2.2.0.7falseSummary of Significant Accounting Policies0201 - Disclosure - Summary of Significant Accounting Policiestruefalsefalsefalse1USDfalsefalseUSDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0$20gpro_SummaryOfSignificantAccountingPoliciesAbstractgprofalsenadurationSummary of significant accounting policies.falsefalsefalsefalsefalsetruefalsefalsefalsefalsefalsefalse1falsefalsefalsefalse00falsefalsefalsexbrli:stringItemTypestringSummary of significant accounting policies.false31us-gaap_SignificantAccountingPoliciesTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabelfalse1falsefalsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
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<div align="left" style="font-family: 'Times New Roman',Times,serif">
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<div align="left">
</div>
<div align="left" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Note 1 — Summary of Significant Accounting Policies</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Basis of Presentation</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The accompanying interim consolidated financial statements of Gen-Probe Incorporated
(“Gen-Probe” or the “Company”) at September 30, 2010, and for the three and nine month periods
ended September 30, 2010 and 2009, are unaudited and have been prepared in accordance with United
States generally accepted accounting principles (“U.S. GAAP”) for interim financial information.
Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for
complete financial statements. In management’s opinion, the unaudited consolidated financial
statements include all adjustments, consisting only of normal recurring accruals, necessary to
state fairly the financial information therein, in accordance with U.S. GAAP. Interim results are
not necessarily indicative of the results that may be reported for any other interim period or for
the year ending December 31, 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     These unaudited interim consolidated financial statements and related footnotes should be read
in conjunction with the audited consolidated financial statements and related footnotes contained
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Certain prior year amounts have been reclassified to conform to the current year presentation.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Principles of Consolidation</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     These unaudited interim consolidated financial statements include the accounts of Gen-Probe as
well as its wholly owned subsidiaries. The Company does not have any interests in variable interest
entities. All material intercompany transactions and balances have been eliminated in
consolidation.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In April 2009, the Company completed its acquisition of Tepnel Life Sciences plc (“Tepnel”), a
United Kingdom (“UK”) based international life sciences products and services company, now known as
Gen-Probe Life Sciences Ltd. Tepnel’s transplant diagnostics and genetic testing businesses have
been included in the Company’s clinical diagnostic operations beginning in April 2009. While
Tepnel’s research products and services business represents a new area of business for the Company,
the activities of this business were immaterial to the Company’s overall operations during the
first nine months of 2010 and 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In October 2009, the Company acquired Prodesse, Inc. (“Prodesse”), a privately-held Wisconsin
corporation, now known as Gen-Probe Prodesse, Inc. Prodesse develops molecular diagnostic products
for a variety of infectious disease applications. Prodesse’s results of operations have been
included in the Company’s clinical diagnostic operations beginning in October 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company translates the financial statements of its non-U.S. operations using the
end-of-period exchange rates for assets and liabilities and the average exchange rates for each
reporting period for results of operations. Net gains and losses resulting from the translation of
foreign financial statements and the effect of exchange rates on intercompany receivables and
payables of a long-term investment nature are recorded as a separate component of stockholders’
equity under the caption “Accumulated other comprehensive income.” These adjustments will affect
net income upon the sale or liquidation of the underlying investment.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Use of Estimates</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The preparation of financial statements in conformity with U.S. GAAP requires management to
make certain estimates and assumptions that affect the amounts reported in the consolidated
financial statements. These estimates include assessing the collectability of accounts receivable,
recognition of revenues, and the valuation of the following: stock-based compensation; marketable
securities; equity investments in publicly and privately held companies; income tax; liabilities
associated with employee benefit costs and contingent consideration; inventories; and goodwill and
long-lived assets, including patent costs, capitalized software, acquired intangible assets and
licenses and manufacturing access fees. Actual results could differ from those estimates.
</div>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Marketable Securities</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The primary objectives of the Company’s marketable security investment portfolio are liquidity
and safety of principal. Investments are made with the goal of achieving the highest rate of return
consistent with these two objectives. The Company’s investment policy limits investments to certain
types of debt and money market instruments issued by institutions primarily with investment grade
credit ratings and places restrictions on maturities and concentration by type and issuer.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Marketable securities are carried at fair value, with unrealized gains and losses, net of tax,
reported as a separate component of stockholders’ equity under the caption “Accumulated other
comprehensive income.” The amortized cost of debt securities is adjusted for amortization of
premiums and accretion of discounts to maturity. Such amortization is included in “Investment and
interest income.”
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Realized gains and losses, and declines in value deemed to be other-than-temporary on
marketable securities, are included in “Investment and interest income.” The cost of securities
sold is based on the specific identification method. Interest and dividends on securities
classified as available-for-sale are included in “Investment and interest income.”
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company periodically reviews its marketable securities for other-than-temporary declines
in fair value below the cost basis, or whenever events or circumstances indicate that the carrying
amount of an asset may not be recoverable. When assessing marketable securities for
other-than-temporary declines in value, the Company considers factors including: the significance
of the decline in value compared to the cost basis; the underlying factors contributing to a
decline in the prices of securities in a single asset class; how long the market value of the
investment has been less than its cost basis; any market conditions that impact liquidity; the
views of external investment managers; any news or financial information that has been released
specific to the investee; and the outlook for the overall industry in which the investee operates.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company does not consider its investments in marketable securities with a current
unrealized loss position to be other-than-temporarily impaired at September 30, 2010 because the
Company does not intend to sell the investments and it is more likely than not that the Company
will not be required to sell the investments before recovery of their amortized cost. However,
investments in an unrealized loss position deemed to be temporary at September 30, 2010 that have a
contractual maturity of greater than 12 months have been classified as non-current marketable
securities under the caption “Marketable securities, net of current portion,” reflecting the
Company’s current intent and ability to hold such investments to maturity. The Company has
determined that its investments in marketable securities should be classified as
available-for-sale.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Revenue Recognition</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company records shipments of its clinical diagnostic products as product sales when the
product is shipped and title and risk of loss have passed and when collection of the resulting
receivable is reasonably assured.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company manufactures blood screening products according to demand specifications of its
collaboration partner, Novartis Vaccines and Diagnostics, Inc. (“Novartis”). Upon shipment to
Novartis, the Company recognizes blood screening product sales at an agreed upon transfer price and
records the related cost of products sold. Based on the terms of the Company’s collaboration
agreement with Novartis, the Company’s ultimate share of the net revenue from sales to the end user
is not known until reported to the Company by Novartis. The Company then adjusts blood screening
product sales upon receipt of customer revenue reports and a net payment from Novartis of amounts
reflecting the Company’s ultimate share of net sales by Novartis for these products, less the
transfer price revenues previously recognized.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Generally, the Company provides its instrumentation to its clinical diagnostics customers
without requiring them to purchase the equipment or enter into an equipment lease. Instead, the
Company recovers the cost of providing the instrumentation in the amount it charges for its
diagnostic assays. The depreciation costs associated with an instrument
are charged to cost of product sales on a straight-line basis over the estimated life of the
instrument. The costs to maintain these instruments in the field are charged to cost of product
sales as incurred.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company sells its instruments to Novartis for use in blood screening and records these
instrument sales upon delivery since Novartis is responsible for the placement, maintenance and
repair of the units with its customers. The Company also sells instruments to its clinical
diagnostics customers and records sales of these instruments upon delivery and receipt of customer
acceptance. Prior to delivery, each instrument is tested to meet Gen-Probe’s and United States Food
and Drug Administration (“FDA”) specifications, and is shipped fully assembled. Customer acceptance
of the Company’s clinical diagnostic instrument systems requires installation and training by the
Company’s technical service personnel. Generally, installation is a standard process consisting
principally of uncrating, calibrating and testing the instrumentation.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company records shipments of its blood screening products in the United States and other
countries in which the products have not received regulatory approval as collaborative research
revenue. This is done because price restrictions apply to these products prior to FDA marketing
approval in the United States and similar approvals in foreign countries. Upon shipment of
FDA-approved and labeled products following commercial approval, the Company classifies sales of
these products as product sales in its consolidated financial statements.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company records revenue on its research products and services in the period during which
the related costs are incurred, or services are provided. This revenue consists of outsourcing
services for the pharmaceutical, biotechnology and healthcare industries, including nucleic acid
purification and analysis services, as well as the sale of monoclonal antibodies.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company analyzes each element of its collaborative arrangements to determine the
appropriate revenue recognition. The Company recognizes revenue on up-front payments over the
period of significant involvement under the related agreements unless the fee is in exchange for
products delivered or services rendered that represent the culmination of a separate earnings
process and no further performance obligation exists under the contract. Revenue arrangements with
multiple deliverables are divided into separate units of accounting if (i) the delivered item has
stand-alone value, (ii) the vendor has objective and reliable evidence of the fair value of the
undelivered item(s), and (iii) the customer has a general right of return relative to the delivered
item(s) and delivery or performance of the undelivered item(s) is probable and substantially within
the vendor’s control. All of these criteria must be met in order for a delivered item to be
accounted for as a separate unit.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company recognizes collaborative research revenue over the term of various collaboration
agreements, as negotiated monthly contracted amounts are earned or reimbursable costs are incurred
related to those agreements. Negotiated monthly contracted amounts are earned in relative
proportion to the performance required under the applicable contracts. Non-refundable license fees
are recognized over the related performance period or at the time that the Company has satisfied
all performance obligations. Milestone payments are recognized as revenue upon the achievement of
specified milestones when (i) the Company has earned the milestone payment, (ii) the milestone is
substantive in nature and the achievement of the milestone is not reasonably assured at the
inception of the agreement, (iii) the fees are non-refundable, and (iv) performance obligations
after the milestone achievement will continue to be funded by the collaborator at a level
comparable to the level before the milestone achievement. Any amounts received prior to satisfying
the Company’s revenue recognition criteria are recorded as deferred revenue on its consolidated
balance sheets.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Royalty and license revenue is recognized related to the sale or use of the Company’s products
or technologies under license agreements with third parties. For those arrangements where royalties
are reasonably estimable, the Company recognizes revenue based on estimates of royalties earned
during the applicable period and adjusts for differences between the estimated and actual royalties
in the following period. Historically, these adjustments have not been material. For those
arrangements where royalties are not reasonably estimable, the Company recognizes revenue upon
receipt of royalty statements from the applicable licensee.
</div>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Stock-based Compensation</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Stock-based compensation expense for awards granted to employees and directors under the
Company’s equity incentive plans is measured based on estimated grant date fair values. These
awards include stock options, restricted stock, deferred issuance restricted stock, performance
stock awards and shares purchasable under the Company’s employee stock purchase plan (“ESPP”). The
value of awards, adjusted for estimated forfeitures, is recognized as expense over the requisite
service period.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Stock-based compensation expense for restricted stock, deferred issuance restricted stock and
performance stock awards is measured based on the closing fair market value of the Company’s common
stock on the date of grant. The Company uses the following weighted average assumptions within the
Black-Scholes model to estimate the fair value of stock options and shares purchasable under the
ESPP for the three and nine month periods ended September 30, 2010 and 2009:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="62%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three Months Ended</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Nine Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b><i>Stock Option Plans</i></b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Risk-free interest rate
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">1.5</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">2.2</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">2.1</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">2.0</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Volatility
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">32</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">35</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">32</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">35</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Dividend yield
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Expected term (years)
</div></td>
<td> </td>
<td> </td>
<td align="right">4.4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4.4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4.4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4.3</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Resulting average fair value
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">12.97</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">12.29</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">12.79</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">12.64</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b><i>ESPP</i></b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Risk-free interest rate
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">0.2</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">2.3</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">0.2</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">1.8</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Volatility
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">21</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">34</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">24</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">40</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Dividend yield
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Expected term (years)
</div></td>
<td> </td>
<td> </td>
<td align="right">0.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.5</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Resulting average fair value
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">9.62</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">10.65</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">9.63</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">11.42</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The following table summarizes the stock-based compensation expense that the Company recorded
in its consolidated statements of income for the three and nine month periods ended September 30,
2010 and 2009 (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three Months Ended</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Nine Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>September 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Cost of product sales
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">946</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">753</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,817</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,356</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Research and development
</div></td>
<td> </td>
<td> </td>
<td align="right">1,783</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,954</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,313</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,422</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Marketing and sales
</div></td>
<td> </td>
<td> </td>
<td align="right">682</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">943</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,319</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,481</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">General and administrative
</div></td>
<td> </td>
<td> </td>
<td align="right">2,788</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,688</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,089</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7,484</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">6,199</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">6,338</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">18,538</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">17,743</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company’s unrecognized stock-based compensation expense as of September 30, 2010, before
income taxes and adjusted for estimated forfeitures, related to outstanding unvested share-based
payment awards is presented in the table as follows (in thousands, except number of years):
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted Average</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Unrecognized</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Remaining</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Expense as of</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Expense Life</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>September 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Awards</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Years)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Options
</div></td>
<td> </td>
<td> </td>
<td align="right">2.5</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">27,017</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Employee stock purchase plan
</div></td>
<td> </td>
<td> </td>
<td align="right">0.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">82</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Performance stock awards
</div></td>
<td> </td>
<td> </td>
<td align="right">2.4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">875</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Restricted stock
</div></td>
<td> </td>
<td> </td>
<td align="right">1.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,891</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred issuance restricted stock
</div></td>
<td> </td>
<td> </td>
<td align="right">2.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,405</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">34,270</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Net Income Per Share</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Basic earnings per share is computed using the two-class method. Under the two-class method,
net income is allocated to common stock and participating securities. The Company’s restricted
stock, deferred issuance restricted stock and performance stock awards meet the definition of
participating securities. Basic net income per share is computed by dividing net income adjusted
for earnings allocated to unvested stockholders for the period by the weighted average number of
common shares outstanding during the period. Diluted net income per share is computed by dividing
net income adjusted for earnings allocated to unvested stockholders for the period by the weighted
average number of common and common equivalent shares outstanding during the period. The Company
excludes stock options from the calculation of diluted net income per share when the combined
exercise price, average unamortized fair values and assumed tax benefits upon exercise are greater
than the average market price for the Company’s common stock because their effect is anti-dilutive.
Potentially dilutive securities totaling approximately 4,065,000 and 4,291,000 shares for the three
month periods ended September 30, 2010 and 2009, respectively, and 4,390,000 and 3,680,000 shares
for the nine month periods ended September 30, 2010 and 2009, respectively, were excluded from the
calculations of diluted earnings per share (“EPS”) below because of their anti-dilutive effect.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The following table sets forth the computation of basic and diluted EPS for the three and nine
month periods ended September 30, 2010 and 2009 (in thousands, except per share amounts):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="40%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="22" style="border-bottom: 1px solid #000000"><b>Three Months Ended September 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Shares</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Per Share</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Shares</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Per Share</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Income</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Outstanding</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Income</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Outstanding</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">27,396</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">22,196</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: Earnings allocated to unvested
stockholders
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(99</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(82</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Basic EPS</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Distributable income available to common
stockholders
</div></td>
<td> </td>
<td> </td>
<td align="right">27,297</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">48,254</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.57</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">22,114</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">49,343</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.45</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Effect of dilutive securities:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Add back: Undistributed earnings allocated to
unvested stockholders
</div></td>
<td> </td>
<td> </td>
<td align="right">99</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">82</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Dilutive stock options
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">425</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">522</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: Undistributed earnings reallocated to
unvested stockholders
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(99</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(82</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 0px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 0px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Diluted EPS — Common stock</b>
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">27,297</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">48,679</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.56</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">22,114</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">49,865</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.44</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="40%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="22" style="border-bottom: 1px solid #000000"><b>Nine Months Ended September 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Shares</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Per Share</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Shares</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Per Share</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Income</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Outstanding</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Income</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Outstanding</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">79,699</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">67,758</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr>
<td align="left" valign="top"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: Earnings allocated to unvested
stockholders
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(327</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(265</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Basic EPS</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Distributable income available to common
stockholders
</div></td>
<td> </td>
<td> </td>
<td align="right">79,372</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">48,796</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1.63</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">67,493</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">50,848</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1.33</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Effect of dilutive securities:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Add back: Undistributed earnings allocated to
unvested stockholders
</div></td>
<td> </td>
<td> </td>
<td align="right">327</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">265</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Dilutive stock options
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">461</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">634</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: Undistributed earnings reallocated to unvested stockholders
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(324</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(262</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 0px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 0px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Diluted EPS — Common stock</b>
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">79,375</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">49,257</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1.61</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">67,496</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">51,482</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1.31</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Pending Adoption of Recent Accounting Pronouncements</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <i>Accounting Standards Update 2010-06</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In January 2010, the Financial Accounting Standards Board (“FASB”) amended Accounting
Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, to require
reporting entities to make new disclosures about recurring and nonrecurring fair value
measurements, including significant transfers into and out of Level 1 and Level 2 fair value
measurements and information about purchases, sales, issuances, and settlements on a gross basis in
the reconciliation of Level 3 fair value measurements. Except for the detailed Level 3 roll forward
disclosures, the guidance was effective January 1, 2010. The new disclosures about purchases,
sales, issuances, and settlements in the roll forward activity for Level 3 fair value measurements
are effective for the Company as of January 1, 2011. Early adoption is permitted. The adoption of
this standard will not impact the Company’s financial position or results of operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt">     <i>Accounting Standards Update 2010-17</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In March 2010, the FASB ratified the final consensus that offers an alternative method of
revenue recognition for milestone payments. The guidance states that an entity can make an
accounting policy election to recognize a payment that is contingent upon the achievement of a
substantive milestone in its entirety in the period in which the milestone is achieved. The
guidance will be effective for fiscal years, and interim periods within those years, beginning on
or after June 15, 2010 with early adoption permitted, provided that the revised guidance is applied
retrospectively to the beginning of the year of adoption. The guidance may be applied
retrospectively or prospectively for milestones achieved after the adoption date. The Company is
currently evaluating prospective adoption and determining the effects, if any, the adoption of this
guidance will have on its consolidated financial statements.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt">     <i>Accounting Standards Update 2009-13</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In September 2009, the FASB revised the authoritative guidance for revenue arrangements with
multiple deliverables. The guidance addresses how to determine whether an arrangement involving
multiple deliverables contains more than one unit of accounting and how the arrangement
consideration should be allocated among the separate units of accounting. The guidance will be
effective for the Company’s fiscal year beginning January 1, 2011 with early adoption permitted.
The guidance may be applied retrospectively or prospectively for new or materially
modified arrangements. The Company is currently evaluating early prospective adoption and determining the
effects, if any, the adoption of this guidance will have on its consolidated financial statements.
</div>
</div>
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