Balance Sheet Details

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Disclosure [Abstract]



4. 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, 2019
(In millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
Debt securities, available for sale:
U.S. government agencies	$	675.6	$	0.4	$	—		$	676.0
Commercial paper	248.1		0.1		—			248.2
Corporate debt	163.0		—		(0.1		)	162.9
Total debt securities, available for sale	$	1,086.7	$	0.5	$	(0.1	)	$	1,087.1



	December 31, 2018
(In millions)	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

As of December 31, 2019 and 2018, all of our debt securities had contractual maturities of less than twelve months. Gross realized gains and losses on our debt securities for the twelve months ended December 31, 2019, 2018 and 2017 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, 2019 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, 2019, 2018 and 2017 to the unrealized gain recognized during those periods on equity securities still held at the reporting dates.



	Twelve Months Ended December 31,
(In millions)	2019			2018			2017
Net gains and losses recognized during the period on equity securities	$	(4.2	)	$	80.1		$	—
Less: Net gains and losses recognized during the period on equity securities sold during the period	4.2			(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)	2019			2018
Accounts receivable	$	292.1		$	233.9
Less allowance for doubtful accounts	(5.8		)	(7.2		)
Total accounts receivable, net	$	286.3		$	226.7



Inventory



	December 31,
(In millions)	2019		2018
Raw materials	$	64.9	$	30.8
Work-in-process	11.1		11.2
Finished goods	43.8		28.7
Total inventory	$	119.8	$	70.7

During the twelve months ended December 31, 2019, we recorded excess and obsolete inventory charges of $14.1 million in cost of sales as a result of our ongoing assessment of sales demand, inventory on hand for each product and the continuous improvement and innovation of our products. During the twelve months ended December 31, 2018, we recorded excess and obsolete inventory charges of $7.3 million in cost of sales primarily as a result of the approval and launch of our G6 system and our ongoing assessment of sales demand and the continuous improvement and innovation of our products.



Property and Equipment



	December 31,
(In millions)	2019			2018
Building and land	$	15.5		$	6.0
Furniture and fixtures	12.8			9.0
Computer software and hardware	32.7			29.2
Machinery and equipment	130.2			80.7
Leasehold improvements	102.5			80.7
Construction in progress	132.6			57.3
Total cost	426.3			262.9
Less accumulated depreciation and amortization	(105.0		)	(79.8		)
Total property and equipment, net	$	321.3		$	183.1

Building and Land. Although we do not legally own these premises, under previous lease accounting standards 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. As a result of our adoption of ASC 842, we de-recognized the estimated fair value of the building shell that was included in “building and land” in our consolidated balance sheets as of December 31, 2018 and the related lease liability and recorded the difference between the asset and liability as an adjustment to retained earnings at the beginning of the first quarter of 2019. The December 31, 2019 balance in “building and land” represents our finance lease right-of-use assets as a result of our adoption of ASC 842.

Depreciation expense related to property and equipment for the twelve months ended December 31, 2019, 2018 and 2017 was $46.9 million, $28.6 million, and $16.1 million, respectively.

Loss on disposal of property and equipment during the twelve months ended December 31, 2019, 2018 and 2017 recorded in operating expenses was $10.5 million, $5.4 million and $11.0 million, respectively.



Accounts Payable and Accrued Liabilities



	December 31,
(In millions)	2019		2018
Accounts payable trade	$	102.3	$	75.5
Accrued tax, audit, and legal fees	14.0		11.7
Accrued rebates	93.3		36.1
Accrued warranty	7.4		6.8
Other accrued liabilities	39.4		17.0
Total accounts payable and accrued liabilities	$	256.4	$	147.1

Restructuring Plan. In February 2019, our Board of Directors approved a restructuring plan that resulted in the transition of certain of our operations to the Philippines. We incurred total pre-tax charges and costs of approximately $8.0 million, primarily for employee severance benefits under both ongoing and one-time benefit arrangements. We incurred most of these costs in the first half of 2019 and the restructuring activities have been substantially completed as of December 31, 2019.



Accrued Warranty

Warranty costs are reflected in our statements of operations as cost of sales. Reconciliations of our accrued warranty costs for the twelve months ended December 31, 2019 and 2018 were as follows:



	Twelve Months Ended December 31,
(In millions)	2019			2018
Beginning balance	$	6.8		$	8.8
Charges to costs and expenses	32.7			17.4
Costs incurred	(32.1		)	(19.4		)
Ending balance	$	7.4		$	6.8



Other Long-Term Liabilities



	December 31,
(In millions)	2019		2018
Finance lease obligations	$	14.4	$	7.3
Deferred rent	—		9.4
Other liabilities	5.7		3.3
Total other liabilities	$	20.1	$	20.0

Our adoption of ASC 842 during the first quarter of 2019 affected the balances of finance lease liabilities and deferred rent. See Note 6, “Leases And Other Commitments” for more information on leases.