Management uses non-GAAP net income (loss) in its evaluation of the Company's core after-tax results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process. Management believes that providing these non-GAAP financial measures allows investors to view the Company's financial results in the way that management views the financial results.

The non-GAAP financial measures presented herein have certain limitations in that they do not reflect all of the costs associated with the operations of the Company's business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures presented by the Company may be different from the non-GAAP financial measures used by other companies.
               

Condensed Consolidated Statements of Income and Reconciliation of Non-GAAP Adjustments

(In thousands, except share and per share data)

(Unaudited)
 
Three months ended Year ended
December 31, December 31,
2012       2011 2012       2011
GAAP cost of product sales 15,231 10,283 46,633 33,838
Non GAAP adjustments to cost of product sales:
Zevalin tech transfer 3,826 -- 3,826 --
Total adjustments to cost of product sales 3,826 -- 3,826 --
 
Non-GAAP cost of product sales 11,405 10,283 42,807 33,838
 
 
GAAP selling, general and administrative expenses 27,242 25,292 91,965 72,553
Non GAAP adjustments to G&A:
Reduction in staff 51 -- 1,925 --
Stock-based compensation 4,932 6,572 13,041 20,609
Allos tender offer and Bayer agreement for licensing rights to market ZEVALIN outside the U.S. 108 -- 6,333 --
Total adjustments to G&A 5,091 6,572 21,299 20,609
 
Non-GAAP selling, general and administrative 22,151 18,720 70,666 51,944
 

GAAP research and development
13,887 6,816 42,544 27,720
Non-GAAP adjustments to R&D:
Stock-based compensation 527 449 1,843 1,628
Reduction in staff (28) -- 519 --
One-time payment for co-development agreement -- -- 1,000 --
Total adjustments to R&D 499 449 3,362 1,628
Non-GAAP research and development 13,388 6,367 39,182 26,092
 
 
GAAP amortization of purchased intangibles 2,341 930 6,741 3,720
Non-GAAP adjustments to purchased intangibles:
Amortization 2,341 930 6,741 3,720
Total adjustments to amortization of purchased intangibles 2,341 930 6,741 3,720
Non-GAAP amortization of purchased intangibles -- -- -- --
 
GAAP change in fair value of common stock warrant liability -- -- -- (3,488)
Non-GAAP adjustments to change in fair value of common stock warrant liability:
Change in fair value of common stock warrant liability -- -- -- (3,488)
Non-GAAP change in fair value of common stock warrant liability -- -- -- --
 
GAAP income before income taxes 11,635 9,685 78,980 52,221
Total non-GAAP adjustments 11,757 7,951 35,228 29,445
Non-GAAP income before income taxes 23,392 17,636 114,208 81,666
 
GAAP (provision)/benefit for income taxes (3,014) (1,404) 15,565 (3,704)
Adjustment to (provision)/benefit for income taxes (2,794) -- (37,851) (1,896)
Non-GAAP (provision)/benefit for income taxes (5,808) (1,404) (22,286) (5,600)
 
GAAP net income 8,621 8,281 94,545 48,517
Non-GAAP adjustments 8,963 7,951 (2,623) 27,549
Non-GAAP net income 17,584 16,232 91,922 76,066
 
Non-GAAP income per share:
Basic 0.30 0.29 1.57 1.43
Diluted 0.27 0.26 1.42 1.31
 
Weighted average shares outstanding:
Basic 58,628,963 56,916,064 58,588,916 53,272,767
Diluted 64,020,783 63,313,226 64,637,256 57,959,714
 

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