INVENTORY AND INVENTORY VALUATION

9 Months Ended

Sep. 30, 2024

The following table summarizes the components of “Inventory” on the Condensed Consolidated Balance Sheets (in millions):


	December 31, 2023		September 30, 2024
Raw materials and work in progress	$	1,584	$	1,696
Finished goods	1,036		984
Total inventory	$	2,620	$	2,680

Inventory is stated at the lower of cost or net realizable value (“LCNRV”) and consists of raw materials, work in progress, finished goods, and service parts. The balance of the Company’s inventory was written down by $319 million and $130 million from its cost to its net realizable value as of December 31, 2023 and September 30, 2024, respectively. Additionally, the Company has LCNRV losses related to firm purchase commitments which were $126 million and $10 million as of December 31, 2023 and September 30, 2024, respectively, and are reflected in the “Inventory” component of “Accrued liabilities” on the Condensed Consolidated Balance Sheets. Refer to Note 7 "Accrued Liabilities" for more information about Accrued liabilities.

The Company recorded a $292 million and $130 million write-down to reflect the LCNRV of inventory as of September 30, 2023 and 2024, respectively, and a $178 million and $116 million decrease in the liability for losses on firm purchase commitments from year end to September 30, 2023 and 2024, respectively. As a result, the Company recorded a $114 million and $14 million charge to reflect both the LCNRV of inventory and losses on firm purchase commitments as of September 30, 2023 and 2024, respectively, in “Cost of revenues” in the Company’s Condensed Consolidated Statements of Operations.