

	Three Months Ended
	March 31, 2012			June 30, 2012 (1)			Sept. 30, 2012			Dec. 31, 2012 (2)
	(in thousands, except per share amounts)
Revenues:
Product revenues, net	$	375,375		$	373,273		$	303,501		$	281,309
Royalty revenues	38,981			33,480			25,586			43,451
Collaborative revenues	24,381			11,552			6,919			9,234
Total revenues	438,737			418,305			336,006			333,994
Costs and expenses:
Cost of product revenues	25,918			104,549			30,680			75,595
Royalty expenses	13,293			9,874			7,856			12,120
Research and development expenses	196,371			196,544			200,161			213,109
Sales, general and administrative expenses	111,146			117,514			97,684			110,452
Restructuring expense (credit)	360			594			696			194
Intangible asset impairment charge	—			—			—			—
Total costs and expenses	347,088			429,075			337,077			411,470
Income (loss) from operations	91,649			(10,770		)	(1,071		)	(77,476		)
Interest income	364			560			519			497
Interest expense	(4,105		)	(4,195		)	(4,560		)	(3,793		)
Change in fair value of derivative instruments	—			—			—			—
Income (loss) before provision for (benefit from) income taxes	87,908			(14,405		)	(5,112		)	(80,772		)
Provision for (benefit from) income taxes	32			20,063			21,355			(2,696		)
Net income (loss)	87,876			(34,468		)	(26,467		)	(78,076		)
Net loss (income) attributable to noncontrolling interest (Alios)	3,714			(30,463		)	(31,076		)	1,928
Net income (loss) attributable to Vertex	$	91,590		$	(64,931	)	$	(57,543	)	$	(76,148	)
Net income (loss) per share attributable to Vertex common shareholders:
Basic	$	0.44		$	(0.31	)	$	(0.27	)	$	(0.35	)
Diluted	$	0.43		$	(0.31	)	$	(0.27	)	$	(0.35	)
Shares used in per share calculations:
Basic	208,018			211,344			213,767			214,607
Diluted	219,264			211,344			213,767			214,607



	Three Months Ended
	March 31, 2011			June 30, 2011			Sept. 30, 2011 (3)			Dec. 31, 2011
	(in thousands, except per share amounts)
Revenues:
Product revenues, net	$	—		$	74,535		$	419,595		$	456,759
Royalty revenues	6,061			10,010			8,539			25,405
Collaborative revenues	67,601			29,879			231,066			81,176
Total revenues	73,662			114,424			659,200			563,340
Costs and expenses:
Cost of product revenues	—			5,404			35,285			22,936
Royalty expenses	2,666			3,902			3,121			7,191
Research and development expenses	158,612			173,604			189,052			186,438
Sales, general and administrative expenses	71,523			96,663			110,654			121,881
Restructuring expense (credit)	760			741			(419		)	992
Intangible asset impairment charge	—			—			105,800			—
Total costs and expenses	233,561			280,314			443,493			339,438
Income (loss) from operations	(159,899		)	(165,890		)	215,707			223,902
Interest income	1,402			202			77			197
Interest expense	(12,001		)	(6,962		)	(7,059		)	(12,430		)
Change in fair value of derivative instruments	(5,598		)	(2,220		)	(8,115		)	(868		)
Income (loss) before provision for (benefit from) income taxes	(176,096		)	(174,870		)	200,610			210,801
Provision for (benefit from) income taxes	—			24,448			(27,842		)	22,660
Net income (loss)	(176,096		)	(199,318		)	228,452			188,141
Net loss (income) attributable to noncontrolling interest (Alios)	—			25,249			(7,342		)	(29,512		)
Net income (loss) attributable to Vertex	$	(176,096	)	$	(174,069	)	$	221,110		$	158,629
Net income (loss) per share attributable to Vertex common shareholders:
Basic	$	(0.87	)	$	(0.85	)	$	1.06		$	0.76
Diluted	$	(0.87	)	$	(0.85	)	$	1.02		$	0.74
Shares used in per share calculations:
Basic	202,329			204,413			206,002			206,758
Diluted	202,329			204,413			219,349			217,602

(1)

During the second quarter of 2012, the Company recorded within cost of product revenues a lower of cost or market charge of $78.0 million for excess and obsolete INCIVEK inventories. This charge affected net income (loss) attributable to Vertex per diluted share, net of tax, by $(0.36) for the second quarter of 2012, resulting in a net loss attributable to Vertex per diluted share in the second quarter of 2012. See Note F, "Inventories," for further information.


(2)	During the fourth quarter of 2012, the Company recorded within cost of product revenues a lower of cost or market charge of $55.2 million for excess and obsolete INCIVEK inventories. This charge resulted in a $0.25 increase in the net loss attributable to Vertex per diluted share for the fourth quarter of 2012. See Note F, "Inventories," for further information.


(3)	During the third quarter of 2011, the Company recorded an impairment charge of $105.8 million. In connection with this impairment charge, the Company recorded a benefit from income taxes of $32.7 million resulting in a net decrease in net income attributable to Vertex related to this impairment charge of $73.1 million in the third quarter of 2011.