Supplemental Balance Sheet Information

9 Months Ended

Sep. 30, 2023

Supplemental Balance Sheet Information [Abstract]

SUPPLEMENTAL BALANCE SHEET INFORMATION

NOTE F – SUPPLEMENTAL BALANCE SHEET INFORMATION

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

Trade accounts receivable, net

	As of
(in millions)	September 30, 2023		December 31, 2022
Trade accounts receivable	$	2,226	$	2,079
Allowance for credit losses	(126)		(109)
	$	2,101	$	1,970

The following is a roll forward of our Allowance for credit losses:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2023		2022		2023		2022
Beginning balance	$	127	$	117	$	109	$	108
Credit loss expense	10		7		44		26
Write-offs	(11)		(9)		(27)		(20)
Ending balance	$	126	$	114	$	126	$	114

In accordance with FASB ASC Topic 326, Financial Instruments - Credit Losses (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, applying country or region-specific factors, to determine the reserve to record at accounts receivable commencement for certain customers. 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 and geopolitical 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 entities, and, in southern Europe, relative to those in other countries. In addition, 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 more 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)	September 30, 2023		December 31, 2022
Finished goods	$	1,466	$	1,171
Work-in-process	187		147
Raw materials	752		548
	$	2,404	$	1,867

Other current assets

	As of
(in millions)	September 30, 2023		December 31, 2022
Restricted cash and restricted cash equivalents	$	123	$	149
Derivative assets	241		232
Licensing arrangements	49		60
Other	328		290
	$	741	$	731

Property, plant and equipment, net

	As of
(in millions)	September 30, 2023		December 31, 2022
Land	$	139	$	137
Buildings and improvements	1,801		1,695
Equipment, furniture and fixtures	3,451		3,297
Capital in progress	691		598
	6,082		5,728
Less: accumulated depreciation	3,446		3,282
	$	2,635	$	2,446

Depreciation expense was $93 million for the third quarter of 2023, $82 million for the third quarter of 2022, $263 million for the first nine months of 2023 and $238 million for the first nine months of 2022.

Other long-term assets

	As of
(in millions)	September 30, 2023		December 31, 2022
Restricted cash equivalents	$	58	$	48
Operating lease right-of-use assets	446		386
Derivative assets	155		149
Investments	427		407
Licensing arrangements	40		67
Indemnification asset	165		172
Other	314		271
	$	1,605	$	1,500

Accrued expenses

	As of
(in millions)	September 30, 2023		December 31, 2022
Legal reserves	$	246	$	231
Payroll and related liabilities	912		830
Rebates	369		352
Contingent consideration	109		74
Other	619		674
	$	2,255	$	2,160

Other current liabilities

	As of
(in millions)	September 30, 2023		December 31, 2022
Deferred revenue	$	246	$	220
Licensing arrangements	50		79
Taxes payable	352		232
Other	234		230
	$	882	$	761

Other long-term liabilities

	As of
(in millions)	September 30, 2023		December 31, 2022
Accrued income taxes	$	487	$	597
Legal reserves	161		212
Contingent consideration	10		75
Licensing arrangements	45		80
Operating lease liabilities	400		347
Deferred revenue	301		289
Other	454		434
	$	1,858	$	2,035