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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F- 71
As of December 31, 2017, minimum rental commitments under non-cancelable leases, net of income from
subleases, for each of the next five years and total thereafter were as follows:
(In millions)
2018
2019
2020
2021
2022
Thereafter
Total
Minimum lease payments
$
72.6 $
72.3 $
68.4 $
66.9 $
65.7 $ 271.1 $ 617.0
Less: income from subleases (1)
(24.3)
(24.7)
(23.9)
(22.3)
(22.0)
(71.3)
(188.5)
Net minimum lease
payments
$
48.3 $
47.6 $
44.5 $
44.6 $
43.7 $ 199.8 $ 428.5
(1) Represents sublease income expected to be received for the vacated manufacturing facility in Cambridge, MA, the vacated
portion of our Weston, MA facility and other facilities throughout the world.
Under certain
of our lease agreements, we are contractually obligated to return leased space to its original
condition upon termination of the lease agreement. At the inception of a lease with such conditions, we record an
asset retirement obligation liability and a corresponding capital asset in an amount equal to the estimated fair value
of the obligation. In subsequent periods, for each such lease, we record interest expense to accrete the asset
retirement obligation liability to full value and depreciate each capitalized asset retirement obligation asset, both
over the term of the associated lease agreement. Our asset retirement obligations
were not significant as of
December 31, 2017 or 2016.
23. Guarantees
As of December 31, 2017 and 2016, we did not have significant liabilities recorded for guarantees.
We enter into indemnification provisions under our agreements with other companies in the ordinary course of
business, typically with business partners, contractors, clinical sites and customers. Under these provisions, we
generally indemnify and hold harmless the indemnified party for losses suffered or incurred by the indemnified party
as a result of our activities. These indemnification provisions generally survive termination of the underlying
agreement. The maximum potential amount of future payments we could be required to make under these
indemnification provisions is unlimited. However, to date we have not incurred material costs to defend lawsuits or
settle claims related to these indemnification provisions.
As a result, the estimated fair value of these agreements
is minimal. Accordingly, we have no liabilities recorded for these agreements as of December 31, 2017 and 2016.
24. Employee Benefit Plans
We sponsor various retirement and pension plans. Our estimates of liabilities and expenses for these plans
incorporate a number of assumptions, including expected rates of return on plan assets and interest rates used to
discount future benefits.
401(k) Savings Plan
We maintain a 401(k) Savings Plan, which is available to substantially all regular employees in the U.S. over the
age of 21. Participants may make voluntary contributions. We make matching contributions according to the 401(k)
Savings Plan’s matching formula. All matching contributions and participant contributions vest immediately. The
401(k) Savings Plan also holds certain transition contributions on behalf of participants
who previously participated
in the Biogen, Inc. Retirement Plan. The expense related to our 401(k) Savings Plan primarily consists of our
matching contributions.
Expense related to our 401(k) Savings Plan totaled $42.6 million, $45.2 million and $51.8 million for the years
ended December 31, 2017, 2016 and 2015, respectively.
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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F- 72
Deferred Compensation Plan
We maintain a non-qualified deferred compensation plan, known as the Supplemental Savings Plan (SSP),
which allows a select group of management employees in the U.S. to defer a portion of their compensation. The SSP
also provides certain credits to highly compensated U.S. employees that are paid by the company.
These credits are
known as the Restoration Match. The deferred compensation amounts are accrued when earned. Such deferred
compensation is distributable in cash in accordance with the rules of the SSP. Deferred compensation amounts
under such plan as of December 31, 2017 and 2016 totaled approximately $109.8 million and $128.5 million,
respectively, and are included in other long-term liabilities in our consolidated balance sheets. The SSP also holds
certain transition contributions on behalf of participants who previously participated in the Biogen, Inc. Retirement
Plan. The Restoration Match and participant contributions vest immediately. Distributions to participants can be
either in one lump sum payment or annual installments as elected by the participants.
Pension Plans
Our retiree benefit plans include defined benefit plans for employees in our affiliates in Switzerland and
Germany as well as other insignificant defined benefit plans in certain other countries where we maintain an
operating presence.
Our Swiss plan is a government-mandated retirement fund that provides employees
with a minimum investment
return. The minimum investment return is determined annually by the Swiss government and was 1.00% in 2017 and
1.25% in 2016 and 1.75% in 2015, respectively. Under the Swiss plan, both we and certain of our employees with
annual earnings in excess of government determined amounts are required to make contributions into a fund
managed by an independent investment fiduciary. Employer contributions must be in an amount at least equal to the
employee’s contribution. Minimum employee contributions are based on the respective employee’s age, salary and
gender.
As of December 31, 2017 and 2016, the Swiss plan had an unfunded net pension obligation of approximately
$48.3 million and $39.1 million, respectively, and plan assets that totaled approximately $83.7 million and $68.6
million, respectively. In 2017, 2016 and 2015, we recognized expense totaling $12.3 million, $15.3 million and
$12.9 million, respectively, related to our Swiss plan.
The obligations under the German plans are unfunded and totaled $43.5 million and $35.4 million as of
December 31, 2017 and 2016, respectively. Net periodic pension cost related to the German plans totaled $5.2
million, $4.2 million and $4.0 million for the years ended December 31, 2017, 2016 and 2015, respectively.
25. Segment Information
We operate
as one operating segment, focused on discovering, developing and delivering worldwide innovative
therapies for people living with serious neurological and neurodegenerative diseases. Our Chief Executive Officer
(CEO), as the chief operating decision-maker, manages and allocates resources to the operations of our company on
a total company basis. Our research and development organization is responsible for the research and discovery of
new product candidates and supports development and registration efforts for potential future products. Our
pharmaceutical, operations and technology organization manages the development of the manufacturing processes,
clinical trial supply, commercial
product supply, distribution, buildings and facilities. Our commercial organization is
responsible for U.S. and international development of our commercial products. The company is also supported by
corporate staff functions. Managing and allocating resources on a total company basis enables our CEO to assess
the overall level of resources available and how to best deploy these resources across functions, therapeutic areas
and research and development projects that are in line with our long-term company-wide strategic goals. Consistent
with this decision-making process, our CEO uses consolidated, single-segment financial information for purposes of
evaluating
performance, forecasting future period financial results, allocating resources and setting incentive targets.
Enterprise-wide disclosures about product revenues, other revenues and long-lived assets by geographic area
and information relating to major customers are presented below. Revenues are primarily attributed to individual
countries based on location of the customer or licensee.