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ENZON PHARMACEUTICALS INC
10-Q
--12-31
48305900
false
0000727510
Yes
No
Accelerated Filer
No
2012
FY
2012-03-31
<p>
<font size="2"><b>(1) Description of Business</b></font>
</p><br/><p align="justify">
<font size="2">          Enzon
Pharmaceuticals, Inc. and subsidiaries (Enzon or the Company)
is a biotechnology company dedicated to the research and
development of innovative therapeutics for cancer patients
with high unmet medical needs. Operations are funded in part
by the receipt of royalty revenues from licensing
arrangements with other companies related to sales of
products developed using the Company’s proprietary
Customized PEGylation Linker Technology (Customized Linker
Technology®) – primarily PEGINTRON, marketed by
Merck & Co., Inc. The Company operates in one business
segment. The Company’s Principal Executive Officer
(chief operating decision maker) reviews the Company’s
operating results on an aggregate basis and manages the
Company’s operations as a single operating unit. The
Company’s operations and assets reside exclusively in
the United States.</font>
</p><br/><p align="justify">
<font size="2">          The
Company’s pipeline drug development programs utilize two
platforms – Customized Linker Technology and
third-generation messenger ribonucleic acid (mRNA)-targeting
agents utilizing the Locked Nucleic Acid (LNA) technology.
The Company currently has four compounds in clinical
development: PEG-SN38 and the mRNA antagonists targeting
Hypoxia-Inducible Factor-1α (HIF-1α), Survivin and
Androgen Receptor (AR). In addition, the Company has other
novel LNA targets in various stages of preclinical
research.</font>
</p><br/>
<p align="justify">
<font size="2"><b>(2) Basis of Presentation</b></font>
</p><br/><table border="0" cellspacing="0" cellpadding="0" width="100%">
<tr style="FONT-SIZE:1PX">
<td width="100%" valign="top">
<p align="justify">
 
</p>
</td>
</tr>
<tr>
<td valign="top">
<p align="justify">
<font size="2"><i>Interim Financial
Statements</i></font>
</p>
</td>
</tr>
<tr>
<td valign="top">
<p align="justify">
<font size="2">          The
accompanying unaudited condensed consolidated financial
statements have been prepared from the books and
records of the Company in accordance with United States
generally accepted accounting principles (U.S. GAAP)
for interim financial information and Rule 10-01 of
Regulation S-X promulgated by the U.S. Securities and
Exchange Commission. Accordingly, these financial
statements do not include all of the information and
footnotes required for complete annual financial
statements. Interim results are not necessarily
indicative of the results that may be expected for the
full year. Interim condensed consolidated financial
statements should be read in conjunction with the
consolidated financial statements and the notes thereto
included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2011.</font>
</p>
</td>
</tr>
<tr>
<td valign="top">
<p align="justify">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="top">
<p align="justify">
<font size="2"><i>Principles of
Consolidation</i></font>
</p>
</td>
</tr>
<tr>
<td valign="top">
<p align="justify">
<font size="2">          The
condensed consolidated financial statements include the
accounts of Enzon Pharmaceuticals, Inc. and its
subsidiaries. All intercompany balances and
transactions have been eliminated as part of the
consolidation.</font>
</p>
</td>
</tr>
<tr>
<td valign="top">
<p align="justify">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="top">
<p align="justify">
<font size="2"><i>Use of Estimates</i></font>
</p>
</td>
</tr>
<tr>
<td valign="top">
<p align="justify">
<font size="2">          The
preparation of condensed consolidated financial
statements in conformity with accounting principles
generally accepted in the U.S. requires management to
make estimates and assumptions that affect reported
amounts of assets and liabilities, disclosures of
contingent assets and liabilities at the date of the
financial statements, and the reported amounts of
revenues and expenses during the reporting period.
These estimates include the valuation of investments,
legal and contractual contingencies, stock-based
compensation, and income taxes. Although management
bases its estimates on historical experience and
various other assumptions that are believed to be
reasonable under the circumstances, actual results
could differ from these estimates.</font>
</p>
</td>
</tr>
</table><br/>
<p align="justify">
<font size="2"><b>(3) Financial Instruments and Fair
Value</b></font>
</p><br/><p align="justify">
<font size="2">          The
carrying values of cash, cash equivalents, other current
assets, accounts payable, and accrued expenses in the
Company’s condensed consolidated balance sheets
approximated their fair values at March 31, 2012 and December
31, 2011 due to their short-term nature. Marketable
securities are carried on the condensed consolidated balance
sheets at fair value. Fair values and carrying amounts of the
Company’s financial instruments are indicated below (in
thousands):</font>
</p><br/><table border="0" cellspacing="0" cellpadding="0" width="93%">
<tr style="FONT-SIZE:1PX">
<td width="5%" valign="bottom">
<p>
 
</p>
</td>
<td width="60%" valign="bottom">
<p>
 
</p>
</td>
<td width="3%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="3%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
</tr>
<tr>
<td valign="bottom" nowrap="nowrap">
<p>
<font size="2">Description</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Fair Value</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Carrying<br />
Amount</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p>
<font size="2">Marketable Securities (Note 4)</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">272,518</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">272,518</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p>
<font size="2">4% Convertible Notes Payable (Note
5)</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">130,060</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">125,749</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td colspan="2" valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
</table><br/>
<p>
<font size="2"><b>(4) Marketable Securities</b></font>
</p><br/><p align="justify">
<font size="2">          The
amortized cost, gross unrealized holding gains or losses, and
fair value of the Company’s marketable securities by
major security type at March 31, 2012 were as follows (in
thousands):</font>
</p><br/><table border="0" cellspacing="0" cellpadding="0" width="98%">
<tr style="FONT-SIZE:1PX">
<td width="41%" valign="bottom">
<p>
 
</p>
</td>
<td width="2%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="9%" valign="bottom">
<p>
 
</p>
</td>
<td width="2%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="2%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="11%" valign="bottom">
<p>
 
</p>
</td>
<td width="2%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="9%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Amortized<br />
Cost</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Gross<br />
Unrealized<br />
Holding Gains</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Gross<br />
Unrealized<br />
Holding Losses</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Fair<br />
Value*</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="2">Corporate debt</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">166,084</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">463</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">(96</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">166,451</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="2">Commercial paper</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">49,933</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">7</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">(3</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">49,937</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="2">U.S. government-sponsored agency</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">33,526</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">140</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">33,666</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="2">Variable rate demand notes</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">12,285</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">12,285</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="2">Municipal bonds</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">8,000</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">1</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">8,001</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="2">Other</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">2,117</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">61</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">2,178</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">271,945</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">672</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">(99</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">272,518</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
</table><br/><p align="justify">
<font size="2">     *    Included
in current marketable securities of $78,480 and long-term
marketable securities of $194,038 at March 31, 2012.</font>
</p><br/><p align="justify">
<font size="2">          The
amortized cost, gross unrealized holding gains or losses, and
fair value of the Company’s marketable securities by
major security type at December 31, 2011 were as follows (in
thousands):</font>
</p><br/><table border="0" cellspacing="0" cellpadding="0" width="98%">
<tr style="FONT-SIZE:1PX">
<td width="41%" valign="bottom">
<p>
 
</p>
</td>
<td width="2%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="9%" valign="bottom">
<p>
 
</p>
</td>
<td width="2%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="2%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="11%" valign="bottom">
<p>
 
</p>
</td>
<td width="2%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="9%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Amortized<br />
Cost</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Gross<br />
Unrealized<br />
Holding Gains</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Gross<br />
Unrealized<br />
Holding Losses</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Fair<br />
Value*</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">Corporate debt</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">130,201</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">175</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">(168</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">130,208</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2">Commercial paper</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">30,979</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">5</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">(3</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">30,981</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">U.S. government-sponsored agency</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">26,531</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">30</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">(19</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">26,542</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2">Variable rate demand notes</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">19,295</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">19,295</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">Municipal bonds</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">5,000</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">5,000</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2">Non-U.S. government bonds</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">2,411</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">2</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">2,413</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">Certificates of deposit</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">2,000</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">2,000</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2">Other</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">2,550</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">(22</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">2,528</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">218,967</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">212</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">(212</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">218,967</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
</table><br/><p align="justify">
<font size="2">     *    Included
in current marketable securities of $58,188 and long-term
marketable securities of $160,779 at December 31,
2011.</font>
</p><br/><p align="justify">
<font size="2">          Money
market funds and marketable securities purchased with
remaining maturities of three months or less of $27.7 million
and $67.7 million at March 31, 2012 and December 31, 2011,
respectively, were recorded at cost, which approximates fair
value and are included in cash and cash equivalents. All
marketable debt securities are classified as
available-for-sale. Other marketable securities in the above
tables are predominantly mutual fund shares in the
Company’s Executive Deferred Compensation Plan with a
fair value totaling $2.2 million and $2.5 million as of March
31, 2012 and December 31, 2011, respectively. There is a
current liability that offsets the aggregate deferred
compensation plan current assets as of March 31, 2012 and
December 31, 2011.</font>
</p><br/><p align="justify">
<font size="2">          With
the exception of money market funds valued based on Level 1
inputs, fair value is determined based on Level 2 inputs
utilizing observable quoted prices for similar assets and
liabilities in active markets and observable quoted prices
for identical or similar assets in markets that are not very
active.</font>
</p><br/><p align="justify">
<font size="2">          Maturities
of marketable debt securities, excluding securities related
to the Company’s Executive Deferred Compensation Plan,
at March 31, 2012 were as follows (in thousands):</font>
</p><br/><table border="0" cellspacing="0" cellpadding="0" width="97%" style="MARGIN-LEFT:2%">
<tr style="FONT-SIZE:1PX">
<td width="70%" valign="bottom">
<p>
 
</p>
</td>
<td width="3%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="3%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Amortized<br />
Cost</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Fair<br />
Value</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">Due in one year or less</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">76,282</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">76,303</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="2">Due after one year through three
years</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">181,261</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">181,752</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">Due more than three years</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">12,285</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">12,285</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">269,828</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">270,340</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
</table><br/><p align="justify">
<font size="2">          Impairment
assessments are made at the individual security level each
reporting period. When the fair value of an investment is
less than its cost at the balance sheet date, a determination
is made as to whether the impairment is other-than-temporary
and, if it is other-than-temporary, an impairment loss is
recognized in earnings equal to the difference between the
investment’s amortized cost and fair value at such date.
The cost of securities is based on the
specific-identification method. As of March 31, 2012 and
December 31, 2011, some of the Company’s investments in
marketable debt securities were in an unrealized loss
position. None of the underlying investments has been in a
continuous loss position longer than twelve months, and no
other-than-temporary impairment is deemed to have occurred.
The Company maintains a short-term liability for the fair
value of the investments in the Executive Deferred
Compensation Plan, and any gains or losses ultimately
realized related to these holdings are borne by the plan
participants.</font>
</p><br/>
<p align="justify">
<font size="2"><b>(5) Notes Payable</b></font>
</p><br/><p align="justify">
<font size="2">          The
Company’s 4% convertible notes mature on June 1, 2013
unless earlier redeemed, repurchased or converted. The notes
are senior unsecured obligations and rank equal to all future
senior unsecured debt of the Company. The notes are
convertible at the option of the holders into the
Company’s common stock at a conversion price of $9.55
per share (104.712 shares per $1,000 of principal amount). If
the closing price of the Company’s common stock for at
least 20 trading days in the 30-consecutive-trading-day
period ending on the date one day prior to the date of a
notice of redemption is greater than 140% of the applicable
conversion price on the date of such notice, the Company, at
its option, may redeem the notes in whole or in part, at a
redemption price in cash equal to 100% of the principal
amount of the notes to be redeemed, plus accrued and unpaid
interest, if any, to the redemption date. Upon occurrence of
a “fundamental change,” as defined in the indenture
governing the notes, holders of the notes may require the
Company to redeem the notes at a price equal to 100% of the
principal amount plus accrued and unpaid interest or, in
certain cases, to convert the notes at an increased
conversion rate based on the price paid per share of the
Company’s common stock in the transaction constituting
the fundamental change.</font>
</p><br/><p align="justify">
<font size="2">          During
the first quarter of 2012, notes totaling $3.75 million
principal amount were repurchased above par, resulting in a
loss on early retirement of debt of approximately $113,000
(included in other, net expense) and a write-off deferred
debt issuance costs of approximately $20,000 (included in
interest expense).</font>
</p><br/><p align="justify">
<font size="2">          Interest
on the notes is payable on June 1 and December 1 of each
year. Accrued interest amounted to $1.7 million and $0.4
million as of March 31, 2012 and December 31, 2011,
respectively.</font>
</p><br/>
<p align="justify">
<font size="2"><b>(6) Stockholders’ Equity</b></font>
</p><br/><p align="justify">
<font size="2">          On
December 21, 2010, the Company announced that its Board of
Directors had authorized a share repurchase program, under
which the Company is authorized to repurchase up to $200.0
million of the Company’s outstanding common stock. This
program was suspended during the third quarter of 2011.
During the first quarter of 2012, the Company announced its
plans to resume repurchasing its outstanding common stock,
but no shares were actually repurchased during the quarter.
Since the inception of this share repurchase program, the
cumulative number of shares repurchased and retired through
March 31, 2012 amounted to 11,461,449 shares at a total cost
of $121.5 million, or an average cost per share of
approximately $10.60. The plan continues to be in
effect.</font>
</p><br/>
<p align="justify">
<font size="2"><b>(7) Supplemental Cash Flow
Information</b></font>
</p><br/><p align="justify">
<font size="2">          The
Company considers all highly liquid investment securities
with original maturities of three months or less to be cash
equivalents. During the three months ended March 31, 2012,
there were interest payments of $25,000 related to
repurchases of the Company’s notes payable. During the
three months ended March 31, 2011, there were no payments of
interest related to the Company’s notes payable. There
were no income tax payments made during the first quarter of
2012 and $34,000 of income tax payments made during the first
quarter of 2011.</font>
</p><br/>
<p align="justify">
<font size="2"><b>(8) Sale of In-Process Research and
Development</b></font>
</p><br/><p align="justify">
<font size="2">          When
the Company sold its specialty pharmaceutical business in
January 2010, it retained its research and development
organization. Prior to the sale, the Company’s research
and development function was engaged in, among other things,
studies oriented towards the next-generation formulations of
Oncaspar and Adagen, two products that were among those sold
as part of the specialty pharmaceuticals business. The
in-process research and development related to those two
products was included in the sale. The selling price was
management’s best estimate of its stand-alone fair value
based on the stage of development and consideration of future
milestone payments. During the first quarter of 2011, the
Company earned the first $5.0 million milestone payment from
the purchaser of the specialty pharmaceutical business
resulting from the approval of a supplemental Biologic
License Application (sBLA) for the manufacture of SS
Oncaspar.</font>
</p><br/>
<p align="justify">
<font size="2"><b>(9) Loss Per Common Share</b></font>
</p><br/><p align="justify">
<font size="2">          Basic
loss and earnings per common share is computed by dividing
the loss or income available to common stockholders by the
weighted-average number of shares of common stock outstanding
during the period. Restricted stock units (nonvested shares)
are not considered to be outstanding shares until the vesting
criteria (service and/or performance) have been
satisfied.</font>
</p><br/><p align="justify">
<font size="2">          For
purposes of calculating diluted earnings per common share,
the denominator includes both the weighted-average number of
shares of common stock outstanding and the number of common
stock equivalents if the inclusion of such common stock
equivalents is dilutive. Dilutive common stock equivalents
potentially include stock options and nonvested shares using
the treasury stock method, shares issuable under the employee
stock purchase plan (ESPP) and the number of shares issuable
upon conversion of the Company’s convertible notes
payable. In the case of notes payable, the diluted earnings
per share calculation is further affected by an add-back of
interest expense to the numerator under the assumption that
the interest would not have been incurred if the notes
payable were converted into common stock.</font>
</p><br/><table border="0" cellspacing="0" cellpadding="0" width="98%">
<tr style="FONT-SIZE:1PX">
<td width="68%" valign="bottom">
<p>
 
</p>
</td>
<td width="3%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="3%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="5" valign="bottom">
<p align="center">
<font size="2">Three months ended March 31,</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="5" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">2012</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">2011</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2"><u>(Loss) Earnings Per Common Share
– Basic:</u></font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Net (loss) income</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">(1,071</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">431</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Weighted-average common shares
outstanding</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">48,293</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">58,002</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Basic (loss) earnings per share</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">(0.02</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">0.01</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2"><u>(Loss) Earnings Per Common Share
– Diluted:</u></font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Net (loss) income</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">(1,071</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">431</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Add-back of interest expense on
outstanding convertible notes payable, net of
tax</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="top" style="background-color: #E5FFFF;">
<p>
<font size="2"><sup>(1)</sup></font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Adjusted net (loss) income</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">(1,071</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">431</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Weighted-average common shares
outstanding</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">48,293</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">58,002</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Weighted-average incremental shares
related to assumed exercise of stock options, vesting
of nonvested shares, and ESPP</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2"><sup>(2)</sup></font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">734</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Weighted-average incremental shares
assuming conversion of outstanding notes payable</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2"><sup>(2)</sup></font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="top" style="background-color: #E5FFFF;">
<p>
<font size="2"><sup>(1)</sup></font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Weighted-average common shares
outstanding and common share equivalents</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">48,293</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">58,736</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Diluted (loss) earnings per share</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">(0.02</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">0.01</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
</table><br/><table border="0" cellspacing="0" cellpadding="0" width="100%">
<tr style="FONT-SIZE:1PX">
<td width="4%" valign="top">
<p>
 
</p>
</td>
<td width="3%" valign="top">
<p>
 
</p>
</td>
<td width="93%" valign="top">
<p align="justify">
 
</p>
</td>
</tr>
<tr>
<td valign="top">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="top">
<p align="left" style="MARGIN-TOP:-3PX">
<font size="2"><sup>(1)</sup></font>
</p>
</td>
<td valign="top">
<p align="justify" style="MARGIN-TOP:3PX">
<font size="2">The assumed conversion of notes payable
would be anti-dilutive because the add-back of interest
expense to the numerator would have a greater effect on
the calculation than would the incremental number of
shares to the denominator. Accordingly, only the
incremental shares related to the assumed exercise of
stock options, vesting of nonvested shares, and ESPP
are included the calculation. For the three months
ended March 31, 2011, approximately 14.1 million
potentially dilutive shares were anti-dilutive and
excluded from the calculation.</font>
</p>
</td>
</tr>
<tr>
<td valign="top">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="top">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="top">
<p align="justify">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="top">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="top">
<p align="left" style="MARGIN-TOP:-3PX">
<font size="2"><sup>(2)</sup></font>
</p>
</td>
<td valign="top">
<p align="justify" style="MARGIN-TOP:3PX">
<font size="2">For the three months ended March 31,
2012, the Company recorded a net loss which cannot be
diluted. Shares issuable which could potentially dilute
basic EPS in the future include 13.2 million shares for
conversion of notes payable, 3.2 million shares for
stock options exercised and 0.7 million shares for
vesting of nonvested shares.</font>
</p>
</td>
</tr>
</table><br/>
<p align="justify">
<font size="2"><b>(10) Restructurings</b></font>
</p><br/><p align="justify">
<font size="2">          The
Company has incurred costs from restructuring activities
undertaken during 2010 and 2011 as part of the transition
from a fully integrated biopharmaceutical company with
research, manufacturing, and marketing operations to a
biotechnology company focused primarily on research and
development. During the second half of 2011, the Company
incurred additional restructuring costs as part of a plan to
more closely align its resources and capital with on-going
research and development activities. Restructuring costs are
charged to earnings and accrued as a liability at the time
they are considered probable and reasonably estimable.
Restructuring costs include employee separation benefits and
lease termination costs for facilities that have been
vacated.</font>
</p><br/><p align="justify">
<font size="2">          The
following table summarizes the changes in the Company’s
accrued restructuring liabilities during first quarter of
2012 (in thousands):</font>
</p><br/><table border="0" cellspacing="0" cellpadding="0" width="100%">
<tr style="FONT-SIZE:1PX">
<td width="28%" valign="bottom">
<p>
 
</p>
</td>
<td width="3%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="3%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="3%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="3%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="3%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2"><b>Balance at<br />
12/31/11</b></font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2"><b>Expense or<br />
(Adjustment)</b></font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2"><b>(Payments)</b></font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2"><b>Balance at<br />
3/31/12</b></font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2"><b>Cumulative<br />
Payments</b></font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="2">Employee separation benefits</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">4,484</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">(37</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">(1,343</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">3,104</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">4,790</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="2">Lease termination costs</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">366</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">(269</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">97</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">1,328</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="top">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="1" width="100%" noshade="noshade" />
</td>
</tr>
<tr style="background-color: #E5FFFF;">
<td valign="bottom">
<p style="MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Total restructuring liability</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">4,850</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">(37</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">(1,612</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">3,201</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">$</font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">6,118</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="top">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="top">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="top">
<hr size="3" width="100%" noshade="noshade" />
</td>
</tr>
</table><br/><p align="justify">
<font size="2">          During
the first quarter of 2011, the Company incurred restructuring
charges of $359,000 related to lease termination costs for
the former Bridgewater, NJ headquarters facility. There were
no restructuring charges incurred during the first quarter of
2012, and the Company does not currently expect to incur
additional material restructuring charges during 2012. Future
cash payments related to restructuring activities are
estimated to be approximately $2.5 million over the remainder
of 2012, $0.5 million in 2013 and $0.2 million in
2014.</font>
</p><br/>
<p align="justify">
<font size="2"><b>(11) Stock-Based Compensation</b></font>
</p><br/><p align="justify">
<font size="2"><i>Stock Options and Restricted Stock Units
(RSUs or Nonvested Shares)</i></font>
</p><br/><p align="justify">
<font size="2">          During
the quarter ended March 31, 2012, the Company recognized
stock-based compensation expense of $0.5 million. There were
no shares withheld to pay taxes on behalf of employees
because no stock options were exercised and no RSUs vested
during the quarter. During the quarter ended March 31, 2011,
the Company recognized stock-based compensation expense of
$1.2 million. Shares were withheld to pay $0.7 million of
taxes on behalf of employees, resulting in a net incremental
credit to additional paid-in capital of $0.5 million during
the prior-year quarter.</font>
</p><br/><p align="justify">
<font size="2">          As
of March 31, 2012, there was $0.8 million of total
unrecognized compensation cost related to unvested stock
options that the Company expects to recognize over a
weighted-average period of 25 months and $4.6 million of
total unrecognized compensation cost related to nonvested
shares to be recognized over a weighted-average period of 27
months.</font>
</p><br/><p align="justify">
<font size="2">          The
weighted-average grant price of stock options granted during
the quarter ended March 31, 2012 was $6.79 per share and the
fair value was $2.28 per share ($0.4 million fair
value).</font>
</p><br/><p align="justify">
<font size="2">          Activity
related to stock options and nonvested shares during the
quarter ended March 31, 2012 and related balances outstanding
as of that date are reflected below (in thousands):</font>
</p><br/><table border="0" cellspacing="0" cellpadding="0" width="92%">
<tr style="FONT-SIZE:1PX">
<td width="70%" valign="bottom">
<p>
 
</p>
</td>
<td width="3%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="3%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
<td width="10%" valign="bottom">
<p>
 
</p>
</td>
<td width="1%" valign="bottom">
<p>
 
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Stock<br />
Options</font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<p align="center">
<font size="2">Nonvested<br />
Shares</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p align="center">
<font size="1"> </font>
</p>
</td>
<td colspan="2" valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="2">Outstanding at January 1, 2012</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">3,121</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">674</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Granted</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">175</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">118</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Exercised and vested</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">—</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="2">Expired and forfeited</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">(101</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">)</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">(64</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="2">)</font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="1" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="2">Outstanding at March 31, 2012</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">3,195</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">728</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="2">Options vested and expected to vest at
March 31, 2012</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="2">3,120</font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom" style="background-color: #E5FFFF;">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="2">Options exercisable at March 31,
2012</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="2">2,817</font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom" style="background-color: #E5FFFF;">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<hr size="3" width="100%" noshade="noshade" />
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p align="right">
<font size="1"> </font>
</p>
</td>
<td valign="bottom">
<p>
<font size="1"> </font>
</p>
</td>
</tr>
</table><br/>
<p align="justify">
<font size="2"><b>(12) Income Taxes</b></font>
</p><br/><p align="justify">
<font size="2">          During
the three months ended March 31, 2012 and 2011, the Company
recorded no income tax expense because the estimated annual
effective tax rate was zero. As of March 31, 2012, the
Company continues to provide a valuation allowance against
its net deferred tax assets since the Company believes it is
more likely than not its deferred tax assets will not be
realized.</font>
</p><br/>
<p align="justify">
<font size="2"><b>(13) Commitments and Contingent
Liabilities</b></font>
</p><br/><p align="justify">
<font size="2">          The
Company has employment and separation agreements with certain
members of its management that provide for severance and
other payments following a termination of employment
occurring for various reasons, including a change in control
of the Company.</font>
</p><br/><p align="justify">
<font size="2">          The
Company has been involved in various claims and legal actions
arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will
not have a material effect on the Company’s consolidated
financial position, results of operations or
liquidity.</font>
</p><br/><p align="justify">
<font size="2">          The
Company has non-cancelable lease obligations for certain
office and production facilities that have been vacated and
sublet.</font>
</p><br/>