Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 26, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Emergent BioSolutions Inc. | |
Entity Central Index Key | 1,367,644 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 50,945,056 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 339,358 | $ 178,292 |
Restricted cash | 1,043 | 1,043 |
Accounts receivable | 76,955 | 143,653 |
Inventories | 125,745 | 142,812 |
Income tax receivable, net | 0 | 2,432 |
Prepaid expenses and other current assets | 20,047 | 17,157 |
Total current assets | 563,148 | 485,389 |
Property, plant and equipment, net | 435,075 | 407,210 |
Intangible assets, net | 107,861 | 119,597 |
Goodwill | 49,130 | 49,130 |
Deferred tax assets, net | 12,652 | 2,834 |
Other assets | 5,757 | 6,046 |
Total assets | 1,173,623 | 1,070,206 |
Current liabilities: | ||
Accounts payable | 38,874 | 41,751 |
Accrued expenses and other current liabilities | 7,425 | 4,831 |
Accrued compensation | 41,807 | 37,882 |
Contingent consideration, current portion | 2,954 | 2,372 |
Income taxes payable, net | 164 | 0 |
Deferred revenue, current portion | 10,790 | 13,232 |
Total current liabilities | 102,014 | 100,068 |
Contingent consideration, net of current portion | 9,003 | 9,902 |
Long-term indebtedness | 13,495 | 13,457 |
Income taxes payable | 12,500 | 12,500 |
Deferred revenue, net of current portion | 65,343 | 17,259 |
Other liabilities | 4,619 | 4,675 |
Total liabilities | 206,974 | 157,861 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 15,000,000 shares authorized, 0 shares issued and outstanding at both September 30, 2018 and December 31, 2017 | 0 | 0 |
Common stock, $0.001 par value; 200,000,000 shares authorized, 51,403,585 shares issued and 50,186,299 shares outstanding at September 30, 2018; 50,619,808 shares issued and 49,405,365 shares outstanding at December 31, 2017 | 51 | 50 |
Treasury stock, at cost, 1,217,286 and 1,214,443 common shares at September 30, 2018 and December 31, 2017, respectively | (39,642) | (39,497) |
Additional paid-in capital | 640,178 | 618,416 |
Accumulated other comprehensive loss | (4,666) | (3,698) |
Retained earnings | 370,728 | 337,074 |
Total stockholders' equity | 966,649 | 912,345 |
Total liabilities and stockholders' equity | $ 1,173,623 | $ 1,070,206 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 51,403,585 | 50,619,808 |
Common stock, shares outstanding (in shares) | 50,186,299 | 49,405,365 |
Treasury stock ( in shares) | 1,217,286 | 1,214,443 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Revenues: | |||||
Total revenues | $ 173,653 | $ 149,434 | $ 511,667 | $ 367,064 | |
Operating expenses: | |||||
Cost of product sales and contract manufacturing | 73,232 | 44,503 | 220,449 | 125,449 | |
Research and development | 37,006 | 22,659 | 90,802 | 68,886 | |
Selling, general and administrative | 42,105 | 34,503 | 121,815 | 101,521 | |
Income from operations | 21,310 | 47,769 | 78,601 | 71,208 | |
Other income (expense): | |||||
Interest income | 701 | 637 | 1,229 | 1,593 | |
Interest expense | (642) | (1,991) | (1,884) | (5,734) | |
Other income (expense), net | 190 | (101) | 11 | (387) | |
Total other income (expense), net | 249 | (1,455) | (644) | (4,528) | |
Income before provision for income taxes | 21,559 | 46,314 | 77,957 | 66,680 | |
Provision for income taxes | 614 | 12,763 | 11,776 | 18,028 | |
Net income | $ 20,945 | $ 33,551 | $ 66,181 | $ 48,652 | |
Net income per share - basic (in dollars per share) | $ 0.42 | $ 0.81 | $ 1.33 | $ 1.19 | |
Net income per share - diluted (in dollars per share) | [1] | $ 0.41 | $ 0.68 | $ 1.29 | $ 1.03 |
Weighted-average number of shares - basic (in shares) | 50,071,632 | 41,222,504 | 49,851,082 | 40,989,813 | |
Weighted-average number of shares - diluted (in shares) | 51,486,996 | 50,467,829 | 51,189,680 | 50,090,088 | |
Product Sales [Member] | |||||
Revenues: | |||||
Total revenues | $ 133,269 | $ 114,296 | $ 389,115 | $ 259,875 | |
Contract Manufacturing [Member] | |||||
Revenues: | |||||
Total revenues | 22,172 | 18,912 | 71,963 | 52,700 | |
Contracts and Grants [Member] | |||||
Revenues: | |||||
Total revenues | $ 18,212 | $ 16,226 | $ 50,589 | $ 54,489 | |
[1] | See "Earnings per share" footnote for details on calculation. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Condensed Consolidated Statements of Comprehensive Income [Abstract] | ||||
Net income | $ 20,945 | $ 33,551 | $ 66,181 | $ 48,652 |
Foreign currency translations, net of tax | (250) | (296) | (968) | 516 |
Comprehensive income | $ 20,695 | $ 33,255 | $ 65,213 | $ 49,168 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | ||
Cash flows from operating activities: | |||
Net income | $ 66,181 | $ 48,652 | |
Adjustments to reconcile to net cash provided by (used in) operating activities: | |||
Stock-based compensation expense | 16,664 | 11,805 | |
Depreciation and amortization | 37,106 | 29,899 | |
Income taxes | 12,761 | 18,618 | |
Change in fair value of contingent obligations | 1,917 | 1,350 | |
Other | 1,515 | 703 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | 66,455 | 9,411 | |
Inventories | 17,067 | 5,113 | |
Income taxes | (10,130) | (5,515) | |
Prepaid expenses and other assets | (5,921) | (2,157) | |
Accounts payable | (5,695) | 2,965 | |
Accrued expenses and other liabilities | 2,457 | (2,334) | |
Accrued compensation | 3,925 | (1,902) | |
Deferred revenue | 3,262 | 14,006 | |
Net cash provided by operating activities | 207,564 | 130,614 | |
Cash flows from investing activities: | |||
Purchases of property, plant and equipment and other | (51,275) | (42,381) | |
Proceeds from sale of assets | 2,624 | 0 | |
Net cash used in investing activities | (48,651) | (42,381) | |
Cash flows from financing activities: | |||
Issuance of common stock upon exercise of stock options | 11,402 | 10,799 | |
Debt issuance costs | 0 | (1,426) | |
Taxes paid on behalf of employees for equity activity | (6,303) | (4,184) | |
Payments of notes payable to Aptevo | 0 | (20,000) | |
Contingent consideration payments | (2,234) | (2,744) | |
Restricted cash | 0 | (1,043) | |
Purchase of treasury stock | (145) | (83) | |
Net cash provided by (used in) financing activities | 2,720 | (18,681) | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (567) | (74) | |
Net increase in cash, cash equivalents and restricted cash | 161,066 | 69,478 | |
Cash, cash equivalents and restricted cash at beginning of period | 179,335 | [1] | 271,513 |
Cash, cash equivalents and restricted cash at end of period | $ 340,401 | [1] | $ 340,991 |
[1] | As of December 31, 2017 and September 30, 2018, the balance includes $1,043 of restricted cash. |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Condensed Consolidated Statements of Cash Flows (Unaudited) [Abstract] | ||
Restricted cash | $ 1,043 | $ 1,043 |
Condensed Consolidated Statem_5
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | $0.001 Par Value Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Loss [Member] | Retained Earnings [Member] | Total |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Adoption of new accounting standard (ASC 606), net of tax | ASC 606 [Member] | $ (32,527) | $ (32,527) | ||||
Balance at Dec. 31, 2017 | $ 50 | $ 618,416 | $ (39,497) | $ (3,698) | 337,074 | 912,345 |
Balance (ASC 606 [Member]) at Dec. 31, 2017 | $ 50 | 618,416 | $ (39,497) | (3,698) | 304,547 | $ 879,818 |
Balance (in shares) at Dec. 31, 2017 | 50,619,808 | (1,214,443) | 49,405,365 | |||
Balance (in shares) (ASC 606 [Member]) at Dec. 31, 2017 | 50,619,808 | (1,214,443) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Employee equity plans activity | $ 1 | 21,762 | $ 21,763 | |||
Employee equity plans activity (in shares) | 783,777 | |||||
Treasury stock | $ (145) | (145) | ||||
Treasury stock (in shares) | (2,843) | |||||
Net income | 66,181 | 66,181 | ||||
Foreign currency translations, net of tax | (968) | (968) | ||||
Balance at Sep. 30, 2018 | $ 51 | $ 640,178 | $ (39,642) | $ (4,666) | $ 370,728 | $ 966,649 |
Balance (in shares) at Sep. 30, 2018 | 51,403,585 | (1,217,286) | 50,186,299 |
Condensed Consolidated Statem_6
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Condensed Consolidated Statement of Changes in Stockholders' Equity [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Summary of significant accounti
Summary of significant accounting policies | 9 Months Ended |
Sep. 30, 2018 | |
Summary of significant accounting policies [Abstract] | |
Summary of significant accounting policies | 1. Summary of significant accounting policies Basis of presentation and consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Emergent BioSolutions Inc. ("Emergent" or the "Company") and its wholly owned and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited consolidated financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC. In the opinion of the Company's management, any adjustments contained in the accompanying unaudited condensed consolidated financial statements are of a normal recurring nature and are necessary to present fairly the financial position of the Company as of September 30, 2018. Interim results are not necessarily indicative of results that may be expected for any other interim period or for an entire year. Significant accounting policies During the nine months ended September 30, 2018, there have been no significant changes to the Company's summary of significant accounting policies contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC, except for the new revenue recognition standard the Company adopted effective January 1, 2018. See Note 2. "Revenue recognition" for further details. Recently issued accounting standards Recently Adopted ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments " ASU 2016-18, Restricted Cash (Topic 230): Statement of Cash Flows In November 2016, the FASB issued ASU 2016-18, Restricted Cash (Topic 230): Statement of Cash Flows " ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting Not Yet Adopted ASU 2016-02, Leases (Topic 842) In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) " ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ASU 2018-11, Leases (Topic 842) Targeted Improvements In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements There are no other recently issued accounting pronouncements that are expected to have a material impact on the Company's financial position, results of operations or cash flows. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2018 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | 2. Revenue recognition In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) " Topic 605, Revenue Recognition A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account under ASC 606. For contracts with multiple performance obligations, the Company allocates the contract's transaction price to each performance obligation on a relative standalone selling price basis using the Company's best estimate of the standalone selling price of each distinct product or service in the contract. The primary method used to estimate standalone selling price is the price observed in standalone sales to customers, however when prices in standalone sales are not available the Company may use third-party pricing for similar products or services or estimate the standalone selling price. Allocation of the transaction price is determined at the contracts' inception. Once the performance obligations in the contract have been identified, the Company estimates the transaction price of the contract. The estimate includes amounts that are fixed as well as those that can vary based on expected outcomes of the activities or contractual terms. The Company's variable consideration primarily includes consideration transferred under its development contracts with the U.S. government as consideration received can vary based on developmental progression of the product candidate(s). When a contract's transaction price includes variable consideration, the Company evaluates the estimate of the variable consideration to determine whether the estimate needs to be constrained; therefore, the Company includes the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration estimates are updated at each reporting date. There were no constraints or material changes to the Company's variable consideration estimates as of or during the nine months ended September 30, 2018. To indicate the transfer of control for the Company's product sales and contract manufacturing services, it must have a present right to payment, legal title must have passed to the customer, and the customer must have the significant risks and rewards of ownership. Revenue for long-term development contracts is generally recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with transferring control of the good or service over time. The Company derives revenues primarily from the sale of its marketed medical countermeasures ("MCMs") products and contract revenues associated with development of its MCMs. The primary customer for the Company's MCM products and the primary source of funding for the development of the Company's MCM product candidate portfolio is the U.S. government. The Company's contracts for the sale of its MCM products generally have single performance obligation. Certain product sales contracts with the U.S. government include multiple performance obligations, which generally include the marketed product, stability testing associated with that product, expiry extensions and plasma collection. The Company's development contracts for its MCM product candidates generally are cost plus fixed fee arrangements, which the Company treats a single performance obligation with variable consideration. The U.S. government contracts for the sale and development of the Company's MCM products and product candidates are normally multi-year contracts. In addition, the Company performs contract manufacturing services for third parties, which includes pharmaceutical product process development, manufacturing and filling services for injectable and other sterile products, inclusive of process design, technical transfer, manufacturing validations, laboratory analytical development support, aseptic filling, lyophilization, final packaging and accelerated and ongoing stability studies. These contracts generally include a single performance obligation with a duration that is less than one-year. The Company finalized the review of its portfolio of revenue contracts that were not complete as of the adoption date and made its determination of its revenue streams as well as completed extensive contract specific reviews to determine the impact of the new standard on its historical and prospective revenue recognition. Because many of the Company's contracts with customers have unique contract terms, the Company reviewed all of its non-standard agreements in order to determine the effect of adoption. The Company determined its Centers for Innovation in Advanced Development and Manufacturing ("CIADM") contract with the ​​Biomedical Advanced Research and Development Authority ("BARDA") will have a material change in revenue recognition under the new guidance. Under ASC 606 at January 1, 2018, the Company determined that there was one performance obligation to provide ongoing manufacturing capability to the U.S. government and would recognize the consideration received in the base period on a straight-line basis over a 24-year period as the capability being created during the base period of the contract is being provided to the customer over both the base period contract term as well as 17 additional option periods. In addition, the Company determined the CIADM contract includes a significant financing component which is included in the transaction price. The Company calculated the financing component using an interest rate the Company had on its other debt obligations at inception of the contract. Prior to the adoption of ASC 606, the Company recognized revenue under the CIADM contract on a straight-line basis, based upon its estimate of the total payments to be received under the contract. The Company analyzed the estimated payments to be received on a quarterly basis to determine if an adjustment to revenue was required. As a result of the adoption of ASC 606, as of January 1, 2018, there was an increase in the deferred revenue liability of $42.4 million and an increase in deferred tax assets of $9.9 million In September 2018, the Company modified the CIADM contract under which one of the modifications reduced the 17 additional option periods to seven with the contract now scheduled to expire in June 2027. The Company determined the modification will be accounted for prospectively as a termination of the existing contract and the creation of a new contract. The Company considers accounts receivables and deferred costs associated with revenue generating contracts, that are not included in inventory or property, plant and equipment, as contract assets. As of September 30, 2018 and December 31, 2017, the Company had $77.0 million and $143.7 million, respectively, in contract assets associated with accounts receivable, When performance obligations are not transferred to a customer at the end of a reporting period, the amount allocated to those performance obligations are deferred until control of these performance obligations is transferred to the customer. The following table presents the rollforward of the contract liabilities, (in thousands) Balance at December 31, 2017 $ 30,491 Adoption of new accounting standard (ASC 606) 42,379 Balance at January 1, 2018 72,870 Deferral of revenue 18,384 Recognition of revenue included in beginning of year contract liability (15,121 ) Balance at September 30, 2018 $ 76,133 We operate in one business segment. Therefore, results of our operations are reported on a consolidated basis for purposes of segment reporting, consistent with internal management reporting. (in thousands) Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 U.S Non-U.S. U.S Non-U.S. Government Government Total Government Government Total Product sales $ 127,332 $ 5,937 $ 133,269 $ 363,254 $ 25,861 $ 389,115 Contract manufacturing - 22,172 22,172 - 71,963 71,963 Contracts and grants 16,656 1,556 18,212 46,711 3,878 50,589 Total revenues $ 143,988 $ 29,665 $ 173,653 $ 409,965 $ 101,702 $ 511,667 |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2018 | |
Acquisitions [Abstract] | |
Acquisitions | 3. Acquisitions Acquisition of ACAM2000 business On October 6, 2017, the Company completed the acquisition of the ACAM2000® (Smallpox (Vaccinia) Vaccine, Live) business of Sanofi Pasteur Biologics, LLC ("Sanofi"). This acquisition included ACAM2000, the only smallpox vaccine licensed by the FDA, a current good manufacturing practices ("cGMP") live viral manufacturing facility and office and warehouse space, both in Canton, Massachusetts, and a cGMP viral fill/finish facility in Rockville, Maryland. With this acquisition, the Company also acquired an existing 10-year contract with the Centers for Disease Control and Prevention ("CDC"), which under the terms expired in March 2018. This contract had a stated value of up to $425 million, with a remaining contract value of up to approximately $160 million as of the acquisition date, for the delivery of ACAM2000 to the U.S. Strategic National Stockpile ("SNS") This acquisition added to the Company's product portfolio and expanded the Company's manufacturing capabilities. At the closing, the Company paid $97.5 million in an upfront payment and $20 million in milestone payments earned as of the closing date tied to the achievement of certain regulatory and manufacturing-related milestones, for a total payment in cash of $117.5 million. The agreement included an additional milestone payment of up to $7.5 million upon achievement of a regulatory milestone, which was achieved in November 2017. The $7.5 million milestone payment was made during the fourth quarter of 2017. This transaction was accounted for by the Company under the acquisition method of accounting, with the Company as the acquirer. Under the acquisition method of accounting, the assets and liabilities of the ACAM2000 business were preliminarily recorded as of October 6, 2017, the acquisition date, at their respective fair values, and combined with those of the Company. The contingent purchase consideration obligation is based on a regulatory milestone. At October 6, 2017, the contingent purchase consideration obligation related to the regulatory milestone was recorded at a fair value of $2.2 million. The fair value of this obligation is based on a present value model of management's assessment of the probability of achievement of the regulatory milestone as of the acquisition date. This assessment is based on inputs that have no observable market (Level 3). The total purchase price is summarized below: (in thousands) Amount of cash paid to Sanofi $ 117,500 Fair value of contingent purchase consideration 2,200 Total purchase price $ 119,700 The table below summarizes the allocation of the purchase price based upon the estimated fair values of assets acquired at October 6, 2017. The Company did not assume any liabilities in the acquisition. The Company has finalized the purchase price allocation related to this acquisition. (in thousands) Fair value of tangible assets acquired: Inventory $ 74,876 Property, plant and equipment 19,995 Total fair value of tangible assets acquired 94,871 Acquired intangible asset 16,700 Goodwill 8,129 Total purchase price $ 119,700 The Company determined the fair value of the intangible asset using the income approach, which is based on the present value of future cash flows. The fair value measurements are based on significant unobservable inputs that are developed by the Company using estimates and assumptions of the respective market and market penetration of the Company's products. The Company determined the fair value of the ACAM2000 intangible asset using the income approach with a present value discount rate of 15.5%; this discount rate is derived from the estimated weighted-average cost of capital for substantially similar companies and assets. This is comparable to the estimated internal rate of return for the acquisition and represents the rate that market participants would use to value these intangible assets. The projected cash flows from the ACAM2000 intangible asset were based on key assumptions, including: estimates of revenues and operating profits, the life of the potential commercialized product and associated risks, and risks related to the viability of and potential alternative treatments in any future target markets. The Company has determined the ACAM2000 intangible asset will be amortized over 10 years. The Company determined the fair value of the inventory using the probability adjusted comparative sales method, which estimates the expected sales price reduced for all costs expected to be incurred to complete and dispose of the inventory with a profit on those costs. The Company determined the fair value of the property, plant and equipment utilizing either the cost approach or the sales comparison approach. The cost approach is derived by determining replacement cost of the asset and then subtracting any value that has been lost due to economic obsolescence, functional obsolescence, or physical deterioration. The sales comparison approach is derived by the determination that an asset is equal to the market price of an asset of comparable features such as design, location, size, construction, materials, use, capacity, specification, operational characteristics and other features or descriptions. The Company recorded approximately $8.1 million in goodwill related to the ACAM2000 acquisition, representing the amount of the purchase price paid in the acquisition in excess of the fair value of the tangible and intangible assets acquired. There is no goodwill for tax purposes. |
Fair value measurements
Fair value measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair value measurements [Abstract] | |
Fair value measurements | 4. Fair value measurements Contingent consideration includes liabilities measured at fair value on a recurring basis. For the three and nine months ended September 30, 2018, the contingent purchase consideration obligations associated with RSDL increased by $0.2 million and $1.8 million, respectively. During the three and nine months ended September 30, 2017, the contingent purchase consideration obligations associated with RSDL increased by $0.9 million and $1.4 million, respectively. The changes in the fair value of the RSDL contingent consideration obligations are primarily due to the expected amount and timing of future net sales, which are inputs that have no observable market (Level 3). These changes are classified in the Company's statement of operations as cost of product sales and contract manufacturing. The following table is a reconciliation of the beginning and ending balance of the liabilities, consisting only of contingent consideration, measured at fair value, using significant unobservable inputs (Level 3) during the nine months ended September 30, 2018. (in thousands) Balance at December 31, 2017 $ 12,274 Expense included in earnings 1,917 Settlements (2,234 ) Balance at September 30, 2018 $ 11,957 Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a non-recurring basis. As of September 30, 2018 and 2017 and for the quarters then ended, the Company had no significant assets or liabilities that were measured at fair value on a non-recurring basis. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2018 | |
Inventories [Abstract] | |
Inventories | 5. Inventories Inventories consisted of the following: September 30, December 31, (in thousands) 2018 2017 Raw materials and supplies $ 33,845 $ 36,069 Work-in-process 64,825 76,610 Finished goods 27,075 30,133 Total inventories $ 125,745 $ 142,812 |
Property, plant and equipment
Property, plant and equipment | 9 Months Ended |
Sep. 30, 2018 | |
Property, plant and equipment [Abstract] | |
Property, plant and equipment | 6. Property, plant and equipment Property, plant and equipment consisted of the following: September 30, December 31, (in thousands) 2018 2017 Land and improvements $ 21,848 $ 21,843 Buildings, building improvements and leasehold improvements 161,175 160,005 Furniture and equipment 217,908 206,819 Software 53,180 50,829 Construction-in-progress 141,348 100,088 Property, plant and equipment, gross 595,459 539,584 Less: Accumulated depreciation and amortization (160,384 ) (132,374 ) Total property, plant and equipment, net $ 435,075 $ 407,210 In the table presented above, as of September 30, 2018 and December 31, 2017, construction-in-progress primarily includes costs related to construction of the Company's CIADM facility. |
Intangible assets
Intangible assets | 9 Months Ended |
Sep. 30, 2018 | |
Intangible assets [Abstract] | |
Intangible assets | 7. Intangible assets During the three months ended September 30, 2018 and 2017, the Company recorded amortization expense for intangible assets of $3.9 million and $1.6 million, respectively. During the nine months ended September 30, 2018 and 2017, the Company recorded amortization expense for intangible assets of $11.7 million and $4.7 million, respectively. Amortization expense has been recorded in operating expenses, specifically selling, general and administrative and cost of product sales and contract manufacturing. As of September 30, 2018, the weighted average amortization period remaining for intangible assets was 8.2 years. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Equity | 8. Equity During the nine months ended September 30, 2018, the Company granted 0.4 million shares of stock options and 0.4 million shares of restricted stock units under the Fourth Amended and Restated Emergent BioSolutions Inc. 2006 Stock Incentive Plan (the "Plan"). The grants vest over three equal annual installments beginning on the day prior to the anniversary of the grant date. On May 24, 2018, the Company's stockholders approved an increase in the number of shares issuable under the Plan by 3.0 million shares, to a total of 21.9 million shares, and extended the plan term to May 23, 2028. |
Income taxes
Income taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income taxes [Abstract] | |
Income taxes | 9. Income taxes The estimated effective annual tax rate for the Company, which excludes discrete adjustments, was 26% and 32% for the nine months ended September 30, 2018 and 2017, respectively. The decrease in the estimated effective annual tax rate is primarily due to the impact of the Tax Reform Act enacted on December 22, 2017, which reduced the U.S. federal corporate income tax rate from 35% to 21% For the nine months ended September 30, 2018 and 2017, the Company recorded a discrete tax benefit of $8.7 million and $3.3 million, respectively, primarily associated with equity awards activity and finalizing positions taken on the Company's 2017 US federal and state income tax filings. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. For the nine months ended September 30, 2018, the Company revised certain provisional estimates recognized in 2017 upon the filing of US federal and state income tax filings. |
Earnings per share
Earnings per share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings per share [Abstract] | |
Earnings per share | 10. Earnings per share The following table presents the calculation of basic and diluted net income per share: Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except share and per share data) 2018 2017 2018 2017 Numerator: Net income $ 20,945 $ 33,551 $ 66,181 $ 48,652 Interest expense on convertible debt, net of tax - 704 - 2,445 Amortization of convertible debt issuance costs, net of tax - 195 - 586 Net income, adjusted $ 20,945 $ 34,450 $ 66,181 $ 51,683 Denominator: Weighted-average number of shares—basic 50,071,632 41,222,504 49,851,082 40,989,813 Dilutive securities—equity awards 1,415,364 1,148,857 1,338,598 1,003,794 Dilutive securities—convertible debt - 8,096,468 - 8,096,481 Weighted-average number of shares—diluted 51,486,996 50,467,829 51,189,680 50,090,088 Net income per share - basic $ 0.42 $ 0.81 $ 1.33 $ 1.19 Net income per share - diluted $ 0.41 $ 0.68 $ 1.29 $ 1.03 For the three and nine months ended September 30, 2018 and 2017, basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. For the three and nine months ended September 30, 2018, diluted earnings per share was computed using the "treasury method" by dividing the net income by the weighted average number of shares of common stock outstanding during the period. The weighted average number of shares is adjusted for the potential dilutive effect of the exercise of stock options, and the vesting of restricted stock units and performance stock units. For the three and nine months ended September 30, 2017, diluted earnings per share is computed using the "if-converted" method by dividing the net income adjusted for interest expense and amortization of debt issuance cost, both net of tax, associated with the 2.875% Convertible Senior Notes due 2021 (the "Notes") by the weighted average number of shares of common stock outstanding during the period. The weighted average number of shares is adjusted for the potential dilutive effect of the exercise of stock options; and the vesting of restricted stock units and performance stock units along with the assumption of the conversion of the Notes, at the beginning of the period. The Company terminated the conversion rights under the Notes during the fourth quarter of 2017. For the three and nine months ended September 30, 2018 and 2017, there were no stock options excluded from the calculation of diluted earnings per share. |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2018 | |
Litigation [Abstract] | |
Litigation | 11. Litigation Shareholder Class Action Lawsuit filed July 19, 2016 On July 19, 2016, Plaintiff William Sponn ("Sponn"), filed a putative class action complaint in the United States District Court for the District of Maryland on behalf of purchasers of the Company's common stock between January 11, 2016 and June 21, 2016, inclusive (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act of 1934 against the Company and certain of its senior officers and directors, collectively, the Defendants. The complaint alleges, among other things, that the Company made materially false and misleading statements about the government's demand for BioThrax and expectations that the Company's five-year exclusive procurement contract with HHS would be renewed and omitted certain material facts. Sponn is seeking unspecified damages, including legal costs. On October 25, 2016, the Court added City of Cape Coral Municipal Firefighters' Retirement Plan and City of Sunrise Police Officers' Retirement Plan as plaintiffs and appointed them Lead Plaintiffs and Robins Geller Rudman & Dowd LLP as Lead Counsel. On December 27, 2016, the Plaintiffs filed an amended complaint that cites the same class period, names the same defendants and makes similar allegations to the original complaint. The Company filed a Motion to Dismiss on February 27, 2017. The Plaintiffs filed an opposition brief on April 28, 2017. The Company's Motion to Dismiss was heard and denied on July 6, 2017. The Company filed its answer on July 28, 2017. The parties then engaged in the process of exchanging discovery. The Plaintiffs filed an amended motion for class certification and appointment of Sponn and Geoffrey L. Flagstad as lead plaintiffs on December 20, 2017. A hearing on that motion was heard on May 2, 2018. On June 8, 2018 the Court granted class certification with a shortened class period, May 5, 2016 to June 21, 2016. The Defendants have denied, and continue to deny any and all allegations of fault, liability, wrongdoing, or damages. However, recognizing the risk, time, and expense of litigating any case to trial, on August 27, 2018, the Company reached an agreement in principle with Plaintiffs to settle all of the related claims of any individual plaintiff that purchased Company stock from January 11, 2016 to June 21, 2016, for $6.5 million, an amount that will be paid by the Company's insurance carrier. The settlement requires no payment by any of the Defendants. The Company and Defendants continue to deny any and all liability. The parties executed the settlement agreement on October 16, 2018, and filed the agreement with the court on October 17, 2018. The court granted preliminary approval of the settlement on October 18, 2018 and has scheduled a hearing regarding final approval for January 22, 2019. Although the court has granted preliminary approval, the court could decide not to grant final approval of the settlement or change terms of the settlement, and the law requires that individual plaintiffs have the right to opt-out of the settlement and bring their own, individual claims. The Company, therefore, at this time, cannot predict the results of this lawsuit and possible other legal proceedings with certainty. Defendants continue to believe that the allegations in the complaint are without merit. As of the date of this filing, the range of potential loss cannot be determined or estimated. |
Subsequent events
Subsequent events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent events [Abstract] | |
Subsequent events | 12. Subsequent events Acquisitions Acquisition of PaxVax On October 4, 2018, the Company completed the acquisition of PaxVax Holding Company Ltd. ("PaxVax"), a company focused on developing, manufacturing, and commercializing specialty vaccines that protect against existing and emerging infectious diseases. This acquisition includes Vivotif® (Typhoid Vaccine Live Oral Ty21a), the only oral vaccine licensed by the FDA for the prevention of typhoid fever, Vaxchora® (Cholera Vaccine, Live, Oral), the only FDA-licensed vaccine for the prevention of cholera, an adenovirus 4/7 vaccine candidate being developed for military personnel under contract with the DoD, and additional clinical-stage vaccine candidates targeting chikungunya and other emerging infectious diseases, European-based current good manufacturing practices ("cGMP") biologics manufacturing facilities, and approximately 250 employees including those in research and development, manufacturing, and commercial operations with a specialty vaccines salesforce in the U.S. and in select European countries. At the closing, the Company paid a cash purchase price of $270 million, using a combination of cash-on-hand and borrowings under the Company's senior secured credit agreement. This transaction will be accounted for by the Company under the acquisition method of accounting, with the Company as the acquirer. Under the acquisition method of accounting, the assets and liabilities of PaxVax will be recorded as of October 4, 2018, the acquisition date, at their respective fair values, and combined with those of the Company. Acquisition of Adapt On October 15, 2018, the Company completed the acquisition of Adapt Pharma Limited ("Adapt") and its NARCAN® (naloxone HCl) Nasal Spray marketed product, the first and only needle-free formulation of naloxone approved by the FDA and Health Canada, for the emergency treatment of known or suspected opioid overdose as manifested by respiratory and/or central nervous system depression. This acquisition includes the NARCAN Nasal Spray marketed product and a development pipeline of new treatment and delivery options to address opioid overdose, and approximately 50 employees, located in the U.S., Canada, and Ireland, including those responsible for supply chain management, research and development, government affairs, and commercial operations. Long-term debt This transaction will be accounted for by the Company under the acquisition method of accounting, with the Company as the acquirer. Under the acquisition method of accounting, the assets and liabilities of Adapt will be recorded as of October 15, 2018, the acquisition date, at their respective fair values, and combined with those of the Company. As of the date of this filing, the Company has not completed the initial accounting for the Adapt acquisition due to the Company's need to continue to gather data necessary to complete the fair value valuation of the assets acquired and liabilities assumed. Legal proceedings associated with the acquisition of Adapt ANDA Litigation On September 14, 2018, Adapt Pharma Inc., Adapt Pharma Operations Limited and Adapt Pharma Ltd. (collectively, "Adapt Pharma") and Opiant Pharmaceuticals, Inc. ("Opiant") received notice from Perrigo UK FINCO Limited Partnership ("Perrigo"), that Perrigo had filed an Abbreviated New Drug Application ("ANDA"), with the United States Food and Drug Administration (the "FDA"), seeking regulatory approval to market a generic version of NARCAN® (naloxone hydrochloride) Nasal Spray 4mg/spray before the expiration of U.S. Patent Nos. 9,211,253 (the "'253 Patent"), 9,468,747 (the "'747 Patent"), 9,561,177 (the "'177 Patent"), 9,629,965 (the "'965 Patent") and 9,775,838 (the "'838 Patent"). Perrigo's notice letter asserts that its generic product will not infringe any valid and enforceable claim of these patents. On October 25, 2018, Emergent BioSolutions' Adapt Pharma subsidiaries and Opiant (collectively, the "Plaintiffs") filed a complaint for patent infringement against Perrigo in the United States District Court for the District of New Jersey arising from Perrigo's ANDA filing with the FDA. As a result of timely filing the lawsuit in accordance with the Hatch-Waxman Act, a 30-month stay of approval will be imposed by the FDA on Perrigo's ANDA, which is expected to remain in effect until March 2021 absent an earlier judgment, unfavorable to the Plaintiffs, by the Court. The Plaintiffs seek, among other relief, an order that the effective date of FDA approval of the ANDA be a date no earlier than the expiration of each of the '253 Patent, the '747 Patent, the '177 Patent, the '965 Patent and the '838 Patent, as well as equitable relief enjoining Perrigo from infringing these patents, and monetary relief as a result of any such infringement. Emergent continues to vigorously enforce the intellectual property portfolio related to NARCAN® Nasal Spray. On or about September 13, 2016, Adapt Pharma Inc. and Adapt Pharma Operations Limited and Opiant received notice from Teva that Teva had filed an ANDA with the FDA seeking regulatory approval to market a generic version of NARCAN® (naloxone hydrochloride) Nasal Spray 4 mg/spray before the expiration of U.S. Patent No. 9,211,253 (the "'253 Patent"). Adapt Pharma Inc. and Adapt Pharma Operations Limited and Opiant received additional notices from Teva relating to the '747, the '177, the '965, and the '838 Patents. Teva's notice letters assert that the commercial manufacture, use or sale of its generic drug product described in its ANDA will not infringe the '253, the '747, the '177, the '965, or the '838 Patent, or that the '253, the '747, the '177, the '965, and the '838 Patents are invalid or unenforceable. Adapt Pharma Inc., Adapt Pharma Operations Limited and Opiant filed a complaint for patent infringement against Teva in the United States District Court for the District of New Jersey with respect to the '253 Patent. Adapt Pharma Inc. and Adapt Pharma Operations Limited and Opiant also filed complaints for patent infringement against Teva in the United States District Court for the District of New Jersey with respect to the '747, the '177, the '965, and the '838 Patents. All five proceedings have been consolidated. In the complaints described in the prior two paragraphs above, the Plaintiffs seek, among other relief, an order that the effective date of FDA approval of the Teva ANDA be a date not earlier than the expiration of the applicable patent, as well as equitable relief enjoining Teva from making, using, offering to sell, selling, or importing the product that is the subject of the Teva ANDA until after the expiration of the applicable patent, and monetary relief as a result of any such infringement. As of the date of this filing, the range of potential gain cannot be determined or estimated for the above mentioned complaints. Long-term debt On September 29, 2017, the Company entered into a senior secured credit agreement (the "2017 Credit Agreement") with four lending financial institutions. The 2017 Credit Agreement provided for a senior secured credit facility of up to $200 million through September 29, 2022. The 2017 Credit Agreement also included a $100 million accordion feature, which provided for an additional $100 million in revolver or incremental term loans, at the option of the Company, resulting in a potential aggregate commitment of up to $300 million. On October 4, 2018, the Company drew down $100 million under the 2017 Credit Agreement to pay for a portion of the purchase price of PaxVax. On October 15, 2018, the Company entered into an Amended and Restated Credit Agreement, dated as of October 15, 2018 (the "Amended Credit Agreement"), which amended and restated the Company's 2017 Credit Agreement, dated as of September 29, 2017. The Amended Credit Agreement (i) increased the revolving credit facility (the "Revolving Credit Facility") from $200 million to $600 million, (ii) extended the maturity of the Revolving Credit Facility from September 29, 2022 to October 13, 2023, (iii) provided for a term loan in the original principal amount of $450 million (the "Term Loan Facility," and together with the Revolving Credit Facility, the "Senior Secured Credit Facility"), (iv) added several additional lenders, (v) amended the applicable margin such that borrowings with respect to the Revolving Credit Facility will bear interest at the annual rate described below, (vi) amended the provision relating to incremental credit facilities such that the Company may request one or more incremental term loan facilities, or one or more increases in the commitments under the Revolving Credit Facility (each an "Incremental Loan"), in any amount if, on a pro forma basis, the Company's consolidated secured net leverage ratio does not exceed 2.50 to 1.00 after such incurrence, plus $200 million and (vii) amended the maximum consolidated net leverage ratio financial covenant from 3.50 to 1.0 (subject to 0.50% step up in connection with material acquisitions) to the maximum consolidated net leverage ratio described below. Prior to entering into the Amended Credit Agreement, the outstanding principal balance under the Revolving Credit Facility was $100 million. On October 15, 2018, the Company borrowed an additional $218 million, bringing the total borrowings under the Revolving Credit Facility to $318 million and the full $450 million under the Term Loan Facility. Such borrowings were used to finance a portion of the consideration for the Adapt acquisition and related fees, costs and expenses and the remainder will be used for general corporate purposes. The Revolving Credit Facility may be utilized for working capital, permitted acquisitions, capital expenditures and other general corporate purposes. The Revolving Credit Facility is available for borrowing through October 12, 2023 (unless earlier terminated). Borrowings under the Revolving Credit Facility and the Term Loan Facility will bear interest at a rate per annum equal to (a) a eurocurrency rate plus a margin ranging from 1.25% to 2.00% per annum, depending on the Company's consolidated net leverage ratio or (b) a base rate (which is the highest of the prime rate, the federal funds rate plus 0.50%, and a eurocurrency rate for an interest period of one month plus 1%) plus a margin ranging from 0.25% to 1.00%, depending on the Company's consolidated net leverage ratio. The Company is required to make quarterly payments under the Amended Credit Agreement for accrued and unpaid interest on the outstanding principal balance under the Revolving Credit Facility and the Term Loan Facility, based on the above interest rates. In addition, the Company is required to pay commitment fees ranging from 0.15% to 0.30% per annum, depending on the Company's consolidated net leverage ratio, in respect of the average daily unused commitments under the Revolving Credit Facility. The Company is to repay the outstanding principal amount of the Term Loan Facility in quarterly installments based on an annual percentage equal to 2.5% of the original principal amount of the Term Loan Facility during each of the first two years of the Term Loan Facility, 5% of the original principal amount of the Term Loan Facility during the third year of the Term Loan Facility and 7.5% of the original principal amount of the Term Loan Facility during each year of the remainder of the term of the Term Loan Facility until the maturity date of the Term Loan Facility, at which time the entire unpaid principal balance of the Term Loan Facility will be due and payable. The Company has the right to prepay the Term Loan Facility without premium or penalty. The Revolving Credit Facility and the Term Loan Facility mature (unless earlier terminated) on October 13, 2023. The Amended Credit Agreement also provides for mandatory prepayments of the Term Loan Facility in the event the Company or its Subsidiaries (a) incur indebtedness not otherwise permitted under the Amended Credit Agreement or (b) receive cash proceeds in excess of $100 million during the term of the Senior Secured Credit Facility from certain dispositions of property or from casualty events involving their property, subject to certain reinvestment rights. The Amended Credit Agreement contains affirmative and negative covenants customary for financings of this type. Negative covenants in the Amended Credit Agreement, among other things, limit the ability of the Company to: incur indebtedness and liens; dispose of assets; make investments including loans, advances, guarantees, or acquisitions (other than permitted acquisitions, subject to compliance with the financial covenants and certain other conditions); and enter into certain merger or consolidation transactions. The Amended Credit Agreement also contains financial covenants, including (1) a minimum consolidated debt service coverage ratio of 2.50 to 1.00, and (2) a maximum consolidated net leverage ratio of 4.00 to 1.00 through September 29, 2019, 3.75 to 1.00 from September 30, 2019 through September 29, 2020 and 3.50 to 1.00 thereafter, which may be adjusted to 4.00 to 1.00 for a four quarter period in connection with a material permitted acquisition, subject to the terms and conditions of the Amended Credit Agreement. Each of the ratios referred to in the foregoing clauses (1) and (2) is calculated on a consolidated basis for each consecutive four fiscal quarter period. |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of significant accounting policies [Abstract] | |
Basis of presentation and consolidation | Basis of presentation and consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Emergent BioSolutions Inc. ("Emergent" or the "Company") and its wholly owned and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited consolidated financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC. In the opinion of the Company's management, any adjustments contained in the accompanying unaudited condensed consolidated financial statements are of a normal recurring nature and are necessary to present fairly the financial position of the Company as of September 30, 2018. Interim results are not necessarily indicative of results that may be expected for any other interim period or for an entire year. Significant accounting policies During the nine months ended September 30, 2018, there have been no significant changes to the Company's summary of significant accounting policies contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC, except for the new revenue recognition standard the Company adopted effective January 1, 2018. See Note 2. "Revenue recognition" for further details. |
Recently issued accounting standards | Recently issued accounting standards Recently Adopted ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments " ASU 2016-18, Restricted Cash (Topic 230): Statement of Cash Flows In November 2016, the FASB issued ASU 2016-18, Restricted Cash (Topic 230): Statement of Cash Flows " ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting Not Yet Adopted ASU 2016-02, Leases (Topic 842) In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) " ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ASU 2018-11, Leases (Topic 842) Targeted Improvements In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements There are no other recently issued accounting pronouncements that are expected to have a material impact on the Company's financial position, results of operations or cash flows. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue Recognition [Abstract] | |
Rollforward of Contract Liabilities | When performance obligations are not transferred to a customer at the end of a reporting period, the amount allocated to those performance obligations are deferred until control of these performance obligations is transferred to the customer. The following table presents the rollforward of the contract liabilities, (in thousands) Balance at December 31, 2017 $ 30,491 Adoption of new accounting standard (ASC 606) 42,379 Balance at January 1, 2018 72,870 Deferral of revenue 18,384 Recognition of revenue included in beginning of year contract liability (15,121 ) Balance at September 30, 2018 $ 76,133 |
Disaggregation of Revenue | We operate in one business segment. Therefore, results of our operations are reported on a consolidated basis for purposes of segment reporting, consistent with internal management reporting. (in thousands) Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 U.S Non-U.S. U.S Non-U.S. Government Government Total Government Government Total Product sales $ 127,332 $ 5,937 $ 133,269 $ 363,254 $ 25,861 $ 389,115 Contract manufacturing - 22,172 22,172 - 71,963 71,963 Contracts and grants 16,656 1,556 18,212 46,711 3,878 50,589 Total revenues $ 143,988 $ 29,665 $ 173,653 $ 409,965 $ 101,702 $ 511,667 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Acquisitions [Abstract] | |
Total Purchase Price | The total purchase price is summarized below: (in thousands) Amount of cash paid to Sanofi $ 117,500 Fair value of contingent purchase consideration 2,200 Total purchase price $ 119,700 |
Allocation of Purchase Price Based Upon Estimated Fair Values of Assets Acquired and Liabilities Assumed | The table below summarizes the allocation of the purchase price based upon the estimated fair values of assets acquired at October 6, 2017. The Company did not assume any liabilities in the acquisition. The Company has finalized the purchase price allocation related to this acquisition. (in thousands) Fair value of tangible assets acquired: Inventory $ 74,876 Property, plant and equipment 19,995 Total fair value of tangible assets acquired 94,871 Acquired intangible asset 16,700 Goodwill 8,129 Total purchase price $ 119,700 |
Fair value measurements (Tables
Fair value measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair value measurements [Abstract] | |
Reconciliation of Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) | The following table is a reconciliation of the beginning and ending balance of the liabilities, consisting only of contingent consideration, measured at fair value, using significant unobservable inputs (Level 3) during the nine months ended September 30, 2018. (in thousands) Balance at December 31, 2017 $ 12,274 Expense included in earnings 1,917 Settlements (2,234 ) Balance at September 30, 2018 $ 11,957 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventories [Abstract] | |
Inventories | Inventories consisted of the following: September 30, December 31, (in thousands) 2018 2017 Raw materials and supplies $ 33,845 $ 36,069 Work-in-process 64,825 76,610 Finished goods 27,075 30,133 Total inventories $ 125,745 $ 142,812 |
Property, plant and equipment (
Property, plant and equipment (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property, plant and equipment [Abstract] | |
Property, Plant and Equipment | Property, plant and equipment consisted of the following: September 30, December 31, (in thousands) 2018 2017 Land and improvements $ 21,848 $ 21,843 Buildings, building improvements and leasehold improvements 161,175 160,005 Furniture and equipment 217,908 206,819 Software 53,180 50,829 Construction-in-progress 141,348 100,088 Property, plant and equipment, gross 595,459 539,584 Less: Accumulated depreciation and amortization (160,384 ) (132,374 ) Total property, plant and equipment, net $ 435,075 $ 407,210 |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings per share [Abstract] | |
Basic and Diluted Net Income per Share | The following table presents the calculation of basic and diluted net income per share: Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except share and per share data) 2018 2017 2018 2017 Numerator: Net income $ 20,945 $ 33,551 $ 66,181 $ 48,652 Interest expense on convertible debt, net of tax - 704 - 2,445 Amortization of convertible debt issuance costs, net of tax - 195 - 586 Net income, adjusted $ 20,945 $ 34,450 $ 66,181 $ 51,683 Denominator: Weighted-average number of shares—basic 50,071,632 41,222,504 49,851,082 40,989,813 Dilutive securities—equity awards 1,415,364 1,148,857 1,338,598 1,003,794 Dilutive securities—convertible debt - 8,096,468 - 8,096,481 Weighted-average number of shares—diluted 51,486,996 50,467,829 51,189,680 50,090,088 Net income per share - basic $ 0.42 $ 0.81 $ 1.33 $ 1.19 Net income per share - diluted $ 0.41 $ 0.68 $ 1.29 $ 1.03 |
Revenue Recognition (Details)
Revenue Recognition (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)PeriodSegment | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)Period | |
Revenue [Abstract] | |||||
Transaction price | $ 599,000 | $ 599,000 | |||
Number of additional option periods | Period | 7 | 17 | |||
Contract revenue | 173,653 | $ 149,434 | $ 511,667 | $ 367,064 | |
Number of operating segments | Segment | 1 | ||||
Contract with Customer, Asset and Liability [Abstract] | |||||
Accounts receivable | 76,955 | $ 76,955 | $ 143,653 | ||
Deferred costs | 4,000 | 4,000 | 2,900 | ||
Contract with Customer, Liability [Abstract] | |||||
Contract liability | 76,133 | 76,133 | |||
Deferral of revenue | 18,384 | ||||
Recognition of revenue included in beginning of year contract liability | (15,121) | ||||
Contract liability | $ 76,133 | $ 76,133 | |||
Accounting Standards Update 2014-09 [Member] | |||||
Contract with Customer, Liability [Abstract] | |||||
Contract liability | 72,870 | ||||
Contract liability | $ 72,870 | ||||
CIADM [Member] | |||||
Revenue [Abstract] | |||||
Term of contract | 24 years | ||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | |||||
Contract with Customer, Liability [Abstract] | |||||
Contract liability | $ 42,379 | ||||
Contract liability | 42,379 | ||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | CIADM [Member] | Accounting Standards Update 2014-09 [Member] | |||||
Revenue [Abstract] | |||||
Retained earnings | 32,500 | ||||
Deferred tax assets | 9,900 | ||||
Contract with Customer, Liability [Abstract] | |||||
Contract liability | 42,400 | ||||
Contract liability | 42,400 | ||||
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | |||||
Contract with Customer, Liability [Abstract] | |||||
Contract liability | 30,491 | ||||
Contract liability | $ 30,491 |
Revenue Recognition, Disaggrega
Revenue Recognition, Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of revenue [Abstract] | ||||
Total revenues | $ 173,653 | $ 149,434 | $ 511,667 | $ 367,064 |
U.S. Government [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total revenues | 143,988 | 409,965 | ||
Non-U.S. Government [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total revenues | 29,665 | 101,702 | ||
Product Sales [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total revenues | 133,269 | 114,296 | 389,115 | 259,875 |
Product Sales [Member] | U.S. Government [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total revenues | 127,332 | 363,254 | ||
Product Sales [Member] | Non-U.S. Government [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total revenues | 5,937 | 25,861 | ||
Contract Manufacturing [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total revenues | 22,172 | 18,912 | 71,963 | 52,700 |
Contract Manufacturing [Member] | U.S. Government [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total revenues | 0 | 0 | ||
Contract Manufacturing [Member] | Non-U.S. Government [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total revenues | 22,172 | 71,963 | ||
Contracts and Grants [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total revenues | 18,212 | $ 16,226 | 50,589 | $ 54,489 |
Contracts and Grants [Member] | U.S. Government [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total revenues | 16,656 | 46,711 | ||
Contracts and Grants [Member] | Non-U.S. Government [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total revenues | $ 1,556 | $ 3,878 |
Revenue Recognition, Performanc
Revenue Recognition, Performance Obligations (Details) $ in Millions | Sep. 30, 2018USD ($) |
Performance Obligations [Abstract] | |
Performance obligations expected to be satisfied | $ 599 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 | |
Performance Obligations [Abstract] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 24 months |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | Oct. 06, 2017 | Sep. 30, 2018 | Dec. 31, 2017 |
Fair value of tangible assets acquired and liabilities assumed [Abstract] | |||
Goodwill | $ 49,130 | $ 49,130 | |
Sanofi [Member] | |||
Summary of total purchase price [Abstract] | |||
Amount of cash paid to Sanofi | $ 117,500 | ||
Fair value of contingent purchase consideration | 2,200 | ||
Total purchase price | 119,700 | ||
Fair value of tangible assets acquired and liabilities assumed [Abstract] | |||
Inventory | 74,876 | ||
Property, plant and equipment | 19,995 | ||
Total fair value of tangible assets acquired and liabilities assumed | 94,871 | ||
Acquired intangible asset | 16,700 | ||
Goodwill | 8,129 | ||
Total purchase price | $ 119,700 | ||
ACAM2000 [Member] | |||
Acquisitions [Abstract] | |||
Term of contract under acquisition | 10 years | ||
Value of contract | $ 425,000 | ||
Amount for deliveries of product to the SNS | 160,000 | ||
Upfront cash payment | 97,500 | ||
Amount of payment for manufacturing related milestones | 20,000 | ||
Amount of payment for regulatory related milestones | $ 7,500 | $ 7,500 | |
Fair value of tangible assets acquired and liabilities assumed [Abstract] | |||
Amortization period of intangible asset | 10 years | ||
ACAM2000 [Member] | Discount Rate [Member] | |||
Fair value of tangible assets acquired and liabilities assumed [Abstract] | |||
Present value discount rate | 15.50% |
Fair value measurements (Detail
Fair value measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Unobservable Input Reconciliation [Roll Forward] | ||||
Balance, beginning of period | $ 12,274 | |||
Expense included in earnings | 1,917 | |||
Settlements | (2,234) | |||
Balance, end of period | $ 11,957 | 11,957 | ||
RSDL [Member] | ||||
Unobservable Input Reconciliation [Roll Forward] | ||||
Change in fair value of contingent obligations | $ 200 | $ 900 | $ 1,800 | $ 1,400 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Inventories [Abstract] | ||
Raw materials and supplies | $ 33,845 | $ 36,069 |
Work-in-process | 64,825 | 76,610 |
Finished goods | 27,075 | 30,133 |
Total inventories | $ 125,745 | $ 142,812 |
Property, plant and equipment_2
Property, plant and equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | $ 595,459 | $ 539,584 |
Less: Accumulated depreciation and amortization | (160,384) | (132,374) |
Total Property, plant and equipment, net | 435,075 | 407,210 |
Land and Improvements [Member] | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 21,848 | 21,843 |
Buildings, Building Improvements and Leasehold Improvements [Member] | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 161,175 | 160,005 |
Furniture and Equipment [Member] | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 217,908 | 206,819 |
Software [Member] | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 53,180 | 50,829 |
Construction-In-Progress [Member] | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | $ 141,348 | $ 100,088 |
Intangible assets (Details)
Intangible assets (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Intangible assets [Abstract] | ||||
Amortization | $ 3.9 | $ 1.6 | $ 11.7 | $ 4.7 |
Weighted average amortization period | 8 years 2 months 12 days |
Equity (Details)
Equity (Details) - 2006 Plan [Member] shares in Millions | May 24, 2018shares | Sep. 30, 2018Installmentshares |
Stock issued or granted during period [Abstract] | ||
Number of installments | Installment | 3 | |
Increase in number of shares issuable under the plan (in shares) | 3 | |
Total number of shares issuable under the plan (in shares) | 21.9 | |
Extended plan term date | May 23, 2028 | |
Stock Options [Member] | ||
Stock issued or granted during period [Abstract] | ||
Stock options granted (in shares) | 0.4 | |
Restricted Stock Units [Member] | ||
Stock issued or granted during period [Abstract] | ||
Restricted stock units granted (in shares) | 0.4 |
Income taxes (Details)
Income taxes (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Income taxes [Abstract] | |||
Effective annual tax rate | 26.00% | 32.00% | |
Federal corporate tax rate | 21.00% | 35.00% | |
Discrete tax benefit | $ 8.7 | $ 3.3 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Numerator [Abstract] | |||||
Net Income | $ 20,945 | $ 33,551 | $ 66,181 | $ 48,652 | |
Interest expense, net of tax | 0 | 704 | 0 | 2,445 | |
Amortization of debt issuance costs, net of tax | 0 | 195 | 0 | 586 | |
Net income, adjusted | $ 20,945 | $ 34,450 | $ 66,181 | $ 51,683 | |
Denominator [Abstract] | |||||
Weighted-average number of shares-basic (in shares) | 50,071,632 | 41,222,504 | 49,851,082 | 40,989,813 | |
Dilutive securities-equity awards (in shares) | 1,415,364 | 1,148,857 | 1,338,598 | 1,003,794 | |
Dilutive securities-convertible debt (in shares) | 0 | 8,096,468 | 0 | 8,096,481 | |
Weighted-average number of shares-diluted (in shares) | 51,486,996 | 50,467,829 | 51,189,680 | 50,090,088 | |
Net income per share-basic (in dollars per share) | $ 0.42 | $ 0.81 | $ 1.33 | $ 1.19 | |
Net income per share-diluted (in dollars per share) | [1] | $ 0.41 | $ 0.68 | $ 1.29 | $ 1.03 |
Convertible debt [Member] | |||||
Antidilutive shares excluded from computation of earnings per share [Abstract] | |||||
Interest rate percentage | 2.875% | 2.875% | |||
[1] | See "Earnings per share" footnote for details on calculation. |
Subsequent events, Acquisitions
Subsequent events, Acquisitions (Details) - Subsequent Event [Member] | Oct. 15, 2018USD ($)Employee$ / sharesshares | Oct. 04, 2018USD ($)Employee |
PaxVax [Member] | ||
Subsequent Event [Line Items] | ||
Number of employees | Employee | 250 | |
Cash paid for acquisition | $ 270,000,000 | |
Adapt Pharma [Member] | ||
Subsequent Event [Line Items] | ||
Number of employees | Employee | 50 | |
Cash paid for acquisition | $ 575,000,000 | |
Common stock issued for acquisition (in shares) | shares | 733,309 | |
Number of trading days considered to determine share price for acquisition | 10 days | |
Number of trading days before closing to determine share price for acquisition | 2 days | |
Share price (in dollars per share) | $ / shares | $ 65.28 | |
Amount of common stock issued for acquisition including adjustments | $ 47,870,412 | |
Adapt Pharma [Member] | Maximum [Member] | ||
Subsequent Event [Line Items] | ||
Remaining consideration payable for acquisition cash amount | $ 100,000,000 |
Subsequent events, Long-term de
Subsequent events, Long-term debt (Details) $ in Millions | Oct. 15, 2018USD ($) | Sep. 29, 2017USD ($)Institution | Oct. 04, 2018USD ($) |
2017 Credit Agreement [Member] | |||
Long-term Debt [Abstract] | |||
Number of lending institutions | Institution | 4 | ||
Current borrowing capacity | $ 200 | ||
Maturity date | Sep. 29, 2022 | ||
Borrowing capacity with accordion feature | $ 100 | ||
Maximum borrowing capacity | $ 300 | ||
Subsequent Event [Member] | 2017 Credit Agreement [Member] | |||
Long-term Debt [Abstract] | |||
Amount drew down under the facility | $ 100 | ||
Subsequent Event [Member] | Amended Credit Agreement [Member] | Minimum [Member] | |||
Long-term Debt [Abstract] | |||
Commitment fee percentage | 0.15% | ||
Subsequent Event [Member] | Amended Credit Agreement [Member] | Maximum [Member] | |||
Long-term Debt [Abstract] | |||
Commitment fee percentage | 0.30% | ||
Subsequent Event [Member] | Amended Credit Agreement [Member] | Eurocurrency [Member] | |||
Long-term Debt [Abstract] | |||
Debt instrument, basis spread on variable rate | 1.00% | ||
Debt instrument, term of variable rate | 1 month | ||
Subsequent Event [Member] | Amended Credit Agreement [Member] | Eurocurrency [Member] | Minimum [Member] | |||
Long-term Debt [Abstract] | |||
Debt instrument, basis spread on variable rate | 1.25% | ||
Subsequent Event [Member] | Amended Credit Agreement [Member] | Eurocurrency [Member] | Maximum [Member] | |||
Long-term Debt [Abstract] | |||
Debt instrument, basis spread on variable rate | 2.00% | ||
Subsequent Event [Member] | Amended Credit Agreement [Member] | Base Rate [Member] | Minimum [Member] | |||
Long-term Debt [Abstract] | |||
Debt instrument, basis spread on variable rate | 0.25% | ||
Subsequent Event [Member] | Amended Credit Agreement [Member] | Base Rate [Member] | Maximum [Member] | |||
Long-term Debt [Abstract] | |||
Debt instrument, basis spread on variable rate | 1.00% | ||
Subsequent Event [Member] | Amended Credit Agreement [Member] | Federal Funds Rate [Member] | |||
Long-term Debt [Abstract] | |||
Debt instrument, basis spread on variable rate | 0.50% | ||
Subsequent Event [Member] | Amended Credit Agreement [Member] | Revolving Credit Facility [Member] | |||
Long-term Debt [Abstract] | |||
Current borrowing capacity | $ 600 | ||
Maturity date | Oct. 13, 2023 | ||
Consolidated secured net leverage ratio | 2.50 | ||
Debt covenant, net leverage ratio | 3.50 | ||
Amount required for net leverage ratio | $ 200 | ||
Percentage of debt covenant, net leverage ratio, step up in connection with material acquistions | 0.50% | ||
Outstanding credit facility | $ 318 | $ 100 | |
Additional amount borrowed under the facility | $ 218 | ||
Subsequent Event [Member] | Amended Credit Agreement [Member] | Revolving Credit Facility [Member] | Minimum [Member] | |||
Long-term Debt [Abstract] | |||
Debt covenant, consolidated debt service coverage ratio, minimum | 2.50 | ||
Subsequent Event [Member] | Amended Credit Agreement [Member] | Revolving Credit Facility [Member] | Maximum [Member] | |||
Long-term Debt [Abstract] | |||
Debt covenant, leverage ratio through September 29, 2019 | 4 | ||
Debt covenant, leverage ratio from September 30, 2019 to September 29, 2020 | 3.75 | ||
Debt covenant, leverage ratio thereafter | 3.50 | ||
Debt covenant, leverage ratio adjusted for forth quarter period | 4 | ||
Subsequent Event [Member] | Amended Credit Agreement [Member] | Term Loan Facility [Member] | |||
Long-term Debt [Abstract] | |||
Current borrowing capacity | $ 450 | ||
Percentage of original principal amount required to repay in the first two years | 2.50% | ||
Percentage of original principal amount required to repay during the third year | 5.00% | ||
Percentage of original principal amount required to repay remaining year | 7.50% | ||
Cash proceeds excess amount from dispositions of property or casualty events subject to certain reinvestment right | $ 100 |