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Section 1: 10-Q (10-Q)

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Table of Contents

unit

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from                to

Commission file number 0-26301

United Therapeutics Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware

    

52-1984749

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification No.)

1040 Spring Street, Silver Spring, MD

20910

(Address of Principal Executive Offices)

(Zip Code)

(301) 608-9292

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of exchange on which registered

Common Stock, par value $0.01 per share

UTHR

Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

    

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No 

The number of shares outstanding of the issuer’s common stock, par value $.01 per share, as of October 23, 2019 was 43,881,350.

.

Table of Contents

INDEX

Page

Part I.

FINANCIAL INFORMATION (UNAUDITED)

3

Item 1.

Consolidated Financial Statements

3

Consolidated Balance Sheets

3

Consolidated Statements of Operations

4

Consolidated Statements of Comprehensive Income

5

Consolidated Statements of Stockholders’ Equity

6

Consolidated Statements of Cash Flows

8

Notes to Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37

Item 4.

Controls and Procedures

37

Part II.

OTHER INFORMATION

38

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

38

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

53

Item 6.

Exhibits

53

SIGNATURES

54

2

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

UNITED THERAPEUTICS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

September 30, 

December 31, 

    

2019

    

2018

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$

719.7

$

669.2

Marketable investments

 

850.3

 

746.7

Accounts receivable, no allowance for 2019 and 2018

 

183.6

 

175.7

Inventories, net

 

94.1

 

101.0

Other current assets

 

85.7

 

75.4

Total current assets

 

1,933.4

 

1,768.0

Marketable investments

 

730.4

 

442.6

Goodwill and other intangible assets, net

 

158.4

 

170.8

Property, plant and equipment, net

 

678.3

699.7

Deferred tax assets, net

 

268.1

 

95.7

Other non-current assets

 

231.0

 

224.2

Total assets

$

3,999.6

$

3,401.0

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable and accrued expenses

$

161.1

$

166.1

Line of credit (current)

250.0

Share tracking awards plan

18.3

72.2

Other current liabilities

 

40.5

 

38.3

Total current liabilities

 

469.9

 

276.6

Line of credit (non-current)

750.0

250.0

Other non-current liabilities

 

63.9

 

66.6

Total liabilities

 

1,283.8

 

593.2

Commitments and contingencies

 

Temporary equity

 

19.2

Stockholders’ equity:

 

 

Preferred stock, par value $.01, 10,000,000 shares authorized, no shares issued

Series A junior participating preferred stock, par value $.01, 100,000 shares authorized, no shares issued

 

 

Common stock, par value $.01, 245,000,000 shares authorized, 70,499,819 and 70,207,581 shares issued, and 43,880,603 and 43,588,365 shares outstanding at September 30, 2019 and December 31, 2018, respectively

 

0.7

 

0.7

Additional paid-in capital

 

2,025.8

 

1,940.2

Accumulated other comprehensive loss

 

(4.1)

 

(7.9)

Treasury stock, 26,619,216 shares at September 30, 2019 and December 31, 2018

 

(2,579.2)

 

(2,579.2)

Retained earnings

 

3,272.6

 

3,434.8

Total stockholders’ equity

 

2,715.8

 

2,788.6

Total liabilities and stockholders’ equity

$

3,999.6

$

3,401.0

See accompanying notes to consolidated financial statements.

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UNITED THERAPEUTICS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

Three Months Ended

Nine Months Ended

September 30, 

    

September 30, 

    

2019

    

2018

    

2019

    

2018

(Unaudited)

(Unaudited)

Revenues:

Net product sales

$

401.5

$

412.7

$

1,137.7

$

1,246.4

Total revenues

 

401.5

412.7

 

1,137.7

 

1,246.4

Operating expenses:

Cost of product sales

 

33.0

 

51.9

 

88.8

 

166.8

Research and development

 

85.7

 

101.1

 

1,069.0

 

219.1

Selling, general and administrative

 

99.4

 

110.1

 

231.0

 

186.6

Total operating expenses

 

218.1

 

263.1

 

1,388.8

 

572.5

Operating income (loss)

 

183.4

 

149.6

 

(251.1)

 

673.9

Interest income

12.1

7.9

32.7

19.9

Interest expense

 

(11.7)

 

(4.1)

 

(34.2)

 

(9.6)

Other (expense) income, net

 

(16.9)

 

(0.9)

 

19.3

 

(4.8)

Impairment of investment in privately-held company

(12.4)

(12.4)

Total other (expense) income, net

 

(16.5)

 

(9.5)

 

17.8

 

(6.9)

Income (loss) before income taxes

 

166.9

 

140.1

 

(233.3)

 

667.0

Income tax (expense) benefit

 

(34.5)

 

(33.6)

 

76.2

 

(143.1)

Net income (loss)

$

132.4

$

106.5

$

(157.1)

$

523.9

Net income (loss) per common share:

Basic

$

3.02

$

2.44

$

(3.59)

$

12.04

Diluted

$

3.01

$

2.42

$

(3.59)

$

11.91

Weighted average number of common shares outstanding:

Basic

 

43.9

 

43.6

 

43.8

 

43.5

Diluted

 

44.0

 

44.0

 

43.8

 

44.0

See accompanying notes to consolidated financial statements.

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UNITED THERAPEUTICS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

Three Months Ended

Nine Months Ended

September 30, 

    

September 30, 

    

2019

    

2018

    

2019

    

2018

(Unaudited)

(Unaudited)

Net income (loss)

$

132.4

$

106.5

$

(157.1)

$

523.9

Other comprehensive income:

Defined benefit pension plan:

Actuarial loss arising during period, net of tax

 

 

 

(0.6)

 

Amortization of actuarial gain and prior service cost included in net periodic pension cost, net of tax

 

(0.1)

 

0.4

 

(1.6)

 

1.0

Total defined benefit pension plan, net of tax

 

(0.1)

 

0.4

 

(2.2)

 

1.0

Unrealized gain (loss) on available-for-sale securities, net of tax

1.0

(0.7)

6.0

(3.6)

Other comprehensive income (loss), net of tax

 

0.9

 

(0.3)

 

3.8

 

(2.6)

Comprehensive income (loss)

$

133.3

$

106.2

$

(153.3)

$

521.3

See accompanying notes to consolidated financial statements.

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UNITED THERAPEUTICS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

Three Months Ended September 30, 2019

(Unaudited)

Accumulated

Additional

Other

Common Stock

Paid-in

Comprehensive

Treasury

Retained

Stockholders’

    

Shares

    

Amount

    

Capital

    

Loss

    

Stock

    

Earnings

    

Equity

Balance, July 1, 2019

 

70.5

$

0.7

$

2,001.7

$

(5.0)

$

(2,579.2)

$

3,140.2

$

2,558.4

Net income

 

 

 

 

 

 

132.4

 

132.4

Unrealized gain on available-for-sale securities

 

 

 

 

1.0

 

 

 

1.0

Defined benefit pension plan

 

 

 

 

(0.1)

 

 

 

(0.1)

Shares issued under employee stock purchase plan

 

 

 

1.9

 

 

 

 

1.9

Restricted stock units withheld for taxes

 

 

 

(0.2)

 

 

 

 

(0.2)

Share-based compensation

 

 

 

22.5

 

 

 

 

22.5

Deconsolidation of variable interest entity

 

 

 

(0.1)

 

 

 

 

(0.1)

Balance, September 30, 2019

 

70.5

$

0.7

$

2,025.8

$

(4.1)

$

(2,579.2)

$

3,272.6

$

2,715.8

Three Months Ended September 30, 2018

(Unaudited)

Accumulated

Additional

Other

Common Stock

Paid-in

Comprehensive

Treasury

Retained

Stockholders’

    

Shares

    

Amount

    

Capital

    

Loss

    

Stock

    

Earnings

    

Equity

Balance, July 1, 2018

 

70.2

$

0.7

$

1,903.0

$

(21.9)

$

(2,579.2)

$

3,263.0

$

2,565.6

Net income

 

 

 

 

 

 

106.5

 

106.5

Unrealized loss on available-for-sale securities

 

 

 

 

(0.7)

 

 

 

(0.7)

Defined benefit pension plan

 

 

 

 

0.4

 

 

 

0.4

Shares issued under employee stock purchase plan

 

 

 

1.8

 

 

 

 

1.8

Exercise of stock options

 

 

 

0.6

 

 

 

 

0.6

Share-based compensation

 

 

 

18.6

 

 

 

 

18.6

Balance, September 30, 2018

 

70.2

$

0.7

$

1,924.0

$

(22.2)

$

(2,579.2)

$

3,369.5

$

2,692.8

Nine Months Ended September 30, 2019

(Unaudited)

Accumulated

Additional

Other

Common Stock

Paid-in

Comprehensive

Treasury

Retained

Stockholders’

    

Shares

    

Amount

    

Capital

    

Loss

    

Stock

    

Earnings

    

Equity

Balance, January 1, 2019

70.2

$

0.7

$

1,940.2

$

(7.9)

$

(2,579.2)

$

3,434.8

$

2,788.6

Net loss

 

 

 

 

 

 

(157.1)

 

(157.1)

Unrealized gain on available-for-sale securities

 

 

 

 

6.0

 

 

 

6.0

Defined benefit pension plan

 

 

 

 

(2.2)

 

 

 

(2.2)

Shares issued under employee stock purchase plan

 

 

 

4.1

 

 

 

 

4.1

Restricted stock units withheld for taxes

 

 

 

(2.1)

 

 

 

 

(2.1)

Common stock issued upon RSU vesting

0.1

Exercise of stock options

 

0.2

 

 

9.9

 

 

 

 

9.9

Share-based compensation

 

 

 

63.0

 

 

 

 

63.0

Cumulative effect of accounting change

 

 

 

 

 

 

(5.1)

 

(5.1)

Reclassification from temporary equity to permanent equity(1)

 

 

 

10.8

 

 

 

 

10.8

Deconsolidation of variable interest entity

(0.1)

(0.1)

Balance, September 30, 2019

 

70.5

$

0.7

$

2,025.8

$

(4.1)

$

(2,579.2)

$

3,272.6

$

2,715.8

(1)

Pursuant to a license agreement with Toray Industries Inc. (Toray), we issued 200,000 shares of our common stock (which have since split into 400,000 shares) to Toray in 2007, and provided Toray the right to require us to repurchase the shares at a price of $27.21 per share (the Put Right), which resulted in classification of such shares within temporary equity. During the second quarter of 2019, we terminated our license agreement with Toray and therefore the Put Right no longer exists. As a result, upon the termination of the license agreement, we reclassified $10.8 million from temporary equity to additional paid-in capital during the second quarter of 2019.

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Nine Months Ended September 30, 2018

(Unaudited)

Accumulated

Additional

Other

Common Stock

Paid-in

Comprehensive

Treasury

Retained

Stockholders’

    

Shares

    

Amount

    

Capital

    

Loss

    

Stock

    

Earnings

    

Equity

Balance, January 1, 2018

69.9

$

0.7

$

1,854.3

$

(19.6)

$

(2,579.2)

$

2,845.6

$

2,101.8

Net income

 

 

 

 

 

 

523.9

 

523.9

Unrealized loss on available-for-sale securities

 

 

 

 

(3.6)

 

 

 

(3.6)

Defined benefit pension plan

 

 

 

 

1.0

 

 

 

1.0

Shares issued under employee stock purchase plan

 

 

 

3.9

 

 

 

 

3.9

Exercise of stock options

 

0.3

 

 

15.5

 

 

 

 

15.5

Share-based compensation

 

 

 

50.3

 

 

 

 

50.3

Balance, September 30, 2018

 

70.2

$

0.7

$

1,924.0

$

(22.2)

$

(2,579.2)

$

3,369.5

$

2,692.8

See accompanying notes to consolidated financial statements.

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UNITED THERAPEUTICS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Nine Months Ended

    

September 30, 

    

2019

    

2018

(Unaudited)

Cash flows from operating activities:

Net (loss) income

$

(157.1)

$

523.9

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Depreciation and amortization

 

33.4

 

25.4

Share-based compensation expense (benefit)

 

15.9

 

(29.2)

Impairment of investment in privately-held company

12.4

Deconsolidation of variable interest entity

2.0

Intangible asset impairment charges

 

8.8

 

Asset impairment charges

 

8.4

 

Other

 

(27.9)

 

4.4

Changes in operating assets and liabilities:

Accounts receivable

 

(7.8)

 

81.9

Inventories

 

10.5

 

4.2

Accounts payable and accrued expenses

 

(4.9)

 

21.9

Other assets and liabilities

 

(190.4)

 

48.1

Net cash (used in) provided by operating activities

 

(309.1)

 

693.0

Cash flows from investing activities:

Purchases of property, plant and equipment

 

(59.0)

 

(132.6)

Decrease in cash due to deconsolidation of variable interest entity

(12.5)

Deposits

(5.6)

(33.0)

Purchases of held-to-maturity and other investments

(63.4)

Sales/maturities of held-to-maturity investments

 

39.7

 

53.0

Purchases of available-for-sale investments

(974.7)

(618.5)

Sales/maturities of available-for-sale investments

618.5

175.2

Purchase of investments in privately-held companies

(8.0)

(5.0)

Acquisition, net of cash acquired

(124.1)

Net cash used in investing activities

 

(401.6)

 

(748.4)

Cash flows from financing activities:

Proceeds from line of credit

800.0

250.0

Repayment of line of credit

(50.0)

(250.0)

Payments of debt issuance costs

(0.7)

(13.2)

Proceeds from the exercise of stock options

9.9

 

15.5

Proceeds from the issuance of stock under employee stock purchase plan

 

4.1

3.9

Restricted stock units withheld for taxes

(2.1)

Net cash provided by financing activities

 

761.2

 

6.2

 

Effect of exchange rate changes on cash and cash equivalents

0.1

Net increase in cash and cash equivalents

 

50.5

 

(49.1)

Cash and cash equivalents, beginning of period

 

669.2

 

705.1

Cash and cash equivalents, end of period

$

719.7

$

656.0

Supplemental cash flow information:

Cash paid for interest

$

31.7

$

6.9

Cash paid for income taxes

$

94.4

$

52.1

Non-cash investing and financing activities:

Non-cash additions to property, plant and equipment

$

3.9

$

18.2

See accompanying notes to consolidated financial statements.

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UNITED THERAPEUTICS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(UNAUDITED)

1.    Organization and Business Description

United Therapeutics Corporation is a biotechnology company focused on the development and commercialization of innovative products to address the unmet medical needs of patients with chronic and life-threatening conditions.

We have approval from the U.S. Food and Drug Administration (FDA) to market the following therapies: Remodulin® (treprostinil) Injection (Remodulin), Tyvaso® (treprostinil) Inhalation Solution (Tyvaso), Orenitram® (treprostinil) Extended-Release Tablets (Orenitram), Unituxin® (dinutuximab) Injection (Unituxin) and Adcirca® (tadalafil) Tablets (Adcirca). Our only significant revenues outside the United States are derived from sales of Remodulin in Europe.

As used in these notes to our consolidated financial statements, unless the context otherwise requires, the terms “we”, “us”, “our”, and similar terms refer to United Therapeutics Corporation and its consolidated subsidiaries.

2.    Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC) for interim financial information. Accordingly, they do not include all of the information required by U.S. generally accepted accounting principles (GAAP) for complete financial statements. These consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the accompanying notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on February 27, 2019.

In our management’s opinion, the accompanying consolidated financial statements contain all adjustments, including normal, recurring adjustments, necessary to fairly present our financial position as of September 30, 2019 and December 31, 2018, our statements of operations, comprehensive income, and stockholders’ equity for the three- and nine-month periods ended September 30, 2019 and 2018 and our statements of cash flows for the nine-month periods ended September 30, 2019 and 2018. Interim results are not necessarily indicative of results for an entire year. In our statements of cash flows, we reclassified the prior period deposits within the “cash flows from operating activities” section to “cash flows from investing activities” section to conform with the current period presentation.

Recently Issued Accounting Standards

Accounting Standards Adopted During the Period

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) (ASU 2016-02), which requires that assets and liabilities arising under leases be recognized on the balance sheets. ASU 2016-02 also requires additional quantitative and qualitative disclosures of the amount, timing and uncertainty of cash flows relating to lease arrangements. ASU 2016-02 was effective for annual reporting periods beginning after December 15, 2018. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842)—Targeted Improvements (ASU 2018-11). ASU 2018-11 allows entities to elect a simplified transition method, allowing for application of ASU 2016-02 at the adoption date, with recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We adopted this standard on January 1, 2019 using the simplified transition method, allowing us to not restate comparative periods and apply ASC 842 on a prospective basis, resulting in a balance sheet presentation that, in certain respects, is not comparable to the prior period in the first year of adoption. We elected the practical expedient package permitted under the transition guidance within the new standard, which among other things, allows us to carry forward historical lease classifications. We also elected to use the lessee component election, allowing us to account for the lease and non-lease components as a single lease component. As the majority of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. We made an accounting policy election to keep leases with an initial term of 12 months or less off of our consolidated balance sheets. We recognize lease payments for such leases in our consolidated statements of operations on a straight-line basis over the lease term.

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Upon adoption of this standard, we recognized a right-of-use asset of $8.2 million, and a corresponding lease liability of the same amount, related to our operating leases as of January 1, 2019. In addition, we recognized a cumulative-effect adjustment for the de-recognition of our build-to-suit leases as these leases no longer qualify for build-to-suit accounting and have instead been recognized as operating leases under ASC 842. The adjustment resulted in a decrease to retained earnings of $5.1 million, which is net of a tax benefit. At adoption, our weighted-average remaining lease term was 3.0 years and our weighted-average discount rate was 4.9%.

Supplemental balance sheet information related to operating leases was as follows (in millions):

    

Financial Statement Line Item on our

    

September 30, 

    

January 1,

Operating Leases

 Consolidated Balance Sheets

2019

2019

Right-of-use assets

 

Other non-current assets

$

4.7

$

8.2

Current lease liabilities

 

Other current liabilities

$

1.9

$

4.1

Non-current lease liabilities

 

Other non-current liabilities

 

2.8

 

4.1

Total operating lease liabilities

 

  

$

4.7

$

8.2

We recorded $1.2 million and $3.9 million in operating lease expense for the three and nine months ended September 30, 2019 and recorded $1.0 million and $3.2 million in operating lease expense for the three and nine months ended September 30, 2018. The amounts recorded in operating lease expense include short-term leases and variable lease costs, which are immaterial.

In connection with completion of construction in the third quarter of 2019 of a building we own, we leased part of the space in the building to another entity as part of a broader collaboration arrangement. The lease is accounted for as a sales-type lease. Upon lease commencement in the third quarter of 2019, we reclassified $23.1 million of property, plant and equipment, net to other non-current assets on our consolidated balance sheets. The collaboration arrangement activity was immaterial for the period ended September 30, 2019.

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). The standard provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect (or portion thereof) of the change in the U.S. federal corporate income tax rate under the Tax Cuts and Jobs Act (Tax Reform) is recorded. We adopted the new standard on January 1, 2019. Adoption of this standard did not have a material impact on our financial statements.

In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, to eliminate or modify certain disclosure rules that are redundant, outdated, or duplicative of U.S. GAAP or other regulatory requirements. Among other changes, the amendments eliminated the annual requirement to disclose the high and low trading prices of our common stock. In addition, the amendments expanded the disclosure requirements related to the analysis of shareholders’ equity for interim financial statements. An analysis of the changes in each caption of shareholders’ equity presented in the balance sheet must be provided in a note or separate statement, and we have provided this disclosure in a separate statement (Consolidated Statements of Stockholders’ Equity) beginning in the first quarter of 2019.

Accounting Standards Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which introduces new guidance for estimating credit losses on certain types of financial instruments based on expected losses and the timing of the recognition of such losses. ASU 2016-13 will be effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted. We have begun to identify all of our financial instruments that could be impacted by the new standard as well as to gather data required to comply with the guidance. While we are currently evaluating the impact of adopting this guidance on our financial statements, we do not expect the adoption of the standard will have a material impact.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment (ASU 2017-04), which simplifies how an entity is required to test goodwill for impairment. A goodwill impairment will be measured by the amount by which a reporting unit’s carrying value exceeds its fair value, with the amount of impairment not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years, and must be adopted on a prospective basis. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our financial statements.

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In August 2018, the FASB issued ASU No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Topic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans (ASU 2018-14). The standard modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. ASU 2018-14 is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our financial statements.

3.    Investments

Available-for-Sale Debt Securities

Available-for-sale debt securities are recorded at fair value, with unrealized gains and losses included as a component of accumulated other comprehensive income in stockholders’ equity, until realized. Available-for-sale debt securities consisted of the following (in millions):

Gross

Gross

Amortized

Unrealized

Unrealized

Fair

As of September 30, 2019

    

Cost

Gains

    

Losses

    

Value

U.S. government and agency securities

$

1,287.9

$

3.2

$

(0.5)

$

1,290.6

Corporate debt securities

223.6

1.8

(0.1)

225.3

Total

$

1,511.5

$

5.0

$

(0.6)

$

1,515.9

Reported under the following captions on our consolidated balance sheet:

Current marketable investments

785.5

Non-current marketable investments

 

730.4

Total

$

1,515.9

Gross

Gross

Amortized

Unrealized

Unrealized

Fair

As of December 31, 2018

    

Cost

Gains

    

Losses

    

Value

U.S. government and agency securities

$

1,077.4

$

0.7

$

(3.9)

$

1,074.2

Corporate debt securities

72.3

(0.3)

72.0

Total

$

1,149.7

$

0.7

$

(4.2)

$

1,146.2

Reported under the following captions on our consolidated balance sheet:

Current marketable investments

705.8

Non-current marketable investments

 

440.4

Total

$

1,146.2

The following table summarizes the contractual maturities of available-for-sale marketable investments (in millions):

As of September 30, 2019

    

Amortized

    

Fair

    

Cost

    

Value

Due within one year

$

784.7

$

785.5

Due in one to three years

726.8

730.4

Total

$

1,511.5

$

1,515.9

As of December 31, 2018

    

Amortized

    

Fair

    

Cost

    

Value

Due within one year

$

708.2

$

705.8

Due in one to three years

 

441.5

440.4

Total

$

1,149.7

$

1,146.2

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Investments in Privately-Held Companies

As of September 30, 2019, we maintained non-controlling equity investments in privately-held companies of $101.7 million in the aggregate. We measure these investments using the measurement alternative because the fair values of these investments are not readily determinable. Under this alternative, the investments are measured at cost, less any impairment, adjusted for any observable price changes. There were no impairments or observable price changes in our investments in privately-held companies during the three and nine months ended September 30, 2019. We include our investments in privately-held companies within other non-current assets on our consolidated balance sheets. These investments are subject