Contract with Customer, Liability, Revenue Recognized

  
The Company records revenue for comparator sourcing arrangements on a net basis because it is acting as an agent that does not control the product or service before it is transferred to the customer. Payment for comparator sourcing activity is typically received in advance at the commencement of the contract and is initially recorded as a contract liability.Contract LiabilitiesContract liabilities relate to cash consideration that the Company receives in advance of satisfying the related performance obligations. The contract liabilities balances (current and non-current) as of June 30, 2022 and June 30, 2021 were as follows:

|  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |
| (Dollars in millions) |  |  |
|  |  |  |
| Balance at June 30, 2021 |  | $ | 321  |  |
|  |  |  |
|  |  |  |
|  |  |  |
|  |  |  |
| Balance at June 30, 2022 |  | $ | 194  |  |
| Revenue recognized in the period from amounts included in contracts liability at the beginning of the period: |  | $ | (272) |  |
|  |  |  |

 Contract liabilities that will be recognized within 12 months of June 30, 2022 are accounted for in Other accrued liabilities and those that will be recognized longer than 12 months after June 30, 2022 are accounted for within Other liabilities.Contract AssetsContract assets primarily relate to the Company's conditional right to receive consideration for development services that have been performed for a customer as of June 30, 2022 but had not yet been invoiced as of June 30, 2022. Contract assets are transferred to trade receivables, net when the Company’s right to receive the consideration becomes unconditional. Contract assets totaled $441 million and $181 million as of June 30, 2022 and 2021, respectively. Contract assets expected to transfer to trade receivables within 12 months are accounted for within Prepaid expenses and other. Contract assets expected to transfer to trade receivables longer than 12 months are accounted for within Other long-term assets.As of June 30, 2022, the Company's aggregate contract asset balance was $441 million, an increase of $260 million compared to June 30, 2021. The majority of this increase is related to large development programs in the Biologics segment, such as manufacturing and development services for COVID-19 vaccines, where revenue is recorded over time and the ability to invoice customers is dictated by contractual terms. As of June 30, 2022, there were no reserves recorded against the Company's aggregate contract asset balance. 3. BUSINESS COMBINATIONS AND DIVESTITURESSkeletal Cell Therapy Support SA Acquisition  
In November 2020, the Company acquired 100% of the equity interest in Skeletal Cell Therapy Support SA (“Skeletal”) for $15 million, and entered into related supply agreements with the seller. Skeletal operates a cell therapy manufacturing facility in Gosselies, Belgium. The operations were assigned to the Company’s Biologics segment, expanding the Company’s cell therapy capacity for clinical and commercial supply. The acquisition, combined with the Company's other European-based facilities and capabilities in cell therapy, has resulted in an integrated European center of excellence in cell therapy.  
The Company accounted for the Skeletal acquisition using the acquisition method in accordance with ASC 805, Business Combinations. The Company funded the entire purchase price with cash on hand and allocated the purchase price among the acquired assets, recognizing $9 million of goodwill. The Company allocated the remainder of the purchase price to trade receivables, property, plant, and equipment, and other current and non-current assets and liabilities assumed in the acquisition. Results for the fiscal years ended June 30, 2022 and 2021 were not material to the Company’s statement of operations, financial position, or cash flows.  
Acorda Therapeutics, Inc. Transaction  
In February 2021, the Company acquired the manufacturing and packaging operations of Acorda Therapeutics, Inc.'s (“Acorda”) dry powder inhaler and spray dry manufacturing business, including its manufacturing facility located near Boston, Massachusetts, for $83 million. In connection with the purchase, Acorda and the Company entered into a long-term supply agreement, under which the Company continues to manufacture and package an Acorda product at the facility. The facility and operations became part of the Company’s Oral and Specialty Delivery segment. Results of the business acquired were not material to the Company's statement of operations, financial position, or cash flows for the fiscal years ended June 30, 2022 and 2021.  
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