Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2017
OR
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-19311
biogenlogostandarda05.jpg
BIOGEN INC.
(Exact name of registrant as specified in its charter)
Delaware
 
33-0112644
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
225 Binney Street, Cambridge, MA 02142
(617) 679-2000
(Address, including zip code, and telephone number, including
area code, of registrant’s principal executive offices)
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  x    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files):    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 (Check One):
Large accelerated filer x
 
Accelerated filer  o
Non-accelerated filer o
 
Smaller reporting company  o
(Do not check if a smaller reporting company)
 
Emerging growth company  o
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  o    No  x
The number of shares of the issuer’s Common Stock, $0.0005 par value, outstanding as of July 21, 2017 was 211,431,746 shares.
 

Table of Contents

BIOGEN INC.
FORM 10-Q — Quarterly Report
For the Quarterly Period Ended June 30, 2017
TABLE OF CONTENTS
 
 
 
Page
 
 
 
Item 1.
Financial Statements (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
PART II — OTHER INFORMATION
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 6.
 
 


2
Table of Contents

NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that are being made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995 (the Act) with the intention of obtaining the benefits of the “Safe Harbor” provisions of the Act. These forward-looking statements may be accompanied by such words as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “possible,” “will” and other words and terms of similar meaning. Reference is made in particular to forward-looking statements regarding:
•
the anticipated amount, timing and accounting of revenues, contingent payments, milestone, royalty and other payments under licensing, collaboration or acquisition agreements, tax positions and contingencies, collectability of receivables, pre-approval inventory, cost of sales, research and development costs, compensation and other selling, general and administrative expenses, amortization of intangible assets, foreign currency exchange risk, estimated fair value of assets and liabilities and impairment assessments;
•
expectations, plans and prospects relating to sales, pricing, growth and launch of our marketed and pipeline products;
•
the potential impact of increased product competition in the markets in which we compete;
•
patent terms, patent term extensions, patent office actions and expected availability and period of regulatory exclusivity;
•
the costs and timing of potential clinical trials, filing and approvals, and the potential therapeutic scope of the development and commercialization of our and our collaborators’ pipeline products;
•
the drivers for growing our business, including our plans and intent to commit resources relating to business development opportunities and research and development programs;
•
our manufacturing capacity, use of third-party contract manufacturing organizations and plans and timing relating to the expansion of our manufacturing capabilities, including anticipated investments and activities in new manufacturing facilities;
•
the potential impact on our results of operations and liquidity of the United Kingdom's (U.K.'s) intent to voluntarily depart from the European Union (E.U.);
•
the impact of the continued uncertainty of the credit and economic conditions in certain countries in Europe and our collection of accounts receivable in such countries;
•
the potential impact of healthcare reform in the United States (U.S.) and measures being taken worldwide designed to reduce healthcare costs to limit the overall level of government expenditures, including the impact of pricing actions and reduced reimbursement for our products;
•
the timing, outcome and impact of administrative, regulatory, legal and other proceedings related to our patents and other proprietary and intellectual property rights, tax audits, assessments and settlements, pricing matters, sales and promotional practices, product liability and other matters;
•
the anticipated benefits, costs and tax treatment of the spin-off of our hemophilia business;
•
lease commitments, purchase obligations and the timing and satisfaction of other contractual obligations;
•
our ability to finance our operations and business initiatives and obtain funding for such activities; and
•
the impact of new laws and accounting standards.
These forward-looking statements involve risks and uncertainties, including those that are described in the “Risk Factors” section of this report and elsewhere in this report that could cause actual results to differ materially from those reflected in such statements. You should not place undue reliance on these statements. Forward-looking statements speak only as of the date of this report. Except as required by law, we do not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

3
Table of Contents

NOTE REGARDING COMPANY AND PRODUCT REFERENCES
References in this report to:
•
“Biogen,” the “company,” “we,” “us” and “our” refer to Biogen Inc. and its consolidated subsidiaries;
•
“RITUXAN” refers to both RITUXAN (the trade name for rituximab in the U.S., Canada and Japan) and MabThera (the trade name for rituximab outside the U.S., Canada and Japan);
•
"ELOCTATE" refers to both ELOCTATE (the trade name for Antihemophilic Factor (Recombinant), Fc Fusion Protein in the U.S., Canada and Japan) and ELOCTA (the trade name for Antihemophilic Factor (Recombinant), Fc Fusion Protein in the E.U.).
NOTE REGARDING TRADEMARKS
AVONEX®, PLEGRIDY®, RITUXAN®, SPINRAZA®, TECFIDERA®, TYSABRI® and ZINBRYTA® are registered trademarks of Biogen. BENEPALITM, CIRARATM, FLIXABITM, FUMADERMTM and IMRALDITM are trademarks of Biogen. ALPROLIX®, ELOCTATE®, ENBREL®, FAMPYRATM, GAZYVA®, HUMIRA®, OCREVUSTM, REMICADE® and other trademarks referenced in this report are the property of their respective owners.

4
Table of Contents

PART I FINANCIAL INFORMATION

BIOGEN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in millions, except per share amounts)
 
 
For the Three Months
Ended June 30,
 
For the Six Months
Ended June 30,
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
Product, net
$
2,639.7

 
$
2,466.0

 
$
5,019.8

 
$
4,775.4

Revenues from anti-CD20 therapeutic programs
397.1

 
349.2

 
737.7

 
678.7

Other
41.6

 
79.0

 
131.6

 
166.9

Total revenues
3,078.4

 
2,894.2

 
5,889.1

 
5,621.0

Cost and expenses:
 
 
 
 
 
 
 
Cost of sales, excluding amortization of acquired intangible assets
366.2

 
370.3

 
750.8

 
683.3

Research and development
796.2

 
473.1

 
1,219.6

 
910.4

Selling, general and administrative
430.2

 
492.4

 
929.3

 
989.7

Amortization of acquired intangible assets
117.5

 
92.9

 
566.0

 
181.7

Acquired in-process research and development
120.0

 
—

 
120.0

 
—

Collaboration profit (loss) sharing
26.5

 
(5.6
)
 
47.3

 
(5.6
)
(Gain) loss on fair value remeasurement of contingent consideration
21.2

 
10.6

 
31.2

 
12.9

Restructuring charges
—

 
—

 
—

 
9.7

Total cost and expenses
1,877.8

 
1,433.7

 
3,664.2

 
2,782.1

Income from operations
1,200.6

 
1,460.5

 
2,224.9

 
2,838.9

Other income (expense), net
(68.2
)
 
(58.5
)
 
(105.8
)
 
(111.3
)
Income before income tax expense and equity in loss of investee, net of tax
1,132.4

 
1,402.0

 
2,119.1

 
2,727.6

Income tax expense
269.6

 
353.6

 
508.8

 
710.0

Equity in loss of investee, net of tax
—

 
—

 
—

 
—

Net income
862.8

 
1,048.4

 
1,610.3

 
2,017.6

Net income (loss) attributable to noncontrolling interests, net of tax
—

 
(1.4
)
 
(0.1
)
 
(3.1
)
Net income attributable to Biogen Inc.
$
862.8

 
$
1,049.8

 
$
1,610.4

 
$
2,020.7

Net income per share:
 
 
 
 
 
 
 
Basic earnings per share attributable to Biogen Inc.
$
4.07

 
$
4.79

 
$
7.53

 
$
9.23

Diluted earnings per share attributable to Biogen Inc.
$
4.07

 
$
4.79

 
$
7.52

 
$
9.21

Weighted-average shares used in calculating:
 
 
 
 
 
 
 
Basic earnings per share attributable to Biogen Inc.
211.9

 
219.1

 
213.7

 
219.0

Diluted earnings per share attributable to Biogen Inc.
212.2

 
219.4

 
214.0

 
219.3







See accompanying notes to these unaudited condensed consolidated financial statements.

5
Table of Contents

BIOGEN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in millions)
 
 
For the Three Months
Ended June 30,
 
For the Six Months
Ended June 30,
 
2017
 
2016
 
2017
 
2016
Net income attributable to Biogen Inc.
$
862.8

 
$
1,049.8

 
$
1,610.4

 
$
2,020.7

Other comprehensive income:
 
 
 
 
 
 
 
Unrealized gains (losses) on securities available for sale, net of tax
7.2

 
4.5

 
5.6

 
7.0

Unrealized gains (losses) on cash flow hedges, net of tax
(103.0
)
 
29.3

 
(126.8
)
 
(18.3
)
Unrealized gains (losses) on pension benefit obligation, net of tax
(0.6
)
 
0.7

 
(0.5
)
 
0.9

Currency translation adjustment
82.8

 
(58.0
)
 
102.8

 
(48.4
)
Total other comprehensive income (loss), net of tax
(13.6
)
 
(23.5
)
 
(18.9
)
 
(58.8
)
Comprehensive income attributable to Biogen Inc.
849.2

 
1,026.3

 
1,591.5

 
1,961.9

Comprehensive income (loss) attributable to noncontrolling interests, net of tax
—

 
(1.4
)
 
(0.1
)
 
(3.1
)
Comprehensive income
$
849.2

 
$
1,024.9

 
$
1,591.4

 
$
1,958.8




































See accompanying notes to these unaudited condensed consolidated financial statements.

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Table of Contents

BIOGEN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in millions, except per share amounts)
 
 
As of June 30,
2017
 
As of December 31,
2016
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
1,169.5

 
$
2,326.5

Marketable securities
1,723.5

 
2,568.6

Accounts receivable, net
1,630.2

 
1,441.6

Due from anti-CD20 therapeutic programs
502.9

 
300.6

Inventory
936.5

 
1,001.6

Other current assets
1,146.1

 
1,093.3

Total current assets
7,108.7

 
8,732.2

Marketable securities
2,632.7

 
2,829.4

Property, plant and equipment, net
2,827.6

 
2,501.8

Intangible assets, net
4,051.3

 
3,808.3

Goodwill
3,870.4

 
3,669.3

Investments and other assets
1,268.3

 
1,335.8

Total assets
$
21,759.0

 
$
22,876.8

LIABILITIES AND EQUITY
Current liabilities:
 
 
 
Current portion of notes payable and other financing arrangements
$
559.9

 
$
4.7

Taxes payable
52.6

 
231.9

Accounts payable
330.3

 
279.8

Accrued expenses and other
2,436.9

 
2,903.5

Total current liabilities
3,379.7

 
3,419.9

Notes payable and other financing arrangements
5,954.0

 
6,512.7

Deferred tax liability
100.8

 
93.1

Other long-term liabilities
750.9

 
722.5

Total liabilities
10,185.4

 
10,748.2

Commitments and contingencies


 


Equity:
 
 
 
Biogen Inc. shareholders’ equity
 
 
 
Preferred stock, par value $0.001 per share
—

 
—

Common stock, par value $0.0005 per share
0.1

 
0.1

Additional paid-in capital
19.3

 
—

Accumulated other comprehensive loss
(338.8
)
 
(319.9
)
Retained earnings
14,881.7

 
15,071.6

Treasury stock, at cost
(2,977.1
)
 
(2,611.7
)
Total Biogen Inc. shareholders’ equity
11,585.2

 
12,140.1

Noncontrolling interests
(11.6
)
 
(11.5
)
Total equity
11,573.6

 
12,128.6

Total liabilities and equity
$
21,759.0

 
$
22,876.8



See accompanying notes to these unaudited condensed consolidated financial statements.

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Table of Contents

BIOGEN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
 
 
For the Six Months
Ended June 30,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Net income
$
1,610.3

 
$
2,017.6

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
Depreciation, amortization and acquired in-process research and development
814.6

 
325.1

Share-based compensation
67.3

 
84.1

Deferred income taxes
(20.5
)
 
(30.2
)
Other
73.5

 
28.9

Changes in operating assets and liabilities, net:
 
 
 
Accounts receivable
(301.2
)
 
(65.0
)
Inventory
(85.3
)
 
(128.3
)
Accrued expenses and other current liabilities
(452.3
)
 
(116.4
)
Income tax assets and liabilities
(114.7
)
 
(76.7
)
Other changes in operating assets and liabilities, net
(187.3
)
 
(25.1
)
Net cash flows provided by operating activities
1,404.4

 
2,014.0

Cash flows from investing activities:
 
 
 
Proceeds from sales and maturities of marketable securities
3,584.5

 
2,823.6

Purchases of marketable securities
(2,536.0
)
 
(3,833.3
)
Contingent consideration related to Fumapharm AG acquisition
(600.0
)
 
(600.0
)
Acquired in-process research and development
(120.0
)
 
—

Purchases of property, plant and equipment
(407.7
)
 
(263.7
)
Acquisitions of intangible assets
(860.3
)
 
—

Other
(7.3
)
 
(65.9
)
Net cash flows used in investing activities
(946.8
)
 
(1,939.3
)
Cash flows from financing activities:
 
 
 
Purchases of treasury stock
(1,365.4
)
 
—

Payments related to issuance of stock for share-based compensation arrangements, net
(17.8
)
 
(21.9
)
Net cash contribution to Bioverativ Inc.
(302.7
)
 
—

Other
33.5

 
1.1

Net cash flows used in financing activities
(1,652.4
)
 
(20.8
)
Net (decrease) increase in cash and cash equivalents
(1,194.8
)
 
53.9

Effect of exchange rate changes on cash and cash equivalents
37.8

 
0.1

Cash and cash equivalents, beginning of the period
2,326.5

 
1,308.0

Cash and cash equivalents, end of the period
$
1,169.5

 
$
1,362.0










See accompanying notes to these unaudited condensed consolidated financial statements.

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Table of Contents
BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


1.    Summary of Significant Accounting Policies
Business Overview
Biogen is a global biopharmaceutical company focused on discovering, developing, manufacturing and delivering therapies to people living with serious neurological and neurodegenerative diseases.
Our marketed products include TECFIDERA, AVONEX, PLEGRIDY, TYSABRI, ZINBRYTA and FAMPYRA for multiple sclerosis (MS), SPINRAZA for the treatment of spinal muscular atrophy (SMA) and FUMADERM for the treatment of severe plaque psoriasis. We also have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, chronic lymphocytic leukemia (CLL) and other conditions, GAZYVA indicated for the treatment of CLL and follicular lymphoma, OCREVUS indicated for the treatment of primary progressive MS and relapsing MS, and other potential anti-CD20 therapies under a collaboration agreement with Genentech, Inc., a wholly-owned member of the Roche Group.
We support our drug discovery and development efforts through the commitment of significant resources to discovery, research and development programs and business development opportunities, particularly within areas of our scientific, manufacturing and technical capabilities. We intend to invest in the future across our core growth areas of MS and neuroimmunology, Alzheimer's disease and dementia, Parkinson's disease and movement disorders, and neuromuscular diseases including SMA and amyotrophic lateral sclerosis (ALS). Further, we see opportunities to invest in emerging growth areas such as pain, ophthalmology, neuropsychiatry, and acute neurology. In addition, we are employing innovative technologies to discover potential treatments for rare and genetic disorders, including new ways of treating diseases through gene therapy.
Our innovative drug development and commercialization activities are complemented by our biosimilar therapies that expand access to medicines and reduce the cost burden for healthcare systems. We are leveraging our manufacturing capabilities and know-how to develop, manufacture and market biosimilars through Samsung Bioepis, our joint venture with Samsung BioLogics Co. Ltd. (Samsung Biologics). Under our commercial agreement, we market and sell BENEPALI, an etanercept biosimilar referencing ENBREL, and FLIXABI, an infliximab biosimilar referencing REMICADE, in the European Union (E.U.).
Hemophilia Spin-Off
On February 1, 2017, we completed the spin-off of our hemophilia business, Bioverativ Inc. (Bioverativ), as an independent, publicly traded company. Our consolidated results of operations and financial position included in these unaudited condensed consolidated financial statements reflect the financial results of our hemophilia business for all periods through January 31, 2017.
For additional information related to the spin-off of our hemophilia business, please read Note 3, Hemophilia Spin-Off, to these condensed consolidated financial statements.
Basis of Presentation
In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial statements for interim periods in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The information included in this quarterly report on Form 10-Q should be read in conjunction with our consolidated financial statements and the accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2016 (2016 Form 10-K). Our accounting policies are described in the “Notes to Consolidated Financial Statements” in our 2016 Form 10-K and updated, as necessary, in this Form 10-Q. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from our audited financial statements, but does not include all disclosures required by U.S. GAAP. The results of operations for the three and six months ended June 30, 2017, are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.
We operate as one operating segment, which is focused on discovering, developing, manufacturing and delivering therapies to people living with serious neurological and neurodegenerative diseases.

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Table of Contents
BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

Consolidation
Our condensed consolidated financial statements reflect our financial statements, those of our wholly-owned subsidiaries and those of certain variable interest entities where we are the primary beneficiary. For consolidated entities where we own or are exposed to less than 100% of the economics, we record net income (loss) attributable to noncontrolling interests in our condensed consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. Intercompany balances and transactions are eliminated in consolidation.
In determining whether we are the primary beneficiary of an entity, we apply a qualitative approach that determines whether we have both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. These considerations impact the way we account for our existing collaborative relationships and other arrangements. We continuously assess whether we are the primary beneficiary of a variable interest entity as changes to existing relationships or future transactions may result in us consolidating or deconsolidating one or more of our collaborators or partners.
 Use of Estimates
The preparation of our condensed consolidated financial statements requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis we evaluate our estimates, judgments and methodologies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenues and expenses. Actual results may differ from these estimates under different assumptions or conditions.
New Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that we adopt as of the specified effective date. Unless otherwise discussed, we do not believe that the impact of recently issued standards that are not yet effective will have a material impact on our financial position or results of operations upon adoption.
We adopted the following new standards effective January 1, 2017:
•
ASU No. 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments.
•
ASU No. 2016-07, Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting.
•
ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.
The adoption of these standards did not have a material impact on our financial position, results of operations or statement of cash flows; however, the adoption of ASU No. 2016-09 resulted in the reclassification of certain prior year amounts in our condensed consolidated statements of cash flows to conform to our current year presentation. Specifically, amounts previously disclosed in net cash flows used in financing activities related to our excess tax benefit from share-based compensation have been reclassified to net cash flows provided by operating activities and amounts related to cash paid when withholding shares for tax withholding purposes, previously disclosed in net cash flows provided by operating activities, have been reclassified to net cash flows used in financing activities.
For additional information related to these standards, please read Note 1, Summary of Significant Accounting Policies: New Accounting Pronouncements, to our consolidated financial statements included in our 2016 Form 10-K.
In May 2014 the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes all existing revenue recognition requirements, including most industry-specific guidance. The new standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. The FASB has subsequently issued amendments to ASU No. 2014-09 that have the same effective date and transition date of January 1, 2018. We expect to adopt these standards using the modified retrospective

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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

method. We have performed a review of the new standards as compared to our current accounting policies with respect to our product revenues, and a review of our customer contracts is in process. As of June 30, 2017, we have not identified any accounting changes that would materially impact the amount of reported product revenues. During the second half of 2017, we plan to finalize our review of product revenues as well as our other revenue streams to determine the impact that this standard may have on our results of operations, financial position and disclosures.
In January 2016 the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new standard amends certain aspects of accounting and disclosure requirements of financial instruments, including the requirement that equity investments with readily determinable fair values be measured at fair value with changes in fair value recognized in a company's results of operations. The new standard does not apply to investments accounted for under the equity method of accounting or those that result in consolidation of the investee. Equity investments that do not have readily determinable fair values may be measured at fair value or at cost minus impairment adjusted for changes in observable prices. A financial liability that is measured at fair value in accordance with the fair value option is required to be presented separately in other comprehensive income for the portion of the total change in the fair value resulting from change in the instrument-specific credit risk. In addition, a valuation allowance should be evaluated on deferred tax assets related to available-for-sale debt securities in combination with other deferred tax assets. The new standard will be effective for us on January 1, 2018. Based on our current investment holdings, the adoption of this standard is not expected to have a material impact on our financial position or results of operations; however, it will result in the reclassification of certain investments.
In February 2016 the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard requires that all lessees recognize the assets and liabilities that arise from leases on their balance sheet and disclose qualitative and quantitative information about their leasing arrangements. The new standard will be effective for us on January 1, 2019. We are currently evaluating the impact that this standard may have on our results of operations, financial position and disclosures. The adoption of this standard is not expected to have a material impact on our net financial position, but may materially impact the reported amount of total assets and total liabilities.
In June 2016 the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard changes the impairment model for most financial assets and certain other instruments. Under the new standard, entities holding financial assets and net investment in leases that are not accounted for at fair value through net income are to be presented at the net amount expected to be collected. An allowance for credit losses will be a valuation account that will be deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. The new standard will be effective for us on January 1, 2020. The adoption of this standard is not expected to have a material impact on our financial position or results of operations.
In August 2016 the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard clarifies certain aspects of the statement of cash flows, including the classification of debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. The new standard also clarifies that an entity should determine each separately identifiable source or use within the cash receipts and cash payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. The new standard will be effective for us on January 1, 2018. The adoption of this standard is not expected to have a material impact on our statements of cash flows upon adoption.
In October 2016 the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other Than Inventory. The new standard eliminates the deferral of the tax effects of intra-entity transfers of an asset other than inventory. Under the new standard, entities should recognize the income tax consequences on an intra-entity transfer of an asset other than inventory when the transfer occurs. The new standard will be effective for us on January 1, 2018. We expect to adopt this standard using the modified retrospective method applied through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The adoption

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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

of this standard is expected to have a material impact on our net financial position; however, the final effect of the adoption of this standard will depend on the nature and amount of future transactions.
In January 2017 the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The new standard will be effective for us on January 1, 2018; however, we have adopted this standard as of January 1, 2017, with prospective application to any business development transaction.
In January 2017 the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test of Goodwill Impairment. The new standard eliminates Step 2 from the goodwill impairment test. Under the amendments in ASU No. 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds that reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The new standard will be effective for us on January 1, 2020; however, early adoption is permitted. We intend to early adopt this standard as of October 31, 2017, during our annual review of goodwill. The adoption of this standard is not expected to have a material impact on our financial position or results of operations.
In March 2017 the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new standard will require that an employer disaggregate the service cost component from the other components of net benefit cost. The amendments also provide explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allow only the service cost component of net benefit cost to be eligible for capitalization. The other components of the net periodic benefit cost must be presented separately from the line items that include service cost and outside of any subtotal of operating income on the condensed consolidated statements of income. The new standard will be effective for us on January 1, 2018. The adoption of this standard is not expected to have a material impact on our financial position or results of operations.
In March 2017 the FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The new standard amends the amortization period for certain purchased callable debt securities held at a premium by shortening the amortization period for the premium to the earliest call date. The new standard will be effective for us on January 1, 2019. We are currently evaluating the potential impact that this standard may have on our financial position and results of operations.
In May 2017 the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The new standard will be effective for us on January 1, 2018; however, early adoption is permitted. The adoption of this standard is not expected to have a material impact on our financial position or results of operations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

2.    Acquisitions
On May 15, 2017, we completed an asset purchase of the Phase 3 candidate, CIRARA (now known as BIIB093), from Remedy Pharmaceuticals Inc. (Remedy). The target indication for BIIB093 is large hemispheric infarction (LHI), a severe form of ischemic stroke where brain swelling (cerebral edema) often leads to a disproportionately large share of stroke-related morbidity and mortality. The U.S. Food and Drug Administration (FDA) recently granted BIIB093 Orphan Drug Designation for severe cerebral edema in patients with acute ischemic stroke. The FDA has also granted BIIB093 Fast Track designation. Under the terms of the purchase agreement, we will have responsibility for the future development and commercialization of BIIB093 and have agreed to pay Remedy certain development and sales based milestone payments, which are substantially payable upon or after regulatory approval, as well as royalties on future commercial sales. Remedy will share in the cost of development for the target indication for BIIB093 in LHI stroke.
We are accounting for this transaction as an asset acquisition as we did not acquire any employees from Remedy nor did we acquire any significant processes required in the development of BIIB093. Upon closing of the transaction, we made a $120.0 million upfront payment, which was recorded as acquired in-process research and development in our condensed consolidated statements of income as BIIB093 has not yet reached technological feasibility.
3.    Hemophilia Spin-Off
On February 1, 2017, we completed the spin-off of our hemophilia business, Bioverativ, as an independent, publicly traded company trading under the symbol "BIVV" on the Nasdaq Global Select Market. The spin-off was accomplished through the distribution of all the then outstanding shares of common stock of Bioverativ to Biogen shareholders, who received one share of Bioverativ common stock for every two shares of Biogen common stock they owned. The separation and distribution was structured to be tax-free for shareholders for federal income tax purposes. Bioverativ assumed all of our rights and obligations under our collaboration agreement with Swedish Orphan Biovitrum AB and our collaboration and license agreement with Sangamo Biosciences Inc.
In connection with the distribution, Biogen and Bioverativ entered into a separation agreement and various other agreements (including a transition services agreement, a tax matters agreement, a manufacturing and supply agreement, an employee matters agreement, an intellectual property matters agreement and certain other commercial agreements). These agreements govern the separation and distribution and the relationship between the two companies going forward. They also provide for the performance of services by each company for the benefit of the other for a period of time. In addition, under the terms of the separation agreement, Bioverativ is obligated to indemnify us for many liabilities that may exist relating to its business activities, whether incurred prior to or after the distribution, including any pending or future litigation.
The services under these agreements generally commenced on February 1, 2017 (the distribution date), and are expected to terminate within 12 months of the distribution date, with the exception of the manufacturing and supply agreement, which has an initial term of five years, with a five year extension at Bioverativ's sole discretion and a further five year extension with Bioverativ's and our consent.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

In connection with the distribution we made a net cash contribution to Bioverativ, during the first quarter of 2017, totaling $302.7 million. The following table summarizes the assets and liabilities that were charged against equity as a result of the spin-off of our hemophilia business:
(In millions)
 
Assets
 
Cash
$
302.7

Accounts receivable
144.7

Inventory
116.1

Property, plant and equipment, net
20.2

Intangible assets, net
56.8

Goodwill
314.1

Other, net
53.7

Assets transferred, net
$
1,008.3

 
 
Liabilities
 
Accrued expenses and other current liabilities
$
87.8

Other long-term liabilities
67.7

Liabilities transferred, net
$
155.5

Under the manufacturing and supply agreement, we manufacture and supply certain products and materials to Bioverativ. For the three and six months ended June 30, 2017, we recognized $4.0 million and $7.1 million, respectively, in revenues in relation to these services, which is reflected as a component of other revenues in our condensed consolidated statements of income. We also recorded $3.7 million and $6.6 million as cost of sales in relation to these services during the three and six months ended June 30, 2017, respectively.
Pursuant to the terms of our agreements with Bioverativ, upon completion of the spin-off, we have continued to distribute ALPROLIX and ELOCTATE on behalf of Bioverativ and expect to do so until Bioverativ obtains appropriate regulatory authorizations in certain countries, including the United States (U.S.) and Canada. Under this arrangement, we are distributing these products as an agent of Bioverativ and will also provide related cash management services in connection with sales transactions, including the collection of receivables and the remittance of applicable discounts and allowances. Our consolidated financial position and results of operations do not reflect recognition of activity or balances related to these transactions.
Amounts earned under the non-manufacturing and supply related transaction service agreements are recorded as a reduction of costs and expenses in their respective expense line items, primarily in selling, general and administrative expenses, in our condensed consolidated statements of income. For the three and six months ended June 30, 2017, these amounts were not significant.
Hemophilia related product revenues reflected in our condensed consolidated statements of income for the six months ended June 30, 2017, totaled $74.4 million, as compared to $205.0 million and $387.7 million for the three and six months ended June 30, 2016, respectively. Results for the six months ended June 30, 2017, only reflect hemophilia-related product revenues through January 31, 2017.
Patents
Prior to the spin-off of our hemophilia business, we were awarded various methods of treatment and composition of matter patents related to ELOCTATE and ALPROLIX. Upon completion of the spin-off, these patents were transferred to the patent portfolio of Bioverativ.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

4.    Reserves for Discounts and Allowances
An analysis of the change in reserves for discounts and allowances is summarized as follows:
(In millions)
Discounts
 
Contractual
Adjustments
 
Returns
 
Total
Balance, as of December 31, 2016
$
71.6

 
$
482.7

 
$
51.2

 
$
605.5

Current provisions relating to sales in current year
276.9

 
1,120.0

 
15.2

 
1,412.1

Adjustments relating to prior years
(0.2
)
 
10.1

 
(8.4
)
 
1.5

Payments/credits relating to sales in current year
(186.5
)
 
(649.9
)
 
—

 
(836.4
)
Payments/credits relating to sales in prior years
(67.6
)
 
(379.1
)
 
(11.7
)
 
(458.4
)
Balance, as of June 30, 2017
$
94.2

 
$
583.8

 
$
46.3

 
$
724.3

The total reserves above, which are included in our condensed consolidated balance sheets, are summarized as follows:
(In millions)
As of
June 30,
2017
 
As of
December 31,
2016
Reduction of accounts receivable
$
191.0

 
$
166.9

Component of accrued expenses and other
533.3

 
438.6

Total reserves
$
724.3

 
$
605.5

5.    Inventory
The components of inventory are summarized as follows:
(In millions)
As of
June 30,
2017
 
As of
December 31,
2016
Raw materials
$
148.3

 
$
170.4

Work in process
629.3

 
698.7

Finished goods
184.2

 
170.3

Total inventory
$
961.8

 
$
1,039.4

 
 
 
 
Balance Sheet Classification:
 
 
 
Inventory
$
936.5

 
$
1,001.6

Investments and other assets
25.3

 
37.8

Total inventory
$
961.8

 
$
1,039.4

Long-term inventory, which primarily consists of work in process, is included in investments and other assets in our condensed consolidated balance sheets.
Balances in the table above as of June 30, 2017, also reflect the elimination of certain amounts transferred to Bioverativ in connection with the completion of the spin-off of our hemophilia business. Balances transferred to Bioverativ related to work in process and finished goods inventory totaled $84.5 million and $31.6 million, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

6.    Intangible Assets and Goodwill
Intangible Assets
Intangible assets, net of accumulated amortization, impairment charges and adjustments, are summarized as follows:
 
 
 
As of June 30, 2017
 
As of December 31, 2016
(In millions)
Estimated
Life
 
Cost
 
Accumulated
Amortization
 
Net
 
Cost
 
Accumulated
Amortization
 
Net
Out-licensed patents
13-23 years
 
$
543.3

 
$
(529.8
)
 
$
13.5

 
$
543.3

 
$
(523.6
)
 
$
19.7

Developed 
technology
15-23 years
 
3,005.3

 
(2,662.2
)
 
343.1

 
3,005.3

 
(2,634.3
)
 
371.0

In-process research and development
Indefinite until commercialization
 
668.6

 
—

 
668.6

 
648.0

 
—

 
648.0

Trademarks and 
tradenames
Indefinite
 
64.0

 
—

 
64.0

 
64.0

 
—

 
64.0

Acquired and in-licensed rights 
and patents
4-18 years
 
3,937.1

 
(975.0
)
 
2,962.1

 
3,481.7

 
(776.1
)
 
2,705.6

Total intangible assets
 
 
$
8,218.3

 
$
(4,167.0
)
 
$
4,051.3

 
$
7,742.3

 
$
(3,934.0
)
 
$
3,808.3

For the three and six months ended June 30, 2017, amortization of acquired intangible assets totaled $117.5 million and $566.0 million, respectively, as compared to $92.9 million and $181.7 million, respectively, in the prior year comparative periods. Amortization of acquired intangible assets for the three and six months ended June 30, 2017, includes $29.4 million and $383.0 million, respectively, of amortization and impairment charges related to our U.S. and rest of world licenses to Forward Pharma A/S' (Forward Pharma) intellectual property related to TECFIDERA, as further discussed below. In-process research and development balances include adjustments related to foreign currency exchange rate fluctuations.
Balances in the table above as of June 30, 2017, also reflect the elimination of certain amounts transferred to Bioverativ in connection with the completion of the spin-off of our hemophilia business. For additional information relating to the spin-off of our hemophilia business, please read Note 3, Hemophilia Spin-Off, to these condensed consolidated financial statements.
Developed Technology
Developed technology primarily relates to our AVONEX product, which was recorded in connection with the merger of Biogen, Inc. and IDEC Pharmaceuticals Corporation in 2003. The net book value of this asset as of June 30, 2017, was $335.9 million.
Acquired and In-licensed Rights and Patents
Acquired and in-licensed rights and patents primarily relate to our acquisition of all remaining rights to TYSABRI from Elan Corporation plc. The net book value of this asset as of June 30, 2017, was $2,351.8 million. The increase in acquired and in-licensed rights and patents during the six months ended June 30, 2017, reflects the $50.0 million milestone due to Ionis Pharmaceuticals, Inc. for the approval of SPINRAZA for the treatment of SMA in the E.U. and net amounts related to our TECFIDERA license rights, as described below.
TECFIDERA License Rights
In January 2017 we entered into a settlement and license agreement among Biogen Swiss Manufacturing GmbH, Biogen International Holding Ltd., Forward Pharma and certain related parties, which was effective as of February 1, 2017. Pursuant to the agreement, we obtained U.S. and rest of world licenses to Forward Pharma's intellectual property, including Forward Pharma's intellectual property related to TECFIDERA. In exchange, we agreed to pay Forward Pharma $1.25 billion in cash. During the fourth quarter of 2016, we recognized a pre-tax charge of $454.8 million related to this agreement, representing the fair value of our license to Forward Pharma’s intellectual property for the period April 2014, when we started selling TECFIDERA, through December 31, 2016. For additional

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

information related to this agreement, please read Note 21, Commitments and Contingencies, to our consolidated financial statements included in our 2016 Form 10-K.
We paid the $1.25 billion in February 2017 and recognized an intangible asset of $795.2 million. The asset represented the fair value of the U.S. and rest of world licenses to Forward Pharma’s intellectual property related to TECFIDERA revenues for the period January 2017, the month in which we entered into this agreement, through December 2020, the last month before royalty payments could first commence pursuant to this agreement.
We have two intellectual property disputes with Forward Pharma, one in the U.S. and one in the E.U., concerning intellectual property related to TECFIDERA. In March 2017 the U.S. intellectual property dispute was decided in our favor. Forward Pharma has appealed to the U.S. Court of Appeals for the Federal Circuit and the appeal is pending. For additional information related to these disputes, please read Note 19, Litigation, to these condensed consolidated financial statements.
As we prevailed in the U.S. proceeding in March 2017, we evaluated the recoverability of the U.S. asset acquired from Forward Pharma and recorded an impairment charge to adjust the carrying value of the acquired U.S. asset to fair value reflecting the impact of the developments in the U.S. legal dispute. We also continue to amortize the remaining net book value of the U.S. and rest of world intangible assets in our condensed consolidated statements of income utilizing an economic consumption model.
Estimated Future Amortization of Intangible Assets
Our amortization expense is based on the economic consumption of intangible assets. Our most significant intangible assets are related to our AVONEX and TYSABRI products. Annually, during our long-range planning cycle, we perform an analysis of anticipated lifetime revenues of AVONEX and TYSABRI. This analysis is also updated whenever we determine events or changes in circumstances would significantly affect the anticipated lifetime revenues of either product. Our most recent long range planning cycle was completed in the third quarter of 2016.
Based upon the above, the estimated future amortization of acquired intangible assets is expected to be as follows:
(In millions)
As of
June 30,
2017
2017 (remaining six months)
$
222.6

2018
425.8

2019
412.5

2020
378.6

2021
239.3

2022
216.7

Goodwill
The following table provides a roll forward of the changes in our goodwill balance:
(In millions)
As of
June 30,
2017
Goodwill, beginning of period
$
3,669.3

Elimination of goodwill allocated to our hemophilia business
(314.1
)
Increase to goodwill
508.9

Other
6.3

Goodwill, end of period
$
3,870.4

The elimination of goodwill represents an allocation based upon the relative enterprise fair value of the hemophilia business as of the distribution date. For additional information relating to the spin-off of our hemophilia business, please read Note 3, Hemophilia Spin-Off, to these condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

The increase in goodwill during the six months ended June 30, 2017, was related to $600.0 million in contingent milestones achieved (exclusive of $91.1 million in tax benefits) and payable to the former shareholders of Fumapharm AG or holders of their rights. Other includes changes in foreign currency exchange rates. For additional information related to future contingent payments to the former shareholders of Fumapharm AG or holders of their rights, please read Note 21, Commitments and Contingencies, to our consolidated financial statements included in our 2016 Form 10-K.
As of June 30, 2017, we had no accumulated impairment losses related to goodwill.
7.    Fair Value Measurements
The tables below present information about our assets and liabilities that are regularly measured and carried at fair value and indicate the level within the fair value hierarchy of the valuation techniques we utilized to determine such fair value:
As of June 30, 2017 (In millions)
Total
 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Cash equivalents
$
836.0

 
$
—

 
$
836.0

 
$
—

Marketable debt securities:
 
 
 
 
 
 
 
Corporate debt securities
2,297.9

 
—

 
2,297.9

 
—

Government securities
1,567.8

 
—

 
1,567.8

 
—

Mortgage and other asset backed securities
490.5

 
—

 
490.5

 
—

Marketable equity securities
15.2

 
15.2

 
—

 
—

Derivative contracts
4.6

 
—

 
4.6

 
—

Plan assets for deferred compensation
32.9

 
—

 
32.9

 
—

Total
$
5,244.9

 
$
15.2

 
$
5,229.7

 
$
—

Liabilities:
 
 
 
 
 
 
 
Derivative contracts
$
70.6

 
$
—

 
$
70.6

 
$
—

Contingent consideration obligations
492.1

 
—

 
—

 
492.1

Total
$
562.7

 
$
—

 
$
70.6

 
$
492.1

As of December 31, 2016 (In millions)
Total
 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Cash equivalents
$
2,039.6

 
$
—

 
$
2,039.6

 
$
—

Marketable debt securities:
 
 
 
 
 
 
 
Corporate debt securities
2,663.8

 
—

 
2,663.8

 
—

Government securities
2,172.5

 
—

 
2,172.5

 
—

Mortgage and other asset backed securities
561.7

 
—

 
561.7

 
—

Marketable equity securities
24.9

 
24.9

 
—

 
—

Derivative contracts
61.0

 
—

 
61.0

 
—

Plan assets for deferred compensation
34.5

 
—

 
34.5

 
—

Total
$
7,558.0

 
$
24.9

 
$
7,533.1

 
$
—

Liabilities:
 
 
 
 
 
 
 
Derivative contracts
$
13.6

 
$
—

 
$
13.6

 
$
—

Contingent consideration obligations
467.6

 
—

 
—

 
467.6

Total
$
481.2

 
$
—

 
$
13.6

 
$
467.6


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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

There have been no material impairments of our assets measured and carried at fair value during the three and six months ended June 30, 2017. In addition, there were no changes in valuation techniques or inputs utilized or transfers between fair value measurement levels during the three and six months ended June 30, 2017. The fair values of Level 2 instruments classified as cash equivalents and marketable debt securities were determined through third party pricing services. For a description of our validation procedures related to prices provided by third party pricing services, please read Note 1, Summary of Significant Accounting Policies: Fair Value Measurements, to our consolidated financial statements included in our 2016 Form 10-K.
Debt Instruments
The fair and carrying values of our debt instruments, which are Level 2 liabilities, are summarized as follows:
 
As of June 30, 2017
 
As of December 31, 2016
(In millions)
Fair
Value
 
Carrying
Value
 
Fair
Value
 
Carrying
Value
Notes payable to Fumedica AG
$
3.3

 
$
3.3

 
$
6.1

 
$
6.0

6.875% Senior Notes due March 1, 2018
569.9

 
554.8

 
583.7

 
558.5

2.900% Senior Notes due September 15, 2020
1,531.5

 
1,487.4

 
1,521.5

 
1,485.3

3.625% Senior Notes due September 15, 2022
1,051.8

 
993.8

 
1,026.6

 
993.2

4.050% Senior Notes due September 15, 2025
1,853.3

 
1,735.6

 
1,796.0

 
1,734.8

5.200% Senior Notes due September 15, 2045
1,996.2

 
1,721.7

 
1,874.5

 
1,721.5

Total
$
7,006.0

 
$
6,496.6

 
$
6,808.4

 
$
6,499.3

The fair value of our notes payable to Fumedica AG was estimated using market observable inputs, including current interest and foreign currency exchange rates. The fair values of each of our series of Senior Notes were determined through market, observable and corroborated sources. For additional information related to our debt instruments, please read Note 11, Indebtedness, to our consolidated financial statements included in our 2016 Form 10-K.
Contingent Consideration Obligations
The following table provides a roll forward of the fair values of our contingent consideration obligations that includes Level 3 measurements:
 
For the Three Months
Ended June 30,
 
For the Six Months
Ended June 30,
(In millions)
2017
 
2016
 
2017
 
2016
Fair value, beginning of period
$
470.9

 
$
508.3

 
$
467.6

 
$
506.0

Additions
—

 
—

 
—

 
—

Changes in fair value
21.2

 
10.6

 
31.2

 
12.9

Payments
—

 
(3.2
)
 
(6.7
)
 
(3.2
)
Fair value, end of period
$
492.1

 
$
515.7

 
$
492.1

 
$
515.7

As of June 30, 2017 and December 31, 2016, approximately $265.8 million and $246.8 million, respectively, of our contingent consideration obligations valued using Level 3 measurements were reflected as components of other long-term liabilities in our condensed consolidated balance sheets with the remaining balances reflected as a component of accrued expenses and other.

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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

8.    Financial Instruments
The following table summarizes our financial assets with maturities of less than 90 days from the date of purchase included in cash and cash equivalents on the accompanying condensed consolidated balance sheets:
(In millions)
As of
June 30,
2017
 
As of
December 31,
2016
Commercial paper
$
74.4

 
$
31.0

Overnight reverse repurchase agreements
22.8

 
—

Money market funds
605.5

 
741.7

Short-term debt securities
133.3

 
1,266.9

Total
$
836.0

 
$
2,039.6

The carrying values of our commercial paper, including accrued interest, overnight reverse repurchase agreements, money market funds and short-term debt securities approximate fair value due to their short-term maturities.
The following tables summarize our marketable debt and equity securities, classified as available-for-sale:
As of June 30, 2017 (In millions)
Fair
Value
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Amortized
Cost
Corporate debt securities
 
 
 
 
 
 
 
Current
$
988.9

 
$
0.1

 
$
(0.5
)
 
$
989.3

Non-current
1,309.0

 
1.9

 
(2.5
)
 
1,309.6

Government securities
 
 
 
 
 
 
 
Current
732.9

 
—

 
(0.9
)
 
733.8

Non-current
834.9

 
0.4

 
(3.3
)
 
837.8

Mortgage and other asset backed securities
 
 
 
 
 
 
 
Current
1.7

 
—

 
—

 
1.7

Non-current
488.8

 
1.1

 
(1.2
)
 
488.9

Total marketable debt securities
$
4,356.2

 
$
3.5

 
$
(8.4
)
 
$
4,361.1

Marketable equity securities, non-current
$
15.2

 
$
0.1

 
$
(3.3
)
 
$
18.4

As of December 31, 2016 (In millions)
Fair
Value
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Amortized
Cost
Corporate debt securities
 
 
 
 
 
 
 
Current
$
1,408.6

 
$
0.2

 
$
(0.6
)
 
$
1,409.0

Non-current
1,255.2

 
1.2

 
(4.7
)
 
1,258.7

Government securities
 
 
 
 
 
 
 
Current
1,156.0

 
0.2

 
(0.3
)
 
1,156.1

Non-current
1,016.5

 
0.5

 
(3.4
)
 
1,019.4

Mortgage and other asset backed securities
 
 
 
 
 
 
 
Current
4.0

 
—

 
—

 
4.0

Non-current
557.7

 
0.8

 
(2.2
)
 
559.1

Total marketable debt securities
$
5,398.0

 
$
2.9

 
$
(11.2
)
 
$
5,406.3

Marketable equity securities, non-current
$
24.9

 
$
0.7

 
$
(9.3
)
 
$
33.5


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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

Summary of Contractual Maturities: Available-for-Sale Securities
The estimated fair value and amortized cost of our marketable debt securities available-for-sale by contractual maturity are summarized as follows:
 
As of June 30, 2017
 
As of December 31, 2016
(In millions)
Estimated
Fair Value
 
Amortized
Cost
 
Estimated
Fair Value
 
Amortized
Cost
Due in one year or less
$
1,723.5

 
$
1,724.8

 
$
2,568.6

 
$
2,569.1

Due after one year through five years
2,377.6

 
2,381.1

 
2,552.6

 
2,559.7

Due after five years
255.1

 
255.2

 
276.8

 
277.5

Total available-for-sale securities
$
4,356.2

 
$
4,361.1

 
$
5,398.0

 
$
5,406.3

The average maturity of our marketable debt securities available-for-sale as of June 30, 2017 and December 31, 2016, was approximately 17 months and 12 months, respectively.
Proceeds from Marketable Debt Securities
The proceeds from maturities and sales of marketable debt securities and resulting realized gains and losses are summarized as follows:
 
For the Three Months
Ended June 30,
 
For the Six Months
Ended June 30,
(In millions)
2017
 
2016
 
2017
 
2016
Proceeds from maturities and sales
$
1,700.2

 
$
1,642.5

 
$
3,584.5

 
$
2,823.6

Realized gains
$
1.2

 
$
0.6

 
$
2.4

 
$
1.0

Realized losses
$
(1.3
)
 
$
(1.2
)
 
$
(3.2
)
 
$
(1.6
)
Strategic Investments
As of June 30, 2017 and December 31, 2016, our strategic investment portfolio was comprised of investments totaling $95.6 million and $99.9 million, respectively, which are included in investments and other assets in our condensed consolidated balance sheets. Our strategic investment portfolio includes investments in equity securities of certain biotechnology companies and investments in venture capital funds where the underlying investments are in equity securities of biotechnology companies.
9.    Derivative Instruments
Foreign Currency Forward Contracts - Hedging Instruments
Due to the global nature of our operations, portions of our revenues and operating expenses are recorded in currencies other than the U.S. dollar. The value of revenues and operating expenses measured in U.S. dollars is therefore subject to changes in foreign currency exchange rates. In order to mitigate these changes we use foreign currency forward contracts to lock in exchange rates associated with a portion of our forecasted international revenues and operating expenses.
Foreign currency forward contracts in effect as of June 30, 2017 and December 31, 2016, had durations of 1 to 24 months and 1 to 18 months, respectively. These contracts have been designated as cash flow hedges, and, accordingly, to the extent effective, any unrealized gains or losses on these foreign currency forward contracts are reported in accumulated other comprehensive income (loss) (referred to as AOCI in the tables below). Realized gains and losses for the effective portion of such contracts are recognized in revenue when the sale of product in the currency being hedged is recognized and in operating expenses when the expense in the currency being hedged is recorded. To the extent ineffective, hedge transaction gains and losses are reported in other income (expense), net.

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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

The notional value of foreign currency forward contracts that were entered into to hedge forecasted revenues and operating expenses is summarized as follows:
 
Notional Amount
Foreign Currency: (In millions)
As of
June 30,
2017
 
As of
December 31,
2016
Euro
$
1,772.5

 
$
871.7

British pound
77.4

 
—

Canadian dollar
39.2

 
—

Swiss franc
32.1

 
—

Total foreign currency forward contracts
$
1,921.2

 
$
871.7

The portion of the fair value of these foreign currency forward contracts that was included in accumulated other comprehensive income (loss) in total equity reflected net losses of $77.4 million and net gains of $49.8 million as of June 30, 2017 and December 31, 2016, respectively. We expect all contracts outstanding as of June 30, 2017, to be settled over the next 24 months and any amounts in accumulated other comprehensive income (loss) to be reported as an adjustment to revenue or operating expense. We consider the impact of our and our counterparties’ credit risk on the fair value of the contracts as well as the ability of each party to execute its contractual obligations. As of June 30, 2017 and December 31, 2016, credit risk did not change the fair value of our foreign currency forward contracts.
The following tables summarize the effect of foreign currency forward contracts designated as hedging instruments on our condensed consolidated statements of income:
For the Three Months Ended June 30,
Net Gains/(Losses)
Reclassified from AOCI into Operating Income
(Effective Portion)
 
Net Gains/(Losses)
Recognized into Net Income
(Ineffective Portion)
Location
 
2017
 
2016
 
Location
 
2017
 
2016
Revenue
 
$
(3.0
)
 
$
(4.3
)
 
Other income (expense)
 
$
2.0

 
$
2.1

Operating expenses
 
$
0.3

 
$
(0.1
)
 
Other income (expense)
 
$
(0.1
)
 
$
—

For the Six Months Ended June 30,
Net Gains/(Losses)
Reclassified from AOCI into Operating Income
(Effective Portion)
 
Net Gains/(Losses)
Recognized into Net Income
(Ineffective Portion)
Location
 
2017
 
2016
 
Location
 
2017
 
2016
Revenue
 
$
3.7

 
$
4.5

 
Other income (expense)
 
$
6.0

 
$
4.0

Operating expenses
 
$
0.2

 
$
(0.2
)
 
Other income (expense)
 
$
(0.3
)
 
$
(0.3
)

Interest Rate Contracts - Hedging Instruments
We have entered into interest rate swap contracts on certain borrowing transactions to manage our exposure to interest rate changes.
In connection with the issuance of our 2.90% Senior Notes, we entered into interest rate swaps with an aggregate notional amount of $675.0 million, which expire on September 15, 2020. The interest rate swap contracts are designated as hedges of the fair value changes in the 2.90% Senior Notes attributable to changes in interest rates. Since the specific terms and notional amount of the swaps match the debt being hedged, it is assumed to be a highly effective hedge and all changes in the fair value of the swaps are recorded as a component of our 2.90% Senior Notes with no net impact recorded in income. Any net interest payments made or received on the interest rate swap contracts are recognized as a component of interest expense in our condensed consolidated statements of income.

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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

Foreign Currency Forward Contracts - Other Derivatives
We also enter into other foreign currency forward contracts, usually with durations of one month or less, to mitigate the foreign currency risk related to certain balance sheet positions. We have not elected hedge accounting for these transactions.
The aggregate notional amount of these outstanding foreign currency contracts was $355.0 million and $902.1 million as of June 30, 2017 and December 31, 2016, respectively. Net gains of $6.1 million and $4.5 million related to these contracts were recognized as a component of other income (expense), net for the three and six months ended June 30, 2017, respectively, as compared to net losses of $18.6 million and $16.2 million, respectively, in the prior year comparative periods.
Summary of Derivatives
While certain of our derivatives are subject to netting arrangements with our counterparties, we do not offset derivative assets and liabilities in our condensed consolidated balance sheets.
The following table summarizes the fair value and presentation in our condensed consolidated balance sheets of our outstanding derivatives, including those designated as hedging instruments:
 
 
Fair Value
(In millions)
Balance Sheet Location
As of June 30, 2017
Hedging Instruments:
 
 
Asset derivatives
Other current assets
$
1.9

Liability derivatives
Accrued expenses and other
$
40.8

 
Other long-term liabilities
$
29.5

Other Derivatives:
 
 
Asset derivatives
Other current assets
$
2.7

Liability derivatives
Accrued expenses and other
$
0.3

 
 
 
 
 
Fair Value
(In millions)
Balance Sheet Location
As of December 31, 2016
Hedging Instruments:
 
 
Asset derivatives
Other current assets
$
50.4

 
Investments and other assets
$
6.6

Liability derivatives
Other long-term liabilities
$
4.6

Other Derivatives:
 
 
Asset derivatives
Other current assets
$
4.0

Liability derivatives
Accrued expenses and other
$
9.0

10.    Property, Plant and Equipment
Property, plant and equipment are recorded at historical cost, net of accumulated depreciation. Accumulated depreciation on property, plant and equipment was $1,511.4 million and $1,439.3 million as of June 30, 2017 and December 31, 2016, respectively.
Solothurn, Switzerland Facility
During the first quarter of 2016 we purchased land in Solothurn, Switzerland for 64.4 million Swiss Francs (approximately $62.5 million), where we are building a biologics manufacturing facility over the next several years. As of June 30, 2017 and December 31, 2016, we had $798.1 million and $481.5 million, respectively, capitalized as construction in progress related to the construction of this facility. As of June 30, 2017, we had contractual commitments of approximately $258.2 million for the construction of this facility.

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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

11.    Equity
Total equity as of June 30, 2017, decreased $555.0 million compared to December 31, 2016. This decrease was primarily driven by share repurchases totaling approximately $1.4 billion, as described below, and an adjustment to retained earnings of $852.8 million reflecting the spin-off of our hemophilia business, as described in Note 3, Hemophilia Spin-Off, to these condensed consolidated financial statements. These decreases were partially offset by net income attributable to Biogen Inc. of $1.6 billion.
Share Repurchases
In July 2016 our Board of Directors authorized a program to repurchase up to $5.0 billion of our common stock (2016 Share Repurchase Program). This authorization does not have an expiration date. All share repurchases under this authorization will be retired. Under this program, we repurchased and retired 2.9 million and 3.7 million shares of common stock at a cost of $781.8 million and $1.0 billion during the three and six months ended June 30, 2017, respectively. As of June 30, 2017, approximately $3.0 billion remains available to repurchase shares under this authorization.
In February 2011 our Board of Directors authorized a program to repurchase up to 20.0 million shares of common stock, which was completed as of March 31, 2017. During the six months ended June 30, 2017, we repurchased 1.3 million shares of common stock at a cost of $365.4 million under this program. During the three and six months ended June 30, 2016, we did not repurchase any shares of common stock under this program.
Noncontrolling Interests
The following table reconciles equity (deficit) attributable to noncontrolling interests (NCI):
 
For the Three Months
Ended June 30,
 
For the Six Months
Ended June 30,
(In millions)
2017
 
2016
 
2017
 
2016
NCI, beginning of period
$
(11.6
)
 
$
1.3

 
$
(11.5
)
 
$
2.1

Net income (loss) attributable to NCI, net of tax
—

 
(1.4
)
 
(0.1
)
 
(3.1
)
Fair value of net assets and liabilities acquired and assigned to NCI
—

 
—

 
—

 
0.9

NCI, end of period
$
(11.6
)
 
$
(0.1
)
 
$
(11.6
)
 
$
(0.1
)
12.    Accumulated Other Comprehensive Income (Loss)
The following table summarizes the changes in accumulated other comprehensive income (loss), net of tax by component:
(In millions)
Unrealized Gains (Losses) on Securities Available for Sale, Net of Tax
 
Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax
 
Unfunded Status of Postretirement Benefit Plans, Net of Tax
 
Translation Adjustments
 
Total
Balance, as of December 31, 2016
$
(10.8
)
 
$
57.8

 
$
(32.7
)
 
$
(334.2
)
 
$
(319.9
)
Other comprehensive income (loss) before reclassifications
5.1

 
(122.8
)
 
(0.5
)
 
102.8

 
(15.4
)
Amounts reclassified from accumulated other comprehensive income (loss)
0.5

 
(4.0
)
 
—

 
—

 
(3.5
)
Net current period other comprehensive income (loss)
5.6

 
(126.8
)
 
(0.5
)
 
102.8

 
(18.9
)
Balance, as of June 30, 2017
$
(5.2
)
 
$
(69.0
)
 
$
(33.2
)
 
$
(231.4
)
 
$
(338.8
)

24
Table of Contents
BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

(In millions)
Unrealized Gains (Losses) on Securities Available for Sale, Net of Tax
 
Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax
 
Unfunded Status of Postretirement Benefit Plans, Net of Tax
 
Translation Adjustments
 
Total
Balance, as of December 31, 2015
$
(0.8
)
 
$
10.2

 
$
(37.8
)
 
$
(195.6
)
 
$
(224.0
)
Other comprehensive income (loss) before reclassifications
6.6

 
(13.9
)
 
0.9

 
(48.4
)
 
(54.8
)
Amounts reclassified from accumulated other comprehensive income (loss)
0.4

 
(4.4
)
 
—

 
—

 
(4.0
)
Net current period other comprehensive income (loss)
7.0

 
(18.3
)
 
0.9

 
(48.4
)
 
(58.8
)
Balance, as of June 30, 2016
$
6.2

 
$
(8.1
)
 
$
(36.9
)
 
$
(244.0
)
 
$
(282.8
)
The following table summarizes the amounts reclassified from accumulated other comprehensive income:
(In millions)
Income Statement Location
Amounts Reclassified from Accumulated Other Comprehensive Income
For the Three Months
Ended June 30,
 
For the Six Months
Ended June 30,
2017
 
2016
 
2017
 
2016
Gains (losses) on securities available for sale
Other income (expense)
$
(0.1
)
 
$
(0.6
)
 
$
(0.8
)
 
$
(0.6
)
 
Income tax benefit (expense)
—

 
0.2

 
0.3

 
0.2

 
 
 
 
 
 
 
 
 
Gains (losses) on cash flow hedges
Revenues
(3.0
)
 
(4.3
)
 
3.7

 
4.5

 
Operating expenses
0.3

 
(0.1
)
 
0.2

 
(0.2
)
 
Other income (expense)
—

 
—

 
0.1

 
0.1

 
Income tax benefit (expense)
—

 
0.1

 
—

 
—

 
 
 
 
 
 
 
 
 
Total reclassifications, net of tax
 
$
(2.8
)
 
$
(4.7
)
 
$
3.5

 
$
4.0

13.    Earnings per Share
Basic and diluted earnings per share are calculated as follows:
 
For the Three Months
Ended June 30,
 
For the Six Months
Ended June 30,
(In millions)
2017
 
2016
 
2017
 
2016
Numerator:
 
 
 
 
 
 
 
Net income attributable to Biogen Inc.
$
862.8

 
$
1,049.8

 
$
1,610.4

 
$
2,020.7

Denominator:
 
 
 
 
 
 
 
Weighted-average number of common shares outstanding
211.9

 
219.1

 
213.7

 
219.0

Effect of dilutive securities:
 
 
 
 
 
 
 
Stock options and employee stock purchase plan
0.1

 
0.1

 
—

 
0.1

Time-vested restricted stock units
0.1

 
0.1

 
0.2

 
0.1

Market stock units
0.1

 
0.1

 
0.1

 
0.1

Dilutive potential common shares
0.3

 
0.3

 
0.3

 
0.3

Shares used in calculating diluted earnings per share
212.2

 
219.4

 
214.0

 
219.3


25
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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

Amounts excluded from the calculation of net income per diluted share because their effects were anti-dilutive were insignificant.
The adjustments related to the spin-off of our hemophilia business did not have a material impact on the potentially dilutive securities to be considered in the calculation of diluted earnings per share of common stock.
14.     Share-based Payments
Share-based Compensation Expense
The following table summarizes share-based compensation expense included in our condensed consolidated statements of income:
 
For the Three Months
Ended June 30,
 
For the Six Months
Ended June 30,
(In millions)
2017
 
2016
 
2017
 
2016
Research and development
$
17.5

 
$
21.5

 
$
36.2

 
$
42.9

Selling, general and administrative
18.9

 
28.7

 
48.3

 
63.4

Restructuring charges
—

 
—

 
—

 
(1.8
)
Subtotal
36.4

 
50.2

 
84.5

 
104.5

Capitalized share-based compensation costs
(2.4
)
 
(4.4
)
 
(5.1
)
 
(7.5
)
Share-based compensation expense included in total cost and expenses
34.0

 
45.8

 
79.4

 
97.0

Income tax effect
(8.5
)
 
(12.7
)
 
(20.9
)
 
(27.9
)
Share-based compensation expense included in net income attributable to Biogen Inc.
$
25.5

 
$
33.1

 
$
58.5

 
$
69.1

The following table summarizes share-based compensation expense associated with each of our share-based compensation programs:
 
For the Three Months
Ended June 30,
 
For the Six Months
Ended June 30,
(In millions)
2017
 
2016
 
2017
 
2016
Market stock units
$
3.0

 
$
7.9

 
$
12.6

 
$
21.3

Time-vested restricted stock units
27.6

 
33.9

 
54.5

 
64.0

Cash settled performance units
2.5

 
4.6

 
6.0

 
4.8

Performance units
1.2

 
1.3

 
5.7

 
8.2

Employee stock purchase plan
2.1

 
2.5

 
5.7

 
6.2

Subtotal
36.4

 
50.2

 
84.5

 
104.5

Capitalized share-based compensation costs
(2.4
)
 
(4.4
)
 
(5.1
)
 
(7.5
)
Share-based compensation expense included in total cost and expenses
$
34.0

 
$
45.8

 
$
79.4

 
$
97.0

We estimate the fair value of our obligations associated with our performance units and cash settled performance units at the end of each reporting period through expected settlement. Cumulative adjustments to these obligations are recorded each quarter to reflect changes in the stock price and estimated outcome of the performance-related conditions. 
Spin-off Related Equity Adjustments
Pursuant to an employee matters agreement entered into in connection with the spin-off of our hemophilia business and the provisions of our existing stock-based compensation arrangements, we made certain adjustments to the number and terms of our outstanding stock options, restricted stock units, cash settled performance units and other share-based awards to preserve the intrinsic value of the awards immediately before and after the spin-off. For purposes of the vesting of these equity awards, continued employment or service with Biogen or with Bioverativ was treated as continued employment for purposes of both Biogen’s and Bioverativ’s equity awards with the

26
Table of Contents
BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

outstanding awards continuing to vest over their respective original vesting periods. Outstanding unvested awards for employees transferring to Bioverativ were converted to unvested Bioverativ awards.
Adjustments to the number of our share-based compensation awards were made using an adjustment ratio based upon the weighted-average closing price of our common stock for the 10 calendar days prior to the effective date of the spin-off and the volume weighted-average prices for the 10 calendar days of our common stock following the effective date of the spin-off. For stock options, the exercise prices of the awards were modified to maintain the pre-spin intrinsic value of the awards in relation to the post-spin stock price of Biogen. The difference between the fair value of the awards based upon the adjustment ratio and the opening price on the distribution date was not material.
2017 Omnibus Equity Plan
In June 2017 our shareholders approved the Biogen Inc. 2017 Omnibus Equity Plan (2017 Omnibus Equity Plan) for share-based awards to our employees. Awards granted from the 2017 Omnibus Equity Plan may include stock options, shares of restricted stock, restricted stock units, performance shares, stock appreciation rights and other awards in such amounts and with such terms and conditions as may be determined by a committee of our Board of Directors, subject to the provisions of the plan. Shares of common stock available for grant under the 2017 Omnibus Equity Plan consist of 8.0 million shares reserved for this purpose, plus shares of common stock that remained available for grant under our 2008 Omnibus Equity Plan (including shares available by reason of a predecessor plan) on the date that our shareholders approved the 2017 Omnibus Equity Plan, plus shares that were subject to awards under the 2008 Omnibus Equity Plan (including shares available by reason of a predecessor plan) that remain unissued upon the cancellation, surrender, exchange, termination or forfeiture of such awards. The 2017 Omnibus Equity Plan provides that awards other than stock options and stock appreciation rights will be counted against the total number of shares available under the plan in a 1.5-to-1 ratio.
We have not made any awards pursuant to the 2008 Omnibus Equity Plan since our shareholders approved the 2017 Omnibus Equity Plan, and do not intend to make any awards pursuant to the 2008 Omnibus Equity Plan in the future, except that unused shares under the 2008 Omnibus Equity Plan have been carried over for use under the 2017 Omnibus Equity Plan.
15.    Income Taxes
A reconciliation between the U.S. federal statutory tax rate and our effective tax rate is summarized as follows:
 
For the Three Months
Ended June 30,
 
For the Six Months
Ended June 30,
 
2017
 
2016
 
2017