Supplemental Balance Sheet Information

6 Months Ended

Jun. 30, 2021

Supplemental Balance Sheet Information [Abstract]

SUPPLEMENTAL BALANCE SHEET INFORMATION

NOTE F – SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of selected captions in our accompanying unaudited consolidated balance sheets are as follows:

Trade accounts receivable, net

	As of
(in millions)	June 30, 2021		December 31, 2020
Trade accounts receivable	$	1,781	$	1,637
Allowance for credit losses	(107)		(105)
	$	1,675	$	1,531

The following is a rollforward of our Allowance for credit losses:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2021		2020		2021		2020
Beginning balance	$	101	$	87	$	105	$	74
Cumulative effect adjustment(1)	n/a		n/a		n/a		10
Credit loss expense	9		14		11		22
Write-offs	(4)		(7)		(10)		(13)
Ending balance	$	107	$	94	$	107	$	94

(1)    Effective January 1, 2020, we adopted FASB ASC Topic 326, Financial Instruments - Credit Losses using the modified retrospective method, which requires that we recognize credit loss reserves when financial assets are established if credit losses are expected over the asset’s contractual life. Refer to Note R – New Accounting Pronouncements to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information.

In accordance with FASB ASC Topic 326, we record credit loss reserves to Allowance for credit losses when we establish Trade accounts receivable if credit losses are expected over the asset's contractual life. We base our estimates of credit loss reserves on historical experience and adjust, as necessary, to reflect current conditions using reasonable and supportable forecasts not already reflected in the historical loss information. We utilize an accounts receivable aging approach to determine the reserve to record at accounts receivable commencement for certain customers, applying country or region-specific factors. In performing the assessment of outstanding accounts receivable, regardless of country or region, we may consider significant factors relevant to collectability, including those specific to a customer such as bankruptcy, lengthy average payment cycles and type of account.

We closely monitor outstanding receivables for potential collection risks, including those that may arise from economic conditions. Our sales to government-owned or supported customers, particularly in southern Europe, are subject to an increased number of days outstanding prior to payment relative to other countries. More recently, we have seen an increase in the volume of our U.S. business conducted in ambulatory surgery centers and office-based laboratories. Many of these customers are smaller than those we have historically done business with and may have limited liquidity. We have adjusted our estimates of credit loss reserves for these customers, regions and conditions based on collection trends.

Inventories

	As of
(in millions)	June 30, 2021		December 31, 2020
Finished goods	$	933	$	893
Work-in-process	121		109
Raw materials	376		349
	$	1,430	$	1,351

Other current assets

	As of
(in millions)	June 30, 2021		December 31, 2020
Restricted cash and restricted cash equivalents	$	167	$	208
Derivative assets	167		133
Licensing arrangements	145		148
Other	299		263
	$	777	$	751

Property, plant and equipment, net

	As of
(in millions)	June 30, 2021		December 31, 2020
Land	$	104	$	104
Buildings and improvements	1,342		1,292
Equipment, furniture and fixtures	3,517		3,465
Capital in progress	432		446
	5,395		5,308
Less: accumulated depreciation	3,313		3,224
	$	2,082	$	2,084

Depreciation expense was $83 million for the second quarter of 2021, $78 million for the second quarter of 2020, $166 million for the first six months of 2021 and $154 million for the first six months of 2020.

Other long-term assets

	As of
(in millions)	June 30, 2021		December 31, 2020
Restricted cash equivalents	$	57	$	52
Operating lease right-of-use assets	411		458
Derivative assets	156		109
Investments	616		918
Licensing arrangements	166		218
Other	224		166
	$	1,629	$	1,921

Accrued expenses

	As of
(in millions)	June 30, 2021		December 31, 2020
Legal reserves	$	417	$	505
Payroll and related liabilities	801		681
Rebates	354		331
Contingent consideration liability	258		26
Other	612		656
	$	2,442	$	2,197

Other current liabilities

	As of
(in millions)	June 30, 2021		December 31, 2020
Deferred revenue	$	141	$	138
Licensing arrangements	151		153
Taxes payable	121		158
Liabilities held for sale	—		200
Other	268		307
	$	680	$	958

Other long-term liabilities

	As of
(in millions)	June 30, 2021		December 31, 2020
Accrued income taxes	$	535	$	547
Legal reserves	200		64
Contingent consideration liability	54		171
Licensing arrangements	199		253
Operating lease liabilities	359		401
Deferred revenue	283		257
Other	560		615
	$	2,190	$	2,309