<PAGE>
RISK FACTORS

WE ARE AT AN EARLY STAGE OF DEVELOPMENT

    We were founded in February 1990 and only introduced our first product into
the market in October 1998. All but two of our products are in research or
development. The products that we have not yet completed developing will require
additional research and development, extensive preclinical studies and clinical
trials and regulatory approval prior to any commercial sales.

WE ARE SUBJECT TO TECHNOLOGICAL UNCERTAINTY IN OUR DEVELOPMENT EFFORTS

    We must successfully address a number of technological challenges to
complete the development of certain of our potential products. These products
may not be efficacious or may prove to have undesirable or unintended side
effects, toxicities or other characteristics that may prevent or limit
commercial use. The use of synthetic peptides in radiopharmaceuticals, which is
central to our technology, is new to nuclear medicine. We believe that the FDA
has granted marketing approval of only two imaging products, including AcuTect,
based on this scientific approach and has not approved any therapeutic products
based on this approach.

THERE ARE UNCERTAINTIES RELATED TO CLINICAL TRIALS

    In order to obtain regulatory approvals for the commercial sale of any of
our products under development, we will be required to demonstrate through
preclinical testing and clinical trials that the product is safe and
efficacious. We currently are conducting preclinical tests and clinical trials
of a number of potential products. The results from preclinical testing and
early clinical trials of a product that is under development may not be
predictive of results that will be obtained in large-scale later clinical
trials. We may not be able successfully to complete those clinical trials that
we initiate. In addition, we may not be able to complete such trials on a timely
basis.

    Two examples of ways in which the results of early clinical trial can affect
development of product candidates are:

    - In Phase I clinical trials of one of our Techtides, P483H for medical
      imaging of infection due to inflammation, the compound concentrated in
      patients' stomachs at unexpectedly high levels. As a result, we conducted
      additional preclinical testing of this compound and alternative compounds
      in animals to determine the cause of this phenomenon. We recently
      initiated a Phase I clinical trial of a new formulation of P483H.

    - In a pilot study of a compound for medical imaging of atherosclerotic
      plaque, we determined that the compound did not exhibit sufficient
      sensitivity to warrant continuing development. We synthesized new
      compounds for this indication and screened them in animal models.

    The rate of completion of our clinical trials is dependent on the rate of
patient enrollment. Patient enrollment is a function of many factors, including
the size of the patient population, the nature of the protocol, the proximity of
patients to clinical sites and the eligibility criteria for the study. Delays in
planned patient enrollment may result in increased costs and program delays. For
example, patient enrollment in our Phase 2 clinical trial of Tin-117m DTPA has
been slower than anticipated because of the reluctance of prospective patients
who are suffering from pain due to metastatic cancer to the bone to receive a
placebo.

THERE IS NO CERTAINTY THAT WE WILL OBTAIN REGULATORY APPROVALS; THE APPROVAL
  PROCESS IS COSTLY AND LENGTHY

    The production and the marketing of our products and our ongoing research
and development activities are subject to extensive regulation by federal, state
and local governmental authorities in the

                                       13
<PAGE>
United States and other countries. Clearing the regulatory process for the
commercial marketing of a pharmaceutical product takes many years and requires
the expenditure of substantial resources. We have had only limited experience in
filing and prosecuting applications necessary to gain regulatory approvals.
Thus, we may not be able to obtain regulatory approvals to conduct clinical
trials of or manufacture or market any of our potential products.

    Factors that may affect the regulatory process for our product candidates
include:

    - Our analysis of data obtained from preclinical and clinical activities is
      subject to confirmation and interpretation by regulatory authorities,
      which could delay, limit or prevent regulatory approval.

    - We or the FDA may suspend clinical trials at any time if the participants
      are being exposed to unanticipated or unacceptable health risks.

    - Any regulatory approval to market a product may be subject to limitations
      on the indicated uses for which we may market the product. These
      limitations may limit the size of the market for the product.

    If we fail to comply with applicable regulatory requirements, we may be
subject to fines, suspension or withdrawal of regulatory approvals, product
recalls, seizure of products, operating restrictions and criminal prosecutions.

    As to products for which we obtain marketing approval, we, the manufacturer
of the product (if other than us) and the manufacturing facilities will be
subject to continual review and periodic inspections by the FDA. The subsequent
discovery of previously unknown problems with the product, manufacturer or
facility may result in restrictions on the product or manufacturer, including
withdrawal of the product from the market.

    The FDA may change its policies as to regulatory matters in the future.
Also, additional statutes or regulations applicable to our business may be
adopted. Such policy changes or additional statutes or regulations impose
substantial additional costs or otherwise adversely affect our operations.

    The Nuclear Regulatory Commission and state authorities regulate the use,
handling, storage and disposal of products containing radioisotopes, such as
Tin-117m DTPA and sources of technetium. We must comply with these regulations
in connection with the testing, manufacturing and marketing of or products and
product candidates.

    We also are subject to numerous and varying foreign regulatory requirements
governing the design and conduct of clinical trials and the manufacturing and
marketing of our products. The approval procedure varies among countries. The
time required to obtain foreign approvals often differs from that required to
obtain FDA approval. Approval by the FDA does not ensure approval by regulatory
authorities in other countries. For example, although the FDA has granted an NDA
permitting us to market AcuTect in the United States, Nycomed withdrew the MAA
filed with the EMEA relating to AcuTect because of the unfavorable preliminary
response of the EMEA to such application.

    We may not receive regulatory approvals to conduct clinical trials of our
products or to manufacture or market our products. In addition, regulatory
agencies may not grant such approvals on a timely basis or may revoke previously
granted approvals. All of these events may have a material adverse effect on our
business, financial condition and results of operations.

    All of the foregoing regulatory matters also are applicable to development,
manufacturing and marketing undertaken by our licensees and other collaborators.

THERE IS UNCERTAINTY AS TO THE MARKET ACCEPTANCE OF OUR TECHNOLOGY AND PRODUCTS

    The commercial success of our products that are approved for marketing by
the FDA will depend upon their acceptance by the medical community and third
party payors as clinically useful, cost-effective

                                       14
<PAGE>
and safe. The synthetic peptide-based radiopharmaceutical and other peptide
based technology that we are developing is relatively new. As a result, peptide
based radiopharmaceuticals have not been extensively tested in humans or used in
the medical community. These factors may make it more difficult for us to
achieve market acceptance of our products, particularly the first products that
we introduce to the market based on this new technology.

    Other factors that we believe will materially affect market acceptance of
our products include:

    - The timing of the receipt of marketing approvals and the countries in
      which such approvals are obtained;

    - The safety, efficacy and ease of administration of the product; and

    - The success of physician education programs.

WE NEED TO ESTABLISH COLLABORATIVE COMMERCIAL RELATIONSHIPS; WE ARE DEPENDENT ON
  OUR COLLABORATIVE PARTNERS

    An important element of our business strategy is entering into strategic
alliances or marketing and distribution arrangements with corporate partners for
the development, commercialization, marketing and distribution of certain of our
potential products. To date, we have only entered into one such arrangement with
only one corporate partner, Nycomed. In August 1998, Nycomed terminated the
research and development portion of its alliance with us, effective December 31,
1998. We are actively seeking additional collaborations with respect to our
Techtide programs that are not subject to Nycomed's options and our Theratide
and Tin-117m DTPA therapeutic programs. Although we are engaging in limited
clinical development of our Techtides and Tin-117m DTPA and preclinical
development of our Theratides in order to generate sufficient data to enter into
discussions with potential collaborative partners, we do not intend to engage in
any significant clinical trials of our Techtides or Theratides without first
obtaining financial support from a collaborative partner unless our existing
capital resources increase significantly.

    We may not be able to negotiate any additional collaborative or marketing
and distribution arrangements. Moreover, the terms of any such arrangement may
not be favorable to us. If we are unable to establish additional collaborative
arrangements, our business may be adversely affected.

    Our existing collaboration with Nycomed and any future collaboration
arrangement that we may enter into with other third parties may not be
scientifically or commercially successful. In particular, it is likely that a
significant portion of any payments due from the collaborator to us will be
contingent upon completion of development milestones or be based upon a
percentage of net sales.

    The factors that may affect the success of our collaborations include:

    - Our collaborative partners may be pursuing alternative technologies or
      developing alternative products, either on their own or in collaboration
      with others, that may be competitive with the product as to which they are
      collaborating with us. For example, Nycomed manufactures and distributes a
      wide variety of imaging agents for other imaging modalities that may
      compete against the products that Nycomed licenses from us or co-markets
      with us.

    - The success of our corporate partners in marketing any successfully
      developed products within the geographic areas in which such partners are
      granted marketing rights will materially affect our commercial success.
      For example, Nycomed has primary responsibility for the promotion of
      AcuTect in the United States and, subject to obtaining final marketing
      approval from the FDA, will have such responsibility for the marketing of
      NeoTect in the United States. A reduction in sales efforts or a
      discontinuance of sales of the our products by collaborative or corporate
      partners may result in reduced revenues to us.

                                       15
<PAGE>
    - Our collaborative partners generally will have various rights to terminate
      the collaboration with us. If a collaborator terminates such a
      collaboration, it may be difficult for us to attract a new collaborator to
      work with us as to the particular product. In addition, the announcement
      of the termination can adversely affect the perception of us in the
      business and financial communities.

WE HAVE NOT BEEN PROFITABLE

    We have incurred net losses since our inception. At December 31, 1998, our
accumulated deficit was approximately $55.4 million. We received our first
revenues from product sales only in October 1998. We expect to incur additional
significant operating losses over the next 12 to 24 months and expect cumulative
losses to increase during the initial marketing of AcuTect and as the Company's
research and development and clinical trial efforts continue. We expect that our
losses will fluctuate from quarter to quarter and that such fluctuations may be
substantial.

WE EXPECT TO REQUIRE ADDITIONAL FUNDING

    Our future capital requirements will depend on many factors, including:

    - continued progress in our research and product development programs, as
      well as the magnitude of these programs;

    - the scope and results of preclinical studies and clinical trials;

    - the time and costs involved in obtaining regulatory approvals;

    - competing technological and market developments;

    - the ability of the Company to establish and maintain collaborative
      academic and commercial research, development and marketing relationships;

    - the costs and success of commercialization activities and arrangements;

    - the costs involved in preparing, filing, prosecuting, maintaining and
      enforcing patent claims and other patent-related costs, including
      litigation costs; and

    - the costs of obtaining any required licenses of third parties
      technologies.

    Based upon our current operating plan, we anticipate that our existing
capital resources, will be adequate to satisfy our capital requirements through
1999. In the future, we may be required to raise additional funds, including
through collaborative relationships and public or private financings. Such
additional financing may not be available to us or may not be available on
acceptable terms.

    If we raise additional funds by issuing equity securities, further dilution
to our then existing stockholders will result. In addition, the terms of the
financing may adversely affect the holdings or the rights of such stockholders.
If we are unable to obtain adequate funding on a timely basis, we may be
required to significantly curtail one or more of our research or product
development programs or reduce our marketing and sales initiatives, or we also
could be required to seek funds through arrangements with collaborative partners
or others that may require us to relinquish rights to certain of its
technologies, product candidates or products which we would otherwise pursue on
our own.

WE FACE SIGNIFICANT COMPETITION

    The pharmaceutical and biotechnology industries are highly competitive and
characterized by rapid and substantial technological change. Our competitors
include pharmaceutical and chemical companies, biotechnology firms, universities
and other research institutions. Many of these competitors are conducting
extensive research and development activities on technologies and products
similar to or competitive with our technologies and products.

                                       16
<PAGE>
    Particular competitive factors that we believe may affect us include:

    - Many other companies are actively seeking to develop nuclear medicine
      imaging agents that will compete with our Techtides. These competitive
      products may be more effective than our products or may render our
      technologies and products obsolete or noncompetitive.

    - Certain radiopharmaceuticals already have been approved for sale for the
      diagnosis or treatment of the indications targeted by our products. In
      particular, OctreoScan-Registered Trademark-, a peptide based
      radiopharmaceutical, is available for the diagnosis of neuroendocrine
      tumors, Ceretec-Registered Trademark-, a radiopharmaceutical labeled with
      technetium, is available for imaging inflammation due to infection, and
      Metastron-Registered Trademark- and Quadramet-Registered Trademark- are
      available for the reduction of pain due to metastatic cancer to the bone.

    - There are several well-established medical imaging modalities that compete
      against nuclear medicine imaging, including x-rays, CT, MRI and
      ultrasound.

    - Many of our competitors have substantially greater financial, technical
      and human resources than we have, including greater experience and
      capabilities in undertaking preclinical studies and human clinical trials,
      obtaining FDA and other regulatory approvals and manufacturing and
      marketing pharmaceuticals. Our principal competitors include such large
      companies as Du Pont Merck and Mallinckrodt.

    In addition, there are alternative therapeutics available for the treatment
of the cancer and cardiovascular indications that are the subject of our
Theratide programs. These competitive development activities include
radiolabeled monoclonal antibodies (MABs) for non-Hodgkins lymphoma and
neuroendocrine tumors, vaccines for non-small cell lung cancer, and
non-radiolabeled MABs which target changing the physiology that supports tumor
growth.

OUR SUCCESS DEPENDS ON OUR PROTECTING OUR PATENTS AND PATENTED RIGHTS

    Our success depends in significant part on our ability to develop patentable
products, to obtain patent protection for our products, both in the United
States and in other countries, and to enforce these patents. The patent
positions of pharmaceutical and biotechnology firms, including us, are generally
uncertain and involve complex legal and factual questions. As a result, patents
may not issue from any patent applications that we own or license. If patents do
issue, the claims allowed may not be sufficiently broad to protect our
technology. In addition, issued patents that we own or license may be
challenged, invalidated or circumvented. Our patents also may not afford us
protection against competitors with similar technology.

    Our success also depends on our not infringing patents issued to competitors
or others. We are aware of patents and patent applications belonging to
competitors and others that may require us to alter our products or processes,
pay licensing fees or cease certain activities.

    We may not be able to obtain a license to any technology owned by a third
party that we require to manufacture or market one or more products. Even if we
can obtain a license, the financial and other forms may be disadvantageous.

    Our success also depends on our maintaining the confidentiality of our trade
secrets and patented know-how. We seek to protect such information by entering
into confidentiality agreements with our employees, consultants, outside
scientific collaborators and sponsored researchers and other advisors. These
agreements may be breached by such parties. We may not be able to obtain an
adequate, or perhaps, any remedy to remedy such a breach. In addition, our trade
secrets may otherwise become known or be independently developed by our
competitors.

                                       17
<PAGE>
WE ARE A PARTY TO A PATENT INTERFERENCE RELATING TO AN ELEMENT OF ACUTECT

    In December 1998, at our request the United States Patent and Trademark
Office declared an interference between a patent application filed by us and a
patent issued to RhoMed Incorporated, a wholly-owned subsidiary of Palatin
Technologies, Inc. This proceeding will determine the patentability of the
technology that is the subject matter of the interference as well as which party
first developed this technology. If the technology is patentable, the party that
first developed the technology will be awarded the United States patent rights.

    The process of resolving an interference can take many years. If the
technology that is the subject of this proceeding is found to be patentable and
RhoMed is found to be the party that first developed the technology, we may not
be able to manufacture or market AcuTect in the United States without a license
from RhoMed. RhoMed would be under no obligation to grant us such a license or
to do so on commercially acceptable terms. Accordingly, an adverse outcome in
this proceeding could materially adversely affect our business, financial
position and results of operations.

WE MAY BECOME INVOLVED IN ADDITIONAL PROCEEDINGS RELATING TO INTELLECTUAL
  PROPERTY RIGHTS

    The pharmaceutical and biotechnology industries have been characterized by
significant litigation and interference and other proceedings regarding patents,
patent applications and other intellectual property rights. In addition to the
interference proceeding with RhoMed, we may become parties to additional patent
litigation and other proceedings in the future. The types of situations in which
we may become parties to such litigation or proceedings include:

    - We may initiate litigation or other proceedings against third parties to
      enforce our patent rights.

    - We may initiate litigation or other proceedings against third parties to
      seek to invalidate the patents held by such third parties or to obtain a
      judgment that our products or processes do not infringe such third
      parties' patents.

    - If our competitors file patent applications that claim technology also
      claimed by us, we may participate in interference or opposition
      proceedings to determine the priority of invention.

    - If third parties initiate litigation claiming that our processes or
      products infringe their patent or other intellectual property rights, we
      will need to defend against such proceedings.

    An adverse outcome in any litigation or other proceeding could subject us to
significant liabilities to third parties and require us to cease using the
technology that is at issue or to license the technology from third parties. We
may not be able to obtain any required licenses on commercially acceptable terms
or at all. Thus, an unfavorable outcome in any patent litigation or other
proceeding could have a material adverse effect on our business, financial
condition or results of operations.

    The cost to us of any patent litigation or other proceeding, even if
resolved in our favor, could be substantial. Some of our competitors may be able
to sustain the cost of such litigation and proceedings more effectively than we
can because of their substantially greater resources. Uncertainties resulting
from the initiation and continuation of patent litigation or other proceedings
could have a material adverse effect on our ability to compete in the
marketplace. Patent litigation and other proceedings may also absorb significant
management time.

OUR PATENT LICENSES ARE SUBJECT TO TERMINATION IN CERTAIN CIRCUMSTANCES

    We are a party to a number of patent licenses that are important to our
business and expect to enter into additional patent licenses in the future.
These licenses impose various commercialization, sublicensing, royalty,
insurance and other obligations on us. If we fail to comply with these
requirements, the licensor will have the right to terminate the license.

                                       18
<PAGE>
WE HAVE ONLY LIMITED SALES AND MARKETING EXPERIENCE

    We introduced our first product to the market in October 1998 and have only
limited product sales, marketing and distribution experience. Although we plan
to rely significantly on collaborative partners for the marketing and
distribution of its products through co-marketing, other licensing or
distribution arrangements, we expect to market and sell certain of our products
directly and to engage in certain other marketing activities in collaboration
with our partners. For example, under our United States co-promotion agreement
with Nycomed, we have primary responsibility for promotion of the products
covered by such agreement to commercial radiopharmacies.

    Our strategy of relying on collaborative partners to market and distribute
our products will result in our being dependent upon the success of the efforts
of these collaborators in performing such functions. The terms of these
marketing and distribution arrangements may not be favorable to us. In addition,
our partner may not successfully market our products. In many instances we may
have little or no control over our partners' activities in marketing and
distributing our products.

    If our plan to rely on corporate partners for significant aspects of
marketing and selling our products is unsuccessful for any reason, we may need
to recruit and train a far larger marketing and sales force than we currently
anticipate doing. In such event, we would face a number of additional risks,
including:

    - we may not be able to attract and build a sufficient marketing staff or
      sales force;

    - the cost of establishing such a marketing staff or sales force may not be
      justifiable in light of anticipated product revenues; and

    - the Company's direct sales and marketing efforts may not be successful.

WE HAVE ONLY LIMITED MANUFACTURING CAPABILITIES AND WILL BE DEPENDENT ON THIRD
  PARTY MANUFACTURERS

    We lack commercial scale facilities to manufacture our products in
accordance with current GMP requirements prescribed by the FDA. We have relied
on a large third party pharmaceutical company for the manufacture of our
peptides for clinical trials and for commercial sale of AcuTect. Similarly, we
have entered into an arrangement with a GMP-qualified third party manufacturer
for the supply of Tin-117m for clinical trials.

    We expect to be dependent on third party manufacturers or collaborative
partners for all of our commercial production of peptides. There are a limited
number of manufacturers that operate under GMP regulations capable of
manufacturing our products. In the event that we are unable to obtain contract
manufacturing, or obtain such manufacturing on commercially reasonable terms, we
may not be able to commercialize our products as planned.

    We are dependent upon our third party suppliers to perform their obligations
in a timely manner. If such third party suppliers fail to will perform their
obligations, we may be adversely affected in a number of ways, including:

    - we may not be able to meet commercial demands for our products;

    - we may not be able to initiate or continue clinical trials of products
      that are under development; and

    - we may be delayed in submitting applications for regulatory approvals of
      our products.

    We have no experience in manufacturing on a commercial scale and no
facilities or equipment to do so. If we determine to develop our own
manufacturing capabilities, we will need to recruit qualified personnel and
build or lease the requisite facilities and equipment. We may not be able to
successfully

                                       19
<PAGE>
develop our own manufacturing capabilities. Moreover, it may be very costly and
time consuming for us to develop such capabilities.

    The manufacture of products by us and our suppliers is subject to regulation
by the FDA and comparable agencies in foreign countries. Delay in complying or
failure to comply with such manufacturing requirements could materially
adversely affect the marketing of our products and our business, financial
condition and results of operations.

WE ARE DEPENDENT UPON A SOLE SOURCE SUPPLIER FOR OUR PEPTIDES

    We purchase our synthetic peptides from a sole source supplier. We may enter
into similar arrangements with respect to other components of our products.
While we are aware of alternative sources for our peptides, the establishment of
additional or replacement suppliers could be time consuming, result in a supply
interruption or cause significant regulatory delays and expense. The
establishment of an alternative source of supply or any significant supply
interruption could have a materially adverse effect on our ability to develop
and manufacture our products.

HAZARDOUS MATERIALS THAT WE HANDLE IN OUR BUSINESS

    Our research and development involves the controlled use of hazardous
materials, chemicals and radioactive compounds. There are risks of accidental
contamination or injury from our handling , storing and disposing of these
materials. In the event of an accident, we could be held liable for significant
damages

WE WILL BE EXPOSED TO PRODUCT LIABILITY CLAIMS AND MAY NOT BE ABLE TO OBTAIN
  ADEQUATE PRODUCT LIABILITY INSURANCE

    Our business exposes us to potential product liability risks which are
inherent in the testing, manufacturing, marketing and sale of human diagnostic
and therapeutic products. Product liability claims might be made by consumers,
health care providers or pharmaceutical companies or others that sell our
products. If product liability claims are made with respect to our products, we
may need to recall such products or change the indications for which they may be
used.

    We have only limited product liability insurance coverage. This coverage is
subject to various deductibles. Product liability coverage is expensive. In the
future, we may not be able to maintain or obtain such product liability
insurance at a reasonable cost or in sufficient amounts to protect us against
losses due to liability claims. Accordingly, such claims could have a material
adverse effect on the Company's business, financial condition and results of
operations.

UNCERTAINTY OF PHARMACEUTICAL PRICING, REIMBURSEMENT AND HEALTHCARE REFORM
  MEASURE

    The availability of reimbursement by governmental and other third party
payors affects the market for any pharmaceutical product. These third party
payors continually attempt to contain or reduce the costs of healthcare by
challenging the prices charged for medical products and services. In certain
foreign countries, particularly the countries of the European Union, the pricing
of prescription pharmaceuticals is subject to governmental control.

    In both the United States and certain foreign jurisdictions, there have been
a number of legislative and regulatory proposals to change the healthcare
system. Further proposals are likely. The potential for adoption of these
proposals affects or will affect our ability to raise capital, obtain additional
collaborative partners and market our products.

    If we or our collaborators obtain marketing approvals for our products, we
expect to experience pricing pressure due to the trend toward managed health
care, the increasing influence of health

                                       20
<PAGE>
maintenance organizations and additional legislative proposals. We may not be
able to sell our products profitably if reimbursement is unavailable or limited
in scope or amount.

WE NEED TO ATTRACT AND RETAIN OF KEY MANAGEMENT AND QUALIFIED PERSONNEL

    We are highly dependent on the principal members of our management and
scientific staff, particularly Dr. Dean, our President and Chief Executive
Officer. The loss of the services of these individuals could have a material
adverse effect on our business. We are a party to an employment agreement with
Dr. Dean that extends through April 2, 2000, subject to automatic extension for
additional one-year periods unless either Dr. Dean or we provide written notice
to the contrary to the other party at least six months prior to the expiration
period.

    Recruiting and retaining qualified scientific personnel to perform research
and development work in the future will be critical to the Company's success. We
may not be able to attract and retain highly skilled personnel on acceptable
terms given the competition for experienced scientists among pharmaceutical,
biotechnology and health care companies, universities and non-profit research
institutions. We do not carry key-man insurance with respect to any of our
executive officers.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    Diatide is exposed to changes in interest rates primarily from its
investments in certain available-for-sale securities and long term obligations
under capital leases. Under our current policies, we do not use interest rate
derivative instruments to manage exposure to interest rate changes.

    The following table provides information about Diatide's financial
instruments that are sensitive to changes in interest rates as of December 31,
1998. For investment securities and debt obligations, the table presents
principal cash flows and related weighted-average interest rates by expected
maturity dates. Additionally, we assumed our available-for-sale securities,
comprised of cash management investment funds and corporate bonds, are similar
enough to aggregate those securities for presentation purposes.

                           INTEREST RATE SENSITIVITY
                     PRINCIPAL AMOUNT BY EXPECTED MATURITY
                             AVERAGE INTEREST RATE
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   1999       2000       2001       TOTAL
                                                                                 ---------  ---------  ---------  ---------
<S>                                                                              <C>        <C>        <C>        <C>
Available-For-Sale Securities..................................................  $   7,472         --         --  $   7,472
Average Interest Rate..........................................................        5.2%        --         --         --
Long-term Debt, including Current Portion (Fixed Rate).........................  $     137  $     157  $     144  $     438
</TABLE>

                                       21