Balance Sheet Details

Short-Term Marketable Securities

Short-term marketable securities, consisting of equity securities and debt securities, were as follows as of the dates indicated:



	December 31, 2018
(In millions)	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
Equity investment in Tandem Diabetes Care, Inc	$	2.0	$	36.0	$	—		$	38.0

Debt securities, available for sale:
U.S. government agencies	173.2		—		(0.1		)	173.1
Commercial paper	36.2		—		—			36.2
Corporate debt	1.3		—		—			1.3
Total debt securities, available for sale	210.7		—		(0.1		)	210.6

Total marketable securities	$	212.7	$	36.0	$	(0.1	)	$	248.6



	December 31, 2017
(In millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
Debt securities, available for sale:
U.S. government agencies	$	87.5	$	—	$	(0.2	)	$	87.3
Commercial paper	14.7		—		—			14.7
Corporate debt	5.1		—		—			5.1
Total debt securities, available for sale	$	107.3	$	—	$	(0.2	)	$	107.1

As of December 31, 2018, all of our debt securities had contractual maturities of less than 12 months. As of December 31, 2017, the estimated market value of debt securities with contractual maturities of less than 12 months was $92.7 million; the remaining debt securities that we held at that date had an estimated market value of $14.4 million and contractual maturities of up to 16 months.

Gross realized gains and losses on our debt securities for the twelve months ended December 31, 2018, 2017 and 2016 were not significant.

We periodically review our portfolio of debt securities to determine if any investment is other-than-temporarily impaired due to changes in credit risk or other potential valuation concerns. We believe that the investments we held at December 31, 2018 were not other-than-temporarily impaired. Unrealized losses on available-for-sale debt securities at that date were not significant and were due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities. We do not intend to sell these investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

The following table reconciles the net gain recognized on equity securities during the twelve months ended December 31, 2018, 2017 and 2016 to the unrealized gain recognized during those periods on equity securities still held at the reporting dates.



	Twelve Months Ended December 31,
(In millions)	2018			2017		2016
Net gains recognized during the period on equity securities	$	80.1		$	—	$	—
Less: Net gains recognized during the period on equity securities sold during the period	(44.1		)	—		—
Unrealized gains recognized during the reporting period on equity securities still held at the reporting date	$	36.0		$	—	$	—

Accounts Receivable



	December 31,
(In millions)	2018			2017
Accounts receivable	$	233.9		$	145.8
Less allowance for doubtful accounts	(7.2		)	(11.5		)
Total accounts receivable, net	$	226.7		$	134.3

Inventory



	December 31,
(In millions)	2018		2017
Raw materials	$	30.8	$	20.0
Work-in-process	11.2		8.2
Finished goods	28.7		17.0
Total inventory	$	70.7	$	45.2

During the twelve months ended December 31, 2018, we recorded excess and obsolete inventory charges of $7.3 million in cost of goods sold that were primarily related to the approval and launch of our G6 System and the continuous improvement and innovation of our products.

During the twelve months ended December 31, 2016, we recorded excess and obsolete inventory charges of $3.5 million in cost of goods sold that were related to the February 2016 customer notification regarding the audible alarms and alerts associated with our receivers. This notification was classified as a voluntary Class 1 recall by the Food and Drug Administration, or FDA, and was closed by the FDA in August 2017.

Property and Equipment



	December 31,
(In millions)	2018			2017
Building ⁽¹⁾	$	6.0		$	6.0
Furniture and fixtures	9.0			5.7
Computer software and hardware	29.2			25.6
Machinery and equipment	80.7			33.8
Leasehold improvements	80.7			41.7
Construction in progress ⁽²⁾	57.3			87.6
Total cost	262.9			200.4
Less accumulated depreciation and amortization	(79.8		)	(54.8		)
Total property and equipment, net	$	183.1		$	145.6

⁽¹⁾ As described in Note 6, “Commitments,” although we do not legally own these premises, we were deemed the owner of the construction project during the construction period of our manufacturing facility in Mesa, Arizona under a build-to suit lease arrangement. We placed the facility into service in 2018 and as of December 31, 2018 had recorded accumulated amortization of $0.7 million.

⁽²⁾ Construction in progress as of December 31, 2018 and December 31, 2017 included approximately $6.2 million and $33.6 million, respectively, related to our manufacturing facility in Mesa, Arizona with the remaining balances as of those dates primarily related to machinery and equipment.

Depreciation expense related to property and equipment for the twelve months ended December 31, 2018, 2017 and 2016 was $28.6 million, $16.1 million, and $14.4 million, respectively.

During the twelve months ended December 31, 2018, we recorded a $5.4 million loss on disposal of property and equipment. The loss on disposal was primarily associated with changes in our product portfolio and was recorded in operating expenses, primarily in research and development expense in our statement of operations.

During the twelve months ended December 31, 2017, we recorded a $11.0 million loss on disposal of property and equipment, the majority of which was previously contained within the construction in progress balance. The loss on disposal was primarily associated with changes in our product portfolio and was recorded in operating expenses, primarily in research and development expense in our statement of operations.

Accounts Payable and Accrued Liabilities



	December 31,
(In millions)	2018		2017
Accounts payable trade	$	75.5	$	46.7
Accrued tax, audit, and legal fees	11.7		7.1
Accrued rebates	36.1		13.9
Accrued warranty	6.8		8.8
Accrued other	17.0		10.7
Total accounts payable and accrued liabilities	$	147.1	$	87.2

Accrued Warranty

Warranty costs are reflected in our statements of operations as cost of product sales. Reconciliations of our accrued warranty costs for the twelve months ended December 31, 2018 and 2017 were as follows:



	Twelve Months Ended December 31,
(In millions)	2018			2017
Beginning balance	$	8.8		$	9.8
Charges to costs and expenses	17.4			18.4
Costs incurred	(19.4		)	(19.4		)
Ending balance	$	6.8		$	8.8

Other Liabilities



	December 31,
(In millions)	2018		2017
Financing lease obligations	$	7.3	$	6.7
Deferred rent	9.4		8.7
Other	3.3		2.8
Total other liabilities	$	20.0	$	18.2