Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 21, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-4448 | |
Entity Registrant Name | BAXTER INTERNATIONAL INC. | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 36-0781620 | |
Entity Address, Address Line One | One Baxter Parkway, | |
Entity Address, City or Town | Deerfield, | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60015 | |
City Area Code | 224. | |
Local Phone Number | 948.2000 | |
Entity Central Index Key | 0000010456 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 508,836,225 | |
Common Stock, $1.00 per Value | NEW YORK STOCK EXCHANGE, INC. | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $1.00 par value | |
Trading Symbol | BAX (NYSE) | |
Security Exchange Name | NYSE | |
Common Stock, $1.00 per Value | CHICAGO STOCK EXCHANGE, INC | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $1.00 par value | |
Trading Symbol | BAX (NYSE) | |
Security Exchange Name | CHX | |
0.4% Global Notes due 2024 | NEW YORK STOCK EXCHANGE, INC. | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 0.4% Global Notes due 2024 | |
Trading Symbol | BAX 24 | |
Security Exchange Name | NYSE | |
1.3% Global Notes due 2025 | NEW YORK STOCK EXCHANGE, INC. | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 1.3% Global Notes due 2025 | |
Trading Symbol | BAX 25 | |
Security Exchange Name | NYSE | |
1.3% Global Notes due 2029 | NEW YORK STOCK EXCHANGE, INC. | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 1.3% Global Notes due 2029 | |
Trading Symbol | BAX 29 | |
Security Exchange Name | NYSE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 4,110 | $ 3,335 |
Accounts receivable, net of allowances of $114 in 2020 and $112 in 2019 | 1,892 | 1,896 |
Inventories | 1,694 | 1,653 |
Prepaid expenses and other current assets | 637 | 619 |
Total current assets | 8,333 | 7,503 |
Property, plant and equipment, net | 4,340 | 4,512 |
Goodwill | 2,961 | 3,030 |
Other intangible assets, net | 1,759 | 1,471 |
Operating lease right-of-use assets | 577 | 608 |
Other non-current assets | 1,105 | 1,069 |
Total assets | 19,075 | 18,193 |
Current liabilities: | ||
Short-term debt | 221 | 226 |
Current maturities of long-term debt and finance lease obligations | 315 | 315 |
Accounts payable and accrued liabilities | 2,500 | 2,689 |
Total current liabilities | 3,036 | 3,230 |
Long-term debt and finance lease obligations | 5,996 | 4,809 |
Operating lease liabilities | 486 | 510 |
Other non-current liabilities | 1,827 | 1,732 |
Total liabilities | 11,345 | 10,281 |
Commitments and contingencies | ||
Equity: | ||
Common stock, $1 par value, authorized 2,000,000,000 shares, issued 683,494,944 shares in 2020 and 2019 | 683 | 683 |
Common stock in treasury, at cost, 175,106,170 shares in 2020 and 177,340,358 shares in 2019 | (10,677) | (10,764) |
Additional contributed capital | 5,935 | 5,955 |
Retained earnings | 15,935 | 15,718 |
Accumulated other comprehensive (loss) income | (4,177) | (3,710) |
Total Baxter stockholders’ equity | 7,699 | 7,882 |
Noncontrolling interests | 31 | 30 |
Total equity | 7,730 | 7,912 |
Total liabilities and equity | $ 19,075 | $ 18,193 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, authorized (in shares) | 2,000,000,000 | 2,000,000,000 |
Common stock, issued (in shares) | 683,494,944 | 683,494,944 |
Treasury stock, shares (in shares) | 175,106,170 | 177,340,358 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for accounts receivable, current | $ 114 | $ 112 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, authorized (in shares) | 2,000,000,000 | 2,000,000,000 |
Common stock, issued (in shares) | 683,494,944 | 683,494,944 |
Treasury stock, shares (in shares) | 175,106,170 | 177,340,358 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Net sales | $ 2,802 | $ 2,638 |
Cost of sales | 1,639 | 1,558 |
Gross margin | 1,163 | 1,080 |
Selling, general and administrative expenses | 628 | 601 |
Research and development expenses | 146 | 129 |
Other operating income, net | (20) | (33) |
Operating income | 409 | 383 |
Interest expense, net | 21 | 18 |
Other (income) expense, net | 10 | (21) |
Income before income taxes | 378 | 386 |
Income tax expense | 45 | 44 |
Net income | 333 | 342 |
Net income attributable to noncontrolling interests | 1 | 0 |
Net income attributable to Baxter stockholders | $ 332 | $ 342 |
Earnings per share | ||
Basic (in dollars per share) | $ 0.65 | $ 0.67 |
Diluted (in dollars per share) | $ 0.64 | $ 0.66 |
Weighted-average number of shares outstanding | ||
Basic (in shares) | 507 | 512 |
Diluted (in shares) | 516 | 522 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 333 | $ 342 |
Other comprehensive (loss) income, net of tax: | ||
Currency translation adjustments, net of tax benefit of ($8) and zero for the three months ended March 31, 2020 and 2019, respectively | (359) | (97) |
Pension and other postretirement benefits, net of tax expense of $6 and $4 for the three months ended March 31, 2020 and 2019, respectively | 22 | 14 |
Hedging activities, net of tax benefit of ($39) and ($5) for the three months ended March 31, 2020 and 2019, respectively | (130) | (15) |
Net other comprehensive income (loss) | (467) | (98) |
Comprehensive (loss) income | (134) | 244 |
Less: Comprehensive income attributable to noncontrolling interests | 1 | 0 |
Comprehensive (loss) income attributable to Baxter stockholders | $ (135) | $ 244 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Currency translation adjustments, tax | $ (8) | $ 0 |
Pension and other postretirement benefits, tax | 6 | 4 |
Hedging activities, tax | $ (39) | $ (5) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Millions | Total | Common Stock | Common Stock in Treasury | Additional Contributed Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Parent | Noncontrolling Interest |
Beginning of period (in shares) at Dec. 31, 2018 | 683,000,000 | |||||||
Beginning of period at Dec. 31, 2018 | $ 7,866 | $ 683 | $ (9,989) | $ 5,898 | $ 15,075 | $ (3,823) | $ 7,844 | $ 22 |
Beginning of period, treasury shares (in shares) at Dec. 31, 2018 | 170,000,000 | |||||||
Adoption of new accounting standards | 161 | (161) | ||||||
Net income | 342 | 342 | 342 | |||||
Other comprehensive (loss) income | $ (98) | (98) | (98) | |||||
Purchases of treasury stock (in shares) | 8,100,000 | 8,000,000 | ||||||
Purchases of treasury stock | $ (586) | $ (586) | (586) | |||||
Stock issued under employee benefit plans and other (in shares) | (5,000,000) | |||||||
Stock issued under employee benefit plans and other | 166 | $ 291 | (59) | (66) | 166 | |||
Dividends declared on common stock | (98) | (98) | (98) | |||||
Change in noncontrolling interests | 1 | 1 | ||||||
End of period (in shares) at Mar. 31, 2019 | 683,000,000 | |||||||
End of period at Mar. 31, 2019 | $ 7,593 | $ 683 | $ (10,284) | 5,839 | 15,414 | (4,082) | 7,570 | 23 |
End of period, treasury shares (in shares) at Mar. 31, 2019 | 173,000,000 | |||||||
Beginning of period (in shares) at Dec. 31, 2019 | 683,494,944 | 683,000,000 | ||||||
Beginning of period at Dec. 31, 2019 | $ 7,912 | $ 683 | $ (10,764) | 5,955 | 15,718 | (3,710) | 7,882 | 30 |
Beginning of period, treasury shares (in shares) at Dec. 31, 2019 | 177,340,358 | 177,000,000 | ||||||
Adoption of new accounting standards | $ (4) | (4) | (4) | |||||
Net income | 333 | 332 | 332 | 1 | ||||
Other comprehensive (loss) income | (467) | (467) | (467) | |||||
Stock issued under employee benefit plans and other (in shares) | (2,000,000) | |||||||
Stock issued under employee benefit plans and other | 67 | $ 87 | (20) | 67 | ||||
Dividends declared on common stock | $ (111) | (111) | (111) | |||||
End of period (in shares) at Mar. 31, 2020 | 683,494,944 | 683,000,000 | ||||||
End of period at Mar. 31, 2020 | $ 7,730 | $ 683 | $ (10,677) | $ 5,935 | $ 15,935 | $ (4,177) | $ 7,699 | $ 31 |
End of period, treasury shares (in shares) at Mar. 31, 2020 | 175,106,170 | 175,000,000 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operations | ||
Net income | $ 333 | $ 342 |
Adjustments to reconcile net income to cash flows from operations: | ||
Depreciation and amortization | 199 | 192 |
Deferred income taxes | (17) | (6) |
Stock compensation | 29 | 22 |
Net periodic pension benefit and other postretirement costs | 20 | 3 |
Other | 13 | 14 |
Changes in balance sheet items: | ||
Accounts receivable, net | (60) | 32 |
Inventories | (83) | (82) |
Accounts payable and accrued liabilities | (110) | (335) |
Other | (50) | (48) |
Cash flows from operations – continuing operations | 274 | 134 |
Cash flows from operations – discontinued operations | (2) | (6) |
Cash flows from operations | 272 | 128 |
Cash flows from investing activities | ||
Capital expenditures | (172) | (193) |
Acquisitions and investments, net of cash acquired | (443) | (109) |
Other investing activities, net | 11 | 1 |
Cash flows from investing activities | (604) | (301) |
Cash flows from financing activities | ||
Issuances of debt | 1,240 | 0 |
Net increases in debt with original maturities of three months or less | 0 | 795 |
Cash dividends on common stock | (111) | (101) |
Proceeds from stock issued under employee benefit plans | 66 | 173 |
Purchases of treasury stock | 0 | (597) |
Other financing activities, net | (25) | (32) |
Cash flows from financing activities | 1,170 | 238 |
Effect of foreign exchange rate changes on cash and cash equivalents | (63) | (1) |
Increase in cash and cash equivalents | 775 | 64 |
Cash and cash equivalents at beginning of period | 3,335 | 1,838 |
Cash and cash equivalents at end of period | $ 4,110 | $ 1,902 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The unaudited interim condensed consolidated financial statements of Baxter International Inc. and its subsidiaries (we or our) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) in the United States have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2019 (2019 Annual Report). In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. All such adjustments, unless otherwise noted herein, are of a normal, recurring nature. The results of operations for the current interim period are not necessarily indicative of the results of operations to be expected for the full year. Certain reclassifications have been made to conform the prior period condensed consolidated statements to the current period presentation. Risks and Uncertainties Related to COVID-19 Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus (COVID-19). COVID-19 may have an adverse impact on our operations, supply chains and distribution systems and increase our expenses, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments are taking. Due to these impacts and measures, we have experienced and may continue to experience reductions or increases in demand for certain of our products as health care customers re-prioritize the treatment of patients. For example, elective surgeries are being de-prioritized which has negatively impacted the usage of certain of our products, while other of our products are experiencing an increase in demand which we may not be able to meet in accordance with the customer’s desired timing. In addition to travel restrictions, countries have closed borders and imposed prolonged quarantines, often with uncertain duration, which has significantly impacted the ability of our employees to get to their places of work to produce products and may significantly hamper our products from moving through the supply chain. As a result, given the rapid and evolving nature of the virus, COVID-19 could negatively affect our sales, and it is uncertain how COVID-19 will affect our global operations generally if these impacts persist or exacerbate over an extended period of time. New Accounting Standards Recently adopted accounting pronouncements As of January 1, 2020, we adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses, which requires the measurement of expected lifetime credit losses, rather than incurred losses, for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. We adopted this ASU using the modified retrospective approach. The impact of the adoption of this ASU was an increase to our allowance for doubtful accounts and a decrease to retained earnings of $4 million. The following table is a summary of the changes in our allowance for doubtful accounts for the three months ended March 31, 2020: (in millions) March 31, Balance at beginning of period $ 112 Adoption of new accounting standard 4 Charged to costs and expenses 7 Currency translation adjustments (9) Balance at end of period $ 114 ASU 2016-13 also requires disclosure by vintage year of origination for net investment in leases. Our net investment in sales-type leases was $127 million as of March 31, 2020, of which $21 million originated in 2016 and prior, $18 million in 2017, $46 million in 2018, $36 million in 2019 and $6 million in 2020. As of January 1, 2020, we adopted ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Our policies for capitalizing implementation costs incurred in a hosting arrangement were not impacted by this ASU. However, we have historically classified those capitalized costs within property, plant and equipment, net on our condensed consolidated balance sheets and as capital expenditures on our condensed consolidated statements of cash flows. Under the new ASU, those capitalized costs are presented as other non-current assets on our condensed consolidated balance sheets and within operating cash flows on our condensed consolidated statements of cash flows. We adopted this ASU on a prospective basis and capitalized $8 million of implementation costs related to hosting arrangements that are service contracts during the three months ended March 31, 2020. |
RESTATEMENT OF PREVIOUSLY ISSUE
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS We have restated herein our condensed consolidated financial statements for the three months ended March 31, 2019. We have also restated impacted amounts within the accompanying notes to the consolidated financial statements, as applicable. The restatement of our condensed consolidated financial statements for the three months ended March 31, 2019 was previously reported in our annual report on Form 10-K for the year ended December 31, 2019. Restatement Background On October 24, 2019, we reported that we had commenced an internal investigation into certain intra-company transactions that impacted our previously reported non-operating foreign exchange gains and losses. Our internal investigation, as it pertains to the evaluation of related financial statement impacts, is complete. We previously had applied a longstanding convention for the initial measurement of foreign currency transactions and the subsequent remeasurement of foreign currency denominated monetary assets and liabilities (collectively, our historical exchange rate convention) that was not consistent with U.S. GAAP. U.S. GAAP requires that foreign currency transactions be initially measured and recorded in an entity’s functional currency using the exchange rate on the date of the transaction and it requires that foreign currency denominated monetary assets and liabilities be remeasured at the end of each reporting period using the exchange rate at that date. Under our historical exchange rate convention, all foreign currency transactions in a given month were initially measured using exchange rates from a specified date near the middle of the previous month. Additionally, all foreign currency denominated monetary assets and liabilities were subsequently remeasured at the end of each month using exchange rates from a specified date near the middle of the current month. Beginning years after the adoption of our historical exchange rate convention, certain intra-company transactions were undertaken, after the related exchange rates were already known, solely for the purpose of generating non-operating foreign exchange gains or avoiding foreign exchange losses. We identified misstatements relating to foreign currency denominated monetary assets and liabilities and foreign currency derivative contracts that caused our Other income (expense), net and Income before income taxes to be overstated by $4 million for the three months ended March 31, 2019. Our quantification of those misstatements to our previously reported foreign exchange gains and losses was not limited to intra-company transactions undertaken for the purpose of generating foreign exchange gains or avoiding foreign exchange losses after the related exchange rates were already known. Rather, we identified every legal entity within our consolidated group that had foreign exchange gains or losses above an immaterial threshold and, for those entities, we remeasured all foreign exchange gains and losses from foreign currency denominated cash balances and intra-company loan receivables and payables using the exchange rates required by U.S. GAAP. For those entities, we also quantified misstatements to our previously reported gains and losses on foreign currency derivative contracts, which had used foreign exchange rates determined under our historical exchange rate convention as inputs to the fair value measurements of those contracts. Our quantification of misstatements to the condensed consolidated financial statements did not include foreign currency gains or losses from short-term third-party and intra-company trade receivables and trade payables denominated in foreign currencies. We determined that any potential misstatements relating to such balances that arise in the ordinary course of business and are ultimately settled for cash within a short period of time, generally thirty to sixty days, would not be material to our condensed consolidated financial statements. In order to correct our previously issued financial statements, we have restated herein our condensed consolidated financial statements for the three months ended March 31, 2019, in accordance with Accounting Standards Codification (ASC) Topic 250, Accounting Changes and Error Corrections . In addition to the misstatements described above relating to foreign exchange gains and losses, we corrected additional misstatements that were not material, individually or in the aggregate, to our previously issued condensed consolidated financial statements. Those other immaterial misstatements relate to equipment leased to customers under operating leases, classification of foreign currency gains and losses on cash balances and intra-company loan receivables and payables in our condensed consolidated statements of cash flows, translation of the financial position and results of operations of our foreign operations into U.S. dollars, other miscellaneous adjustments, and the income tax effects of those items. We believe that the use of our historical exchange rate convention to generate non-operating foreign exchange gains and avoid losses had occurred for at least ten years. The cumulative impact of misstatements related to non-operating foreign exchange gains and losses that we corrected for periods earlier than 2019, as well as the cumulative impact of correcting other immaterial misstatements relating to those earlier periods, have been recorded as a reduction to our opening retained earnings as of January 1, 2019. The categories of misstatements and their impact on our previously issued condensed consolidated financial statements for the three months ended March 31, 2019 are described in more detail below. Description of Misstatements Misstatements of Foreign Exchange Gains and Losses (a) Foreign Currency Denominated Monetary Assets and Liabilities As discussed above, we recorded adjustments to correct foreign exchange gains and losses on monetary assets and liabilities denominated in a foreign currency to reflect the gains and losses resulting from application of the exchange rates required by U.S. GAAP. The impacts of the foreign currency gain or loss misstatements are discussed in restatement reference (a) throughout this note. (b) Foreign Currency Derivative Contracts As discussed above, we recorded adjustments to correct gains and losses on foreign currency derivative contracts by using current exchange rates at the applicable measurement dates as inputs to the related fair value measurements. The impacts of the foreign currency derivative contract gain or loss misstatements are discussed in restatement reference (b) throughout this note. Additional Misstatements (c) Equipment Leased to Customers under Operating Leases Our manufacturing subsidiaries often sell products to commercial subsidiaries within our consolidated group which then sell or lease those products to third-party customers. Under U.S. GAAP, intra-company sales, intra-company cost of sales, and any step-ups in the carrying amount of inventory from intra-company transactions are eliminated in consolidation. If we subsequently sell the products to a third-party customer, the related intra-company profit previously eliminated in consolidation is recognized in our condensed consolidated statements of income. For transactions in which we lease, rather than sell, our products to customers under operating lease arrangements, no profit or loss should be recognized at inception of the arrangement and any intra-company profit previously eliminated in consolidation should be recognized as a reduction to the carrying amount of the related leased assets. Prior to the third quarter of 2019, our international operations incorrectly recognized intra-company profit previously eliminated in consolidation as a reduction of cost of sales, rather than as a reduction of leased assets, at inception of operating lease arrangements. Accordingly, we have recorded adjustments to increase cost of sales and decrease property, plant, and equipment, net in our condensed consolidated financial statements. Those adjustments include corrections of depreciation expense and accumulated depreciation resulting from the decreases to the carrying amounts of the related leased equipment. The impacts of the operating lease misstatements are discussed in restatement reference (c) throughout this note. (d) Classification of Foreign Currency Gains and Losses in our Condensed Consolidated Statements of Cash Flows We previously included foreign exchange gains and losses related to intra-company receivables and payables and cash balances within our cash flows from operations. In the accompanying condensed consolidated statements of cash flows, foreign exchange gains and losses, as restated, related to intra-company receivables and payables and cash balances are presented as reconciling items between income from continuing operations and cash flows from operations. The impacts of those misclassifications on our operating cash flows are discussed in restatement reference (d) throughout this note. (e) Translation of the Financial Position and Results of Operations of our Foreign Operations into U.S. Dollars U.S. GAAP specifies that the income statement of a foreign operation should be translated into the reporting currency using the exchange rates on the dates the income or expense was recognized and indicates that the use of weighted-average exchange rates during the period is generally appropriate. Similar to our convention for the initial measurement of foreign currency transactions, we historically translated the results of operations of our foreign operations for a given month into U.S. dollars using exchange rates from a specified date near the middle of the previous month. Accordingly, we have recorded adjustments to translate the income statements of our foreign operations into U.S. dollars using the applicable average foreign exchange rates for each month. U.S. GAAP specifies that the assets and liabilities of foreign operations be translated into the reporting currency at the end of each reporting period using the exchange rate at that date. Similar to our convention for the subsequent remeasurement of foreign currency denominated monetary assets and liabilities, our financial reporting systems were previously configured to translate assets and liabilities at the end of each month using exchange rates from a specified date near the middle of the current month. In recent years, we separately computed the impact of translating assets and liabilities at period-end exchange rates and adjusted our condensed consolidated balance sheets to reflect that difference. However, due to an incorrect input in those manual calculations as of December 31, 2018, the currency translation adjustments component of our other comprehensive income (loss) was misstated in our condensed consolidated statement of comprehensive income (loss) for the three months ended March 31, 2019. The impacts of misstatements related to the translation of the financial position and results of operations of our foreign operations are discussed in restatement reference (e) throughout this note. (f) Other Miscellaneous Adjustments We recorded adjustments to correct other out-of-period items and previously uncorrected misstatements that were not material, individually or in the aggregate, to our condensed consolidated financial statements. Those other misstatements were primarily related to a historical restructuring liability and amounts related to our separation of Baxalta in 2015. The impacts of the other miscellaneous adjustments are discussed in restatement reference (f) throughout this note. Description of Restatement Tables The following tables were previously presented in our Annual Report on Form 10-K for the year ended December 31, 2019. See Note 19, Quarterly Financial Data (unaudited), to the consolidated financial statements in our Annual Report on Form 10-K. Below, we have presented reconciliations from our prior periods as previously reported to the restated amounts for each of our condensed consolidated financial statements for the three months ended March 31, 2019. The amounts as previously reported were derived from our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 filed on May 7, 2019. Baxter International Inc. Condensed Consolidated Statement of Income (in millions, except per share) Three months ended March 31, 2019 As previously reported Restatement impacts Restatement reference As restated Net sales $ 2,632 $ 6 (e) $ 2,638 Cost of sales 1,552 6 (c)(e) 1,558 Gross margin 1,080 — 1,080 Selling, general and administrative expenses 600 1 (e) 601 Research and development expenses 129 — 129 Other operating income, net (33) — (33) Operating income 384 (1) 383 Interest expense, net 18 — 18 Other (income) expense, net (25) 4 (a)(b) (21) Income before income taxes 391 (5) 386 Income tax expense 44 — 44 Net income $ 347 $ (5) $ 342 Earnings per share Basic $ 0.68 $ (0.01) $ 0.67 Diluted $ 0.66 $ — $ 0.66 Weighted-average number of shares outstanding Basic 512 — 512 Diluted 522 — 522 (a) Foreign Currency Denominated Monetary Assets and Liabilities—The correction of these misstatements resulted in a decrease to other (income) expense, net of $5 million for the three months ended March 31, 2019. (b) Foreign Currency Derivative Contracts—The correction of these misstatements resulted in an increase to other (income) expense, net of $1 million for the three months ended March 31, 2019. (c) Equipment Leased to Customers under Operating Leases—The correction of these misstatements resulted in an increase to cost of sales of $2 million for the three months ended March 31, 2019. (e) Translation of the Financial Position and Results of Operations of our Foreign Operations into U.S. Dollars—The correction of these misstatements resulted in increases to net sales of $6 million, cost of sales of $4 million and selling, general and administrative (SG&A) expense of $1 million for the three months ended March 31, 2019. Baxter International Inc. Condensed Consolidated Statement of Comprehensive Income (in millions) Three months ended March 31, 2019 As previously reported Restatement impacts As restated Net income $ 347 $ (5) $ 342 Other comprehensive (loss) income, net of tax: Currency translation adjustments 30 (127) (97) Pension and other postretirement benefit plans 8 6 14 Hedging activities (15) — (15) Total other comprehensive loss, net of tax 23 (121) (98) Comprehensive income $ 370 $ (126) $ 244 The $5 million decrease to net income was driven by the items described above in the condensed consolidated statement of income for the three months ended March 31, 2019 section. The $127 million decrease to currency translation adjustments for the three months ended March 31, 2019 is comprised of a $132 million decrease to correct the foreign exchange rates used to translate the financial position and results of operations of our foreign operations into U.S. dollars partially offset by a $5 million increase from the offsetting balance sheet impact of the adjustments to foreign exchange gains and losses on intra-company receivables and payables. The $6 million increase to pension and other postretirement benefit plans for the three months ended March 31, 2019 is a result of the correction of the foreign exchange rates used to translate the financial position and results of operations of our foreign operations into U.S. dollars. Baxter International Inc. Condensed Consolidated Statement of Changes in Equity (in millions) For the Three Months Ended March 31, 2019 Baxter International Inc. stockholders' equity Common stock shares Common stock Common stock shares in treasury Common stock in treasury Additional contributed capital Retained earnings Accumulated other comprehensive income (loss) Total Baxter stockholders' equity Noncontrolling interests Total equity As previously reported Balance as of January 1, 2019 683 $ 683 170 $ (9,989) $ 5,898 $ 15,626 $ (4,424) $ 7,794 $ 22 $ 7,816 Adoption of new accounting standards — — — — — 161 (161) — — — Net income — — — — — 347 — 347 — 347 Other comprehensive income (loss) — — — — — — 23 23 — 23 Purchases of treasury stock — — 8 (586) — — — (586) — (586) Stock issued under employee benefit plans and other — — (5) 291 (59) (66) — 166 — 166 Dividends declared on common stock — — — — — (98) — (98) — (98) Changes in noncontrolling interests — — — — — — — — 1 1 Balance as of March 31, 2019 683 $ 683 173 $ (10,284) $ 5,839 $ 15,970 $ (4,562) $ 7,646 $ 23 $ 7,669 Restatement impacts Balance as of January 1, 2019 — $ — — $ — $ — $ (551) $ 601 $ 50 $ — $ 50 Net income — — — — — (5) — (5) — (5) Other comprehensive income (loss) — — — — — — (121) (121) — (121) Balance as of March 31, 2019 — $ — — $ — $ — $ (556) $ 480 $ (76) $ — $ (76) As restated Balance as of January 1, 2019 683 $ 683 170 $ (9,989) $ 5,898 $ 15,075 $ (3,823) $ 7,844 $ 22 $ 7,866 Adoption of new accounting standards — — — — — 161 (161) — — — Net income — — — — — 342 — 342 — 342 Other comprehensive income (loss) — — — — — — (98) (98) — (98) Purchases of treasury stock — — 8 (586) — — — (586) — (586) Stock issued under employee benefit plans and other — — (5) 291 (59) (66) — 166 — 166 Dividends declared on common stock — — — — — (98) — (98) — (98) Changes in noncontrolling interests — — — — — — — — 1 1 Balance as of March 31, 2019 683 $ 683 173 $ (10,284) $ 5,839 $ 15,414 $ (4,082) $ 7,570 $ 23 $ 7,593 The adjustments to the January 1, 2019 retained earnings and accumulated other comprehensive loss represent the cumulative impacts of foreign exchange gains and losses and the translation of our financial position and results of operations for our foreign operations into U.S. dollars for the periods prior to January 1, 2019. Retained earnings also includes the cumulative impacts of equipment leased to customers under operating leases and other miscellaneous adjustments for the periods prior to January 1, 2019. See descriptions of the net income and other comprehensive income impacts in the condensed consolidated statement of income and condensed consolidated statement of comprehensive income for the three months ended March 31, 2019 sections above. Baxter International Inc. Condensed Consolidated Statement of Cash Flows (in millions) For the Three Months Ended March 31, 2019 As previously reported Restatement impacts Restatement reference As restated Cash flows from operations Net income $ 347 $ (5) $ 342 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 195 (3) (c) 192 Deferred income taxes (6) — (6) Stock compensation 22 — 22 Net periodic pension benefit and other postretirement costs 3 — 3 Other 19 (5) (d) 14 Changes in balance sheet items: Accounts receivable, net 32 — 32 Inventories (82) — (82) Accounts payable and accrued liabilities (333) (2) (b)(f) (335) Other (49) 1 (b)(e)(f) (48) Cash flows from operations - continuing operations 148 (14) 134 Cash flows from operations - discontinued operations (6) — (6) Cash flows from operations 142 (14) 128 Cash flows from investing activities Capital expenditures (198) 5 (c) (193) Acquisitions and investments, net of cash acquired (109) — (109) Other investing activities, net 1 — 1 Cash flows from investing activities (306) 5 (301) Cash flows from financing activities Net increases in debt obligations with original maturities of three months or less 795 — 795 Cash dividends on common stock (101) — (101) Proceeds from stock issued under employee benefit plans 173 — 173 Purchases of treasury stock (597) — (597) Other financing activities, net (32) — (32) Cash flows from financing activities 238 — 238 Effect of foreign exchange rate changes on cash and cash equivalents 2 (3) (a)(d)(e) (1) Increase (decrease) in cash and cash equivalents 76 (12) 64 Cash and cash equivalents at beginning of period 1,832 6 (e) 1,838 Cash and cash equivalents at end of period $ 1,908 $ (6) (e) $ 1,902 The $5 million decrease to net income was driven by the items described above in the condensed consolidated statement of income for the three months ended March 31, 2019 section. (a) Foreign Currency Denominated Monetary Assets and Liabilities—The correction of these misstatements resulted in an increase to the effect of foreign exchange rate changes on cash and cash equivalents of $4 million for the three months ended March 31, 2019. (b) Foreign Currency Derivative Contracts—The correction of these misstatements resulted in a decrease to changes in accounts payable and accrued liabilities of $1 million and an increase in other changes in balance sheet items of $1 million for the three months ended March 31, 2019. (c) Equipment Leased to Customers under Operating Leases—The correction of these misstatements resulted in decreases to depreciation and amortization of $3 million and capital expenditures of $5 million for the three months ended March 31, 2019. (d) Classification of Foreign Currency Gains and Losses in our Consolidated Statements of Cash Flows—The corrections of these misstatements resulted in an increase to the effect of foreign exchange rate changes on cash and cash equivalents and a decrease to other adjustments to reconcile net income to net cash from operating activities of $5 million for the three months ended March 31, 2019. (e) Translation of the Financial Position and Results of Operations of our Foreign Operations into U.S. Dollars—The corrections of these misstatements resulted in an increase in cash and cash equivalents at the beginning of the period of $6 million and decreases to other changes in balance sheet items of $1 million, cash and cash equivalents at the end of the period of $6 million and the effect of foreign exchange rate changes on cash and cash equivalents of $12 million for the three months ended March 31, 2019. (f) Other miscellaneous adjustments—The correction of these misstatements resulted in an increase to other changes in balance sheet items of $1 million and a decrease in changes in accounts payable and accrued liabilities of $1 million for the three months ended March 31, 2019. |
ACQUISITIONS AND OTHER ARRANGEM
ACQUISITIONS AND OTHER ARRANGEMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
ACQUISITIONS AND OTHER ARRANGEMENTS | ACQUISITIONS AND OTHER ARRANGEMENTS Seprafilm Adhesion Barrier In February 2020, we acquired the product rights to Seprafilm Adhesion Barrier (Seprafilm) from Sanofi. The transaction closed in February 2020 and we paid approximately $342 million in cash for the acquired assets. Seprafilm is indicated for use in patients undergoing abdominal or pelvic laparotomy as an adjunct intended to reduce the incidence, extent and severity of postoperative adhesions between the abdominal wall and the underlying viscera such as omentum, small bowel, bladder, and stomach, and between the uterus and surrounding structures such as tubes and ovaries, large bowel, and bladder. We concluded that the acquired assets met the definition of a business and accounted for the transaction as a business combination using the acquisition method of accounting. The following table summarizes the fair values of the assets acquired as of the acquisition date: (in millions) Assets acquired Inventories $ 16 Goodwill 29 Other intangible assets 297 Total assets acquired $ 342 The valuation of the assets acquired are preliminary and measurement period adjustments may be recorded in the future as we finalize our fair value estimates. The results of operations of the acquired business have been included in our condensed consolidated statement of income since the date the business was acquired. The acquisition contributed $13 million of net sales for the three months ended March 31, 2020. Net earnings from the acquisition were not significant during the three months ended March 31, 2020 and included acquisition and integration costs, primarily incremental cost of sales relating to inventory fair value step-ups, of $9 million. We allocated $287 million and $10 million of the total consideration to the Seprafilm developed product rights and customer relationships with useful lives of 10 and 7 years, respectively. The fair values of the intangible assets were determined using the income approach. The discount rates used to measure the developed product rights and customer relationship intangible assets were 14.8% and 11.0%, respectively. We consider the fair value of the intangible assets to be Level 3 measurements due to the significant estimates and assumptions used by management in establishing the estimated fair values. The goodwill, which is deductible for tax purposes, includes the value of potential future indications as well as the overall strategic benefits provided to our product portfolio of hemostats and sealants and is included in the Americas and APAC segments. Other Business Combinations We completed other individually immaterial acquisitions in the three months ended March 31, 2020 for total consideration of $13 million in cash at closing plus aggregate future potential contingent consideration of up to $12 million with an acquisition date fair value of $4 million. The acquisitions primarily resulted in the recognition of goodwill and other intangible assets. We have not presented pro forma financial information for any of our acquisitions because their results are not material to our condensed consolidated financial statements. Other Business Development Activities In January 2020, we acquired the U.S. rights to an additional product for $60 million. The purchase price was capitalized as a developed-technology intangible asset in the quarter ended March 31, 2020 and is being amortized over its estimated useful life of 11 years. In the three months ended March 31, 2020, we entered into distribution license arrangements for multiple products that have not yet obtained regulatory approval for upfront cash payments of $21 million. The cash paid was treated as research and development (R&D) expenses on our condensed consolidated statement of income. We could make additional payments of up to $41 million upon the achievement of certain development, regulatory or commercial milestones. |
SUPPLEMENTAL FINANCIAL INFORMAT
SUPPLEMENTAL FINANCIAL INFORMATION | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUPPLEMENTAL FINANCIAL INFORMATION | SUPPLEMENTAL FINANCIAL INFORMATION Interest Expense, Net Three months ended (in millions) 2020 2019 Interest expense, net of capitalized interest $ 30 $ 25 Interest income (9) (7) Interest expense, net $ 21 $ 18 Other (Income) Expense, Net Three months ended As Restated (in millions) 2020 2019 Foreign exchange losses (gains), net $ 11 $ (1) Pension and other postretirement benefit plans (1) (15) Other, net — (5) Other (income) expense, net $ 10 $ (21) Inventories (in millions) March 31, December 31, Raw materials $ 402 $ 377 Work in process 188 185 Finished goods 1,104 1,091 Inventories $ 1,694 $ 1,653 Property, Plant and Equipment, Net (in millions) March 31, December 31, Property, plant and equipment, at cost $ 10,443 $ 10,660 Accumulated depreciation (6,103) (6,148) Property, plant and equipment, net $ 4,340 $ 4,512 Non-Cash Operating and Investing Activities Right-of-use operating lease assets obtained in exchange for lease obligations for the three months ended March 31, 2020 and 2019 were $15 million and $42 million, respectively. Purchases of property, plant and equipment included in accounts payable and accrued liabilities as of March 31, 2020 and 2019 was $49 million and $39 million, respectively. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | GOODWILL AND OTHER INTANGIBLE ASSETS, NET Goodwill The following is a reconciliation of goodwill by business segment. (in millions) Americas EMEA APAC Total Balance as of December 31, 2019 $ 2,428 $ 385 $ 217 $ 3,030 Acquisitions 32 — 7 39 Currency translation adjustments (86) (14) (8) (108) Balance as of March 31, 2020 $ 2,374 $ 371 $ 216 $ 2,961 As of March 31, 2020, there were no reductions in goodwill relating to impairment losses. Other intangible assets, net The following is a summary of our other intangible assets. (in millions) Developed technology, including patents Other amortized intangible assets Indefinite-lived intangible assets March 31, 2020 Gross other intangible assets $ 2,612 $ 461 $ 179 $ 3,252 Accumulated amortization (1,209) (284) — (1,493) Other intangible assets, net $ 1,403 $ 177 $ 179 $ 1,759 December 31, 2019 Gross other intangible assets $ 2,309 $ 464 $ 173 $ 2,946 Accumulated amortization (1,190) (285) — (1,475) Other intangible assets, net $ 1,119 $ 179 $ 173 $ 1,471 Intangible asset amortization expense was $52 million and $43 million for the three months ended March 31, 2020 and 2019, respectively. |
FINANCIAL ARRANGEMENTS
FINANCIAL ARRANGEMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
FINANCIAL ARRANGEMENTS | FINANCING ARRANGEMENTS Debt Issuance In March 2020, we issued $750 million of 3.75% senior notes due in March 2025 and $500 million of 3.95% senior notes due in March 2030 (collectively, the senior notes). Pursuant to a registration rights agreement (the Registration Rights Agreement) with the initial purchasers of the senior notes, we agreed to use our commercially reasonable efforts to file a registration statement with respect to a registered offer to exchange the senior notes for new notes with terms substantially identical in all material respects to the senior notes and to have such registration statement declared effective under the U.S. Securities Act of 1933. If we fail to have such registration statement declared effective by September 17, 2021 (a registration default), the annual interest rate on the senior notes would increase by 0.25% for the 90-day period immediately following such registration default and by an additional 0.25% thereafter. The maximum additional interest rate is 0.50% per annum and if a registration default is corrected, the senior notes would revert to the original interest rates. The payment of additional interest is the sole remedy for the holders of the senior notes in the event of a registration default. Credit Facilities |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES We are involved in product liability, patent, commercial, and other legal matters that arise in the normal course of our business. We record a liability when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, and no amount within the range is a better estimate, the minimum amount in the range is accrued. If a loss is not probable or a probable loss cannot be reasonably estimated, no liability is recorded. As of March 31, 2020 and December 31, 2019, our total recorded reserves with respect to legal and environmental matters were $53 million and $56 million, respectively, and there were no related receivables. We have established reserves for certain of the matters discussed below. We are not able to estimate the amount or range of any loss for certain contingencies for which there is no reserve or additional loss for matters already reserved. While our liability in connection with these claims cannot be estimated and the resolution thereof in any reporting period could have a significant impact on our results of operations and cash flows for that period, the outcome of these legal proceedings is not expected to have a material adverse effect on our consolidated financial position. While we believe that we have valid defenses in the matters set forth below, litigation is inherently uncertain, excessive verdicts do occur, and we may incur material judgments or enter into material settlements of claims. In addition to the matters described below, we remain subject to the risk of future administrative and legal actions. With respect to governmental and regulatory matters, these actions may lead to product recalls, injunctions, and other restrictions on our operations and monetary sanctions, including significant civil or criminal penalties. With respect to intellectual property, we may be exposed to significant litigation concerning the scope of our and others’ rights. Such litigation could result in a loss of patent protection or the ability to market products, which could lead to a significant loss of sales, or otherwise materially affect future results of operations. Environmental We are involved as a potentially responsible party (PRP) for environmental clean-up costs at six Superfund sites. Under the U.S. Superfund statute and many state laws, generators of hazardous waste sent to a disposal or recycling site are liable for site cleanup if contaminants from that property later leak into the environment. The laws generally provide that a PRP may be held jointly and severally liable for the costs of investigating and remediating the site. Separate from the Superfund cases noted above, we are involved in an ongoing voluntary environmental remediation associated with historic operations at our Irvine, California, United States facility. As of March 31, 2020 and December 31, 2019, our environmental reserves, which are measured on an undiscounted basis, were $18 million. After considering these reserves, management is of the opinion that the outcome of these matters will not have a material adverse effect on our financial position or results of operations. General Litigation In November 2016, a putative antitrust class action complaint seeking monetary and injunctive relief was filed in the United States District Court for the Northern District of Illinois. The complaint alleges a conspiracy among manufacturers of IV solutions to restrict output and affect pricing in connection with a shortage of such solutions. Similar parallel actions subsequently were filed. In January 2017, a single consolidated complaint covering these matters was filed in the Northern District of Illinois. We filed a motion to dismiss the consolidated complaint in February 2017. The court granted our motion to dismiss the consolidated complaint without prejudice in July 2018. The plaintiffs filed an amended complaint, which we moved to dismiss on November 9, 2018. The court granted our motion to dismiss the amended complaint with prejudice on April 3, 2020. In April 2017, we became aware of a criminal investigation by the U.S. Department of Justice (DOJ), Antitrust Division and a federal grand jury in the United States District Court for the Eastern District of Pennsylvania. We and an employee received subpoenas seeking production of documents and testimony regarding the manufacturing, selling, pricing and shortages of IV solutions and containers (including saline solutions and certain other injectable medicines sold by us) and communications with competitors regarding the same. On November 30, 2018, the DOJ notified us that it had closed the investigation. The New York Attorney General has also requested that we provide information regarding business practices in the IV saline industry. We have cooperated with the New York Attorney General. In August 2019, we were named in an amended complaint filed by Fayette County, Georgia in the MDL In re: National Prescription Opiate Litigation pending in the U.S. District Court, Northern District of Ohio. The complaint alleges that multiple manufacturers and distributors of opiate products improperly marketed and diverted these products, which caused harm to Fayette County. The complaint is limited in its allegations as to Baxter and does not distinguish between injectable opiate products and orally administered opiates. We manufactured generic injectable opiate products in our facility in Cherry Hill, NJ, which we divested in 2011. In November 2019, we and certain of our officers were named in a class action complaint captioned Ethan E. Silverman et al. v. Baxter International Inc. et al. that was filed in the United States District Court for the Northern District of Illinois. The plaintiff, who allegedly purchased shares of our common stock during the specified class period, filed this putative class action on behalf of himself and shareholders who acquired Baxter common stock between February 21, 2019 and October 23, 2019. The plaintiff alleges that we and certain officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements and failing to disclose material facts relating to certain intra-company transactions undertaken for the purpose of generating foreign exchange gains or avoiding foreign exchange losses, as well as our internal controls over financial reporting. On January 29, 2020, the Court appointed Varma Mutual Pension Insurance Company and Louisiana Municipal Police Employees Retirement System as lead plaintiffs in the case. In addition, we have received a stockholder request for inspection of our books and records in connection with the announcement made in our Form 8-K on October 24, 2019 that we had commenced an internal investigation into certain intra-company transactions that impacted our previously reported non-operating foreign exchange gains and losses. As initially disclosed on October 24, 2019, we also voluntarily advised the staff of the SEC of our internal investigation and we are continuing to cooperate with the staff of the SEC. In March 2020, two lawsuits were filed against us in the Northern District of Illinois by plaintiffs alleging injuries as a result of exposure to ethylene oxide used in our manufacturing facility in Mountain Home, Arkansas to sterilize certain of our products. The plaintiffs seek damages, including compensatory and punitive damages in an unspecified amount, and unspecified injunctive and declaratory relief. Other As previously disclosed, in 2008 we recalled our heparin sodium injection products in the United States. Following the recall, more than 1,000 lawsuits alleging that plaintiffs suffered various reactions to a heparin contaminant, in some cases resulting in fatalities, were filed. In January 2019, the last of these cases was settled. In the first three months of 2019, following the resolution of an insurance dispute, we received cash proceeds of $35 million for our allocation of the insurance proceeds under a settlement and cost-sharing agreement related to the defense of the heparin product liability cases. We recognized a $33 million gain in connection with the resolution of the dispute with the insurer that is classified within other operating income, net on the condensed consolidated statement of income for the three months ended March 31, 2019. |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Stock-Based Compensation Stock compensation expense totaled $29 million and $22 million in the first quarter of 2020 and 2019, respectively. Approximately 70% of stock compensation expense is classified within SG&A expense with the remainder classified in cost of sales and R&D expense. We awarded stock compensation grants which consisted of 3.7 million stock options, 0.5 million restricted stock units (RSUs) and 0.4 million performance stock units (PSUs) during the first quarter of 2020. The grant date fair values of stock options, RSUs and PSUs awarded in the first quarter of 2020 were $59 million, $37 million and $29 million, respectively. Stock options and RSUs generally vest in one-third increments over a three-year period. One-fourth of the PSUs granted related to the establishment of the adjusted operating margin vesting condition for awards issued in 2018 and 2019 whereas the remainder were related to awards made in March 2020, which are equally divided into PSUs based on our compound annual sales growth rate performance, our adjusted return on invested capital performance and on our stock performance relative to our peer group. All of the PSUs granted vest at the end of the applicable three-year service period. Stock Options The weighted-average Black-Scholes assumptions used in establishing the fair value of stock options granted during the period, along with weighted-average grant date fair values, were as follows: Three months ended 2020 2019 Expected volatility 26 % 19 % Expected life (in years) 5.5 5.5 Risk-free interest rate 0.6 % 2.6 % Dividend yield 1.2 % 1.0 % Fair value per stock option $ 16 $ 15 The total intrinsic value of stock options exercised was $52 million and $153 million during the first quarters of 2020 and 2019, respectively. As of March 31, 2020, the unrecognized compensation cost related to all unvested stock options of $103 million is expected to be recognized as expense over a weighted-average period of 2.1 years. RSUs As of March 31, 2020, the unrecognized compensation cost related to all unvested RSUs of $73 million is expected to be recognized as expense over a weighted-average period of 2.0 years. PSUs As of March 31, 2020, the unrecognized compensation cost related to all unvested PSUs of $44 million is expected to be recognized as expense over a weighted-average period of 2.1 years. Stock Options Award Modification In the first quarter of 2020, we modified the terms of stock option awards granted to 123 employees. Specifically, we extended the term for certain stock options that were scheduled to expire in the first quarter of 2020 as applicable employees were not permitted to exercise these awards due to our announcement in February 2020 that our previously issued financial statements should no longer be relied upon. The stock options were extended in order to allow impacted employees to exercise their stock option awards for a brief period once we became current with our SEC reporting obligations, which occurred in March 2020. As a result of the modifications, we recognized an additional $8 million of stock compensation expense during the quarter ended March 31, 2020. Cash Dividends Cash dividends declared per share for the three months ended March 31, 2020 and March 31, 2019 were $0.22 and $0.19, respectively. Stock Repurchase Programs |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | ACCUMULATED OTHER COMPREHENSIVE INCOME Comprehensive income includes all changes in stockholders’ equity that do not arise from transactions with stockholders, and consists of net income, currency translation adjustments (CTA), certain gains and losses from pension and other postretirement employee benefit (OPEB) plans and gains and losses on cash flow hedges. The following table is a net-of-tax summary of the changes in AOCI by component for the three months ended March 31, 2020 and 2019. (in millions) CTA Pension and OPEB plans Hedging activities Total Gains (losses) Balance as of December 31, 2019 $ (2,954) $ (715) $ (41) $ (3,710) Other comprehensive income (loss) before reclassifications (359) 10 (131) (480) Amounts reclassified from AOCI (a) — 12 1 13 Net other comprehensive income (loss) (359) 22 (130) (467) Balance as of March 31, 2020 $ (3,313) $ (693) $ (171) $ (4,177) As Restated (in millions) CTA Pension and OPEB plans Hedging activities Total Gains (losses) Balance as of December 31, 2018 $ (2,868) $ (954) $ (1) $ (3,823) Adoption of new accounting standard 9 (169) (1) (161) Other comprehensive income (loss) before (97) 7 (15) (105) Amounts reclassified from AOCI (a) — 7 — 7 Net other comprehensive income (loss) (97) 14 (15) (98) Balance as of March 31, 2019 $ (2,956) $ (1,109) $ (17) $ (4,082) (a) See table below for details about these reclassifications. The following is a summary of the amounts reclassified from AOCI to net income during the three months ended March 31, 2020 and 2019. Amounts reclassified from AOCI (a) As Restated (in millions) Three months ended March 31, 2020 Three months ended March 31, 2019 Location of impact in income statement Amortization of pension and OPEB items Amortization of net losses and prior service costs or credits $ (15) $ (8) Other (income) expense, net Less: Tax effect 3 1 Income tax expense $ (12) $ (7) Net of tax Gains on hedging activities Foreign exchange contracts $ (1) $ — Cost of sales Less: Tax effect — — Income tax expense $ (1) $ — Net of tax Total reclassifications for the period $ (13) $ (7) Total net of tax (a) Amounts in parentheses indicate reductions to net income. Refer to Note 12 for additional information regarding the amortization of pension and OPEB items and Note 15 for additional information regarding hedging activity. |
REVENUES
REVENUES | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
REVENUES | REVENUES Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Some of our contracts have multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Our global payment terms are typically between 30-90 days. The majority of our performance obligations are satisfied at a point in time. This includes sales of our broad portfolio of essential healthcare products across our geographic segments including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. For a majority of these sales, our performance obligation is satisfied upon delivery to the customer. Shipping and handling activities are considered to be fulfillment activities and are not considered to be a separate performance obligation. To a lesser extent, in all of our segments, we enter into other types of contracts including contract manufacturing arrangements, equipment leases, and certain subscription software and licensing arrangements. We recognize revenue for these arrangements over time or at a point in time depending on our evaluation of when the customer obtains control of the promised goods or services. Revenue is recognized over time when we are creating or enhancing an asset that the customer controls as the asset is created or enhanced or our performance does not create an asset with an alternative use and we have an enforceable right to payment for performance completed. On March 31, 2020, we had $8.2 billion of transaction price allocated to remaining performance obligations related to executed contracts with an original duration of one year or more, which are primarily included in the Americas segment. Some contracts in the United States included in this amount contain index-dependent price increases, which are not known at this time. We expect to recognize approximately 20% of this amount as revenue over the remainder of 2020, 25% in 2021, 20% in each of 2022 and 2023, 5% in each of 2024 and 2025, and the remaining balance thereafter. Significant Judgments Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration related to rebates, product returns, sales discounts and wholesaler chargebacks. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are included in accounts receivable, net and accounts payable and accrued liabilities on the condensed consolidated balance sheets. Management's estimates take into consideration historical experience, current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract using the expected value method. The amount of variable consideration included in the net sales price is limited to the amount that is probable not to result in a significant reversal in the amount of the cumulative revenue recognized in a future period. Revenue recognized during the three months ended March 31, 2020 and 2019 related to performance obligations satisfied in prior periods was not material. Contract Balances The timing of revenue recognition, billings and cash collections results in the recognition of trade accounts receivable, unbilled receivables, contract assets and customer advances and deposits (contract liabilities) on our condensed consolidated balance sheets. Net trade accounts receivable was $1.7 billion and $1.8 billion as of March 31, 2020 and December 31, 2019, respectively. For contract manufacturing arrangements, revenue is primarily recognized throughout the production cycle, which typically lasts up to 90 days, resulting in the recognition of contract assets until the related services are completed and the customers are billed. Additionally, for arrangements containing a performance obligation to deliver software that can be used with medical devices, we recognize revenue upon delivery of the software, which results in the recognition of contract assets when customers are billed over time, generally over one one Disaggregation of Net Sales The following tables disaggregate our net sales from contracts with customers by Global Business Unit (GBU) between the U.S. and international: Three months ended March 31, As Restated 2020 2019 (in millions) U.S. International Total U.S. International Total Renal Care 1 $ 204 $ 666 $ 870 $ 192 $ 662 $ 854 Medication Delivery 2 461 229 690 406 228 634 Pharmaceuticals 3 231 296 527 232 278 510 Clinical Nutrition 4 82 138 220 77 128 205 Advanced Surgery 5 137 87 224 120 79 199 Acute Therapies 6 60 96 156 48 81 129 Other 7 42 73 115 45 62 107 Total Baxter $ 1,217 $ 1,585 $ 2,802 $ 1,120 $ 1,518 $ 2,638 1 Renal Care includes sales of our peritoneal dialysis (PD), hemodialysis (HD) and additional dialysis therapies and services. 2 Medication Delivery includes sales of our intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices. 3 Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services. 4 Clinical Nutrition includes sales of our parenteral nutrition (PN) therapies and related products. 5 Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention. 6 Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU). 7 Other primarily includes sales of contract manufacturing services from our pharmaceutical partnering business. Lease Revenue We lease medical equipment, such as renal dialysis equipment and infusion pumps, to customers, primarily in conjunction with arrangements to provide consumable medical products such as dialysis therapies, IV fluids and inhaled anesthetics. Certain of our equipment leases are classified as sales-type leases and the remainder are operating leases. The terms of the related contracts, including the proportion of fixed versus variable payments and any options to shorten or extend the lease term, vary by customer. We allocate revenue between equipment leases and medical products based on their standalone selling prices. The components of lease revenue for the three months ended March 31, 2020 and March 31, 2019 were: (in millions) Three months ended March 31, 2020 Three months ended March 31, 2019 Sales-type lease revenue $ 6 $ 6 Operating lease revenue 14 15 Variable lease revenue 18 21 Total lease revenue $ 38 $ 42 |
BUSINESS OPTIMIZATION CHARGES
BUSINESS OPTIMIZATION CHARGES | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
BUSINESS OPTIMIZATION CHARGES | BUSINESS OPTIMIZATION CHARGESIn recent years, we have undertaken actions to transform our cost structure and enhance operational efficiency. These efforts include restructuring the organization, optimizing the manufacturing footprint, R&D operations and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions. From the commencement of our business optimization activities in the second half of 2015 through March 31, 2020, we have incurred cumulative pre-tax costs of $1.0 billion related to these actions. The costs consisted primarily of employee termination costs, implementation costs, asset impairments and accelerated depreciation. We currently expect to incur additional pre-tax costs of approximately $30 million through the completion of these initiatives under our current program. These costs will primarily include employee termination costs, implementation costs, and accelerated depreciation. To the extent further cost savings opportunities are identified, we may incur additional business optimization expenses. During the three months ended March 31, 2020 and 2019, we recorded the following charges related to business optimization programs. Three months ended (in millions) 2020 2019 Restructuring charges $ 25 $ 25 Costs to implement business optimization programs 7 10 Accelerated depreciation — 3 Total business optimization charges $ 32 $ 38 For segment reporting purposes, business optimization charges are unallocated expenses. Costs to implement business optimization programs for the three months ended March 31, 2020 and 2019, respectively, consisted primarily of external consulting and transition costs, including employee compensation and related costs. The costs were generally included within cost of sales, SG&A expense and R&D expense. For the three months ended March 31, 2019, we recognized accelerated depreciation, primarily associated with facilities to be closed. The costs were recorded within cost of sales and SG&A expense. During the three months ended March 31, 2020 and 2019, we recorded the following restructuring charges. Three months ended March 31, 2020 (in millions) COGS SG&A R&D Total Employee termination costs $ 2 $ 16 $ 1 $ 19 Asset impairments 6 — — 6 Total restructuring charges $ 8 $ 16 $ 1 $ 25 Three months ended March 31, 2019 (in millions) COGS SG&A R&D Total Employee termination costs $ — $ (1) $ 9 $ 8 Contract termination costs 7 — — 7 Asset impairments 9 1 — 10 Total restructuring charges $ 16 $ — $ 9 $ 25 In conjunction with our business optimization initiatives, we sold property that resulted in a gain of $17 million. This benefit is reflected within other operating income, net in our condensed consolidated statement of income for the three months ended March 31, 2020. The following table summarizes activity in the liability related to our restructuring initiatives. (in millions) Liability balance as of December 31, 2019 $ 92 Charges 19 Payments (21) Currency translation (2) Liability balance as of March 31, 2020 $ 88 Substantially all of our restructuring liabilities as of March 31, 2020 relate to employee termination costs, with the remaining liabilities attributable to contract termination costs. Substantially all of the cash payments for those liabilities are expected to be disbursed by the end of 2020. |
PENSION AND OTHER POSTRETIREMEN
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS | 3 Months Ended |
Mar. 31, 2020 | |
Retirement Benefits [Abstract] | |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS | PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS The following is a summary of net periodic benefit cost relating to our pension and OPEB plans. Three months ended As Restated (in millions) 2020 2019 Pension benefits Service cost $ 21 $ 18 Interest cost 24 47 Expected return on plan assets (41) (72) Amortization of net losses and prior service costs 19 15 Net periodic pension benefit cost $ 23 $ 8 OPEB Interest cost $ 1 $ 2 Amortization of net loss and prior service credit (4) (7) Net periodic OPEB cost (income) $ (3) $ (5) |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Our effective income tax rate was 11.9% and 11.4% for the three months ended March 31, 2020 and 2019, respectively. Our effective income tax rate can differ from the 21% U.S. federal statutory rate due to a number of factors, including foreign rate differences, tax incentives, increases or decreases in valuation allowances and liabilities for uncertain tax positions and excess tax benefits on stock compensation awards. For the three months ended March 31, 2020, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to a favorable geographic earnings mix and excess tax benefits on stock compensation awards. For the three months ended March 31, 2019, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to excess tax benefits on stock compensation awards. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The numerator for both basic and diluted earnings per share (EPS) is net income. The denominator for basic EPS is the weighted-average number of shares outstanding during the period. The dilutive effect of outstanding stock options, RSUs and PSUs is reflected in the denominator for diluted EPS using the treasury stock method. The following table is a reconciliation of basic shares to diluted shares. Three months ended (in millions) 2020 2019 Basic shares 507 512 Effect of dilutive securities 9 10 Diluted shares 516 522 The effect of dilutive securities included unexercised stock options, unvested RSUs and contingently issuable shares related to granted PSUs. The computation of diluted EPS excluded 1 million and 4 million equity awards for the three months ended March 31, 2020 and 2019, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS. Refer to Note 8 for additional information regarding items impacting basic and diluted shares. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES We operate on a global basis and are exposed to the risk that our earnings, cash flows and equity could be adversely impacted by fluctuations in foreign exchange and interest rates. Our hedging policy attempts to manage these risks to an acceptable level based on our judgment of the appropriate trade-off between risk, opportunity and costs. We are primarily exposed to foreign exchange risk with respect to recognized assets and liabilities, forecasted transactions and net assets denominated in the Euro, British Pound, Chinese Yuan, Korean Won, Australian Dollar, Canadian Dollar, Japanese Yen, Colombian Peso, Brazilian Real, Mexican Peso and Swedish Krona. We manage our foreign currency exposures on a consolidated basis, which allows us to net exposures and take advantage of any natural offsets. In addition, we use derivative and nonderivative instruments to further reduce the net exposure to foreign exchange risk. Gains and losses on the hedging instruments offset losses and gains on the hedged transactions and reduce the earnings and equity volatility resulting from changes in foreign exchange rates. Financial market and currency volatility may limit our ability to cost-effectively hedge these exposures. We are also exposed to the risk that our earnings and cash flows could be adversely impacted by fluctuations in interest rates. Our policy is to manage interest costs using a mix of fixed- and floating-rate debt that we believe is appropriate. To manage this mix in a cost-efficient manner, we periodically enter into interest rate swaps in which we agree to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional amount. We do not hold any instruments for trading purposes and none of our outstanding derivative instruments contain credit-risk-related contingent features. All derivative instruments are recognized as either assets or liabilities at fair value in the condensed consolidated balance sheets and are classified as short-term or long-term based on the scheduled maturity of the instrument. We designate certain of our derivatives and foreign-currency denominated debt as hedging instruments in cash flow, fair value, or net investment hedges. Cash Flow Hed g es We may use options, including collars and purchased options, forwards and cross-currency swaps to hedge the foreign exchange risk to earnings relating to forecasted transactions and recognized assets and liabilities. We periodically use treasury rate locks to hedge the risk to earnings associated with movements in interest rates relating to anticipated issuances of debt. For each derivative instrument that is designated and effective as a cash flow hedge, the gain or loss on the derivative is recorded in AOCI and then recognized in earnings consistent with the underlying hedged item. Option premiums or net premiums paid are initially recorded as assets and reclassified to other comprehensive income (OCI) over the life of the option, and then recognized in earnings consistent with the underlying hedged item. Cash flow hedges are classified in cost of sales and interest expense, net, and are primarily related to forecasted third-party sales denominated in foreign currencies, forecasted intra-company sales denominated in foreign currencies, and anticipated issuances of debt, respectively. The notional amounts of foreign exchange contracts designated as cash flow hedges were $583 million and $617 million as of March 31, 2020 and December 31, 2019, respectively. The maximum term over which we have cash flow hedge contracts in place related to forecasted transactions at March 31, 2020 is 12 months for foreign exchange contracts. The total notional amounts of interest rate contracts designated as cash flow hedges were $550 million as of March 31, 2020 and December 31, 2019, respectively. The interest rate contracts have maturity dates in 2022 and hedge the variability in future benchmark interest payments attributable to changes in interest rates on the forecasted issuance of fixed-rate debt. Fair Value Hed g es We periodically use interest rate swaps to convert a portion of our fixed-rate debt into variable-rate debt. These instruments hedge our earnings from changes in the fair value of debt due to fluctuations in the designated benchmark interest rate. For each derivative instrument that is designated and effective as a fair value hedge, the gain or loss on the derivative is recognized immediately to earnings, and offsets changes in fair value attributable to a particular risk, such as changes in interest rates, of the hedged item, which are also recognized in earnings. Fair value hedges are classified in interest expense, net, as they hedge the interest rate risk associated with certain of our fixed-rate debt. There were no outstanding interest rate swap contracts designated as fair value hedges as of March 31, 2020 and December 31, 2019. Net Investment Hed g es In May 2017, we issued €600 million of senior notes due May 2025. In May 2019, we issued €750 million of senior notes due May 2024 and €750 million of senior notes due May 2029. We have designated these debt obligations as hedges of our net investment in our European operations and, as a result, mark to spot rate adjustments on the outstanding debt balances are recorded as a component of AOCI. As of March 31, 2020, we had an accumulated pre-tax unrealized translation gain in AOCI of $28 million related to the Euro-denominated senior notes. Dedesignations If it is determined that a derivative or nonderivative hedging instrument is no longer highly effective as a hedge, we discontinue hedge accounting prospectively. Gains or losses relating to terminations of effective cash flow hedges generally continue to be deferred and are recognized consistent with the loss or income recognition of the underlying hedged items. However, if it is probable that the hedged forecasted transactions will not occur, any gains or losses would be immediately reclassified from AOCI to earnings. There were no hedge dedesignations in the first three months of 2020 or 2019 resulting from changes in our assessment of the probability that the hedged forecasted transactions would occur. If we terminate a fair value hedge, an amount equal to the cumulative fair value adjustment to the hedged item at the date of termination is amortized to earnings over the remaining term of the hedged item. There were no fair value hedges terminated during the first three months of 2020 or 2019. If we remove a net investment hedge designation, any gains or losses recognized in AOCI are not reclassified to earnings until we sell, liquidate, or deconsolidate the foreign investments that were being hedged. Undesignated Derivative Instruments We use forward contracts to hedge earnings from the effects of foreign exchange relating to certain of our intra-company and third-party receivables and payables denominated in a foreign currency. These derivative instruments are generally not formally designated as hedges and the terms of these instruments generally do not exceed one month. The total notional amount of undesignated derivative instruments was $824 million as of March 31, 2020 and $619 million as of December 31, 2019. Gains and Losses on Hedging Instruments The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our condensed consolidated financial statements for the three months ended March 31, 2020 and 2019. Gain (loss) recognized in OCI Location of gain (loss) Gain (loss) reclassified from AOCI into income (in millions) 2020 2019 2020 2019 Cash flow hedges Interest rate contracts $ (184) $ (11) Interest expense, net $ — $ — Foreign exchange contracts 14 (9) Cost of sales (1) — Net investment hedges 49 14 Other (income) expense, net — — Total $ (121) $ (6) $ (1) $ — Location of gain (loss) in income statement Gain (loss) recognized in income As Restated (in millions) 2020 2019 Undesignated derivative instruments Foreign exchange contracts Other (income) expense, net $ 2 $ (8) As of March 31, 2020, $6 million of deferred, net after-tax gains on derivative instruments included in AOCI are expected to be recognized in earnings during the next 12 months, coinciding with when the hedged items are expected to impact earnings. Derivative Assets and Liabilities The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of March 31, 2020. Derivatives in asset positions Derivatives in liability positions (in millions) Balance sheet location Fair value Balance sheet location Fair value Derivative instruments designated as hedges Interest rate contracts Other non-current assets $ — Other non-current liabilities $ 226 Foreign exchange contracts Prepaid expenses and other current assets 24 Accounts payable and accrued liabilities 3 Total derivative instruments designated as hedges 24 229 Undesignated derivative instruments Foreign exchange contracts Prepaid expenses and other current assets 5 Accounts payable and accrued liabilities 4 Total derivative instruments $ 29 $ 233 The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2019. Derivatives in asset positions Derivatives in liability positions (in millions) Balance sheet location Fair value Balance sheet location Fair value Derivative instruments designated as hedges Interest rate contracts Other non-current assets $ 10 Other non-current liabilities $ 52 Foreign exchange contracts Prepaid expenses and other current assets 10 Accounts payable and accrued liabilities — Total derivative instruments designated as hedges 20 52 Undesignated derivative instruments Foreign exchange contracts Prepaid expenses and other current assets 1 Accounts payable and accrued liabilities 2 Total derivative instruments $ 21 $ 54 While some of our derivatives are subject to master netting arrangements, we present our assets and liabilities related to derivative instruments on a gross basis within the condensed consolidated balance sheets. Additionally, we are not required to post collateral for any of our outstanding derivatives. The following table provides information on our derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty. March 31, 2020 December 31, 2019 (in millions) Asset Liability Asset Liability Gross amounts recognized in the consolidated balance sheet $ 29 $ 233 $ 21 $ 54 Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet (7) (7) (11) (11) Total $ 22 $ 226 $ 10 $ 43 The following table presents the amounts recorded on the condensed consolidated balance sheet related to fair value hedges: Carrying amount of hedged item Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged item (a) (in millions) Balance as of March 31, 2020 Balance as of December 31, 2019 Balance as of March 31, 2020 Balance as of December 31, 2019 Long-term debt $ 103 $ 103 $ 6 $ 6 (a) These fair value hedges were terminated prior to December 31, 2019. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis. Basis of fair value measurement (in millions) Balance as of March 31, 2020 Quoted prices in active markets for identical assets Significant other Significant Assets Foreign exchange contracts $ 29 $ — $ 29 $ — Marketable equity securities 3 3 — — Total $ 32 $ 3 $ 29 $ — Liabilities Foreign exchange contracts $ 7 $ — $ 7 $ — Interest rate contracts 226 — 226 — Contingent payments related to acquisitions 39 — — 39 Total $ 272 $ — $ 233 $ 39 Basis of fair value measurement (in millions) Balance as of December 31, 2019 Quoted prices in active markets for identical assets Significant other Significant Assets Foreign exchange contracts $ 11 $ — $ 11 $ — Interest rate contracts 10 — 10 — Marketable equity securities 3 3 — — Total $ 24 $ 3 $ 21 $ — Liabilities Foreign exchange contracts $ 2 $ — $ 2 $ — Interest rate contracts 52 — 52 — Contingent payments related to acquisitions 39 — — 39 Total $ 93 $ — $ 54 $ 39 As of March 31, 2020 and December 31, 2019, cash and cash equivalents of $4.1 billion and $3.3 billion, respectively, included money market and other short-term funds of approximately $2.3 billion and $1.7 billion, respectively, which are considered Level 2 in the fair value hierarchy. For assets that are measured using quoted prices in active markets, the fair value is the published market price per unit multiplied by the number of units held, without consideration of transaction costs. The majority of the derivatives entered into by us are valued using internal valuation techniques as no quoted market prices exist for such instruments. The principal techniques used to value these instruments are discounted cash flow and Black-Scholes models. The key inputs, which are considered observable and vary depending on the type of derivative, include contractual terms, interest rate yield curves, foreign exchange rates and volatility. Contingent payments related to acquisitions, which consist of milestone payments and sales-based payments, are valued using discounted cash flow techniques. The fair value of milestone payments reflects management’s expectations of probability of payment, and increases as the probability of payment increases or the expected timing of payments is accelerated. The fair value of sales-based payments is based upon probability-weighted future revenue estimates, and increases as revenue estimates increase, probability weighting of higher revenue scenarios increases or the expected timing of payment is accelerated. The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions. Three months ended (in millions) 2020 2019 Fair value at beginning of period $ 39 $ 32 Additions 4 — Change in fair value recognized in earnings (3) — Payments (1) (1) Fair value at end of period $ 39 $ 31 Financial Instruments Not Measured at Fair Value In addition to the financial instruments that we are required to recognize at fair value in the condensed consolidated balance sheets, we have certain financial instruments that are recognized at amortized cost or some basis other than fair value. For these financial instruments, the following table provides the values recognized in the condensed consolidated balance sheets and the estimated fair values as of March 31, 2020 and December 31, 2019. Book values Fair values(a) (in millions) 2020 2019 2020 2019 Liabilities Short-term debt $ 221 $ 226 $ 221 $ 226 Current maturities of long-term debt and finance lease obligations 315 315 315 315 Long-term debt and finance lease obligations 5,996 4,809 6,324 5,156 (a) These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs. The carrying value of short-term debt approximates its fair value due to the short-term maturities of the obligations. The estimated fair values of current and long-term debt were computed by multiplying price by the notional amount of the respective debt instruments. Price is calculated using the stated terms of the respective debt instrument and yield curves commensurate with our credit risk. The carrying values of other financial instruments approximate their fair values due to the short-term maturities of most of those assets and liabilities. Equity investments not measured at fair value are comprised of other equity investments without readily determinable fair values and were $77 million at March 31, 2020 and $73 million at December 31, 2019. These amounts are included in Other non-current assets on our condensed consolidated balance sheets. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION We manage our business based on three geographical segments: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific). Our segments provide a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. We use operating income on a segment basis to make resource allocation decisions and assess the ongoing performance of our business segments. Intersegment sales are eliminated in consolidation. Certain items are maintained at Corporate and are not allocated to a segment. They primarily include the majority of foreign currency hedging activities, corporate headquarters costs, certain R&D costs, certain GBU support costs, stock compensation expense, certain employee benefit plan costs, and certain gains, losses, and other charges (such as business optimization, acquisition and integration costs, intangible asset amortization and asset impairments). Our chief operating decision maker does not receive any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Financial information for our segments is as follows. Three months ended As Restated (in millions) 2020 2019 Net sales: Americas $ 1,499 $ 1,409 EMEA 754 707 APAC 549 522 Total net sales $ 2,802 $ 2,638 Operating income : Americas $ 544 $ 538 EMEA 161 144 APAC 128 120 Total segment operating income $ 833 $ 802 The following is a reconciliation of segment operating income to income before income taxes per the condensed consolidated statements of income. Three months ended As Restated (in millions) 2020 2019 Total segment operating income $ 833 $ 802 Corporate and other (424) (419) Total operating income 409 383 Net interest expense 21 18 Other (income) expense, net 10 (21) Income before income taxes $ 378 $ 386 Refer to Note 10 for additional information on Net Sales by GBU. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The unaudited interim condensed consolidated financial statements of Baxter International Inc. and its subsidiaries (we or our) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) in the United States have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2019 (2019 Annual Report). In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. All such adjustments, unless otherwise noted herein, are of a normal, recurring nature. The results of operations for the current interim period are not necessarily indicative of the results of operations to be expected for the full year. Certain reclassifications have been made to conform the prior period condensed consolidated statements to the current period presentation. Risks and Uncertainties Related to COVID-19 Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus (COVID-19). COVID-19 may have an adverse impact on our operations, supply chains and distribution systems and increase our expenses, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments are taking. Due to these impacts and measures, we have experienced and may continue to experience reductions or increases in demand for certain of our products as health care customers re-prioritize the treatment of patients. For example, elective surgeries are being de-prioritized which has negatively impacted the usage of certain of our products, while other of our products are experiencing an increase in demand which we may not be able to meet in accordance with the customer’s desired timing. In addition to travel restrictions, countries have closed borders and imposed prolonged quarantines, often with uncertain duration, which has significantly impacted the ability of our employees to get to their places of work to produce products and may significantly hamper our products from moving through the supply chain. As a result, given the rapid and evolving nature of the virus, COVID-19 could negatively affect our sales, and it is uncertain how COVID-19 will affect our global operations generally if these impacts persist or exacerbate over an extended period of time. |
New Accounting Standards | New Accounting Standards Recently adopted accounting pronouncements |
BASIS OF PRESENTAITON (Tables)
BASIS OF PRESENTAITON (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of New Accounting Standards | The following table is a summary of the changes in our allowance for doubtful accounts for the three months ended March 31, 2020: (in millions) March 31, Balance at beginning of period $ 112 Adoption of new accounting standard 4 Charged to costs and expenses 7 Currency translation adjustments (9) Balance at end of period $ 114 |
RESTATEMENT OF PREVIOUSLY ISS_2
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of Quantifying Prior Year Misstatements Corrected in Current Year Financial Statements | The following tables were previously presented in our Annual Report on Form 10-K for the year ended December 31, 2019. See Note 19, Quarterly Financial Data (unaudited), to the consolidated financial statements in our Annual Report on Form 10-K. Below, we have presented reconciliations from our prior periods as previously reported to the restated amounts for each of our condensed consolidated financial statements for the three months ended March 31, 2019. The amounts as previously reported were derived from our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 filed on May 7, 2019. Baxter International Inc. Condensed Consolidated Statement of Income (in millions, except per share) Three months ended March 31, 2019 As previously reported Restatement impacts Restatement reference As restated Net sales $ 2,632 $ 6 (e) $ 2,638 Cost of sales 1,552 6 (c)(e) 1,558 Gross margin 1,080 — 1,080 Selling, general and administrative expenses 600 1 (e) 601 Research and development expenses 129 — 129 Other operating income, net (33) — (33) Operating income 384 (1) 383 Interest expense, net 18 — 18 Other (income) expense, net (25) 4 (a)(b) (21) Income before income taxes 391 (5) 386 Income tax expense 44 — 44 Net income $ 347 $ (5) $ 342 Earnings per share Basic $ 0.68 $ (0.01) $ 0.67 Diluted $ 0.66 $ — $ 0.66 Weighted-average number of shares outstanding Basic 512 — 512 Diluted 522 — 522 (a) Foreign Currency Denominated Monetary Assets and Liabilities—The correction of these misstatements resulted in a decrease to other (income) expense, net of $5 million for the three months ended March 31, 2019. (b) Foreign Currency Derivative Contracts—The correction of these misstatements resulted in an increase to other (income) expense, net of $1 million for the three months ended March 31, 2019. (c) Equipment Leased to Customers under Operating Leases—The correction of these misstatements resulted in an increase to cost of sales of $2 million for the three months ended March 31, 2019. (e) Translation of the Financial Position and Results of Operations of our Foreign Operations into U.S. Dollars—The correction of these misstatements resulted in increases to net sales of $6 million, cost of sales of $4 million and selling, general and administrative (SG&A) expense of $1 million for the three months ended March 31, 2019. Baxter International Inc. Condensed Consolidated Statement of Comprehensive Income (in millions) Three months ended March 31, 2019 As previously reported Restatement impacts As restated Net income $ 347 $ (5) $ 342 Other comprehensive (loss) income, net of tax: Currency translation adjustments 30 (127) (97) Pension and other postretirement benefit plans 8 6 14 Hedging activities (15) — (15) Total other comprehensive loss, net of tax 23 (121) (98) Comprehensive income $ 370 $ (126) $ 244 Baxter International Inc. Condensed Consolidated Statement of Changes in Equity (in millions) For the Three Months Ended March 31, 2019 Baxter International Inc. stockholders' equity Common stock shares Common stock Common stock shares in treasury Common stock in treasury Additional contributed capital Retained earnings Accumulated other comprehensive income (loss) Total Baxter stockholders' equity Noncontrolling interests Total equity As previously reported Balance as of January 1, 2019 683 $ 683 170 $ (9,989) $ 5,898 $ 15,626 $ (4,424) $ 7,794 $ 22 $ 7,816 Adoption of new accounting standards — — — — — 161 (161) — — — Net income — — — — — 347 — 347 — 347 Other comprehensive income (loss) — — — — — — 23 23 — 23 Purchases of treasury stock — — 8 (586) — — — (586) — (586) Stock issued under employee benefit plans and other — — (5) 291 (59) (66) — 166 — 166 Dividends declared on common stock — — — — — (98) — (98) — (98) Changes in noncontrolling interests — — — — — — — — 1 1 Balance as of March 31, 2019 683 $ 683 173 $ (10,284) $ 5,839 $ 15,970 $ (4,562) $ 7,646 $ 23 $ 7,669 Restatement impacts Balance as of January 1, 2019 — $ — — $ — $ — $ (551) $ 601 $ 50 $ — $ 50 Net income — — — — — (5) — (5) — (5) Other comprehensive income (loss) — — — — — — (121) (121) — (121) Balance as of March 31, 2019 — $ — — $ — $ — $ (556) $ 480 $ (76) $ — $ (76) As restated Balance as of January 1, 2019 683 $ 683 170 $ (9,989) $ 5,898 $ 15,075 $ (3,823) $ 7,844 $ 22 $ 7,866 Adoption of new accounting standards — — — — — 161 (161) — — — Net income — — — — — 342 — 342 — 342 Other comprehensive income (loss) — — — — — — (98) (98) — (98) Purchases of treasury stock — — 8 (586) — — — (586) — (586) Stock issued under employee benefit plans and other — — (5) 291 (59) (66) — 166 — 166 Dividends declared on common stock — — — — — (98) — (98) — (98) Changes in noncontrolling interests — — — — — — — — 1 1 Balance as of March 31, 2019 683 $ 683 173 $ (10,284) $ 5,839 $ 15,414 $ (4,082) $ 7,570 $ 23 $ 7,593 The adjustments to the January 1, 2019 retained earnings and accumulated other comprehensive loss represent the cumulative impacts of foreign exchange gains and losses and the translation of our financial position and results of operations for our foreign operations into U.S. dollars for the periods prior to January 1, 2019. Retained earnings also includes the cumulative impacts of equipment leased to customers under operating leases and other miscellaneous adjustments for the periods prior to January 1, 2019. See descriptions of the net income and other comprehensive income impacts in the condensed consolidated statement of income and condensed consolidated statement of comprehensive income for the three months ended March 31, 2019 sections above. Baxter International Inc. Condensed Consolidated Statement of Cash Flows (in millions) For the Three Months Ended March 31, 2019 As previously reported Restatement impacts Restatement reference As restated Cash flows from operations Net income $ 347 $ (5) $ 342 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 195 (3) (c) 192 Deferred income taxes (6) — (6) Stock compensation 22 — 22 Net periodic pension benefit and other postretirement costs 3 — 3 Other 19 (5) (d) 14 Changes in balance sheet items: Accounts receivable, net 32 — 32 Inventories (82) — (82) Accounts payable and accrued liabilities (333) (2) (b)(f) (335) Other (49) 1 (b)(e)(f) (48) Cash flows from operations - continuing operations 148 (14) 134 Cash flows from operations - discontinued operations (6) — (6) Cash flows from operations 142 (14) 128 Cash flows from investing activities Capital expenditures (198) 5 (c) (193) Acquisitions and investments, net of cash acquired (109) — (109) Other investing activities, net 1 — 1 Cash flows from investing activities (306) 5 (301) Cash flows from financing activities Net increases in debt obligations with original maturities of three months or less 795 — 795 Cash dividends on common stock (101) — (101) Proceeds from stock issued under employee benefit plans 173 — 173 Purchases of treasury stock (597) — (597) Other financing activities, net (32) — (32) Cash flows from financing activities 238 — 238 Effect of foreign exchange rate changes on cash and cash equivalents 2 (3) (a)(d)(e) (1) Increase (decrease) in cash and cash equivalents 76 (12) 64 Cash and cash equivalents at beginning of period 1,832 6 (e) 1,838 Cash and cash equivalents at end of period $ 1,908 $ (6) (e) $ 1,902 The $5 million decrease to net income was driven by the items described above in the condensed consolidated statement of income for the three months ended March 31, 2019 section. (a) Foreign Currency Denominated Monetary Assets and Liabilities—The correction of these misstatements resulted in an increase to the effect of foreign exchange rate changes on cash and cash equivalents of $4 million for the three months ended March 31, 2019. (b) Foreign Currency Derivative Contracts—The correction of these misstatements resulted in a decrease to changes in accounts payable and accrued liabilities of $1 million and an increase in other changes in balance sheet items of $1 million for the three months ended March 31, 2019. (c) Equipment Leased to Customers under Operating Leases—The correction of these misstatements resulted in decreases to depreciation and amortization of $3 million and capital expenditures of $5 million for the three months ended March 31, 2019. (d) Classification of Foreign Currency Gains and Losses in our Consolidated Statements of Cash Flows—The corrections of these misstatements resulted in an increase to the effect of foreign exchange rate changes on cash and cash equivalents and a decrease to other adjustments to reconcile net income to net cash from operating activities of $5 million for the three months ended March 31, 2019. (e) Translation of the Financial Position and Results of Operations of our Foreign Operations into U.S. Dollars—The corrections of these misstatements resulted in an increase in cash and cash equivalents at the beginning of the period of $6 million and decreases to other changes in balance sheet items of $1 million, cash and cash equivalents at the end of the period of $6 million and the effect of foreign exchange rate changes on cash and cash equivalents of $12 million for the three months ended March 31, 2019. (f) Other miscellaneous adjustments—The correction of these misstatements resulted in an increase to other changes in balance sheet items of $1 million and a decrease in changes in accounts payable and accrued liabilities of $1 million for the three months ended March 31, 2019. |
ACQUISITIONS AND OTHER ARRANG_2
ACQUISITIONS AND OTHER ARRANGEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the fair values of the assets acquired as of the acquisition date: (in millions) Assets acquired Inventories $ 16 Goodwill 29 Other intangible assets 297 Total assets acquired $ 342 |
SUPPLEMENTAL FINANCIAL INFORM_2
SUPPLEMENTAL FINANCIAL INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Interest Expense, Net | Interest Expense, Net Three months ended (in millions) 2020 2019 Interest expense, net of capitalized interest $ 30 $ 25 Interest income (9) (7) Interest expense, net $ 21 $ 18 |
Other Income, Net | Other (Income) Expense, Net Three months ended As Restated (in millions) 2020 2019 Foreign exchange losses (gains), net $ 11 $ (1) Pension and other postretirement benefit plans (1) (15) Other, net — (5) Other (income) expense, net $ 10 $ (21) |
Inventories | Inventories (in millions) March 31, December 31, Raw materials $ 402 $ 377 Work in process 188 185 Finished goods 1,104 1,091 Inventories $ 1,694 $ 1,653 |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net (in millions) March 31, December 31, Property, plant and equipment, at cost $ 10,443 $ 10,660 Accumulated depreciation (6,103) (6,148) Property, plant and equipment, net $ 4,340 $ 4,512 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | The following is a reconciliation of goodwill by business segment. (in millions) Americas EMEA APAC Total Balance as of December 31, 2019 $ 2,428 $ 385 $ 217 $ 3,030 Acquisitions 32 — 7 39 Currency translation adjustments (86) (14) (8) (108) Balance as of March 31, 2020 $ 2,374 $ 371 $ 216 $ 2,961 |
Schedule of Indefinite-Lived Intangible Assets | Other intangible assets, net The following is a summary of our other intangible assets. (in millions) Developed technology, including patents Other amortized intangible assets Indefinite-lived intangible assets March 31, 2020 Gross other intangible assets $ 2,612 $ 461 $ 179 $ 3,252 Accumulated amortization (1,209) (284) — (1,493) Other intangible assets, net $ 1,403 $ 177 $ 179 $ 1,759 December 31, 2019 Gross other intangible assets $ 2,309 $ 464 $ 173 $ 2,946 Accumulated amortization (1,190) (285) — (1,475) Other intangible assets, net $ 1,119 $ 179 $ 173 $ 1,471 |
Schedule of Finite-Lived Intangible Assets | Other intangible assets, net The following is a summary of our other intangible assets. (in millions) Developed technology, including patents Other amortized intangible assets Indefinite-lived intangible assets March 31, 2020 Gross other intangible assets $ 2,612 $ 461 $ 179 $ 3,252 Accumulated amortization (1,209) (284) — (1,493) Other intangible assets, net $ 1,403 $ 177 $ 179 $ 1,759 December 31, 2019 Gross other intangible assets $ 2,309 $ 464 $ 173 $ 2,946 Accumulated amortization (1,190) (285) — (1,475) Other intangible assets, net $ 1,119 $ 179 $ 173 $ 1,471 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The weighted-average Black-Scholes assumptions used in establishing the fair value of stock options granted during the period, along with weighted-average grant date fair values, were as follows: Three months ended 2020 2019 Expected volatility 26 % 19 % Expected life (in years) 5.5 5.5 Risk-free interest rate 0.6 % 2.6 % Dividend yield 1.2 % 1.0 % Fair value per stock option $ 16 $ 15 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Summary of Changes in AOCI by Component | The following table is a net-of-tax summary of the changes in AOCI by component for the three months ended March 31, 2020 and 2019. (in millions) CTA Pension and OPEB plans Hedging activities Total Gains (losses) Balance as of December 31, 2019 $ (2,954) $ (715) $ (41) $ (3,710) Other comprehensive income (loss) before reclassifications (359) 10 (131) (480) Amounts reclassified from AOCI (a) — 12 1 13 Net other comprehensive income (loss) (359) 22 (130) (467) Balance as of March 31, 2020 $ (3,313) $ (693) $ (171) $ (4,177) As Restated (in millions) CTA Pension and OPEB plans Hedging activities Total Gains (losses) Balance as of December 31, 2018 $ (2,868) $ (954) $ (1) $ (3,823) Adoption of new accounting standard 9 (169) (1) (161) Other comprehensive income (loss) before (97) 7 (15) (105) Amounts reclassified from AOCI (a) — 7 — 7 Net other comprehensive income (loss) (97) 14 (15) (98) Balance as of March 31, 2019 $ (2,956) $ (1,109) $ (17) $ (4,082) (a) See table below for details about these reclassifications. |
Summary of Reclassification from AOCI to Net Income | The following is a summary of the amounts reclassified from AOCI to net income during the three months ended March 31, 2020 and 2019. Amounts reclassified from AOCI (a) As Restated (in millions) Three months ended March 31, 2020 Three months ended March 31, 2019 Location of impact in income statement Amortization of pension and OPEB items Amortization of net losses and prior service costs or credits $ (15) $ (8) Other (income) expense, net Less: Tax effect 3 1 Income tax expense $ (12) $ (7) Net of tax Gains on hedging activities Foreign exchange contracts $ (1) $ — Cost of sales Less: Tax effect — — Income tax expense $ (1) $ — Net of tax Total reclassifications for the period $ (13) $ (7) Total net of tax (a) Amounts in parentheses indicate reductions to net income. Refer to Note 12 for additional information regarding the amortization of pension and OPEB items and Note 15 for additional information regarding hedging activity. |
REVENUES (Tables)
REVENUES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Net Sales from Contracts with Customers by Global Business Unit | The following tables disaggregate our net sales from contracts with customers by Global Business Unit (GBU) between the U.S. and international: Three months ended March 31, As Restated 2020 2019 (in millions) U.S. International Total U.S. International Total Renal Care 1 $ 204 $ 666 $ 870 $ 192 $ 662 $ 854 Medication Delivery 2 461 229 690 406 228 634 Pharmaceuticals 3 231 296 527 232 278 510 Clinical Nutrition 4 82 138 220 77 128 205 Advanced Surgery 5 137 87 224 120 79 199 Acute Therapies 6 60 96 156 48 81 129 Other 7 42 73 115 45 62 107 Total Baxter $ 1,217 $ 1,585 $ 2,802 $ 1,120 $ 1,518 $ 2,638 1 Renal Care includes sales of our peritoneal dialysis (PD), hemodialysis (HD) and additional dialysis therapies and services. 2 Medication Delivery includes sales of our intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices. 3 Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services. 4 Clinical Nutrition includes sales of our parenteral nutrition (PN) therapies and related products. 5 Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention. 6 Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU). 7 Other primarily includes sales of contract manufacturing services from our pharmaceutical partnering business. |
Sales-type Lease, Lease Income | The components of lease revenue for the three months ended March 31, 2020 and March 31, 2019 were: (in millions) Three months ended March 31, 2020 Three months ended March 31, 2019 Sales-type lease revenue $ 6 $ 6 Operating lease revenue 14 15 Variable lease revenue 18 21 Total lease revenue $ 38 $ 42 |
Operating Lease, Lease Income | The components of lease revenue for the three months ended March 31, 2020 and March 31, 2019 were: (in millions) Three months ended March 31, 2020 Three months ended March 31, 2019 Sales-type lease revenue $ 6 $ 6 Operating lease revenue 14 15 Variable lease revenue 18 21 Total lease revenue $ 38 $ 42 |
BUSINESS OPTIMIZATION CHARGES (
BUSINESS OPTIMIZATION CHARGES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Summary of Business Optimization Charges | During the three months ended March 31, 2020 and 2019, we recorded the following charges related to business optimization programs. Three months ended (in millions) 2020 2019 Restructuring charges $ 25 $ 25 Costs to implement business optimization programs 7 10 Accelerated depreciation — 3 Total business optimization charges $ 32 $ 38 |
Components of Restructuring Charges | During the three months ended March 31, 2020 and 2019, we recorded the following restructuring charges. Three months ended March 31, 2020 (in millions) COGS SG&A R&D Total Employee termination costs $ 2 $ 16 $ 1 $ 19 Asset impairments 6 — — 6 Total restructuring charges $ 8 $ 16 $ 1 $ 25 Three months ended March 31, 2019 (in millions) COGS SG&A R&D Total Employee termination costs $ — $ (1) $ 9 $ 8 Contract termination costs 7 — — 7 Asset impairments 9 1 — 10 Total restructuring charges $ 16 $ — $ 9 $ 25 |
Summary of Activity in Reserves Related to Restructuring Initiatives | The following table summarizes activity in the liability related to our restructuring initiatives. (in millions) Liability balance as of December 31, 2019 $ 92 Charges 19 Payments (21) Currency translation (2) Liability balance as of March 31, 2020 $ 88 |
PENSION AND OTHER POSTRETIREM_2
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Retirement Benefits [Abstract] | |
Net Periodic Benefit Cost Relating to Pension and Other Postemployment Employee Benefit Plans | The following is a summary of net periodic benefit cost relating to our pension and OPEB plans. Three months ended As Restated (in millions) 2020 2019 Pension benefits Service cost $ 21 $ 18 Interest cost 24 47 Expected return on plan assets (41) (72) Amortization of net losses and prior service costs 19 15 Net periodic pension benefit cost $ 23 $ 8 OPEB Interest cost $ 1 $ 2 Amortization of net loss and prior service credit (4) (7) Net periodic OPEB cost (income) $ (3) $ (5) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic Shares to Diluted Shares | The following table is a reconciliation of basic shares to diluted shares. Three months ended (in millions) 2020 2019 Basic shares 507 512 Effect of dilutive securities 9 10 Diluted shares 516 522 |
DERIVATIVE INSTRUMENTS AND HE_2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Gains and Losses on Derivative Instruments | The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our condensed consolidated financial statements for the three months ended March 31, 2020 and 2019. Gain (loss) recognized in OCI Location of gain (loss) Gain (loss) reclassified from AOCI into income (in millions) 2020 2019 2020 2019 Cash flow hedges Interest rate contracts $ (184) $ (11) Interest expense, net $ — $ — Foreign exchange contracts 14 (9) Cost of sales (1) — Net investment hedges 49 14 Other (income) expense, net — — Total $ (121) $ (6) $ (1) $ — Location of gain (loss) in income statement Gain (loss) recognized in income As Restated (in millions) 2020 2019 Undesignated derivative instruments Foreign exchange contracts Other (income) expense, net $ 2 $ (8) |
Classification and Fair Values of Derivative Instruments | The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of March 31, 2020. Derivatives in asset positions Derivatives in liability positions (in millions) Balance sheet location Fair value Balance sheet location Fair value Derivative instruments designated as hedges Interest rate contracts Other non-current assets $ — Other non-current liabilities $ 226 Foreign exchange contracts Prepaid expenses and other current assets 24 Accounts payable and accrued liabilities 3 Total derivative instruments designated as hedges 24 229 Undesignated derivative instruments Foreign exchange contracts Prepaid expenses and other current assets 5 Accounts payable and accrued liabilities 4 Total derivative instruments $ 29 $ 233 The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2019. Derivatives in asset positions Derivatives in liability positions (in millions) Balance sheet location Fair value Balance sheet location Fair value Derivative instruments designated as hedges Interest rate contracts Other non-current assets $ 10 Other non-current liabilities $ 52 Foreign exchange contracts Prepaid expenses and other current assets 10 Accounts payable and accrued liabilities — Total derivative instruments designated as hedges 20 52 Undesignated derivative instruments Foreign exchange contracts Prepaid expenses and other current assets 1 Accounts payable and accrued liabilities 2 Total derivative instruments $ 21 $ 54 |
Derivative Positions Presented On Net Basis | The following table provides information on our derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty. March 31, 2020 December 31, 2019 (in millions) Asset Liability Asset Liability Gross amounts recognized in the consolidated balance sheet $ 29 $ 233 $ 21 $ 54 Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet (7) (7) (11) (11) Total $ 22 $ 226 $ 10 $ 43 |
Amounts Recorded on Condensed Consolidated Balance Sheet Related to Fair Value Hedges | The following table presents the amounts recorded on the condensed consolidated balance sheet related to fair value hedges: Carrying amount of hedged item Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged item (a) (in millions) Balance as of March 31, 2020 Balance as of December 31, 2019 Balance as of March 31, 2020 Balance as of December 31, 2019 Long-term debt $ 103 $ 103 $ 6 $ 6 (a) These fair value hedges were terminated prior to December 31, 2019. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Instruments Measured at Fair Value on Recurring Basis | The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis. Basis of fair value measurement (in millions) Balance as of March 31, 2020 Quoted prices in active markets for identical assets Significant other Significant Assets Foreign exchange contracts $ 29 $ — $ 29 $ — Marketable equity securities 3 3 — — Total $ 32 $ 3 $ 29 $ — Liabilities Foreign exchange contracts $ 7 $ — $ 7 $ — Interest rate contracts 226 — 226 — Contingent payments related to acquisitions 39 — — 39 Total $ 272 $ — $ 233 $ 39 Basis of fair value measurement (in millions) Balance as of December 31, 2019 Quoted prices in active markets for identical assets Significant other Significant Assets Foreign exchange contracts $ 11 $ — $ 11 $ — Interest rate contracts 10 — 10 — Marketable equity securities 3 3 — — Total $ 24 $ 3 $ 21 $ — Liabilities Foreign exchange contracts $ 2 $ — $ 2 $ — Interest rate contracts 52 — 52 — Contingent payments related to acquisitions 39 — — 39 Total $ 93 $ — $ 54 $ 39 |
Reconciliation of Fair Value Measurements that Use Significant Unobservable Inputs | The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions. Three months ended (in millions) 2020 2019 Fair value at beginning of period $ 39 $ 32 Additions 4 — Change in fair value recognized in earnings (3) — Payments (1) (1) Fair value at end of period $ 39 $ 31 |
Book Values and Fair Values of Financial Instruments | the following table provides the values recognized in the condensed consolidated balance sheets and the estimated fair values as of March 31, 2020 and December 31, 2019. Book values Fair values(a) (in millions) 2020 2019 2020 2019 Liabilities Short-term debt $ 221 $ 226 $ 221 $ 226 Current maturities of long-term debt and finance lease obligations 315 315 315 315 Long-term debt and finance lease obligations 5,996 4,809 6,324 5,156 (a) These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Summary of Financial Information for Our Segments | Financial information for our segments is as follows. Three months ended As Restated (in millions) 2020 2019 Net sales: Americas $ 1,499 $ 1,409 EMEA 754 707 APAC 549 522 Total net sales $ 2,802 $ 2,638 Operating income : Americas $ 544 $ 538 EMEA 161 144 APAC 128 120 Total segment operating income $ 833 $ 802 |
Operating Income to Income Before Income Taxes Reconciliation | The following is a reconciliation of segment operating income to income before income taxes per the condensed consolidated statements of income. Three months ended As Restated (in millions) 2020 2019 Total segment operating income $ 833 $ 802 Corporate and other (424) (419) Total operating income 409 383 Net interest expense 21 18 Other (income) expense, net 10 (21) Income before income taxes $ 378 $ 386 |
BASIS OF PRESENTATION - Additio
BASIS OF PRESENTATION - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ 15,935 | $ 15,718 | |
Sales-type lease, net of investment in lease | 127 | ||
Service contracts, implementation costs | 8 | ||
Lease Term Originated in 2016 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Sales-type lease, net of investment in lease | 21 | ||
Lease Term Originated in 2017 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Sales-type lease, net of investment in lease | 18 | ||
Lease Term Originated in 2018 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Sales-type lease, net of investment in lease | 46 | ||
Lease Term Originated in 2019 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Sales-type lease, net of investment in lease | 36 | ||
Lease Term Originated in 2020 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Sales-type lease, net of investment in lease | $ 6 | ||
Accounting Standards Update 2016-13 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ (4) |
BASIS OF PRESENTATION- Schedule
BASIS OF PRESENTATION- Schedule Of Changes In Allowance for Doubtful Accounts (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |
Balance at beginning of period | $ 112 |
Adoption of new accounting standard | 4 |
Charged to costs and expenses | 7 |
Currency translation adjustments | (9) |
Balance at end of period | $ 114 |
RESTATEMENT OF PREVIOUSLY ISS_3
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS - Consolidated Statement of Income (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net sales | $ 2,802 | $ 2,638 |
Cost of sales | 1,639 | 1,558 |
Gross margin | 1,163 | 1,080 |
Selling, general and administrative expenses | 628 | 601 |
Research and development expenses | 146 | 129 |
Other operating income, net | (20) | (33) |
Operating income | 409 | 383 |
Interest expense, net | 21 | 18 |
Other (income) expense, net | 10 | (21) |
Income before income taxes | 378 | 386 |
Income tax expense | 45 | 44 |
Net income | $ 333 | $ 342 |
Earnings per share | ||
Basic (in dollars per share) | $ 0.65 | $ 0.67 |
Diluted (in dollars per share) | $ 0.64 | $ 0.66 |
Weighted-average number of shares outstanding | ||
Basic (in shares) | 507 | 512 |
Diluted (in shares) | 516 | 522 |
As previously reported | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net sales | $ 2,632 | |
Cost of sales | 1,552 | |
Gross margin | 1,080 | |
Selling, general and administrative expenses | 600 | |
Research and development expenses | 129 | |
Other operating income, net | (33) | |
Operating income | 384 | |
Interest expense, net | 18 | |
Other (income) expense, net | (25) | |
Income before income taxes | 391 | |
Income tax expense | 44 | |
Net income | $ 347 | |
Earnings per share | ||
Basic (in dollars per share) | $ 0.68 | |
Diluted (in dollars per share) | $ 0.66 | |
Weighted-average number of shares outstanding | ||
Basic (in shares) | 512 | |
Diluted (in shares) | 522 | |
Restatement impacts | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net sales | $ 6 | |
Cost of sales | 6 | |
Gross margin | 0 | |
Selling, general and administrative expenses | 1 | |
Research and development expenses | 0 | |
Other operating income, net | 0 | |
Operating income | (1) | |
Interest expense, net | 0 | |
Other (income) expense, net | $ 4 | 4 |
Income before income taxes | (5) | |
Income tax expense | 0 | |
Net income | $ (5) | |
Earnings per share | ||
Basic (in dollars per share) | $ (0.01) | |
Diluted (in dollars per share) | $ 0 | |
Weighted-average number of shares outstanding | ||
Basic (in shares) | 0 | |
Diluted (in shares) | 0 | |
Restatement impacts | Foreign Currency Denominated Monetary Assets and Liabilities | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Other (income) expense, net | $ 5 | |
Restatement impacts | Equipment Leased to Customers under Operating Leases | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Cost of sales | 2 | |
Restatement impacts | Translation of the Financial Position and Results of Operations of our Foreign Operations into U.S. Dollars | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net sales | 6 | |
Cost of sales | 4 | |
Selling, general and administrative expenses | 1 | |
Restatement impacts | Foreign exchange contracts | Foreign Currency Derivative Contracts | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Other (income) expense, net | $ 1 |
RESTATEMENT OF PREVIOUSLY ISS_4
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS - Consolidated Statement of Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net income | $ 333 | $ 342 |
Other comprehensive (loss) income, net of tax: | ||
Currency translation adjustments | (359) | (97) |
Pension and other postretirement benefit plans | 22 | 14 |
Hedging activities | (130) | (15) |
Net other comprehensive income (loss) | (467) | (98) |
Comprehensive (loss) income | $ (134) | 244 |
As previously reported | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net income | 347 | |
Other comprehensive (loss) income, net of tax: | ||
Currency translation adjustments | 30 | |
Pension and other postretirement benefit plans | 8 | |
Hedging activities | (15) | |
Net other comprehensive income (loss) | 23 | |
Comprehensive (loss) income | 370 | |
Restatement impacts | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Net income | (5) | |
Other comprehensive (loss) income, net of tax: | ||
Currency translation adjustments | (127) | |
Pension and other postretirement benefit plans | 6 | |
Hedging activities | 0 | |
Net other comprehensive income (loss) | (121) | |
Comprehensive (loss) income | (126) | |
Currency translation adjustments | 127 | |
Restatement impacts | Foreign Exchange Rate Used To Translate | ||
Other comprehensive (loss) income, net of tax: | ||
Currency translation adjustments | 5 | |
Restatement impacts | Offsetting Balance Sheet Impact Adjustments | ||
Other comprehensive (loss) income, net of tax: | ||
Currency translation adjustments | $ 132 |
RESTATEMENT OF PREVIOUSLY ISS_5
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS - Consolidated Statement of Changes in Equity (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period (in shares) | 683,494,944 | |||
Beginning of period | $ 7,912 | $ 7,866 | ||
Treasury stock, shares (in shares) | 175,106,170 | 177,340,358 | ||
Adoption of new accounting standards | $ (4) | |||
Net income | 333 | 342 | ||
Other comprehensive (loss) income | (467) | $ (98) | ||
Purchases of treasury stock (in shares) | 8,100,000 | |||
Purchases of treasury stock | $ (586) | |||
Stock issued under employee benefit plans and other | 67 | 166 | ||
Dividends declared on common stock | $ (111) | (98) | ||
Change in noncontrolling interests | 1 | |||
End of period (in shares) | 683,494,944 | |||
End of period | $ 7,730 | $ 7,593 | ||
Common stock | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period (in shares) | 683,000,000 | 683,000,000 | ||
Beginning of period | $ 683 | $ 683 | ||
End of period (in shares) | 683,000,000 | 683,000,000 | ||
End of period | $ 683 | $ 683 | ||
Common stock in treasury | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | $ (10,764) | $ (9,989) | ||
Treasury stock, shares (in shares) | 175,000,000 | 173,000,000 | 177,000,000 | 170,000,000 |
Purchases of treasury stock (in shares) | 8,000,000 | |||
Purchases of treasury stock | $ (586) | |||
Stock issued under employee benefit plans and other (in shares) | (2,000,000) | (5,000,000) | ||
Stock issued under employee benefit plans and other | $ 87 | $ 291 | ||
End of period | (10,677) | (10,284) | ||
Additional contributed capital | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 5,955 | 5,898 | ||
Stock issued under employee benefit plans and other | (20) | (59) | ||
End of period | 5,935 | 5,839 | ||
Retained earnings | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 15,718 | 15,075 | ||
Adoption of new accounting standards | (4) | 161 | ||
Net income | 332 | 342 | ||
Stock issued under employee benefit plans and other | (66) | |||
Dividends declared on common stock | (111) | (98) | ||
End of period | 15,935 | 15,414 | ||
Accumulated other comprehensive income (loss) | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | (3,710) | (3,823) | ||
Adoption of new accounting standards | (161) | |||
Other comprehensive (loss) income | (467) | (98) | ||
End of period | (4,177) | (4,082) | ||
Total Baxter stockholders' equity | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 7,882 | 7,844 | ||
Adoption of new accounting standards | (4) | |||
Net income | 332 | 342 | ||
Other comprehensive (loss) income | (467) | (98) | ||
Purchases of treasury stock | (586) | |||
Stock issued under employee benefit plans and other | 67 | 166 | ||
Dividends declared on common stock | (111) | (98) | ||
End of period | 7,699 | 7,570 | ||
Noncontrolling interests | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 30 | 22 | ||
Net income | 1 | |||
Change in noncontrolling interests | 1 | |||
End of period | $ 31 | 23 | ||
As previously reported | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 7,816 | |||
Net income | 347 | |||
Other comprehensive (loss) income | 23 | |||
Purchases of treasury stock | (586) | |||
Stock issued under employee benefit plans and other | 166 | |||
Dividends declared on common stock | (98) | |||
Change in noncontrolling interests | 1 | |||
End of period | $ 7,669 | |||
As previously reported | Common stock | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period (in shares) | 683,000,000 | |||
Beginning of period | $ 683 | |||
End of period (in shares) | 683,000,000 | |||
End of period | $ 683 | |||
As previously reported | Common stock in treasury | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | $ (9,989) | |||
Treasury stock, shares (in shares) | 173,000,000 | 170,000,000 | ||
Purchases of treasury stock (in shares) | 8,000,000 | |||
Purchases of treasury stock | $ (586) | |||
Stock issued under employee benefit plans and other (in shares) | (5,000,000) | |||
Stock issued under employee benefit plans and other | $ 291 | |||
End of period | (10,284) | |||
As previously reported | Additional contributed capital | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 5,898 | |||
Stock issued under employee benefit plans and other | (59) | |||
End of period | 5,839 | |||
As previously reported | Retained earnings | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 15,626 | |||
Net income | 347 | |||
Stock issued under employee benefit plans and other | (66) | |||
Dividends declared on common stock | (98) | |||
End of period | 15,970 | |||
As previously reported | Accumulated other comprehensive income (loss) | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | (4,424) | |||
Other comprehensive (loss) income | 23 | |||
End of period | (4,562) | |||
As previously reported | Total Baxter stockholders' equity | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 7,794 | |||
Net income | 347 | |||
Other comprehensive (loss) income | 23 | |||
Purchases of treasury stock | (586) | |||
Stock issued under employee benefit plans and other | 166 | |||
Dividends declared on common stock | (98) | |||
End of period | 7,646 | |||
As previously reported | Noncontrolling interests | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 22 | |||
Change in noncontrolling interests | 1 | |||
End of period | 23 | |||
Restatement impacts | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 50 | |||
Net income | (5) | |||
Other comprehensive (loss) income | (121) | |||
End of period | $ (76) | |||
Restatement impacts | Common stock | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period (in shares) | 0 | |||
Beginning of period | $ 0 | |||
End of period (in shares) | 0 | |||
End of period | $ 0 | |||
Restatement impacts | Common stock in treasury | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | $ 0 | |||
Treasury stock, shares (in shares) | 0 | 0 | ||
End of period | $ 0 | |||
Restatement impacts | Additional contributed capital | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 0 | |||
End of period | 0 | |||
Restatement impacts | Retained earnings | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | (551) | |||
Net income | (5) | |||
End of period | (556) | |||
Restatement impacts | Accumulated other comprehensive income (loss) | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 601 | |||
Other comprehensive (loss) income | (121) | |||
End of period | 480 | |||
Restatement impacts | Total Baxter stockholders' equity | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 50 | |||
Net income | (5) | |||
Other comprehensive (loss) income | (121) | |||
End of period | (76) | |||
Restatement impacts | Noncontrolling interests | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Beginning of period | 0 | |||
End of period | $ 0 |
RESTATEMENT OF PREVIOUSLY ISS_6
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS - Consolidated Statement of Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operations | |||
Net income | $ 333 | $ 342 | |
Adjustments to reconcile net income to cash flows from operations: | |||
Depreciation and amortization | 199 | 192 | |
Deferred income taxes | (17) | (6) | |
Stock compensation | 29 | 22 | |
Net periodic pension benefit and other postretirement costs | 20 | 3 | |
Other | 13 | 14 | |
Changes in balance sheet items: | |||
Accounts receivable, net | (60) | 32 | |
Inventories | (83) | (82) | |
Accounts payable and accrued liabilities | (110) | (335) | |
Other | (50) | (48) | |
Cash flows from operations – continuing operations | 274 | 134 | |
Cash flows from operations – discontinued operations | (2) | (6) | |
Cash flows from operations | 272 | 128 | |
Cash flows from investing activities | |||
Capital expenditures | (172) | (193) | |
Acquisitions and investments, net of cash acquired | (443) | (109) | |
Other investing activities, net | 11 | 1 | |
Cash flows from investing activities | (604) | (301) | |
Cash flows from financing activities | |||
Net increases in debt with original maturities of three months or less | 0 | 795 | |
Cash dividends on common stock | (111) | (101) | |
Proceeds from stock issued under employee benefit plans | 66 | 173 | |
Purchases of treasury stock | 0 | (597) | |
Other financing activities, net | (25) | (32) | |
Cash flows from financing activities | 1,170 | 238 | |
Effect of foreign exchange rate changes on cash and cash equivalents | (63) | (1) | |
Increase in cash and cash equivalents | 775 | 64 | |
Cash and cash equivalents at beginning of period | 3,335 | 1,838 | |
Cash and cash equivalents at end of period | $ 4,110 | 1,902 | |
As previously reported | |||
Cash flows from operations | |||
Net income | 347 | ||
Adjustments to reconcile net income to cash flows from operations: | |||
Depreciation and amortization | 195 | ||
Deferred income taxes | (6) | ||
Stock compensation | 22 | ||
Net periodic pension benefit and other postretirement costs | 3 | ||
Other | 19 | ||
Changes in balance sheet items: | |||
Accounts receivable, net | 32 | ||
Inventories | (82) | ||
Accounts payable and accrued liabilities | (333) | ||
Other | (49) | ||
Cash flows from operations – continuing operations | 148 | ||
Cash flows from operations – discontinued operations | (6) | ||
Cash flows from operations | 142 | ||
Cash flows from investing activities | |||
Capital expenditures | (198) | ||
Acquisitions and investments, net of cash acquired | (109) | ||
Other investing activities, net | 1 | ||
Cash flows from investing activities | (306) | ||
Cash flows from financing activities | |||
Net increases in debt with original maturities of three months or less | 795 | ||
Cash dividends on common stock | (101) | ||
Proceeds from stock issued under employee benefit plans | 173 | ||
Purchases of treasury stock | (597) | ||
Other financing activities, net | (32) | ||
Cash flows from financing activities | 238 | ||
Effect of foreign exchange rate changes on cash and cash equivalents | 2 | ||
Increase in cash and cash equivalents | 76 | ||
Cash and cash equivalents at beginning of period | 1,832 | ||
Cash and cash equivalents at end of period | 1,908 | ||
Restatement impacts | |||
Cash flows from operations | |||
Net income | (5) | ||
Adjustments to reconcile net income to cash flows from operations: | |||
Depreciation and amortization | (3) | ||
Deferred income taxes | 0 | ||
Stock compensation | 0 | ||
Net periodic pension benefit and other postretirement costs | 0 | ||
Other | (5) | ||
Changes in balance sheet items: | |||
Accounts receivable, net | 0 | ||
Inventories | 0 | ||
Accounts payable and accrued liabilities | (2) | ||
Other | 1 | ||
Cash flows from operations – continuing operations | (14) | ||
Cash flows from operations – discontinued operations | 0 | ||
Cash flows from operations | (14) | ||
Cash flows from investing activities | |||
Capital expenditures | 5 | ||
Acquisitions and investments, net of cash acquired | 0 | ||
Other investing activities, net | 0 | ||
Cash flows from investing activities | 5 | ||
Cash flows from financing activities | |||
Net increases in debt with original maturities of three months or less | 0 | ||
Cash dividends on common stock | 0 | ||
Proceeds from stock issued under employee benefit plans | 0 | ||
Purchases of treasury stock | 0 | ||
Other financing activities, net | 0 | ||
Cash flows from financing activities | 0 | ||
Effect of foreign exchange rate changes on cash and cash equivalents | (3) | ||
Increase in cash and cash equivalents | (12) | ||
Cash and cash equivalents at beginning of period | 6 | ||
Cash and cash equivalents at end of period | (6) | ||
Restatement impacts | Foreign Currency Denominated Monetary Assets and Liabilities | |||
Cash flows from financing activities | |||
Effect of foreign exchange rate changes on cash and cash equivalents | 4 | ||
Restatement impacts | Foreign Currency Derivative Contracts | Foreign exchange contracts | |||
Changes in balance sheet items: | |||
Accounts payable and accrued liabilities | 1 | ||
Other | 1 | ||
Restatement impacts | Equipment Leased to Customers under Operating Leases | |||
Adjustments to reconcile net income to cash flows from operations: | |||
Depreciation and amortization | (3) | ||
Cash flows from investing activities | |||
Capital expenditures | 5 | ||
Restatement impacts | Correction of Classification of Foreign Currency Gains and Losses in our Consolidated Statements of Cash Flows | |||
Cash flows from financing activities | |||
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 5 | ||
Restatement impacts | Correction Of Translation Of The Financial Position And Results Of Operations Into U.S. Dollars Misstatements | |||
Changes in balance sheet items: | |||
Accounts payable and accrued liabilities | 1 | ||
Other | 1 | ||
Cash flows from financing activities | |||
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 12 | ||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 6 | $ 6 |
RESTATEMENT OF PREVIOUSLY ISS_7
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Other Nonoperating Income (Expense) | $ (10) | $ 21 | |
Selling, general and administrative expenses | $ 628 | 601 | |
Common stock, par value (in dollars per share) | $ 1 | $ 1 | |
Common stock, authorized (in shares) | 2,000,000,000 | 2,000,000,000 | |
Common stock, issued (in shares) | 683,494,944 | 683,494,944 | |
Treasury stock, common (in shares) | 170,495,859 | ||
Restatement impacts | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Other Nonoperating Income (Expense) | $ (4) | (4) | |
Selling, general and administrative expenses | $ 1 |
ACQUISITIONS AND OTHER ARRANG_3
ACQUISITIONS AND OTHER ARRANGEMENTS - Seprafilm Adhesion Barrier (Details) $ in Millions | 1 Months Ended | 3 Months Ended | |
Feb. 29, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Acquisitions And Collaborations [Line Items] | |||
Goodwill | $ 2,961 | $ 3,030 | |
Seprafilm Adhesion Barrier | |||
Acquisitions And Collaborations [Line Items] | |||
Cash consideration transferred | $ 342 | ||
Inventories | 16 | ||
Goodwill | 29 | ||
Other intangible assets | 297 | ||
Total assets acquired | 342 | ||
Net sales | 13 | ||
Integration related costs | $ 9 | ||
Seprafilm Adhesion Barrier | Developed Product Rights | |||
Acquisitions And Collaborations [Line Items] | |||
Fair value of asset acquired | $ 287 | ||
Weighted-average useful life | 10 years | ||
Seprafilm Adhesion Barrier | Customer Relationships | |||
Acquisitions And Collaborations [Line Items] | |||
Fair value of asset acquired | $ 10 | ||
Weighted-average useful life | 7 years | ||
Seprafilm Adhesion Barrier | Measurement Input, Discount Rate | Developed Product Rights | |||
Acquisitions And Collaborations [Line Items] | |||
Discount rate used to measure intangible assets | 0.148 | ||
Seprafilm Adhesion Barrier | Measurement Input, Discount Rate | Customer Relationships | |||
Acquisitions And Collaborations [Line Items] | |||
Discount rate used to measure intangible assets | 0.110 |
ACQUISITIONS AND OTHER ARRANG_4
ACQUISITIONS AND OTHER ARRANGEMENTS - Other Business Combinations (Details) - Other Acquisitions $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Business Acquisition [Line Items] | |
Cash consideration transferred | $ 13 |
Contingent consideration | 12 |
Contingent consideration, liability | $ 4 |
ACQUISITIONS AND OTHER ARRANG_5
ACQUISITIONS AND OTHER ARRANGEMENTS - Other Business Development Activities (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended |
Jan. 31, 2020 | Mar. 31, 2020 | |
Licensing Agreements | ||
Business Acquisition [Line Items] | ||
Payments to acquire intangible assets | $ 21 | |
Payments for Development Regulatory and Commercial Milestones | $ 41 | |
Developed Technology Rights Acquisition | ||
Business Acquisition [Line Items] | ||
Asset acquisition, consideration transferred | $ 60 | |
Developed Technology Rights Acquisition | Developed Technology Intangible Asset | ||
Business Acquisition [Line Items] | ||
Finite-lived intangible asset, useful life | 11 years |
Supplemental Financial Inform_3
Supplemental Financial Information - Interest Expense, Net (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Interest Income Expense Net | ||
Interest expense, net of capitalized interest | $ 30 | $ 25 |
Interest income | (9) | (7) |
Interest expense, net | $ 21 | $ 18 |
Supplemental Financial Inform_4
Supplemental Financial Information - Other Income, Net (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Other Income, net | ||
Foreign exchange losses (gains), net | $ 11 | $ (1) |
Pension and other postretirement benefit plans | 1 | 15 |
Other, net | 0 | (5) |
Other (income) expense, net | $ 10 | $ (21) |
Supplemental Financial Inform_5
Supplemental Financial Information - Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 402 | $ 377 |
Work in process | 188 | 185 |
Finished goods | 1,104 | 1,091 |
Inventories | $ 1,694 | $ 1,653 |
Supplemental Financial Inform_6
Supplemental Financial Information - Property, Plant and Equipment, Net (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Property, plant and equipment, at cost | $ 10,443 | $ 10,660 |
Accumulated depreciation | (6,103) | (6,148) |
Property, plant and equipment, net | $ 4,340 | $ 4,512 |
Supplemental Financial Inform_7
Supplemental Financial Information - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Operating lease right-of-use assets | $ 577 | $ 608 | |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | 15 | $ 42 | |
Property, Plant and Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, additions | $ 49 | $ 39 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets, Net - Goodwill (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 3,030 |
Acquisitions | 39 |
Currency translation adjustments | (108) |
Goodwill, ending balance | 2,961 |
Americas | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 2,428 |
Acquisitions | 32 |
Currency translation adjustments | (86) |
Goodwill, ending balance | 2,374 |
EMEA | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 385 |
Acquisitions | 0 |
Currency translation adjustments | (14) |
Goodwill, ending balance | 371 |
APAC | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 217 |
Acquisitions | 7 |
Currency translation adjustments | (8) |
Goodwill, ending balance | $ 216 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets, Net - Other Intangible Assets, Net (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets | $ 3,252 | $ 2,946 |
Accumulated amortization | (1,493) | (1,475) |
Other intangible assets | 179 | 173 |
Other intangible assets, net | 1,759 | 1,471 |
Developed technology, including patents | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets | 2,612 | 2,309 |
Accumulated amortization | (1,209) | (1,190) |
Other intangible assets, net | 1,403 | 1,119 |
Other amortized intangible assets | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets | 461 | 464 |
Accumulated amortization | (284) | (285) |
Other intangible assets, net | $ 177 | $ 179 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets, Net - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible asset amortization expense | $ 52 | $ 43 |
Financing Arrangements - Additi
Financing Arrangements - Additional Information (Details) | 3 Months Ended | ||
Mar. 31, 2020USD ($) | Mar. 31, 2020EUR (€) | Dec. 31, 2019USD ($) | |
Debt Instrument [Line Items] | |||
Annual interest rate, potential increase | 0.25% | ||
Annual interest rate, maximum potential increase | 0.50% | ||
Foreign Line of Credit | |||
Debt Instrument [Line Items] | |||
Line of credit, current borrowing capacity | $ 220,000,000 | € 200,000,000 | $ 224,000,000 |
Line of credit facility, interest rate at period end | 0.91% | 0.91% | |
Senior Notes Due 2025 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Senior notes | $ 750,000,000 | ||
Senior notes, interest rate | 3.75% | 3.75% | |
Senior Notes Due 2030 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Senior notes | $ 500,000,000 | ||
Senior notes, interest rate | 3.95% | 3.95% |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | 3 Months Ended | 132 Months Ended | ||
Mar. 31, 2020USD ($)Site | Mar. 31, 2019USD ($) | Dec. 31, 2018Lawsuit | Dec. 31, 2019USD ($) | |
Loss Contingencies [Line Items] | ||||
Litigation reserve | $ 53,000,000 | $ 56,000,000 | ||
Litigation related receivables | $ 0 | 0 | ||
Proceeds from insurance dispute settlements | $ 35,000,000 | |||
Gain on insurance claims | $ 33,000,000 | |||
Minimum | ||||
Loss Contingencies [Line Items] | ||||
Number of law suits filed | Lawsuit | 1,000 | |||
Superfund Sites | Environmental Clean-up | ||||
Loss Contingencies [Line Items] | ||||
Number of sites | Site | 6 | |||
Environmental reserves | $ 18,000,000 | $ 18,000,000 |
STOCKHOLDERS' EQUITY - Addition
STOCKHOLDERS' EQUITY - Additional Information (Details) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020USD ($)u_baxEmployees$ / sharesshares | Mar. 31, 2019USD ($)$ / shares | |
Stockholders Equity Note [Line Items] | ||
Stock compensation | $ 29 | $ 22 |
Total intrinsic value of stock options exercised | $ 52 | $ 153 |
Cash dividends declared per common share (in dollars per share) | $ / shares | $ 0.22 | $ 0.19 |
Number of employees affected | u_baxEmployees | 123 | |
Selling, General and Administrative Expenses | ||
Stockholders Equity Note [Line Items] | ||
Share -based compensation allocation, percentage | 70.00% | |
Employee Stock Option | ||
Stockholders Equity Note [Line Items] | ||
Gross stock options (in shares) | shares | 3.7 | |
Stock granted, value, share-based compensation, gross | $ 59 | |
Unrecognized compensation cost related to all unvested stock options | $ 103 | |
Weighted-average period for all unvested stock options | 2 years 1 month 6 days | |
Incremental compensation cost | $ 8 | |
Restricted Stock Units (RSUs) | ||
Stockholders Equity Note [Line Items] | ||
Grants in period (in shares) | shares | 0.5 | |
Stock granted, value, share-based compensation, gross | $ 37 | |
Unrecognized compensation cost related to all unvested stock options | $ 73 | |
Weighted-average period for all unvested stock options | 2 years | |
Performance Shares | ||
Stockholders Equity Note [Line Items] | ||
Grants in period (in shares) | shares | 0.4 | |
Stock granted, value, share-based compensation, gross | $ 29 | |
Unrecognized compensation cost related to all unvested stock options | $ 44 | |
Weighted-average period for all unvested stock options | 2 years 1 month 6 days |
STOCKHOLDERS' EQUITY - Stock Op
STOCKHOLDERS' EQUITY - Stock Options Fair Value Assumptions (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||
Expected volatility | 26.00% | 19.00% |
Expected life (in years) | 5 years 6 months | 5 years 6 months |
Risk-free interest rate | 0.60% | 2.60% |
Dividend yield | 1.20% | 1.00% |
Fair value per stock option (in dollars per share) | $ 16 | $ 15 |
STOCKHOLDERS' EQUITY - Stock Re
STOCKHOLDERS' EQUITY - Stock Repurchase Programs Narrative (Details) - USD ($) shares in Millions | 3 Months Ended | |||||
Mar. 31, 2019 | Mar. 31, 2020 | Nov. 30, 2018 | Feb. 28, 2018 | Nov. 30, 2016 | Jul. 31, 2012 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||
Stock repurchase program, authorized amount | $ 2,000,000,000 | |||||
Stock repurchase program, additional authorized amount | $ 2,000,000,000 | $ 1,500,000,000 | $ 1,500,000,000 | |||
Remaining value available under stock repurchase programs | $ 897,000,000 | |||||
Purchases of treasury stock (in shares) | 8.1 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income - Summary of Changes in AOCI by Component (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning of period | $ 7,912 | $ 7,866 |
Other comprehensive income (loss) before reclassifications | (480) | (105) |
Amounts reclassified from AOCI | 13 | 7 |
Net other comprehensive income (loss) | (467) | (98) |
End of period | 7,730 | 7,593 |
ASU 2018-02 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Adoption of new accounting standard | (161) | |
CTA | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning of period | (2,954) | (2,868) |
Other comprehensive income (loss) before reclassifications | (359) | (97) |
Amounts reclassified from AOCI | 0 | 0 |
Net other comprehensive income (loss) | (359) | (97) |
End of period | (3,313) | (2,956) |
CTA | ASU 2018-02 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Adoption of new accounting standard | 9 | |
Pension and OPEB Plans | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning of period | (715) | (954) |
Other comprehensive income (loss) before reclassifications | 10 | 7 |
Amounts reclassified from AOCI | 12 | 7 |
Net other comprehensive income (loss) | 22 | 14 |
End of period | (693) | (1,109) |
Pension and OPEB Plans | ASU 2018-02 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Adoption of new accounting standard | (169) | |
Hedging activities | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning of period | (41) | (1) |
Other comprehensive income (loss) before reclassifications | (131) | (15) |
Amounts reclassified from AOCI | 1 | 0 |
Net other comprehensive income (loss) | (130) | (15) |
End of period | (171) | (17) |
Hedging activities | ASU 2018-02 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Adoption of new accounting standard | (1) | |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning of period | (3,710) | (3,823) |
End of period | $ (4,177) | $ (4,082) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income - Summary of Amounts Reclassification from AOCI to Net Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Other (income) expense, net | $ (10) | $ 21 |
Income tax expense | 45 | 44 |
Cost of sales | 1,639 | 1,558 |
Net income (loss) attributable to Baxter | 332 | 342 |
Amounts reclassified from AOCI | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Net income (loss) attributable to Baxter | (13) | (7) |
Amortization of pension and OPEB items | Amounts reclassified from AOCI | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Other (income) expense, net | (15) | (8) |
Income tax expense | 3 | 1 |
Net income (loss) attributable to Baxter | (12) | (7) |
Gains (losses) on hedging activities | Amounts reclassified from AOCI | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Income tax expense | 0 | 0 |
Net income (loss) attributable to Baxter | (1) | 0 |
Gains (losses) on hedging activities | Foreign exchange contracts | Amounts reclassified from AOCI | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Cost of sales | $ (1) | $ 0 |
Revenues - Additional Informati
Revenues - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Revenue From Contract With Customer [Line Items] | ||
Net trade accounts receivable | $ 1,700 | $ 1,800 |
Contract assets | 133 | 131 |
Contract with Customer, Liability | 19 | 12 |
Accounts and Other Receivables, Net | ||
Revenue From Contract With Customer [Line Items] | ||
Contract assets, current | 66 | 63 |
Other non-current assets | ||
Revenue From Contract With Customer [Line Items] | ||
Contract assets, noncurrent | 67 | 68 |
Other non-current liabilities | ||
Revenue From Contract With Customer [Line Items] | ||
Contract liability, noncurrent | 12 | 12 |
Accounts payable and accrued liabilities | ||
Revenue From Contract With Customer [Line Items] | ||
Contract with customer, liability, current | 7 | |
Consumable Medical Products | ||
Revenue From Contract With Customer [Line Items] | ||
Contract assets, current | 12 | 52 |
Manufacturing Arrangements | ||
Revenue From Contract With Customer [Line Items] | ||
Contract assets | 37 | 36 |
Software Arrangements | ||
Revenue From Contract With Customer [Line Items] | ||
Contract assets, current | 47 | 43 |
Bundled Equipment | ||
Revenue From Contract With Customer [Line Items] | ||
Contract assets | $ 49 | |
Contract assets, current | $ 52 | |
Minimum | ||
Revenue From Contract With Customer [Line Items] | ||
Global payment terms | 30 days | |
Minimum | Consumable Medical Products | ||
Revenue From Contract With Customer [Line Items] | ||
Revenue recognized contract period | 1 year | |
Minimum | Software Arrangements | ||
Revenue From Contract With Customer [Line Items] | ||
Revenue recognized contract period | 1 year | |
Maximum | ||
Revenue From Contract With Customer [Line Items] | ||
Global payment terms | 90 days | |
Maximum | Consumable Medical Products | ||
Revenue From Contract With Customer [Line Items] | ||
Revenue recognized contract period | 7 years | |
Maximum | Manufacturing Arrangements | ||
Revenue From Contract With Customer [Line Items] | ||
Revenue recognized contract period | 90 days | |
Maximum | Software Arrangements | ||
Revenue From Contract With Customer [Line Items] | ||
Revenue recognized contract period | 5 years |
Revenues - Narrative (Details)
Revenues - Narrative (Details) $ in Billions | Mar. 31, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
Transaction price allocated to remaining performance obligations | $ 8.2 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-04-01 | |
Revenue From Contract With Customer [Line Items] | |
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 20.00% |
Remaining performance obligations period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01 | |
Revenue From Contract With Customer [Line Items] | |
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 25.00% |
Remaining performance obligations period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-01-01 | |
Revenue From Contract With Customer [Line Items] | |
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 20.00% |
Remaining performance obligations period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-01-01 | |
Revenue From Contract With Customer [Line Items] | |
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 20.00% |
Remaining performance obligations period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01 | |
Revenue From Contract With Customer [Line Items] | |
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 5.00% |
Remaining performance obligations period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01 | |
Revenue From Contract With Customer [Line Items] | |
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 5.00% |
Remaining performance obligations period | 1 year |
Revenues - Net Sales from Contr
Revenues - Net Sales from Contracts with Customers by Global Business Unit (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue From Contract With Customer [Line Items] | ||
Net sales | $ 2,802 | $ 2,638 |
U.S. | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 1,217 | 1,120 |
International | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 1,585 | 1,518 |
Renal | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 870 | 854 |
Renal | U.S. | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 204 | 192 |
Renal | International | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 666 | 662 |
Medication Delivery | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 690 | 634 |
Medication Delivery | U.S. | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 461 | 406 |
Medication Delivery | International | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 229 | 228 |
Pharmaceuticals | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 527 | 510 |
Pharmaceuticals | U.S. | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 231 | 232 |
Pharmaceuticals | International | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 296 | 278 |
Clinical Nutrition | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 220 | 205 |
Clinical Nutrition | U.S. | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 82 | 77 |
Clinical Nutrition | International | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 138 | 128 |
Advanced Surgery | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 224 | 199 |
Advanced Surgery | U.S. | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 137 | 120 |
Advanced Surgery | International | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 87 | 79 |
Acute Therapies | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 156 | 129 |
Acute Therapies | U.S. | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 60 | 48 |
Acute Therapies | International | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 96 | 81 |
Other | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 115 | 107 |
Other | U.S. | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | 42 | 45 |
Other | International | ||
Revenue From Contract With Customer [Line Items] | ||
Net sales | $ 73 | $ 62 |
Revenues - Lease Revenue (Detai
Revenues - Lease Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | ||
Sales-type lease revenue | $ 6 | $ 6 |
Operating lease revenue | 14 | 15 |
Variable lease revenue | 18 | 21 |
Total lease revenue | $ 38 | $ 42 |
Business Optimization Charges -
Business Optimization Charges - Additional Information (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Restructuring and Related Activities [Abstract] | |
Cumulative pre-tax costs incurred | $ 1,000 |
Expected additional pre-tax costs | 30 |
Sale of properties | $ 17 |
Business Optimization Charges_2
Business Optimization Charges - Summary of Business Optimization Charges (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 25 | $ 25 |
Business Optimization Programs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 25 | 25 |
Costs to implement business optimization programs | 7 | 10 |
Accelerated depreciation | 0 | 3 |
Total business optimization charges | $ 32 | $ 38 |
Business Optimization Charges_3
Business Optimization Charges - Components of Restructuring Charges (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||
Charges | $ 25 | $ 25 |
Cost of Goods Sold | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 8 | 16 |
Selling, General and Administrative Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 16 | 0 |
Research and Development Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 1 | 9 |
Employee termination costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 19 | 8 |
Employee termination costs | Cost of Goods Sold | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 2 | 0 |
Employee termination costs | Selling, General and Administrative Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 16 | (1) |
Employee termination costs | Research and Development Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 1 | 9 |
Contract termination costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 7 | |
Contract termination costs | Cost of Goods Sold | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 7 | |
Contract termination costs | Selling, General and Administrative Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 0 | |
Contract termination costs | Research and Development Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 0 | |
Asset impairments | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 6 | 10 |
Asset impairments | Cost of Goods Sold | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 6 | 9 |
Asset impairments | Selling, General and Administrative Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 0 | 1 |
Asset impairments | Research and Development Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | $ 0 | $ 0 |
Business Optimization Charges_4
Business Optimization Charges - Summary of Activity in Reserves Related to Restructuring Initiatives (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||
Charges | $ 25 | $ 25 |
Severance and Other Employee Related Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Reserve, beginning balance | 92 | |
Charges | 19 | |
Payments | (21) | |
Currency translation | (2) | |
Reserve, ending balance | $ 88 |
Pension and Other Postretirem_3
Pension and Other Postretirement Benefit Programs - Net Periodic Benefit Cost Relating to Pension and Other Postemployment Employee Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Pension benefits | ||
Net periodic benefit cost | ||
Service cost | $ 21 | $ 18 |
Interest cost | 24 | 47 |
Expected return on plan assets | (41) | (72) |
Amortization of net losses and prior service costs | 19 | 15 |
Net periodic cost | 23 | 8 |
OPEB | ||
Net periodic benefit cost | ||
Interest cost | 1 | 2 |
Amortization of net losses and prior service costs | (4) | (7) |
Net periodic cost | $ (3) | $ (5) |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 11.90% | 11.40% |
U.S. Federal statutory rate | 21.00% | 21.00% |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Basic Shares to Diluted Shares (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Reconciliation of Basic Shares to Diluted Shares | ||
Basic (in shares) | 507 | 512 |
Effect of dilutive securities (in shares) | 9 | 10 |
Diluted (in shares) | 516 | 522 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Anti-dilutive securities excluded from computation of EPS (in shares) | 1 | 4 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities - Additional Information (Details) | 3 Months Ended | ||||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | May 31, 2019EUR (€) | May 31, 2017EUR (€) | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Derivative, fair value, terminated | $ 0 | $ 0 | |||
Deferred, net after-tax gains on derivative instruments | 6,000,000 | ||||
Undesignated derivative instruments | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Derivative, notional amount | 824,000,000 | $ 619,000,000 | |||
1.30% Senior Notes due May 2025 | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Senior notes | € | € 600,000,000 | ||||
0.4% Senior Notes Due in May 2024 | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Senior notes | € | € 750,000,000 | ||||
1.3% Senior Notes Due in May 2029 | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Senior notes | € | € 750,000,000 | ||||
Net investment hedge | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Accumulated pre-tax unrealized translation gain in AOCI | 28,000,000 | ||||
Foreign exchange contracts | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Derivative, notional amount | $ 583,000,000 | 617,000,000 | |||
Maximum length of time hedge in cash flow hedge | 12 months | ||||
Interest rate contracts | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Derivative, notional amount | $ 550,000,000 | 550,000,000 | |||
Interest rate swap | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Derivative, fair value, net | $ 0 | $ 0 |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activities - Summary of Gains and Losses on Hedging Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other comprehensive income (loss), net investment hedge, gain (loss), before reclassification and tax | $ 49 | $ 14 |
Other comprehensive income (loss), cash flow hedge and net investment hedge, gain (loss), before reclassification, tax | (121) | (6) |
Other comprehensive income (loss), reclassification adjustment from AOCI, cash flow hedges and net investment hedges, net of tax | (1) | 0 |
Other income, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other comprehensive income (loss), net investment hedge, gain (loss), before reclassification and tax | 0 | 0 |
Interest rate contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other comprehensive income (loss), cash flow hedge, gain (loss), before reclassification, tax | (184) | (11) |
Interest rate contracts | Interest expense, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other comprehensive income (loss), cash flow hedge, gain (loss), reclassification, before tax | 0 | 0 |
Foreign exchange contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other comprehensive income (loss), cash flow hedge, gain (loss), before reclassification, tax | 14 | (9) |
Foreign exchange contracts | Cost of Sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other comprehensive income (loss), cash flow hedge, gain (loss), reclassification, before tax | (1) | 0 |
Foreign exchange contracts | Other income, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) recognized in income, undesignated derivative instruments | $ 2 | $ (8) |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activities - Classification and Fair Value Amounts of Derivative Instruments (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | $ 29 | $ 21 |
Derivative liability, fair value | 233 | 54 |
Derivative instruments designated as hedges | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 24 | 20 |
Derivative liability, fair value | 229 | 52 |
Derivative instruments designated as hedges | Interest rate contracts | Other non-current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 0 | 10 |
Derivative instruments designated as hedges | Interest rate contracts | Other non-current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | 226 | 52 |
Derivative instruments designated as hedges | Foreign exchange contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 24 | 10 |
Derivative instruments designated as hedges | Foreign exchange contracts | Accounts payable and accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | 3 | 0 |
Undesignated derivative instruments | Foreign exchange contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 5 | 1 |
Undesignated derivative instruments | Foreign exchange contracts | Accounts payable and accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | $ 4 | $ 2 |
Derivative Instruments and He_6
Derivative Instruments and Hedging Activities - Derivative Positions Presented On Net Basis (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross amounts recognized in the consolidated balance sheet, Asset | $ 29 | $ 21 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, Asset | (7) | (11) |
Total, Asset | 22 | 10 |
Gross amounts recognized in the consolidated balance sheet, Liability | 233 | 54 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, Liability | (7) | (11) |
Total, Liability | $ 226 | $ 43 |
Derivative Instruments and He_7
Derivative Instruments and Hedging Activities - Amounts Recorded on Condensed Consolidated Balance Sheet Related to Fair Value Hedges (Details) - Long-term debt - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Contracts designated as fair value hedges | $ 103 | $ 103 |
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged item | $ 6 | $ 6 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Financial Instruments Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign exchange contracts | $ 29 | $ 11 |
Interest rate contracts | 10 | |
Marketable equity securities | 3 | 3 |
Total assets | 32 | 24 |
Foreign exchange contracts | 7 | 2 |
Interest rate contracts | 226 | 52 |
Contingent payments related to acquisitions | 39 | 39 |
Total liabilities | 272 | 93 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign exchange contracts | 0 | 0 |
Interest rate contracts | 0 | |
Marketable equity securities | 3 | 3 |
Total assets | 3 | 3 |
Foreign exchange contracts | 0 | 0 |
Interest rate contracts | 0 | 0 |
Contingent payments related to acquisitions | 0 | 0 |
Total liabilities | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign exchange contracts | 29 | 11 |
Interest rate contracts | 10 | |
Marketable equity securities | 0 | 0 |
Total assets | 29 | 21 |
Foreign exchange contracts | 7 | 2 |
Interest rate contracts | 226 | 52 |
Contingent payments related to acquisitions | 0 | 0 |
Total liabilities | 233 | 54 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign exchange contracts | 0 | 0 |
Interest rate contracts | 0 | |
Marketable equity securities | 0 | 0 |
Total assets | 0 | 0 |
Foreign exchange contracts | 0 | 0 |
Interest rate contracts | 0 | 0 |
Contingent payments related to acquisitions | 39 | 39 |
Total liabilities | $ 39 | $ 39 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value Disclosures [Line Items] | ||
Cash and cash equivalents | $ 4,110 | $ 3,335 |
Other Assets | ||
Fair Value Disclosures [Line Items] | ||
Other equity investments without readily determinable fair values | 77 | 73 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Disclosures [Line Items] | ||
Money market funds, at carrying value | $ 2,300 | $ 1,700 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Fair Value Measurements that Use Significant Unobservable Inputs (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | ||
Contingent payments, Fair value as of beginning of period | $ 39 | $ 32 |
Contingent payments, additions | 4 | 0 |
Contingent payments, change in fair value recognized in earnings | (3) | 0 |
Contingent payments, payments | (1) | (1) |
Contingent payments, Fair value as of end of period | $ 39 | $ 31 |
Fair Value Measurements - Book
Fair Value Measurements - Book Values and Fair Values of Financial Instruments (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Book Values | ||
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ||
Short-term debt | $ 221 | $ 226 |
Current maturities of long-term debt and finance lease obligations | 315 | 315 |
Long-term debt and finance lease obligations | 5,996 | 4,809 |
Fair values | ||
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ||
Short-term debt | 221 | 226 |
Current maturities of long-term debt and finance lease obligations | 315 | 315 |
Long-term debt and finance lease obligations | $ 6,324 | $ 5,156 |
Segment Information - Summary o
Segment Information - Summary of Financial Information for Our Segments (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2020USD ($)Segment | Mar. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of operating segments | Segment | 3 | |
Net sales | $ 2,802 | $ 2,638 |
Total segment operating income | 409 | 383 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Net sales | 2,802 | 2,638 |
Total segment operating income | 833 | 802 |
Operating Segments | Americas | ||
Segment Reporting Information [Line Items] | ||
Net sales | 1,499 | 1,409 |
Total segment operating income | 544 | 538 |
Operating Segments | EMEA | ||
Segment Reporting Information [Line Items] | ||
Net sales | 754 | 707 |
Total segment operating income | 161 | 144 |
Operating Segments | APAC | ||
Segment Reporting Information [Line Items] | ||
Net sales | 549 | 522 |
Total segment operating income | $ 128 | $ 120 |
Segment Information - Operating
Segment Information - Operating Income to Income Before Income Taxes Reconciliation (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Operating Income (Loss) | $ 409 | $ 383 |
Net interest expense | (21) | (18) |
Other (income) expense, net | 10 | (21) |
Income before income taxes | 378 | 386 |
Operating Segments | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Operating Income (Loss) | 833 | 802 |
Corporate and Other | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Operating Income (Loss) | $ (424) | $ (419) |