Inventory valuation
We capitalize the costs of rawmaterials that we purchase for use in producing our drugs because until we
use these rawmaterials they have alternative future uses. We include in inventory rawmaterial costs for drugs
that we manufacture for our partners under contractual terms and that we use primarily in our clinical
development activities and drug products. We can use each of our rawmaterials in multiple products and, as a
result, each rawmaterial has future economic value independent of the development status of any single drug.
For example, if one of our drugs failed, we could use the rawmaterials for that drug to manufacture our other
drugs. We expense these costs when we deliver the drugs to our partners, or as we provide these drugs for our
own clinical trials. We reflect our inventory on the balance sheet at the lower of cost or market value under the
first-in, first-out method. We review inventory periodically and reduce the carrying value of items we consider to
be slowmoving or obsolete to their estimated net realizable value. We consider several factors in estimating the
net realizable value, including shelf life of rawmaterials, alternative uses for our drugs and clinical trial
materials, and historical write-offs. We did not record any inventory write-offs for the years ended December 31,
2014, 2013 or 2012. Total inventory was $6.3 million and $8.0 million as of December 31, 2014 and 2013,
respectively.
Property, plant and equipment
We carry our property, plant and equipment at cost, which consists of the following (in thousands):
December 31,
2014
2013
Equipment and computer software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 49,772 $ 44,698
Building and building systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48,521 48,132
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,853
2,846
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37,935 35,282
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,732
5,473
144,813 136,431
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(66,053) (60,431)
78,760 76,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,198 10,198
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 88,958 $ 86,198
We depreciate our property, plant and equipment on the straight-line method over estimated useful lives as
follows:
Computer software and hardware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 years
Other equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5-7 years
Furniture and fixtures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5-10 years
Manufacturing equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10 years
Building systems and improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10-25 years
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20 years
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40 years
We depreciate our leasehold improvements using the shorter of the estimated useful life or remaining lease
term.
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