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Galen Hldgs (WCRX)

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Wednesday 08 August, 2001

Galen Hldgs

3rd Quarter & 9 Mths Results

Galen Holdings PLC
8 August 2001


                                                                  NEWS RELEASE


8 August 2001


                            Galen Holdings PLC
            Record results for the third quarter ended 30 June 2001

Craigavon, Northern Ireland/Rockaway, New Jersey - 8 August 2001: Galen
Holdings PLC ('Galen') (LSE: GAL, Nasdaq: GALN), the international specialty
pharmaceutical products and services company, announces its results for the
quarter ended 30 June 2001.


Financial Highlights


                                Quarter ended          Quarter ended     Change
                                 30 June 2001           30 June 2000        (%)

                                         (£m)                   (£m)
Revenue                                  46.7                   21.4        118
Operating profit*                        14.1                    6.0        134
Earnings per share*                      6.0p                   3.7p         62


*  before amortisation of intangible assets and goodwill



-         Normalised earnings per ordinary share increased to 6.0p, up 62%
          over the same quarter in the prior year.

-         Total revenue increased 118% to a record £46.7 million:

-         Pharmaceutical product revenue increased 202% reflecting the
          impact of the acquisition of Warner Chilcott in September 2000 and its
          ensuing strong performance.

-         Pharmaceutical services revenue continued to post solid gains, up
          34% over the prior year.

-         Gross profit increased to £30.2 million from £11.1 million.



Business Highlights

-         Successful £300 million Open Offer and International Offer
          completed in July 2001 with good support from existing and new        
          shareholders, particularly in US.

-         Acquisition of Estrace tablets (branded estrogen replacement
          therapy) from Bristol-Myers Squibb announced on 29 June 2001.


Commenting on the results, Roger Boissonneault, Chief Executive, said:

'The Group has once again performed strongly during the quarter, with both our
Product and Services divisions contributing positively to the overall
profitability of the Group.  Of particular note during the period was the
completion of the International Open Offer which has strengthened and expanded
our international investor base.  The funds raised have placed us in a strong
position to expand our portfolio of women's healthcare products through
strategic opportunities, as already demonstrated by our recent acquisition of
the Estrace tablets.'



                                       *  *  *


For further information, please contact:


Galen Holdings
Richard McCann, Senior Vice President, Corporate     Tel:  + 1 973 442 3200
Finance

Financial Dynamics
Sophie Pender-Cudlip                                 Tel:  + 44 (0) 20 7831 3113


For further information on Galen visit: www.galenplc.com


A conference call will be held for analysts at 3pm (UK) today.  Please call Mo
Noonan on + 44 (0) 20 7831 3113 for further details.


Note:

Statements made in this press release include forward-looking statements made
pursuant to the safe harbor provisions of the Securities Litigation Reform Act
of 1995.  Such statements, including those relating to financial expectations
for the fiscal year 2001 and beyond, involve certain risks and uncertainties
that could cause actual results to differ materially from those in the forward
looking statements, including, but not limited to, the company's dependence on
key products, risks associated with product development and manufacturing, the
uncertainty of future financial results and fluctuations in operating results,
dependence on the Company's acquisition strategy, new product introductions,
currency fluctuations and other risks described from time to time in the
Company's SEC filings.  These forward-looking statements represent the
judgment of the Company, as of the date of this release, and the Company
disclaims any intent or obligation to update these forward-looking statements.
Information on other significant potential risks and uncertainties not
discussed herein may be found in the Company's filings with the Securities and
Exchange Commission including its Form 20F for the year ended September 30,
2000, its Form F1 Registration Statement filed on July 19th 2001, and all
information previously filed by the Company's wholly owned subsidiary, Warner
Chilcott plc, including Warner Chilcott plc's definitive proxy statement filed
with the SEC on August 8, 2000.



Galen Holdings PLC

                      Results for the nine months ended 30 June 2001 

Unaudited results for the period ended 30 June 2001
Consolidated profit and loss account

                                                                              
                                 Unaudited               Unaudited     Audited
                             Quarter ended       Nine months ended        Year
                                   30 June                 30 June       ended
                                                                  30 September
                             2001     2000          2001      2000        2000
                            £'000    £'000         £'000     £'000       £'000
                            _____    _____         _____     _____       _____
  Turnover                                                                    
  Pharmaceutical           32,452   10,736        91,823    33,900      44,397
  products                                                                    
  Pharmaceutical           14,213   10,631        41,035    29,913      41,623
  services                  _____    _____         _____     _____       _____
  Total turnover           46,665   21,367       132,858    63,813      86,020
  Cost of sales            16,473   10,311        46,237    32,610      44,222
                            _____    _____         _____     _____       _____
  Gross profit             30,192   11,056        86,621    31,203      41,798
                            _____    _____         _____     _____       _____

  Net operating expenses                                                        
           
  Before                   16,127    5,049        46,468    13,152      17,744
  exceptional                                                                 
  items and                                                                   
  amortisation of                                                             
  goodwill and                                                                
  intangibles                                                                 

  Exceptional items             -        -             -         -       3,311
  Goodwill and              5,858      460        17,817     1,361       1,999
  intangibles               _____    _____         _____     _____       _____
  amortisation                                                                

  Total net                21,985    5,509        64,285    14,513      23,054
  operating                 _____    _____         _____     _____       _____
  expenses                                                                    

  Operating profit                                                            
  Before                   14,065    6,007        40,153    18,051      24,054
  exceptional                                                                 
  items and                                                                   
  amortisation of                                                             
  goodwill and                                                                
  intangibles                                                                 

  Exceptional items             -        -             -         -     (3,311)
  Goodwill and            (5,858)    (460)      (17,817)   (1,361)     (1,999)
  intangibles               _____    _____        ______     _____       _____
  amortisation                                                                

  Total operating           8,207    5,547        22,336    16,690      18,744
  profit                                                                      

  Investment income           678      600         2,635     1,347       2,089
                            _____    _____         _____     _____       _____
  Profit on                 8,885    6,147        24,971    18,037      20,833
  ordinary                                                                    
  activities                                                                  
  before interest                                                             

  Interest payable          4,215      598        13,883     1,242       1,760
  and similar               _____     ____         _____     _____       _____
  charges                                                                     

  Profit on                 4,670    5,549        11,088    16,795      19,073
  ordinary                                                                    
  activities                                                                  
  before taxation                                                             

  Tax on profit on          1,050    1,505         2,751     4,004       4,699
  ordinary                  _____    _____         _____     _____       _____
  activities                                                                  

  Profit on                 3,620    4,044         8,337    12,791      14,374
  ordinary                                                                    
  activities after                                                            
  taxation                                                                    

  Minority                     29       31           104        70          89
  interests                 _____    _____         _____     _____       _____

  Profit for the            3,591    4,013         8,233    12,721      14,285
  financial period                                                            

  Dividends                     -        -         1,342       910       3,036
                            _____    _____         _____     _____       _____

  Retained profit           3,591    4,013         6,891    11,811      11,249
  for the                   _____    _____         _____     _____       _____
  financial period                                                            

  Earnings per               2.3p     3.3p          5.2p     10.5p       11.8p
  share                                                                       

  Diluted earnings           2.2p     3.3p          5.1p     10.5p       11.7p
  per share                                                                   

  Adjusted                   6.0p     3.7p         16.6p     11.6p       15.5p
  earnings per                                                                
  share (before                                                               
  exceptional                                                                 
  items and                                                                   
  amortisation of                                                             
  goodwill and                                                                
  other intangibles)                                                            
   
  Adjusted diluted           5.9p     3.6p         16.2p     11.6p       15.5p
  earnings per              _____    _____         _____     _____       _____
  share (before
  exceptional  
  items and    
  amortisation of 
  goodwill and    
  other intangibles)                                                            
   



Unaudited results for the period ended 30 June 2001
Consolidated balance sheet




                                                   Unaudited            Audited
                                                   30 June         30 September
                                                      2001    2000         2000
                                                     £'000   £'000        £'000

                                                     _____   _____        _____
Fixed assets
Intangible assets                                  521,723  43,199      456,102
Tangible assets                                     87,418  75,982       79,388

                                                     _____   _____        _____
                                                   609,141 119,181      535,490

                                                     _____   _____        _____
Current assets
Stocks                                              15,003  11,383       14,207
Debtors                                             37,025  21,530       34,747
Cash at bank and in hand                            58,001  23,482       77,660

                                                     _____  ______        _____
                                                   110,029  56,395      126,614

Creditors: amounts falling due within one year      78,437  20,943       82,345

                                                     _____   _____        _____
Net current assets                                  31,592  35,452       44,269

                                                     _____   _____        _____
Total assets less current liabilities              640,733 154,633      579,759
Creditors: amounts falling due after more than     206,605  32,842      159,200
one year
Provisions for liabilities and charges               3,233       -        3,223
Deferred income                                      5,462   6,430        6,670

                                                     _____   _____        _____
Net assets                                         425,433 115,361      410,666

                                                     _____   _____        _____

Capital and reserves
Called up share capital                             16,272  12,727       15,897
Share premium account                               58,746  55,031       55,031
Merger reserve                                     290,685       -      290,685
Profit and loss account                             59,506  47,516       48,933
                                                     _____   _____        _____
Equity shareholders' funds                         425,209 115,274      410,546
Minority interests - equity                            224      87          120
                                                     _____   _____        _____
                                                   425,433 115,361      410,666

                                                     _____   _____        _____




Unaudited results for the period ended 30 June 2001
Consolidated cash flow statement

                                            Unaudited     Unaudited     Audited
                                             Quarter     Nine months       Year
                                              ended         ended            30
                                             30 June       30 June    September
                                             2001  2000   2001   2000      2000
                                            £'000 £'000  £'000  £'000     £'000

                                            _____ _____  _____  _____     _____
Net cash inflow from operating activities  14,884 4,964 38,599 12,877    16,659

                                           ______ _____  _____  _____     _____
Returns on investments and servicing of
finance
Interest paid                             (4,216) (584)(13,884)(1,242)   (1,501)
Interest received                             678 1,041  2,635  1,347     1,642

                                            _____ _____  _____  _____     _____
                                           (3,538)  457(11,249)   105       141

                                            _____ _____  _____  _____     _____
Taxation
Corporation tax (paid) recovered           (1,805)(1,713) (820)(2,736)   (3,242)

                                            _____ _____  _____  _____     _____
Capital expenditure
Purchase of tangible fixed assets         (4,467)(5,559)(11,905)(13,042)(15,454)
Sale of tangible fixed assets                   -     -     217      31      33
Purchase of intangible fixed assets       (67,669)    - (67,669)      -  (1,984)
Government grant received                       -     -      -    1,114   1,695

                                            _____ ______  _____  _____     _____
                                         (72,136)(5,559)(79,357)(11,897)(15,710)
                                            _____ _____  _____  _____     _____
Acquisitions
Acquisition costs and deferred                 - (7,989)(16,101) (9,871)(15,063)
consideration payments
Net funds acquired with subsidiary             -     -      -      -        474
undertakings
                                            _____ _____  _____  _____     _____
                                               - (7,989)(16,101)(9,871) (14,589)

                                            _____ _____  _____  _____     _____
Equity dividends paid                           -     -  (2,191)(1,400)  (2,278)

                                            _____ _____  _____  _____     _____
Net cash flow before management          (62,595)(9,840)(71,119)(12,922)(19,019)
 of liquid resources and financing
                                            _____ _____  _____  _____     _____
Management of liquid resources

Decrease/(increase) in short term deposits 15,000  (251) 36,000 (31,000)(24,500)

                                            _____ _____  _____  _____     _____
Financing
Issue of ordinary share capital (net of     (671)     -   4,090  36,367  36,367
expenses)
Loan notes repaid                               -     - (27,323)      -       -
Loans obtained/(repaid) (net)              53,075 (2,804) 55,482 (4,965) 13,476
Principal repayment under hire purchase     (100)    (39)  (300)   (163)   (329)
agreements
                                            _____ _____  _____  _____     _____
                                           52,304 (2,843) 31,949 31,239  49,514

                                            _____ _____  _____  _____     _____
Increase/(decrease) in cash in the period   4,709(12,934)(3,170)(12,683)  5,995
                                            _____ ______  _____  _____    ______


Unaudited results for the period ended 30 June 2001

Notes to results


1  Basis of preparation

The financial information for the quarterly and nine months periods ended 30
June 2001 and 2000, which is unaudited and does not constitute statutory
accounts, has been prepared using accounting policies consistent with those
set out in the group's 30 September 2000 statutory accounts.

The abridged financial information for the year ended 30 September 2000 has
been extracted from the group's statutory accounts for that year, which have
been filed with the Registrar of Companies.  The report of the auditors on
those accounts was unqualified.


2  Earnings per share

Earnings per ordinary share is based on profit for the financial period and on
the weighted average number of ordinary shares in issue during the period,
excluding those held in the employee share trust.  Diluted earnings per share
is calculated using an adjusted number of shares reflecting the number of
dilutive shares under option.  Adjusted earnings per share figures reflecting
the results before the impact of exceptional items and goodwill and
intangibles amortisation have been calculated to provide shareholders with a
clearer understanding of the underlying trading performance of the group.


The weighted average numbers of shares used in the calculation of earnings per
share are as follows:

                                                                              
                       Quarter ended           Nine months ended          Year
                             30 June                     30 June         ended
                                                                  30 September
                   2001         2000          2001          2000          2000
                 Number       Number        Number        Number        Number
                     of           of            of            of            of
                 shares       shares        shares        shares        shares
                  _____        _____         _____         _____         _____
  Weighted                                                                    
  average                                                                     
  number                                                                      
  of                                                                          
  shares:                                                                     
  Basic     157,406,120  122,346,774   157,326,345   121,140,656   121,444,370
  Diluted   159,761,634  122,795,745   160,504,760   121,560,320   121,925,851
                  _____        _____         _____         _____         _____
 

Summary of differences between UK and US Generally Accepted Accounting
Principles ('GAAP')

(1)               Profit for the financial year and shareholders' funds

The group financial statements are prepared in accordance with UK GAAP which
differs in certain significant respects from US GAAP.  The effect of the US
GAAP adjustments to profit for the financial period and equity shareholders'
funds are set out in the tables below:


                                                                  9 months to
                                                                    30 June
                                                                   2001    2000
                                                                  £'000   £'000
                                                                    Unaudited

(a)  Reconciliation of profit for the financial year to US GAAP
  Profit for the financial period under UK GAAP                   8,233  12,721

                                                                  _____   _____
  US GAAP adjustments:
  Amortisation of goodwill                                        5,027     387
  Amortisation of intangibles                                     (798)       -
  In-process research and development related amortisation of        38      38
  goodwill
  Capitalisation of interest                                       (26)    (26)
  Deferred taxation                                             (4,641)   (472)
  Compensation expense  (i)                                     (3,312) (1,249)
  Inventory step up release                                       (986)       -
  Deferred tax effect of US GAAP adjustments                        940       -
                                                                  _____   _____
  US GAAP adjustments total                                     (3,758) (1,322)

                                                                  _____   _____
Profit for the financial period under US GAAP
  - UK pounds                                                     4,475  11,399
  - US dollars                                                    6,370  18,128

                                                                  _____   _____


(i)  Included in the compensation expense reconciling item above is an amount
of £2.68 million ($3.88 million) relating to the intrinsic value of share
options, the terms of which were modified on the cessation of employment of a
director.  This is a once-off, non-cash adjustment required under US GAAP; it
does not impact on equity shareholders' funds.


                                                                As at     As at
                                                                   30        30
                                                                 June September
                                                                 2001      2000
                                                                £'000     £'000
                                                                   Unaudited

(b)   Effect on equity shareholders' funds of differences
      between UK GAAP and US GAAP

  Equity shareholders' funds under UK GAAP                     425,209   410,546

                                                                _____     _____
  US GAAP adjustments:
  Acquisition accounting                                      (84,167)  (87,072)
  Amortisation of goodwill relating to contingent                 946       608
  consideration
  In-process research and development                         (17,813)  (17,851)
  Capitalisation of interest                                    1,666     1,692
  Deferred taxation                                           (10,293)   (6,592)
  Employee benefit trust                                       (7,082)   (7,377)
  Share premium account                                         7,082     7,377
  Dividends                                                     1,342     2,194

                                                                _____     _____
  US GAAP adjustments total                                  (108,319) (107,021)

                                                                _____     _____
Equity shareholders' funds under US GAAP
  - UK pounds                                                  316,890   303,525
  - US dollars                                                 445,254   444,269

                                                                _____     _____



Unaudited consolidated balance sheets
(In thousands of US dollars)

                                                                As at   Audited
                                                                 June     As at
                                                                   30 September
                                                                             30
                                                                 2001      2000
                                                                _____     _____
Assets
Current assets:
  Cash and cash equivalents                                     81,509   113,671
  Accounts receivable, net                                      44,138    44,877
  Inventories                                                   21,083    22,230
  Prepaid expense and other assets                              14,839    12,982

                                                                _____     _____
                                                               161,569   193,760

                                                                _____     _____
Property, equipment, furniture and fixtures, net               125,188   118,677
Intangible assets, net                                         571,337   493,474

                                                                _____     _____
Total assets                                                   858,094   805,911

                                                                _____     _____
Liabilities
Current liabilities:
  Accounts payable                                              16,011    13,305
  Accrued and other liabilities                                 33,628    45,774
  Current instalments of long-term debt                         41,124    47,146
  Current instalments of obligation under capital leases           535       525
  Income taxes                                                   6,125     3,567
  Deferred consideration                                             -     7,000

                                                                _____     _____
Total current liabilities                                       97,423   117,317

                                                                _____     _____
Other liabilities:
  Long-term debt, excluding current instalments                287,663   219,575
  Long-term obligations under capital leases, excluding current    679       445
   instalments
  Deferred income taxes                                         19,052    14,366
  Other non-current liabilities                                  7,676     9,763

                                                                ______
Total liabilities                                              412,493   361,466

                                                                _____     _____
Minority interest                                                  316       176

Shareholders' equity

Ordinary shares, par value (pounds sterling) 0.10 per share;    26,039    25,498
250,000,000 (September 30, 2000;250,000,000) shares authorised,
162,719,203 shares issued and outstanding at June 30, 2001 and
158,965,206 issued and outstanding at September 30, 2000

Additional paid in capital                                      409,372  399,656
Retained earnings                                                45,774   42,568
Treasury stock                                                  (11,472)(11,950)
Accumulated other comprehensive loss                            (24,428)(11,503)

                                                                _____     _____
Total shareholders' equity                                      445,285  444,269

                                                                _____    ______
Total liabilities and shareholders' equity                      858,094  805,911

                                                                _____    ______



Unaudited consolidated statement of operations  
(In thousands of US dollars, except per share data) 
 

                                                                              
                                    Quarter ended            Nine months ended
                                          June 30                      June 30
                               2001          2000           2001          2000
                              _____         _____          _____         _____
  Revenues                                                                    
  Product revenue            46,092        16,465        132,101        54,104
  Services revenue           20,186        16,306         59,087        47,378
                              _____         _____          _____         _____
  Total revenues             66,278        32,771        191,188       101,482
                              _____         _____          _____         _____
  Operating                                                                   
  expenses                                                                    
  Cost of sales              21,748        16,723         63,367        48,860
  Selling, general           18,826         3,564         60,842        12,891
  and                                                                         
  administrative                                                              
  Research and                3,768         2,285          8,990         7,796
  development                                                                 
  Depreciation                2,282         1,941          6,455         5,256
  Amortisation                6,335           358         19,506         1,489
                              _____         _____          _____         _____
  Total operating            52,959        24,871        159,160        76,292
  expenses                    _____         _____          _____         _____
  Operating income           13,319         7,900         32,028        25,190
                              _____         _____          _____         _____
  Other income                                                                
  (expense)                                                                   
  Interest income               962           941          3,802         2,142
  Interest expense          (5,987)         (933)       (20,004)       (1,975)
                              _____         _____          _____         _____
  Total other               (5,025)             8       (16,202)           167
  income (expense)            _____         _____          _____         _____
  Income before               8,294         7,908         15,826        25,357
  taxes and                   _____         _____          _____         _____
  minority interest                                                           
  Provision for               4,415         2,187          9,306         7,118
  income taxes                                                                
  Minority                       41            48            150           111
  interest in                                                                 
  earnings of                                                                 
  subsidiaries                                                                
  Net income                  3,838         5,673          6,370        18,128
                              _____         _____          _____         _____
  Net income per                                                              
  ordinary share:                                                             
  Basic                       0.024         0.046          0.040         0.150
                              _____         _____          _____         _____
  Diluted                     0.024         0.046          0.040         0.149
                              _____         _____          _____         _____
  Net income per                                                              
  ADR equivalent:                                                             
  Basic                       0.098         0.185          0.162         0.599
                              _____         _____          _____         _____
  Diluted                     0.096         0.185          0.159         0.597
                              _____         _____          _____         _____
  Weighted average                                                            
  ordinary shares                                                             
  outstanding:                                                                
  Basic                 157,406,120   122,346,774    157,326,345   121,140,656
                              _____         _____          _____         _____
  Diluted               159,761,634   122,795,745    160,504,760   121,560,320
                              _____         _____          _____         _____
  Weighted average                                                            
  equivalent ADRs                                                             
  outstanding:                                                                
  Basic                  39,351,530    30,586,694     39,331,586    30,285,164
                              _____         _____          _____         _____
  Diluted                39,940,408    30,698,936     40,126,190    30,390,080
                              _____         _____          _____         _____
 

Unaudited consolidated statements of cash flows 
(In thousands of US dollars) 
 

                                                                              
                                       Quarter ended         Nine months ended
                                             June 30                   June 30
                                     2001       2000           2001       2000
                                    _____      _____          _____      _____
  Cash flows from                                                             
  operating activities                                                        
  Net income                        3,838      5,673          6,370     18,128
  Adjustment to reconcile                                                     
  net income to net cash                                                      
  provided by operating                                                       
  activities                                                                  
  Depreciation                      2,282      1,941          6,455      5,256
  Amortisation of                   6,335        358         19,506      1,489
  intangibles                                                                 
  (Gain)/loss on sale of                3          -             23       (19)
  assets                                                                      
  Amortisation of                   (231)      (523)        (1,717)    (2,399)
  government grants                                                           
  Stock compensation                  236      1,240          4,705      1,986
  expense                                                                     
  Minority interest                    41         48            150        111
  Changes in assets and                                                       
  liabilities                                                                 
  Increase in accounts            (6,515)    (2,192)        (1,118)    (6,530)
  receivable, prepaid                                                         
  expense and other assets                                                    
  (Increase)/decrease in              (1)       (34)          1,147    (2,693)
  inventories                                                                 
  Increase/(decrease) in            3,812      1,081        (3,583)      3,232
  accounts payable,                                                           
  accrued liabilities and                                                     
  other liabilities                                                           
  Income taxes                      1,484    (1,290)          7,244      1,394
  Foreign exchange gain             3,739    (4,146)          2,142    (4,557)
  (loss)                            _____      _____          _____      _____

  Net cash provided by             15,023      2,156         41,324     15,398
  operating activities              _____      _____          _____      _____

  Cash flows from                                                             
  investing activities                                                        
  Purchase of tangible            (6,311)    (5,593)       (16,909)   (20,741)
  fixed assets                                                                
  Purchase of intangible         (96,110)          -       (96,110)          -
  fixed assets                                                                
  Proceeds from sale of                 -          -            308         49
  tangible fixed assets                                                       
  Deferred consideration                -   (12,703)       (23,333)   (15,705)
  and acquisition costs             _____      _____          _____     ______

  Net cash used in              (102,421)   (18,296)      (136,044)   (36,397)
  investing activities              _____      _____          _____      _____

  Cash flows from                                                             
  financing activities                                                        
  Long term debt                   93,668    (8,806)         62,065   (11,697)
  obtained/(repaid)                                                           
  Payments under capital            (115)       (36)          (426)      (259)
  leases                                                                      
  Proceeds from share             (1,098)          -          5,809     59,304
  capital issue (net of                                                       
  expenses)                                                                   
  Cash dividends paid                   -          -        (3,163)    (2,266)
  Government grants                     -          5              -      1,807
  received                          _____      _____          _____     ______

  Net cash provided                92,455    (8,837)         64,285     46,889
  by/(used in) financing            _____      _____          _____      _____
  activities                                                                  

  Net increase/(decrease)           5,057   (24,977)       (30,435)     25,890
  in cash and cash                                                            
  equivalents                                                                 
  Cash and cash                    77,034     60,999        113,671     10,459
  equivalents, beginning                                                      
  of period                                                                   
  Foreign exchange                  (582)      (473)        (1,727)      (800)
  adjustment on cash and            _____      _____          _____      _____
  cash equivalents                                                            
  Cash and cash                    81,509     35,549         81,509     35,549
  equivalents, end of               _____      _____          _____      _____
  period