Guilford Pharmaceuticals Inc. (together with its subsidiaries, “Guilford” or the “Company”) is a biopharmaceutical company, located in Baltimore, Maryland, engaged in the development and commercialization of novel products in two principal areas: (i) targeted and controlled drug delivery systems using proprietary biodegradable polymers for the treatment of cancer and other diseases; and (ii) therapeutic and diagnostic products for neurological diseases and conditions.
(2) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Guilford Pharmaceuticals Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents
Highly liquid investments with an original maturity of three months or less are classified as cash equivalents.
Investments
The Company classifies investments at the time of purchase as either available-for-sale or held-to-maturity. Investments in securities that are classified as available-for-sale are carried at their fair values. Changes in the fair values of available-for-sale securities are recognized as a separate component of stockholders’ equity as “Accumulated Other Comprehensive Income.” Realized gains and losses from the sale of available-for-sale securities are determined on a specific identification basis. Held-to-maturity securities are carried at cost adjusted for amortized premium or discount.
A decline in the market value of any available-for-sale or held-to-maturity security below cost that is deemed to be other than temporary is an impairment which would result in a reduction in the carrying amount to fair value. Such impairment, if any, is charged to earnings and a new cost basis for the security is established. Dividends and interest income are recognized when earned.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined using a weighted-average approach which approximates the first-in, first-out method.
Property and Equipment
Property and equipment are recorded at cost, including interest on funds borrowed to finance construction of real property. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets, generally three to seven years for furniture and equipment, and over the shorter of the estimated useful life of leasehold improvements or the related lease term for such improvements. Upon the disposition of assets, the costs and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the consolidated statements of operations. Expenditures for repairs and maintenance are expensed as incurred.
Revenue Recognition
Product sales are recognized at the time the product has received a certificate of analysis and has been shipped. Sales are reported net of estimated discounts, rebates, chargebacks and product returns.
Royalty revenue is recognized at such time as the Company’s sales, marketing and distribution partner sells the product (see Note 14).
Collaborative research revenue is recognized, up to the contractual limits, when the Company meets its performance obligations under the respective agreements. Contract and non-refundable licensing revenue is recognized when milestones are met and the Company’s significant performance obligations have been satisfied in accordance with the terms of the respective agreements. Payments received that relate to future performance are deferred and recognized as revenue at the time such future performance has been accomplished.
Research and Development, Patent and Royalty Costs
Research and development, patent, and royalty costs are expensed as incurred. Royalty expense related to product sales is recognized concurrently with the recognition of product revenue and included as part of cost of sales. Royalty expense from third-party sales is expensed as incurred and is offset against royalty revenue related to third-party sales.
Accounting for Income Taxes
Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits, which are not expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted.
Stock-Based Compensation
On January 1, 1996, the Company adopted Statement of Financial Accounting Standards (“FAS”) No. 123, “Accounting for Stock-Based Compensation” (“FAS 123”), which permits companies to continue to apply the provisions of Accounting Principles Board APB No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), and related interpretations, in accounting for its employee share options plans. The Company continues to apply APB No. 25. Under the Company’s employee share option plans, share options are granted at an exercise price that equals the current fair market value at the date of grant. Under APB 25, no compensation expense is recorded for employee share options issued at current fair market value. Under FAS 123, the Company is required to provide pro forma net earnings (loss) and pro forma earnings (loss) per share footnote disclosures for employee stock option grants as if the fair-value based method defined in FAS 123 had been applied. Stock-based awards issued to non-employees are accounted for under the fair-value based method defined in FAS 123.
Comprehensive Income
On January 1, 1998, the Company adopted FAS No. 130 “Reporting Comprehensive Income” (“FAS 130”). Under FAS 130, the Company is required to display comprehensive income (loss) and its components as part of the Company’s full set of financial statements. Comprehensive income (loss) is comprised of net income (loss) and net unrealized gains (losses) on securities and is presented in the consolidated statements of changes in stockholders’ equity. The Statement requires only additional disclosures in the consolidated financial statements; it does not affect the Company’s financial position or results of operations. Prior year financial statements have been reclassified to conform with the requirements of FAS 130.
Earnings (loss) per Share
Basic EPS is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. The computation of Diluted EPS is similar to Basic EPS except that the weighted-average number of shares outstanding for the period is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Potential common shares are excluded if the effect on earnings (loss) per share is antidilutive.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. Such asset is deemed impaired and written down to its fair value if expected future net cash flows are less than its carrying amount.
Interest Rate Swap Agreements
As a hedge against fluctuations in interest rates, the Company has entered into interest rate swap agreements to exchange a portion of its variable rate interest payment obligations for fixed rates. The Company does not speculate on the future direction of interest rates nor does the Company use these derivative financial instruments for trading purposes. The differential to be paid or received as interest rates change is accrued and recognized as an adjustment of interest expense related to the financial obligation.
Fair Value of Financial Instruments
The fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. The fair values of financial instruments approximate their recorded value.
Concentration of Credit Risk
The Company invests excess cash in accordance with a policy objective that seeks to preserve both liquidity and safety of principal. The policy limits investments to certain instruments issued by institutions with strong investment grade credit ratings at the time of purchase and places restrictions on their terms and concentrations by type and issuer.
Uncertainties
The Company is subject to certain risks common to companies within the biotechnology industry. These include, but are not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, estimation by the Company of the size and characteristics of the market for the Company’s product(s), acceptance of the Company’s product(s), health care containment initiatives, product liability, and compliance with government regulations and agencies, including the U.S. Food and Drug Administration.
Use of Estimates
The preparation of the Company’s financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Significant Customer and Product
The Company sells only one product, GLIADEL, a novel treatment for recurrent malignant gliablastoma multiforme, the most fatal form of brain cancer. The Company markets, sells and distributes its product through one of its partners Rhône-Poulenc Rorer Pharmaceuticals Inc (“RPR”) (see note 14). Substantially all sales were with RPR for the years ended December 31, 1998 and 1997. GLIADEL was launched in February of 1997; accordingly, there were no sales in 1996. The Company expects that future sales will also be derived largely from the same customer and will be relying upon that customer’s ability to obtain regulatory clearance where necessary and then market, sell and distribute the product.
Reclassifications
Certain prior year amounts have been reclassified to conform with the current year presentation.
New Accounting Standard
In June 1998, the Financial Accounting Standards Board issued FAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”), effective beginning in the first quarter of 2000. FAS 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 FAS 133. Based on the requirements of FAS 133, there may be changes to the balance sheet and reported assets and liabilities. The Company is currently evaluating the impact of FAS 133 on its consolidated financial position and results of operations.
(3) Investments
Investments in marketable securities as of December 31, 1998 and 1997 are as follows:
Gross
Gross
Unrealized
Unrealized
Holding
Holding
Fair
(in thousands)
Cost
Gains
Losses
Value
1998
Available-for-sale:
U.S. Treasury
Securities
$
89,399
$
689
$
—
$
90,088
Corporate Debt
Securities
15,900
36
—
15,936
Other Debt Securities
11,073
151
—
11,224
$
116,372
$
876
$
—
$
117,248
Held-to-maturity:
U.S. Treasury
Securities
$
2,023
$
16
$
—
$
2,039
Corporate Debt
Securities
510
—
(1
)
509
$
2,533
$
16
$
(1
)
$
2,548
$
118,905
$
892
$
(1
)
$
119,796
1997
Available-for-sale:
U.S. Treasury
Securities
$
97,499
$
458
$
(89
)
$
97,868
Corporate Debt
Securities
6,990
13
(5
)
6,998
Other Debt Securities
6,292
49
—
6,341
$
110,781
$
520
$
(94
)
$
111,207
Held-to-maturity:
U.S. Treasury
Securities
$
20,162
$
24
$
(4
)
$
20,182
Corporate Debt
Securities
3,870
7
(4
)
3,873
$
24,032
$
31
$
(8
)
$
24,055
$
134,813
$
551
$
(102
)
$
135,262
At December 31, 1998 and 1997, investments of $16.5 million and $12.1 million, respectively, are classified as “Investments—restricted” in the accompanying consolidated balance sheets (see Notes 7 and 8).
Maturities of debt securities classified as available-for-sale and held-to-maturity were as follows at December 31, 1998;
Amortized
Fair
(in thousands)
Cost
Value
Available-for-sale
Due in 1 year or less
$
23,869
$
23,962
Due in 1-5 years
86,555
87,320
Greater than 5 years
5,948
5,966
$
116,372
$
117,248
Held-to-maturity
Due in 1 year or less
$
2,023
$
2,033
Due in 1-5 years
510
515
$
2,533
$
2,548
$
118,905
$
119,796
(4) Interest Rate Swap Agreements
During 1998, the Company entered into interest rate swap agreements to reduce the impact of changes in interest rates on certain financial lease obligations (see Note 8). The interest rate swap agreements are with First Union National Bank (“First Union”), having a total notional principal amount of $20 million at December 31, 1998. In January 1999, the Company entered into additional interest rate swap agreements having a total notional principal amount of $10 million on its long-term debt (see Note 7). As a result of these interest rate swap agreements, the Company has effectively fixed the interest rates on its long-term debt and certain financial lease obligations to an annual rate of approximately 6%. The interest rate swap agreements have the same maturity as its long-term debt and certain financial lease obligations. First Union has the right to terminate these agreements on the fifth year anniversary date of each such agreement. The fair value of the Company’s interest rate swap agreements approximate carrying value at December 31, 1998. The Company is not directly exposed to credit risk. In the event of non-performance by First Union, which is unlikely, the Company could be exposed to market risk related to interest rates.
(5) Inventories
Inventories consist of the following:
December 31,
(in thousands)
1998
1997
Raw materials
$
283
$
386
Work in process
371
497
Finished goods
637
459
$
1,291
$
1,342
Inventories are net of applicable reserves and allowances. Inventories include products and materials that may be either available for sale and/or production or utilized internally in the Company’s development activities. Inventories identified for development activities are expensed in the period in which such inventories are designated for such use.
(6) Property and Equipment
Property and equipment consist of the following:
December 31,
(in thousands)
1998
1997
Laboratory equipment
$
4,055
$
4,779
Manufacturing equipment
2,544
2,299
Computer and office equipment
4,106
3,825
Leasehold improvements
15,838
7,773
Construction in process
—
2,925
$
26,543
$
21,601
Less accumulated depreciation
and amortization
(7,753
)
(4,448
)
$
18,790
$
17,153
(7) Indebtedness
Long-term debt at December 31, 1998 and 1997 consists of the following:
December 31,
(in thousands)
1998
1997
Borrowings under bond financing arrangement**,
payable in monthly installments of $78,431,
plus interest at LIBOR + .75% (6.287% at
December 31,1998*), final payment due
December 2004
$
5,647
$
6,588
Borrowings under term loan**, payable in
monthly installments of $101,515, plus
interest at LIBOR + .625% (6.172% at
December 31, 1998*), final payment
due April 2003
5,278
6,497
Total long-term debt
$
10,925
$
13,085
Less current portion of long-term debt
(2,159
)
(2,159
)
Long-term debt, net of current portion
$
8,766
$
10,926
* See note 4 - Interest Rate Swap Agreements
**Secured by equipment and leasehold improvements
Bond Financing Arrangement
In 1994, the Company entered into a $8 million bond financing arrangement with a commercial bank. The bond was issued by the Maryland Economic Development Corporation and 50% of the outstanding borrowings were guaranteed by the Maryland Industrial Development Financing Authority (“MIDFA”). Effective June 1998, MIDFA increased its guarantee from 50% to 81.73% of the outstanding borrowings.
Term Loan Agreement
In 1996, the Company entered into a term loan agreement, as amended, with a commercial bank for up to $6.7 million. During 1997, the Company borrowed $1.8 million, the remaining available principal amount under the term loan agreement.
The aggregate maturities of long-term debt for each of the five years subsequent to December 31, 1998 are approximately: 1999, $2.2 million; 2000, $2.2 million; 2001, $2.2 million; 2002, $2.2 million; and 2003, $1.3 million.
Restrictive Covenants
The aforementioned debt agreements contain certain restrictions which require the Company to meet certain financial covenants. Under the bond financing arrangement, the Company maintained $0.9 million at December 31, 1998 as cash collateral (approximately 18.27% of the outstanding principal balance). In accordance with the term loan agreement, the Company maintained $5.3 million at December 31, 1998 (equal to 100% of the outstanding principal balance). The total cash collateral is included in the accompanying consolidated balance sheets as “Investments-restricted”. Other covenants preclude the Company from declaring any cash dividends on its common stock without prior written consent.
Revolving Line of Credit
In 1998, the Company entered into a revolving line of credit agreement with a commercial bank for $5 million. Borrowings under the line of credit, if any, require interest at LIBOR plus .55% and are payable on demand. Under the terms of the agreement, the Company is required to maintain cash, cash equivalents and investments in the aggregate equal to $40 million. There were no amounts outstanding under the line of credit at December 31, 1998.
(8) Leases
In February 1998, the Company entered into a Real Estate Development Agreement and an operating lease agreement in connection with the construction of a new research and development facility. The facility, which is expected to be approximately 73,000 square feet, will be adjacent to the Company’s corporate headquarters in Baltimore, Maryland. Construction costs are estimated not to exceed $20 million in the aggregate. The lease term is for a maximum of 84 months, which includes a construction period of up to 24 months. The Company will not make rental payments during the construction period and will have the option to purchase the facility at the end of the lease term in February 2005. The Company anticipates that the annual lease payments will not exceed $1.5 million. In the event the Company chooses not to exercise its purchase option, the Company is obligated to arrange for the sale of the facility and is required to pay the lessor any difference between the net sales proceeds and the lessor’s net investment in the facility. If the sales proceeds are less than the lessor’s net investment in the facility, the Company has to pay an amount equal to the difference between 83% of the lessor’s net investment in the facility and the shortfall. During the construction period, the Company must maintain cash collateral equal to 100% of the cost of construction not to exceed $20 million. Upon completion of construction, the Company may reduce the amount of aggregate cash collateral by approximately $5.1 million. As of December 31, 1998, the Company had established cash collateral of approximately $8.1 million related to this transaction. The cash collateral is included in the accompanying consolidated balance sheets as “Investments-restricted.” In addition the Company is subject to certain financial covenants the most restrictive of which requires that the Company maintain unrestricted cash, cash equivalents and investments in the aggregate equal to $40 million.
The Company has several non-cancelable operating leases for equipment and buildings. In March 1998, the Company entered into certain Master Lease Agreements to provide up to $10.8 million for computer and equipment financing. The Company’s ability to draw on these Master Lease Agreements expires on December 31, 1999. The term of each operating lease may range from 24 to 48 months based upon the type of equipment being financed. As of December 31, 1998, the Company had leased approximately $4.1 million in computer and other equipment under these agreements. The Company’s future minimum lease payments under these non-cancelable operating leases for years subsequent to December 31, 1998 are as follows:
(in thousands)
Year
Amount
1999
$
3,943
2000
3,658
2001
2,870
2002
2,221
2003 and thereafter
6,240
$
18,932
Rent expense for operating leases was approximately $2.7 million, $1.5 million and $0.7 million in 1998, 1997 and 1996, respectively.
(9) Income Taxes
As of December 31, 1998, the Company had net operating loss (“NOL”) carryforwards available for federal income tax purposes of approximately $51 million, which expire at various dates between 2010 and 2018. NOL carryforwards are subject to ownership change limitations and may also be subject to various other limitations on the amounts to be utilized. As of December 31, 1998, the Company had tax credit carryforwards of approximately $1 million expiring between 2010 and 2015.
Actual income tax expense differs from the expected income tax expense computed at the effective federal rate as follows:
(in thousands)
1998
1997
1996
Computed "expected" tax
expense (benefit) at
statutory rate
$
(10,097
)
$
(3,889
)
$
1,725
State income tax, net of
federal expense (benefit)
(1,965
)
(515
)
230
Research collaboration revenue
—
—
557
Compensatory stock awards
—
(373
)
—
Change in valuation allowance
12,608
4,734
(2,552
)
Other, net
(546
)
43
40
$
—
$
—
$
—
Realization of net deferred tax assets related to the Company’s NOL carryforwards and other items is dependent on future earnings, which are uncertain. Accordingly, a valuation allowance has been established equal to net deferred tax assets which are not likely to be realized in the future, resulting in net deferred tax assets of approximately $138,000 at December 31, 1998 and 1997. The change in the valuation allowance was an increase of approximately $12.6 million in 1998 and an increase of approximately $6.6 million in 1997.
Significant components of the Company’s deferred tax assets and liabilities as of December 31, 1998 and 1997 are shown below.
December 31,
(in thousands)
1998
1997
Deferred tax assets:
Net operating loss carryforwards
$
20,771
$
8,869
Research and experimentation credits
960
1,710
Compensatory stock grants
1,599
1,228
Alternative minimum tax
credit carryforwards
138
138
Accrued expenses
1,502
403
Contribution carryover and capitalized
start-up costs
88
51
$
25,058
$
12,399
Deferred tax liabilities:
Prepaid expenses and depreciation
(266
)
(215
)
Net deferred tax assets
24,792
12,184
Valuation allowance
(24,654
)
(12,046
)
Net deferred tax assets reported
$
138
$
138
(10) Capital Transactions
In September 1998, the Company announced that a Committee of the Company’s Board of Directors had authorized a common stock repurchase program of up to 1,000,000 shares of the Company’s common stock in the aggregate. The Company plans to purchase its common stock in the open market or in block transactions from time to time as it deems appropriate. As of December 31, 1998, the Company has repurchased 39,600 shares of its common stock under this repurchase program at an aggregate cost of approximately $475,000.
On October 1, 1997, the Company sold 640,095 shares of common stock to Amgen Inc. (“Amgen”) for $15 million (see note 14). In addition, the Company issued for $5 million a five-year warrant to purchase up to 700,000 shares of the Company’s common stock at an exercise price of $35.15 per share.
In April 1997, the Company completed a follow-on public equity offering of approximately 3.7 million shares of its common stock providing net proceeds of approximately $71 million to the Company.
In March 1997, The Abell Foundation, Inc. exercised its put option to receive the 750,000 shares of the Company’s common stock in exchange for its 80% interest in Gell Pharmaceuticals Inc. (“Gell”). After such date, Gell became a wholly owned subsidiary of the Company and is included in the accompanying consolidated financial statements.
On October 15, 1996, the Board of Directors declared a three-for-two stock split. Equity transactions (including number of shares) prior to that date have been adjusted to reflect the stock split. In June 1996, the Company entered into a stock purchase agreement with Rhône-Poulenc Rorer Pharmaceuticals Inc. and its parent corporation (collectively “RPR”) (see note 14) whereby, RPR purchased 281,531 shares of the Company’s common stock for $7.5 million. In March 1996, the Company completed a follow-on public equity offering of approximately 3.5 million shares of its common stock, providing net proceeds of approximately $43 million to the Company.
The Company is authorized to issue up to 4,700,000 shares of preferred stock in one or more different series with terms fixed by the Board of Directors. Stockholder approval is not required to issue this preferred stock. There are no shares of this preferred stock outstanding at December 31, 1998.
(11) Stockholder Rights Plan
In September 1995, the Board of Directors adopted a Stockholder Rights Plan in which preferred stock purchase rights (“Rights”) were granted at the rate of one Right for each share of common stock. All Rights expire on October 10, 2005. At December 31, 1998, the Rights were neither exercisable nor traded separately from the Company’s common stock, and become exercisable only if a person or group becomes the beneficial owner of 20% or more of the Company’s common stock or announces a tender or exchange offer which would result in its ownership of 20% or more of the Company’s common stock. Each holder of a Right, other than the acquiring person, would be entitled to purchase $120 worth of common stock of the Company for each Right at the exercise price of $60 per Right, which would effectively enable such Rights holders to purchase common stock at one-half of the then current price.
If the Company is acquired in a merger, or 50% or more of the Company’s assets are sold in one or more related transactions, each Right would entitle the holder thereof to purchase $120 worth of common stock of the acquiring company at the exercise price of $60 per Right. At any time after a person or group of persons becomes the beneficial owner of 20% or more of the common stock, the Board of Directors, on behalf of all stockholders, may exchange one share of common stock for each Right, other than Rights held by the acquiring person.
(12) Share Option and Restricted Share Plans
Employee Share Option and Restricted Share Plans
The Company adopted Employee Share Option and Restricted Share Plans (the “Plans”) in 1998 and 1993. The Plans were established to provide eligible individuals with an opportunity to acquire or increase an equity interest in the Company and to encourage such individuals to continue in the employment of the Company. Under both plans, share options are granted at the fair market value of the stock on the day immediately preceding the date of grant or date of initial employment, if later. Share options are exercisable for a period not to exceed ten years from the date of grant. In general, share options vest over four years.
Shares awarded under the restricted share provisions of the Plans are valued at the fair market value of the stock on the day immediately preceding the date of award (date of grant, if later) and require a vesting period determined by the Board of Directors. Should an individual leave the employment of the Company for any reason (other than by reason of death or permanent disability), the award recipient would forfeit their ownership rights for all share options and restricted shares not otherwise fully vested.
At December 31, 1998, the maximum share options issuable under the Plans are 4,035,000, of which up to 350,000 shares may be issued under the restricted share provisions. At December 31, 1998, there were 1,898,239 share options available for grant under the Plans.
The Directors’ Plan
The Directors’ Stock Option Plan (the “Directors’ Plan”) was established to provide non-employee directors an opportunity to acquire or increase an equity interest in the Company. Under the Directors’ Plan, 300,000 shares of common stock are reserved for issuance at an exercise price not less than fair value of the Company’s common stock on the day immediately preceding the date of grant. Such share options vest 50% at the end of year one and 100% at the end of year two. Under the Directors’ Plan, 52,500, 22,500, and 37,500 share options were granted during 1998, 1997 and 1996, respectively. As of December 31, 1998, 172,500 share options were outstanding under the Directors’ Plan, of which 108,750 are exercisable as of December 31, 1998. At December 31, 1998, there were 127,500 share options available for grant under the Directors’ Plan. In 1996, the Company granted 120,000 options outside of the Directors’ Plan to two directors with an exercise price of $13.54 (market value at date of grant). These share options fully vested in 1998.
Consultants
In 1996, the Company granted share options to each of two consultants to purchase up to 225,000 shares of the Company’s common stock, valid for 10 years from issuance, with varying exercise prices. Vesting periods are based on either the passage of time or based upon the achievement of certain milestones, which, if ever achieved, would result in accelerated vesting. Of the aforementioned share options for each consultant, 150,600 were exercisable as of December 31, 1998. The Company recognized $439,000, $985,000 and $1.2 million in non-cash compensation expense in accordance with FAS 123 relating to the value of such share options (as established using the Black- Scholes pricing model) for the years ended December 31, 1998, 1997 and 1996, respectively, and it expects to charge varying amounts (up to an additional $750,000 in the aggregate) of non-cash compensation expense to operations through 2001 relating to such agreements.
Additional information with respect to the Company’s share option plan(s) activity is summarized as follows:
Weighted-
Share
Average
Options
Exercise Price
Balance, January 1, 1996
782,037
$
4.47
Granted
1,786,740
15.05
Exercised
(58,363
)
3.02
Canceled
(6,658
)
10.82
Balance, December 31, 1996
2,503,756
12.04
Granted
337,600
25.20
Exercised
(262,925
)
6.58
Canceled
(156,942
)
13.35
Balance, December 31, 1997
2,421,489
14.38
Granted
867,403
19.31
Exercised
(178,678
)
5.91
Canceled
(137,984
)
17.63
Balance, December 31, 1998
2,972,230
$
16.18
Share options outstanding and exercisable by price range are as follows:
