Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENTS OF CASH FLOWS

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Operating activities      
Net income (loss) $ 143,321 $ 12,556 $ (1,636)
Less: gain from discontinued operations 0 0 731
Income (loss) from continuing operations 143,321 12,556 (2,367)
Adjustments to reconcile net income to net cash provided by operating activities:      
Change in estimated fair value of contingent liabilities 3,448 2,580 3,334
Realized gain on sale of short-term investment (2,611) (831) (2,352)
Depreciation and amortization 14,718 11,714 11,290
Loss on equity investment in Viking (42,346) 2,048 23,132
Change in fair value of the convertible debt receivable from Viking and warrants (5,411) (4,032) (462)
Amortization of premium (discount) on investments, net (5,452) (81) 348
Amortization of debt discount and issuance fees 43,954 11,619 10,925
Stock-based compensation 20,846 24,915 18,893
Deferred income taxes 29,739 44,518 10,697
Royalties recorded in retained earnings upon adoption of ASC 606 32,707 0 0
Change in derivative asset and liability fair value 2,931 0 0
Changes in operating assets and liabilities, net of acquisition:      
Accounts receivable, net (29,544) (8,358) (8,525)
Inventory (2,559) (843) (244)
Other current assets (868) 402 526
Other long term assets 728 0 183
Accounts payable and accrued liabilities (4,542) (1,713) (2,369)
Contingent liabilities (3,842) (4,998) (2,268)
Deferred revenue (1,158) (926) (8)
Net cash provided by operating activities 194,059 88,570 60,733
Investing activities      
Purchase of commercial license rights (10,000) 0 (17,695)
Cash paid for acquisition, net of cash acquired (5,856) (26,653) (92,502)
Payments to CVR holders and other contingency payments (1,000) 0 0
Purchases of property and equipment (887) (2,156) (1,850)
Purchases of short-term investments (1,434,255) (254,258) (164,438)
Proceeds from sale of short-term investments 131,942 86,985 24,596
Proceeds from maturity of short-term investments 892,873 109,649 118,874
Proceeds from commercial license rights 0 7,054 0
Proceeds received from repayment of Viking note receivable 3,914 200 300
Net cash used in investing activities (423,269) (79,179) (134,415)
Financing activities      
Repayments of debt (217,674) 0 0
Gross proceeds from issuance of 2023 Convertible Senior Notes 750,000 0 0
Payment of debt issuance costs (16,900) 0 0
Proceeds from issuance of warrants 90,000 0 0
Purchase of convertible bond hedge (140,250) 0 0
Proceeds from bond hedge 439,559 0 0
Payments to convert holders for bond conversion (439,581) 0 0
Net proceeds from stock option exercises and ESPP 20,183 4,517 6,415
Taxes paid related to net share settlement of equity awards (3,765) (10,074) (999)
Share repurchases (122,868) (1,966) (3,901)
Repurchase of warrants (30,094) 0 0
Payments to CVR holders (25) 0 (6,509)
Net cash (used in) provided by financing activities 328,585 (7,523) (4,994)
Effect of exchange rate changes on cash (215) 0 0
Net increase (decrease) in cash and cash equivalents 99,375 1,868 (78,676)
Cash, cash equivalents, and restricted cash at end of year 119,780 20,620 18,752
Cash, cash equivalents, and restricted cash at beginning of year 20,620 18,752 97,428
Supplemental disclosure of cash flow information      
Interest paid 1,513 1,838 1,838
Taxes paid 341 157 38
Supplemental schedule of non-cash investing and financing activities      
Stock issued for acquisition, net of issuance cost 0 0 (77,331)
Stock and warrant received for repayment of Viking notes receivable 0 0 1,200
Accrued inventory purchases 2,059 1,007 646
Unrealized gain on AFS investments 48 144 (1,109)
Viking Therapeutics, Inc.      
Investing activities      
Common stock and warrants in equity method investments 0 0 (700)
Purchase of Common Stock      
Investing activities      
Common stock and warrants in equity method investments $ 0 $ 0 $ (1,000)