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Interim Financial Statements
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Interim Financial Statements
Interim Financial Statements
The interim Condensed Consolidated Financial Statements of Regeneron Pharmaceuticals, Inc. and its subsidiaries ("Regeneron," "Company," "we," "us," and "our") have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and disclosures necessary for a presentation of the Company's financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, these financial statements reflect all normal recurring adjustments and accruals necessary for a fair statement of the Company's financial position, results of operations, and cash flows for such periods. The results of operations for any interim period are not necessarily indicative of the results for the full year. The December 31, 2017 Condensed Consolidated Balance Sheet data were derived from audited financial statements, but do not include all disclosures required by accounting principles generally accepted in the United States of America. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
Certain reclassifications have been made to prior period amounts to conform with the current period's presentation.
We adopted Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, as of January 1, 2018. The Company adopted the standard using the modified retrospective method, and thus recognized a cumulative-effect adjustment to reduce Retained earnings and increase Deferred revenue on January 1, 2018 by $143.4 million, net of tax. Prior period amounts have not been adjusted in connection with the adoption of this standard.
The new standard did not have an impact on the recognition of revenue from product sales (see Note 2). However, the new standard has resulted in certain changes to the timing of revenue recognition related to our collaboration agreements (see Note 3). As a result of adopting ASC 606, non-refundable upfront payments, which were previously recognized ratably over the performance period, and substantive development milestones, which were previously recognized in the period when the milestone was achieved, will be recognized over the remaining performance period based on the Company's progress towards satisfying its identified performance obligation.
The following tables summarize the impacts of adopting ASC 606 on the Company's condensed consolidated financial statements as of and for the three and nine months ended September 30, 2018 compared with the guidance that was in effect before the change.
 
 
September 30, 2018
Balance Sheet Data
 
As Reported
 
Adjustments
 
Balance Without Adoption of ASC 606
Inventories
 
$
1,039,679

 
$
17,518

 
$
1,057,197

Deferred tax assets
 
$
562,818

 
$
(15,027
)
 
$
547,791

Total assets
 
$
10,805,613

 
$
2,491

 
$
10,808,104

Accrued expenses and other current liabilities
 
$
781,924

 
$
(1,175
)
 
$
780,749

Deferred revenue from Sanofi (current)
 
$
246,812

 
$
(60,406
)
 
$
186,406

Deferred revenue - other (current)
 
$
216,133

 
$
(78,611
)
 
$
137,522

Total current liabilities
 
$
1,417,230

 
$
(140,192
)
 
$
1,277,038

Deferred revenue from Sanofi (noncurrent)
 
$
421,196

 
$
(28,078
)
 
$
393,118

Deferred revenue - other (noncurrent)
 
$
197,651

 
$
32,952

 
$
230,603

Total liabilities
 
$
2,937,313

 
$
(135,318
)
 
$
2,801,995

Retained earnings
 
$
4,433,904

 
$
137,809

 
$
4,571,713

Total stockholders' equity
 
$
7,868,300

 
$
137,809

 
$
8,006,109

Total liabilities and stockholders' equity
 
$
10,805,613

 
$
2,491

 
$
10,808,104


 
 
Three Months Ended
September 30, 2018
 
Nine Months Ended
September 30, 2018
Consolidated Statement of Operations Data
 
As Reported
 
Adjustments
 
Balance Without Adoption of ASC 606
 
As Reported
 
Adjustments
 
Balance Without Adoption of ASC 606
Sanofi collaboration revenue
 
$
256,265

 
$
12,172

 
$
268,437

 
$
683,508

 
$
(5,159
)
 
$
678,349

Other revenue
 
$
117,370

 
$
24,574

 
$
141,944

 
$
314,552

 
$
(22,615
)
 
$
291,937

Total revenues
 
$
1,663,496

 
$
36,746

 
$
1,700,242

 
$
4,783,003

 
$
(27,774
)
 
$
4,755,229

Cost of collaboration and contract manufacturing
 
$
79,552

 
$
(17,518
)
 
$
62,034

 
$
180,918

 
$
(17,518
)
 
$
163,400

Income from operations
 
$
626,923

 
$
54,264

 
$
681,187

 
$
1,816,342

 
$
(10,256
)
 
$
1,806,086

Income before income taxes
 
$
635,861

 
$
54,264

 
$
690,125

 
$
1,877,333

 
$
(10,256
)
 
$
1,867,077

Income tax expense
 
$
(41,206
)
 
$
(2,663
)
 
$
(43,869
)
 
$
(253,286
)
 
$
4,630

 
$
(248,656
)
Net income
 
$
594,655

 
$
51,601

 
$
646,256

 
$
1,624,047

 
$
(5,626
)
 
$
1,618,421


The Company also adopted Accounting Standards Update ("ASU") 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, as of January 1, 2018. The amendments require companies to measure equity investments at fair value with changes in fair value recognized in net income. We have elected to measure certain equity investments we hold that do not have readily determinable fair values at cost minus impairment, if any, and adjust for observable price changes in orderly transactions for identical or similar investments of the same issuer. Upon adoption, the Company recognized a cumulative-effect adjustment, related to unrealized gains on equity securities, to reduce Accumulated other comprehensive income and increase Retained earnings on January 1, 2018 by $6.6 million. See Note 5 and Note 6.