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(1) Includes employee stock-based compensation charges of:
Three Months Ended Year Ended December 31, December 31, -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- ---------Cost of goods sold $ 4 $ - $ 6 $ -Research and development 2,255 1,461 9,296 6,269Selling, general, and administrative 6,568 2,556 26,024 20,121 --------- --------- --------- ---------Total employee stock-based compensation $ 8,827 $ 4,017 $ 35,326 $ 26,390 ========= ========= ========= =========
(2) Includes a $12.7 million non-cash expense related to the unamortized balance of funding provided to S*BIO which was recorded in the first quarter of 2011.
(3) Includes $11.5 million and $3.0 million imputed interest expense recorded for the full year and fourth quarter in 2012, related to the convertible senior notes due 2016. For the comparable periods in 2011, imputed interest expense was $10.2 million and $2.6 million.
(4) Includes a $0.5 million impairment charge which reflects the write off of Onyx's equity investment in S*BIO which was recorded in the third quarter of 2012 and $4.1 million net proceeds received pursuant to the sale of Jak2 inhibitors by S*BIO during the year ended December 31, 2012. In 2011, a $3.8 million impairment charge was recorded which reflected the reassessment of the fair value of Onyx's equity investment in S*BIO.
(5) Includes a $96.8 million and $1.1 million tax benefit representing the non-cash tax related effect on certain acquired intangible assets for the full year and fourth quarter of 2012, respectively.
(6) Under the "if-converted" method, interest and issuance costs and potential common shares related to the Company's convertible senior notes were excluded in the computation of diluted per share amounts for the three months ended December 31, 2012, and the years ended December 31, 2012 and 2011 because their effect would be anti-dilutive.
ONYX PHARMACEUTICALS, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except per share amounts) (unaudited) Three Months Ended Year Ended December 31, December 31, -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- ---------(i) Net income Net income (loss) - GAAP $ (42,922) $ 216,675 $(187,787) $ 76,110 Non-GAAP adjustments: Contingent consideration expense (benefit) (a) 2,937 (116,663) 69,173 (93,468) Employee stock-based compensation (b) 8,827 4,017 35,326 26,390 Imputed interest related to the convertible senior notes due 2016 (c) 3,009 2,605 11,511 10,191 Advance funding to S*BIO (d) - - - 12,666 Impairment of equity investment in S*BIO (d) - 750 500 3,750 Proceeds received pursuant to the sale of Jak2 inhibitors by S*BIO (e) - - (4,096) - Lease termination exit costs (f) - (4,540) - 6,317 Amortization of certain acquired intangible assets (g) 5,221 - 9,331 - Non-cash tax related effect on certain acquired intangible assets (h) (1,066) - (96,843) - --------- --------- --------- --------- Net income (loss) - Non-GAAP $ (23,994) $ 102,844 $(162,885) $ 41,956 ========= ========= ========= =========(ii) Cost of goods sold Cost of goods sold - GAAP $ 832 $ - $ 1,328 $ - Non-GAAP adjustments: Employee stock-based compensation (b) (4) - (6) - --------- --------- --------- --------- Cost of goods sold - Non-GAAP $ 828 $ - $ 1,322 $ - ========= ========= ========= =========(iii) Research and development expenses Research and development expenses - GAAP $ 82,572 $ 83,990 $ 325,256 $ 268,060 Non-GAAP adjustments: Employee stock-based compensation(b) (2,255) (1,461) (9,296) (6,269) Advance funding to S*BIO (d) - - - (12,666) --------- --------- --------- --------- Research and development expenses - Non-GAAP $ 80,317 $ 82,529 $ 315,960 $ 249,125 ========= ========= ========= =========(iv) Selling, general and administrative expenses Selling, general and administrative expenses - GAAP $ 74,566 $ 52,611 $ 224,164 $ 167,959 Non-GAAP adjustments: Employee stock-based compensation (b) (6,568) (2,556) (26,024) (20,121) --------- --------- --------- --------- Selling, general & administrative expenses - Non-GAAP $ 67,998 $ 50,055 $ 198,140 $ 147,838 ========= ========= ========= =========(v) Earnings per share --------- --------- --------- --------- Net income (loss) - Non-GAAP $ (23,994) $ 102,844 $(162,885) $ 41,956 ========= ========= ========= ========= Add: Interest and issuance costs related to dilutive convertible senior notes (i) - 2,456 - - --------- --------- --------- --------- Net income (loss) - diluted - Non-GAAP $ (23,994) $ 105,300 $(162,885) $ 41,956 ========= ========= ========= ========= Computation of non-GAAP diluted shares Basic shares - GAAP 67,028 63,700 65,148 63,422 Dilutive effect of options and restricted stock - 629 - 588 Dilutive effect of convertible senior notes (i) - 5,801 - - --------- --------- --------- --------- Diluted shares - Non-GAAP 67,028 70,130 65,148 64,010 ========= ========= ========= ========= Net income (loss) per share - Non-GAAP $ (0.36) $ 1.61 $ (2.50) $ 0.66 ========= ========= ========= ========= Net income (loss) per share - diluted - Non-GAAP $ (0.36) $ 1.50 $ (2.50) $ 0.66 ========= ========= ========= ========= ONYX PHARMACEUTICALS, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
