Microsoft Excel LibreOffice Calc

Regeneron Pharmaceuticals Inc. (REGN)


Analysis of Property, Plant and Equipment

Difficulty: Advanced


Property, Plant and Equipment Accounting Policy

Property, plant, and equipment are stated at cost, net of accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the lease term. Costs of construction of certain long-lived assets include capitalized interest, which is amortized over the estimated useful life of the related asset. Expenditures for maintenance and repairs which do not materially extend the useful lives of the assets are charged to expense as incurred. The cost and accumulated depreciation or amortization of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in operations. The estimated useful lives of property, plant, and equipment are as follows:

Building and improvements 10–50 years
Laboratory and other equipment 3–10 years
Furniture and fixtures 5 years

Regeneron periodically assesses the recoverability of long-lived assets, such as property, plant, and equipment, and evaluates such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Source: 10-K (filing date: 2019-02-07).


Property, Plant and Equipment Disclosure

Regeneron Pharmaceuticals Inc., Statement of Financial Position, Property, Plant and Equipment

USD $ in thousands

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Land 199,000  192,757  103,906  77,826  2,768 
Building and improvements 1,507,200  1,441,565  1,278,283  760,517  398,981 
Leasehold improvements 97,000  102,599  101,101  95,226  42,600 
Construction-in-progress 469,600  408,857  318,929  579,834  472,231 
Laboratory and other equipment 773,700  599,153  554,181  330,432  253,058 
Furniture, computer and office equipment, and other 258,000  179,968  152,525  81,381  58,655 
Property, plant, and equipment, at cost 3,304,500  2,924,899  2,508,925  1,925,216  1,228,293 
Accumulated depreciation and amortization (728,700) (566,294) (425,504) (331,096) (253,984)
Property, plant, and equipment, net 2,575,800  2,358,605  2,083,421  1,594,120  974,309 

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-12).

Item Description The company
Property, plant, and equipment, at cost Amount before accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures. Regeneron Pharmaceuticals Inc.’s property, plant, and equipment, at cost increased from 2016 to 2017 and from 2017 to 2018.
Property, plant, and equipment, net Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures. Regeneron Pharmaceuticals Inc.’s property, plant, and equipment, net increased from 2016 to 2017 and from 2017 to 2018.

Property, Plant and Equipment Ratios (Summary)

Regeneron Pharmaceuticals Inc., Property, Plant and Equipment Ratios

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Average age 23.46% 20.73% 17.69% 17.92% 20.72%
Estimated total useful life (years) 22 19 23 25 23
Estimated age, time elapsed since purchase (years) 5 4 4 4 5
Estimated remaining life (years) 16 15 19 20 18

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-12).

Ratio Description The company
Average age As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company’s fixed asset base is old or new. Newer assets are likely to be more efficient. Regeneron Pharmaceuticals Inc.’s average age of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.
Estimated total useful life Over longer time periods, this ratio is a useful measure of company’s depreciation policy and can be used for comparisons with competitors. Regeneron Pharmaceuticals Inc.’s estimated total useful life of depreciable property, plant and equipment declined from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.
Estimated time elapsed since purchase The approximate age in years of a company’s fixed assets. Useful for comparison purposes. Regeneron Pharmaceuticals Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.
Estimated remaining life Regeneron Pharmaceuticals Inc.’s estimated remaining life of depreciable property, plant and equipment declined from 2016 to 2017 but then slightly increased from 2017 to 2018.

Average Age

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in thousands)
Accumulated depreciation and amortization 728,700  566,294  425,504  331,096  253,984 
Property, plant, and equipment, at cost 3,304,500  2,924,899  2,508,925  1,925,216  1,228,293 
Land 199,000  192,757  103,906  77,826  2,768 
Ratio
Average age1 23.46% 20.73% 17.69% 17.92% 20.72%

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-12).

2018 Calculations

1 Average age = 100 × Accumulated depreciation and amortization ÷ (Property, plant, and equipment, at cost – Land)
= 100 × 728,700 ÷ (3,304,500199,000) = 23.46%

Ratio Description The company
Average age As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company’s fixed asset base is old or new. Newer assets are likely to be more efficient. Regeneron Pharmaceuticals Inc.’s average age of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.

Estimated Total Useful Life

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in thousands)
Property, plant, and equipment, at cost 3,304,500  2,924,899  2,508,925  1,925,216  1,228,293 
Land 199,000  192,757  103,906  77,826  2,768 
Depreciation and amortization expense on property, plant, and equipment 144,100  142,200  104,700  74,900  52,700 
Ratio
Estimated total useful life (years)1 22 19 23 25 23

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-12).

2018 Calculations

1 Estimated total useful life (years) = (Property, plant, and equipment, at cost – Land) ÷ Depreciation and amortization expense on property, plant, and equipment
= (3,304,500199,000) ÷ 144,100 = 22

Ratio Description The company
Estimated total useful life Over longer time periods, this ratio is a useful measure of company’s depreciation policy and can be used for comparisons with competitors. Regeneron Pharmaceuticals Inc.’s estimated total useful life of depreciable property, plant and equipment declined from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.

Estimated Age, Time Elapsed since Purchase

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in thousands)
Accumulated depreciation and amortization 728,700  566,294  425,504  331,096  253,984 
Depreciation and amortization expense on property, plant, and equipment 144,100  142,200  104,700  74,900  52,700 
Ratio
Time elapsed since purchase (years)1 5 4 4 4 5

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-12).

2018 Calculations

1 Time elapsed since purchase (years) = Accumulated depreciation and amortization ÷ Depreciation and amortization expense on property, plant, and equipment
= 728,700 ÷ 144,100 = 5

Ratio Description The company
Estimated time elapsed since purchase The approximate age in years of a company’s fixed assets. Useful for comparison purposes. Regeneron Pharmaceuticals Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.

Estimated Remaining Life

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in thousands)
Property, plant, and equipment, net 2,575,800  2,358,605  2,083,421  1,594,120  974,309 
Land 199,000  192,757  103,906  77,826  2,768 
Depreciation and amortization expense on property, plant, and equipment 144,100  142,200  104,700  74,900  52,700 
Ratio
Estimated remaining life (years)1 16 15 19 20 18

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-12).

2018 Calculations

1 Estimated remaining life (years) = (Property, plant, and equipment, net – Land) ÷ Depreciation and amortization expense on property, plant, and equipment
= (2,575,800199,000) ÷ 144,100 = 16

Ratio Description The company
Estimated remaining life Regeneron Pharmaceuticals Inc.’s estimated remaining life of depreciable property, plant and equipment declined from 2016 to 2017 but then slightly increased from 2017 to 2018.