuticals derives research and development revenues from Crescendo. Revenues from Crescendo are offset by intersegment charges from ALZA Technologies for research and development expenses incurred on behalf of ALZA Pharmaceuticals related to products under development for marketing by ALZA Pharmaceuticals. ALZA expects that Crescendo will expend all its funds available for product development during 2000. ALZA has an option to acquire an exclusive, royalty-bearing license to each product developed by Crescendo under the Development Agreement. The option is exercisable on a product-by- product, country-by-country, basis. In December 1998, ALZA exercised its option to obtain a worldwide license to OROS oxybutynin (marketed in the United States as Ditropan XL). Under the terms of the license agreement, ALZA makes payments to Crescendo based upon worldwide sales of the product. In consideration of the grant of the license, ALZA paid Crescendo 2.5% of net sales of the product in 1999 and will pay 3% for 2000 and 2001. Thereafter, until 15 years after the date of the first commercial sale of the product, the percentage of net sales owed to Crescendo will be based upon development costs of the product paid by Crescendo; based upon current information, this rate is expected to be between 5.5% and 6.5%. On March 3, 2000, the FDA approved DUROS leuprolide (which ALZA has named Viadur) for marketing in the United States. The product is the first FDA-approved product to incorporate ALZA's DUROS implant technology. Also on March 3, 2000, ALZA exercised its option to obtain a worldwide license to DUROS leuprolide from Crescendo. Under the terms of the license agreement between Crescendo and ALZA, Crescendo will receive payments from ALZA based on worldwide net sales of the product. For the first three years after launch the rates will be 2.5%, 3.0% and 3.0% of net sales, respectively; thereafter the rate is expected to be between 8.5% and 9.0%. In April 2000, ALZA entered into a commercialization agreement with Bayer for Viadur. Under the terms of the agreement, Bayer will have the commercial rights to Viadur in the United States through 2015. ALZA has received an upfront payment, and will receive certain milestone payments. ALZA is also receiving quarterly manufacturing, patent and trademark payments through the third quarter of 2001. Following the launch of Viadur, ALZA will receive royalty payments based on net sales of the product, as well as milestone payments when the product achieves specified sales levels. ALZA will manufacture Viadur for Bayer, for which ALZA will receive a negotiated supply price. ALZA retains the right to buy back the United States commercialization rights at the end of 2008, 2010 or 2012, in exchange for specified payments. ALZA TECHNOLOGIES Research and development revenues from other clients decreased 26% for the quarter ended March 31, 2000 compared to the same period in 1999 reflecting a lower level of product development activities under agreements with client companies. Several new technology agreements were signed since the beginning of 2000, which may increase the level of product development activities in some areas. Revenues from product development activities vary from quarter to quarter depending upon the mix of projects underway and the phase of development of each project. The decrease in the intersegment revenues is due to a decline in research and development activities related to Crescendo products as well as the change in the current period's segment presentation for research and development expenses. In the current year segment presentation certain research and development expenses, previously recorded in the ALZA Technologies segment and charged to ALZA Pharmaceuticals, were moved to the ALZA Pharmaceuticals segment as they were incurred directly by ALZA Pharmaceuticals departments. Under the prior period's segment presentation, intersegment revenues for ALZA Technologies for the quarter ended March 31, 2000 would have been $20.1 million instead of $11.5 million under the current segment presentation. Research and Development Expenses Quarter Ended March 31, (In millions) 2000 1999 _________________________________________________________________ ALZA PHARMACEUTICALS Intersegment $ 11.5 $ 23.2 Product development expense 13.1 8.7 _________________________________________________________________ Total ALZA Pharmaceuticals 24.6 31.9 _________________________________________________________________ ALZA TECHNOLOGIES Intersegment 0.6 - Product development expense 31.7 35.4 _________________________________________________________________ Total ALZA Technologies 32.3 35.4 _________________________________________________________________ Intersegment elimination (12.1) (23.2) _________________________________________________________________ Total research and development expenses $ 44.8 $ 44.1 _________________________________________________________________ As a percentage of total revenues 22% 24% _________________________________________________________________ ALZA PHARMACEUTICALS ALZA Pharmaceuticals engages ALZA Technologies to provide research and development services, which are charged under the same formula ALZA charges client companies. Research and development expenses decreased 23% due to a decline in research and development activities related to Crescendo products as well the change in the current period's segment presentation for research and development expenses. In the current year segment presentation certain research and development expenses, previously recorded in the ALZA Technologies segment and charged to ALZA Pharmaceuticals, were moved to the ALZA Pharmaceuticals segment as they were incurred directly by ALZA Pharmaceuticals departments. Under the prior period's segment presentation, intersegment expenses and product development expense for the quarter ended March 31, 2000 would have been $20.1 million and $9.2 million, respectively. ALZA TECHNOLOGIES Research and development expenses decreased 9% for the quarter ended March 31, 2000 compared to same period in 1999, reflecting a decrease in product development activities for ALZA Pharmaceuticals (and Crescendo) and under agreements with client companies. In the current year segment presentation certain research and development expenses, previously recorded in the ALZA Technologies segment and charged to ALZA Pharmaceuticals, were moved to the ALZA Pharmaceuticals segment as they were incurred directly by ALZA Pharmaceuticals departments. Under the prior period's segment presentation, product development expense for the quarter ended March 31, 2000 would have been $35.6 million. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses Quarter Ended March 31, (In millions) 2000 1999 _________________________________________________________________ ALZA PHARMACEUTICALS Sales and marketing expenses $ 53.6 $ 42.4 _________________________________________________________________ ALZA PHARMACEUTICALS Amortization of product acquisition payments 3.8 4.0 ALZA TECHNOLOGIES Amortization of product acquisition payments 2.3 2.3 _________________________________________________________________ Total 6.1 6.3 _________________________________________________________________ OTHER General and administrative expenses 12.3(1) 6.5 _________________________________________________________________ Total selling, general and administrative expenses $ 72.0 $ 55.2 _________________________________________________________________ Total selling, general and administrative expenses as a percentage of total revenues 36% 30% _________________________________________________________________ 1 For the quarter ended March 31, 2000, general and administrative expenses for Other includes $4.8 million of charges associated with the consolidation of certain research and development facilities. Excluding these charges, general and administrative expenses for Other would have been $7.5 million for the quarter ended March 31, 2000. ALZA PHARMACEUTICALS Sales and marketing expenses increased 24% for the quarter ended March 31, 2000 compared to the same period in 1999 as a result of the significant increase in sales and marketing expenses for ALZA's expanded product portfolio and commercial organization, as well as the increase in expenses associated with the promotion of Ditropan XL. During the quarter ended March 31, 2000, ALZA increased the size of its urology, primary care and oncology sales forces, and accelerated certain spending in preparation for the anticipated launch of the OROS methylphenidate product under development with Crescendo, which ALZA has named Concerta-registered trademark-. OTHER General and administrative expenses remained relatively constant for the quarter ended March 31, 2000, excluding charges described above, compared to the same period in 1999. NET INTEREST Net Interest Quarter Ended March 31, (In millions) 2000 1999 _________________________________________________________________ Interest and other income $ (5.4) $ (5.0) Interest expense 15.4 14.9 _________________________________________________________________ Net interest and other expense $ 10.0 $ 9.9 _________________________________________________________________ Interest expense was slightly higher for the three months ended March 31, 2000 compared to the same period for 1999, primarily due to accreted interest on ALZA's outstanding 5-1/4% Debentures. Effective Tax Rate For the quarter ended March 31, 2000, ALZA's effective income tax rate was 31% compared to 32% for same period in 1999, excluding the tax effect of $7.8 million resulting from merger- related costs of $32.6 million. ALZA currently expects its combined federal and state effective income tax rate in 2000 and 2001 to be approximately 31%. The actual effective income tax rate will depend upon the actual level of earnings, changes in the tax laws, and the amount of investment and research credits available and ALZA's ability to utilize such credits. LIQUIDITY AND CAPITAL RESOURCES LIQUIDITY AND CAPITAL RESOURCES March 31, December 31, (In millions) 2000 1999 _________________________________________________________________ Working capital $ 311.9 $ 297.8 Cash and investments 546.8 589.1 Total assets 1,852.9 1,852.5 Long-term debt 978.3 979.0 _________________________________________________________________ Three Months ended March 31, 2000 1999 Net cash used in operating activities $ 33.3 $ 11.4 Capital expenditures 11.9 15.8 Product acquisition payments 1.0 20.0 _________________________________________________________________ Cash flows used in operating activities for the quarter ended March 31, 2000 was $33.3 million compared to $11.4 million for the same period in 1999. The increase in cash flows used in operating activities resulted from a decrease in accounts payable of $41.4 million for the quarter ended March 31, 2000 compared to $12.3 million for the quarter ended March 31, 1999. ALZA's capital spending for the quarter ended March 31, 2000 was $11.9 million for additions to facilities and equipment to support its expanding research, development and manufacturing activities, compared to capital spending of $15.8 million for the same period in 1999. Capital expenditures for the remainder of 2000 are expected to decrease compared to 1999 levels as a result of the completion of the development of the Mountain View campus into which ALZA moved during 1999. ALZA believes that its existing cash and investment balances are adequate to fund its cash needs for 2000 and beyond. In addition, should the need arise, ALZA believes it would be able to borrow additional funds (although no such borrowing arrangements are in place) or otherwise raise additional capital. ALZA may use its capital to acquire or license technology or products and/or to make strategic investments. Year 2000 As a result of ALZA's Year 2000 planning and implementation efforts, ALZA experienced no significant disruptions in mission critical information technology and non-information technology systems and believes those systems successfully responded to the Year 2000 date change. ALZA is not aware of any material problems resulting from Year 2000 issues, either with its products, its internal systems, or the products and services of third parties. ALZA will continue to monitor its mission critical computer applications and those of its suppliers and vendors throughout the year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly. Item 3. Quantitative and Qualitative Disclosures about Market Risk Financial market risks related to changes in interest rates and foreign currency exchange rates are described in Part II, Item 7A, Quantitative and Qualitative Disclosure About Market Risk, in ALZA's Annual Report on Form 10-K for the year ended December 31, 1999. ALZA is exposed to equity price risks on the marketable portion of equity securities included in its portfolio of investments entered into to further its business and strategic objectives. These investments are generally in small capitalization stocks in the pharmaceutical and biotechnology industry sector, in companies with which ALZA has research and development or product agreements. ALZA typically does not attempt to reduce or eliminate its market exposure on these securities. A 20% adverse change in equity prices would result in an approximate $3 million decrease in ALZA'S available-for- sale securities, based upon a sensitivity analysis performed on ALZA's financial position at March 31, 2000. However, actual results may differ materially. PART II. OTHER INFORMATION Item 1. Legal Proceedings Product liability suits have been filed against ALZA from time to time on its products, and a number of suits have been filed against Janssen and ALZA relating to the Duragesic product. Janssen is managing the defense of the Duragesic product suits in consultation with ALZA under an agreement between the parties. In October 1999, purported class action lawsuits were filed against ALZA, Abbott and certain directors of each company and such suits were consolidated as In re Abbott/ALZA Merger Litigation in the federal court in the Northern District of Illinois (99C6584). The suits alleged that ALZA and Abbott had wrongfully failed to disclose certain regulatory issues regarding Abbott's diagnostic business to ALZA stockholders prior to an ALZA stockholders meeting in September 1999. The suits were dismissed in December 1999. Attorneys representing the plaintiffs in this litigation have petitioned the court for attorneys' fees in connection with their services in this case; ALZA and Abbott have opposed this petition. Historically, the cost of resolution of liability claims against ALZA (including product liability claims) has not been significant, and ALZA is not aware of any asserted or unasserted claims pending against it, including the suits mentioned above, the resolution of which would have a material adverse impact on the operations or financial position of ALZA. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 27 Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter 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. ALZA CORPORATION Date: May 11, 2000 By: /s/ E. Mario Dr. Ernest Mario Chairman and Chief Executive Officer Date: May 11, 2000 By: /s/ Matthew K. Fust Matthew K. Fust Senior Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the financial statements included in Part I, Item 1 of Form 10-Q dated March 31, 2000 and is qualified in its entirety by reference to such financial statements. 1,000,000 3-MOS DEC-31-2000 MAR-31-2000 103 64 168 17 70 412 573 154 1,853 100 945 0 0 1 725 1,853 109 201 35 80 72 0 15 40 12 28 0 0 0 28 0.27 0.27
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