This report is the second in a series of publications developed to assist in the planning and development of a comprehensive, coordinated service delivery system for Arizona infants and toddlers who are developmentally delayed or at risk of developing handicapping conditions, and their families. It documents the number of children in Arizona currently being served, and the number in need of special services, based on the prevalence and incidence of certain characteristics in the population and an interpretation of the broad definition of who needs early intervention provided in Public Law 99-457. Three distinct groups are considered: (1) children who are experiencing developmental delays; (2) children who have a diagnosed physical or mental condition that has a high probability of resulting in developmental delay; and (3) children who are at risk of having substantial developmental delays if early intervention services are not provided. The report provides numerical projections of the size of the target population through the year 2000, and examines the geographic, ethnic, and socioeconomic distribution of the target population across Arizona. Appendices contain statistical data and eligibility policy formation information. Includes 50 references. (JDD)