Supplemental Balance Sheet Details

9 Months Ended

Sep. 27, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplemental Balance Sheet Details

6. SUPPLEMENTAL BALANCE SHEET DETAILS

Accounts Receivable

In millions	September 27, 2020		December 29, 2019
Trade accounts receivable, gross	$	468	$	575
Allowance for credit losses	(4)		(2)
Total accounts receivable, net	$	464	$	573

Inventory

In millions	September 27, 2020		December 29, 2019
Raw materials	$	142	$	108
Work in process	246		225
Finished goods	27		26
Total inventory	$	415	$	359

Intangible Assets and Goodwill

We recorded a developed technology intangible asset of $26 million, with a useful life of 10 years, as a result of an acquisition in Q2 2020.

Changes to goodwill during YTD 2020 were as follows:

In millions	Goodwill
Balance as of December 29, 2019	$	824
Acquisitions	73
Balance as of September 27, 2020	$	897

Goodwill is reviewed for impairment at least annually during the second quarter, or more frequently if an event occurs indicating the potential for impairment. We performed our annual assessment for goodwill impairment in Q2 2020, noting no impairment.

Accrued Liabilities

In millions	September 27, 2020		December 29, 2019
Contract liabilities, current portion	$	154	$	167
Accrued compensation expenses	123		154
Accrued taxes payable	46		86
Operating lease liabilities, current portion	54		45
Other, including warranties (a)	75		64
Total accrued liabilities	$	452	$	516

(a) Changes in the reserve for product warranties were as follows:

In millions	Q3 2020		Q3 2019		YTD 2020		YTD 2019
Balance at beginning of period	$	10	$	16	$	14	$	19
Additions charged to cost of product revenue	6		3		11		12
Repairs and replacements	(6)		(5)		(15)		(17)
Balance at end of period	$	10	$	14	$	10	$	14

We generally provide a one-year warranty on instruments. Additionally, we provide a warranty on consumables through the expiration date, which generally ranges from six to twelve months after the manufacture date. At the time revenue is recognized, an accrual is established for estimated warranty expenses based on historical experience as well as anticipated product performance. We periodically review the warranty reserve for adequacy and adjust the warranty accrual, if necessary, based on actual experience and estimated costs to be incurred. Warranty expense is recorded as a component of cost of product revenue.

Derivatives

We are exposed to foreign exchange rate risks in the normal course of business. We enter into foreign exchange contracts to manage foreign currency risks related to monetary assets and liabilities that are denominated in currencies other than the U.S. dollar. These foreign exchange contracts are carried at fair value in other current assets or accrued liabilities and are not designated as hedging instruments. Changes in the value of the derivatives are recognized in other income (expense), net, along with the remeasurement gain or loss on the foreign currency denominated assets or liabilities.

As of September 27, 2020, we had foreign exchange forward contracts in place to hedge exposures in the euro, Japanese yen, Australian dollar, Canadian dollar, Singapore dollar, Chinese Yuan Renminbi, and British pound. As of September 27, 2020 and December 29, 2019, the total notional amounts of outstanding forward contracts in place for foreign currency purchases were $315 million and $252 million, respectively.