Supplemental Balance Sheet Information

6 Months Ended

Jun. 30, 2020

Supplemental Balance Sheet Information [Abstract]

SUPPLEMENTAL BALANCE SHEET INFORMATION

NOTE F – SUPPLEMENTAL BALANCE SHEET INFORMATION

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

Cash, cash equivalents, restricted cash and restricted cash equivalents

	As of
(in millions)	June 30, 2020		December 31, 2019
Cash and cash equivalents	$	1,724	$	217
Restricted cash and restricted cash equivalents in Other current assets	245		346
Restricted cash equivalents in Other long-term assets	46		43
	$	2,016	$	607

Trade accounts receivable, net

	As of
(in millions)	June 30, 2020		December 31, 2019
Trade accounts receivable	$	1,551	$	1,902
Allowance for credit losses	(94)		(74)
	$	1,457	$	1,828

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

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2020		2019		2020		2019
Beginning balance	$	87	$	72	$	74	$	68
Cumulative effect adjustment for adoption of ASU 2016-13	n/a		n/a		10		n/a
Credit loss expense	14		4		22		11
Write-offs	(7)		(4)		(13)		(6)
Ending balance	$	94	$	73	$	94	$	73

Note: Effective January 1, 2020, we adopted FASB ASC Topic 326 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. Prior period amounts have not been restated and are presented in accordance with FASB ASC Topic 310. Please refer to Note A – Basis of Presentation 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.

Inventories

	As of
(in millions)	June 30, 2020		December 31, 2019
Finished goods	$	867	$	971
Work-in-process	166		192
Raw materials	482		416
	$	1,516	$	1,579

Other current assets

	As of
(in millions)	June 30, 2020		December 31, 2019
Restricted cash and restricted cash equivalents	$	245	$	346
Derivative assets	161		105
Licensing arrangements	167		186
Other	351		243
	$	925	$	880

Property, plant and equipment, net

	As of
(in millions)	June 30, 2020		December 31, 2019
Land	$	118	$	117
Buildings and improvements	1,229		1,198
Equipment, furniture and fixtures	3,449		3,411
Capital in progress	405		442
	5,201		5,169
Less: accumulated depreciation	3,122		3,089
	$	2,079	$	2,079

Depreciation expense was $78 million for the second quarter of 2020, $73 million for the second quarter of 2019, $154 million for the first six months of 2020 and $142 million for the first six months of 2019.

Other long-term assets

	As of
(in millions)	June 30, 2020		December 31, 2019
Restricted cash equivalents	$	46	$	43
Operating lease right-of-use assets	315		336
Derivative assets	241		216
Investments	467		458
Licensing arrangements	273		332
Other	157		144
	$	1,500	$	1,529

Accrued expenses

	As of
(in millions)	June 30, 2020		December 31, 2019
Legal reserves	$	314	$	470
Payroll and related liabilities	572		708
Rebates	269		298
Contingent consideration	32		56
Other	531		576
	$	1,718	$	2,109

Other current liabilities

	As of
(in millions)	June 30, 2020		December 31, 2019
Deferred revenue	$	143	$	144
Licensing arrangements	174		197
Taxes payable	193		265
Other	219		195
	$	729	$	800

Other long-term liabilities

	As of
(in millions)	June 30, 2020		December 31, 2019
Accrued income taxes	$	640	$	667
Legal reserves	54		227
Accrued contingent consideration	176		299
Licensing arrangements	314		374
Operating lease liabilities	263		276
Deferred revenue	251		257
Other	537		535
	$	2,236	$	2,635