Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 27, 2014 | |
Document Information [Line Items] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Trading Symbol | 'BAX | ' |
Entity Registrant Name | 'BAXTER INTERNATIONAL INC | ' |
Entity Central Index Key | '0000010456 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 541,978,180 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Net sales | $4,197 | $3,710 | $12,199 | $10,645 |
Cost of sales | 2,124 | 1,804 | 6,266 | 5,169 |
Gross margin | 2,073 | 1,906 | 5,933 | 5,476 |
Marketing and administrative expenses | 1,040 | 975 | 2,938 | 2,588 |
Research and development expenses | 455 | 277 | 1,086 | 769 |
Net interest expense | 31 | 45 | 116 | 87 |
Other (income) expense, net | -39 | -55 | -48 | 10 |
Income from continuing operations before income taxes | 586 | 664 | 1,841 | 2,022 |
Income tax expense | 139 | 136 | 419 | 419 |
Income from continuing operations | 447 | 528 | 1,422 | 1,603 |
Income from discontinued operations, net of tax | 21 | 16 | 122 | 83 |
Net income | $468 | $544 | $1,544 | $1,686 |
Income from continuing operations per common share | ' | ' | ' | ' |
Basic | $0.83 | $0.97 | $2.62 | $2.95 |
Diluted | $0.82 | $0.96 | $2.60 | $2.91 |
Income from discontinued operations per common share | ' | ' | ' | ' |
Basic | $0.03 | $0.03 | $0.23 | $0.15 |
Diluted | $0.04 | $0.03 | $0.22 | $0.15 |
Net income per common share | ' | ' | ' | ' |
Basic | $0.86 | $1 | $2.85 | $3.10 |
Diluted | $0.86 | $0.99 | $2.82 | $3.06 |
Weighted-average number of common shares outstanding | ' | ' | ' | ' |
Basic | 542 | 543 | 542 | 543 |
Diluted | 547 | 549 | 548 | 550 |
Cash dividends declared per common share | $0.52 | $0.49 | $1.53 | $1.43 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Net income | $468 | $544 | $1,544 | $1,686 |
Other comprehensive (loss) income, net of tax: | ' | ' | ' | ' |
Currency translation adjustments, net of tax (benefit) expense of ($60) and $19 for the three months ended September 30, 2014 and 2013, respectively, and ($68) and $15 for the nine months ended September 30, 2014 and 2013, respectively | -608 | 112 | -815 | 58 |
Pension and other employee benefits, net of tax expense of $45 and $23 for the three months ended September 30, 2014 and 2013, respectively, and $68 and $67 for the nine months ended September 30, 2014 and 2013, respectively | 81 | 42 | 132 | 119 |
Hedging activities, net of tax expense of $12 and $0 for the three months ended September 30, 2014 and 2013, respectively, and $10 and $11 for the nine months ended September 30, 2014 and 2013, respectively | 21 | -2 | 15 | 21 |
Other, net of tax (benefit) expense of ($1) and $5 for the three months ended September 30, 2014 and 2013, respectively, and ($3) and $5 for the nine months ended September 30, 2014 and 2013, respectively | -3 | 13 | -10 | 12 |
Total other comprehensive (loss) income, net of tax | -509 | 165 | -678 | 210 |
Comprehensive (loss) income | ($41) | $709 | $866 | $1,896 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Tax expense (benefit) on currency translation adjustments | ($60) | $19 | ($68) | $15 |
Tax expense pension and other employee benefits | 45 | 23 | 68 | 67 |
Tax expense on hedging activities | 12 | 0 | 10 | 11 |
Tax (benefit) expense on other | ($1) | $5 | ($3) | $5 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Current assets | ' | ' |
Cash and equivalents | $2,078 | $2,733 |
Accounts and other current receivables, net | 2,842 | 2,911 |
Inventories | 3,704 | 3,499 |
Prepaid expenses and other | 850 | 861 |
Assets held for sale | 157 | ' |
Total current assets | 9,631 | 10,004 |
Property, plant and equipment, net | 8,448 | 7,832 |
Other assets | ' | ' |
Goodwill | 4,016 | 4,205 |
Other intangible assets, net | 2,185 | 2,294 |
Other | 1,283 | 1,534 |
Total other assets | 7,484 | 8,033 |
Total assets | 25,563 | 25,869 |
Current liabilities | ' | ' |
Short-term debt | 392 | 181 |
Current maturities of long-term debt and lease obligations | 1,123 | 859 |
Accounts payable and accrued liabilities | 4,460 | 4,866 |
Liabilities held for sale | 15 | ' |
Total current liabilities | 5,990 | 5,906 |
Long-term debt and lease obligations | 7,753 | 8,126 |
Other long-term liabilities | 3,394 | 3,351 |
Commitments and contingencies | ' | ' |
Equity | ' | ' |
Common stock, $1 par value, authorized 2,000,000,000 shares, issued 683,494,944 shares in 2014 and 2013 | 683 | 683 |
Common stock in treasury, at cost, 141,266,970 shares in 2014 and 140,456,989 shares in 2013 | -8,004 | -7,914 |
Additional contributed capital | 5,816 | 5,818 |
Retained earnings | 12,563 | 11,852 |
Accumulated other comprehensive loss | -2,654 | -1,976 |
Total Baxter International Inc. (Baxter) shareholders' equity | 8,404 | 8,463 |
Noncontrolling interests | 22 | 23 |
Total equity | 8,426 | 8,486 |
Total liabilities and equity | $25,563 | $25,869 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Common stock, par value | $1 | $1 |
Common stock, authorized | 2,000,000,000 | 2,000,000,000 |
Common stock, issued | 683,494,944 | 683,494,944 |
Treasury stock, shares | 141,266,970 | 140,456,989 |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operations | ' | ' |
Net income | $1,544 | $1,686 |
Adjustments | ' | ' |
Depreciation and amortization | 747 | 573 |
Deferred income taxes | 35 | 85 |
Stock compensation | 115 | 111 |
Realized excess tax benefits from stock issued under employee benefit plans | -21 | -32 |
Business optimization charges | 24 | 12 |
Net periodic pension benefit and OPEB costs | 211 | 282 |
Infusion pump and other product-related charges | 93 | ' |
Other | 217 | 2 |
Changes in balance sheet items | ' | ' |
Accounts and other current receivables, net | -35 | 70 |
Inventories | -468 | -412 |
Accounts payable and accrued liabilities | -154 | -56 |
Business optimization and infusion pump payments | -118 | -81 |
Other | -118 | -125 |
Cash flows from operations | 2,072 | 2,115 |
Cash flows from investing activities | ' | ' |
Capital expenditures | -1,325 | -1,037 |
Acquisitions and investments, net of cash acquired | -323 | -3,772 |
Divestitures and other investing activities | 103 | 14 |
Cash flows from investing activities | -1,545 | -4,795 |
Cash flows from financing activities | ' | ' |
Issuances of debt, net of issuance costs | 41 | 3,498 |
Payments of obligations | -526 | -526 |
Increase in debt with original maturities of three months or less, net | 350 | ' |
Cash dividends on common stock | -813 | -757 |
Proceeds and realized excess tax benefits from stock issued under employee benefit plans | 320 | 468 |
Purchases of treasury stock | -500 | -863 |
Other | 1 | -25 |
Cash flows from financing activities | -1,127 | 1,795 |
Effect of foreign exchange rate changes on cash and equivalents | -55 | -9 |
Decrease in cash and equivalents | -655 | -894 |
Cash and equivalents at beginning of period | 2,733 | 3,270 |
Cash and equivalents at end of period | $2,078 | $2,376 |
Basis_of_Presentation
Basis of Presentation | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Basis of Presentation | ' | ||||||||||||||||
1. BASIS OF PRESENTATION | |||||||||||||||||
The unaudited interim condensed consolidated financial statements of Baxter International Inc. and its subsidiaries (the company or Baxter) 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 generally accepted accounting principles (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 the company’s Annual Report on Form 10-K for the year ended December 31, 2013 (2013 Annual Report). | |||||||||||||||||
In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair statement of the interim periods. All such adjustments, unless otherwise noted herein, are of a normal, recurring nature. The results of operations for the 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 financial statements to the current period presentation. | |||||||||||||||||
Vaccines discontinued operations | |||||||||||||||||
In July 2014, the company entered into an agreement to sell its commercial vaccines business, including NeisVac-C, a vaccine which helps protect against meningitis caused by group C meningococcal meningitis, and FSME-IMMUN, which helps protect against tick-borne encephalitis (TBE), an infection of the brain transmitted by the bite of ticks infected with the TBE-virus. The divestiture is expected to be completed in the fourth quarter of 2014. Concurrent with the sale, the company also committed to a plan to divest the remainder of its Vaccines franchise, which includes certain research and development (R&D) programs. As a result of the sale and divestiture plan, the operations and cash flows of the Vaccines franchise will be eliminated from the ongoing operations of the company. In addition, the company will not have significant continuing involvement or cash flows from the operations associated with the Vaccines franchise. | |||||||||||||||||
Following is a summary of the operating results of the Vaccines franchise, which have been reflected as discontinued operations for the three and nine months ended September 30, 2014 and 2013. The assets and liabilities of the Vaccines franchise have been classified as held for sale as of September 30, 2014. | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Net sales | $54 | $64 | $267 | $246 | |||||||||||||
Income before income taxes | 23 | 18 | 138 | 96 | |||||||||||||
Income tax expense | 2 | 2 | 16 | 13 | |||||||||||||
Net income | $21 | $16 | $122 | $ 83 | |||||||||||||
As of September 30, | |||||||||||||||||
(in millions) | 2014 | ||||||||||||||||
Assets | |||||||||||||||||
Inventories | $ 87 | ||||||||||||||||
Property, plant and equipment, net | 53 | ||||||||||||||||
Goodwill and other intangible assets, net | 17 | ||||||||||||||||
Assets held for sale | $157 | ||||||||||||||||
Liabilities | |||||||||||||||||
Accrued liabilities and other long-term liabilities | $ 15 | ||||||||||||||||
Liabilities held for sale | $ 15 | ||||||||||||||||
Planned spin-off of biopharmaceuticals business | |||||||||||||||||
In March 2014 Baxter announced plans to create two separate, independent global healthcare companies – one focused on developing and marketing innovative biopharmaceuticals and the other on life-saving medical products. The transaction is intended to take the form of a tax-free distribution to Baxter shareholders of publicly traded stock in the new biopharmaceuticals company. The transaction is expected to be completed by mid-year 2015, subject to market, regulatory and certain other conditions, including final approval by the Baxter Board of Directors, receipt of a favorable opinion and/or rulings with respect to the tax-free nature of the transaction, and the effectiveness of a Form 10 registration statement that will be filed with the SEC. Subsequent to the separation, the historical results of the biopharmaceuticals business will be presented as discontinued operations. | |||||||||||||||||
New accounting standards | |||||||||||||||||
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU No. 2014-09 will be effective for the company beginning on January 1, 2017. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The company is currently evaluating the impact of adopting the new revenue standard on its consolidated financial statements. |
Supplemental_Financial_Informa
Supplemental Financial Information | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Supplemental Financial Information | ' | ||||||||||||||||
2. SUPPLEMENTAL FINANCIAL INFORMATION | |||||||||||||||||
Net interest expense | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Interest expense, net of capitalized interest | $36 | $51 | $131 | $106 | |||||||||||||
Interest income | (5 | ) | (6 | ) | (15 | ) | (19 | ) | |||||||||
Net interest expense | $31 | $45 | $116 | $ 87 | |||||||||||||
Inventories | |||||||||||||||||
September 30, | December 31, | ||||||||||||||||
(in millions) | 2014 | 2013 | |||||||||||||||
Raw materials | $ 920 | $ 920 | |||||||||||||||
Work in process | 1,115 | 1,136 | |||||||||||||||
Finished goods | 1,669 | 1,443 | |||||||||||||||
Inventories | $3,704 | $3,499 | |||||||||||||||
Property, plant and equipment, net | |||||||||||||||||
September 30, | December 31, | ||||||||||||||||
(in millions) | 2014 | 2013 | |||||||||||||||
Property, plant and equipment, at cost | $14,508 | $13,795 | |||||||||||||||
Accumulated depreciation | (6,060 | ) | (5,963 | ) | |||||||||||||
Property, plant and equipment (PP&E), net | $ 8,448 | $ 7,832 | |||||||||||||||
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Earnings Per Share | ' | ||||||||||||||||
3. EARNINGS PER SHARE | |||||||||||||||||
The numerator for both basic and diluted earnings per share (EPS) is net income from continuing operations and net income from discontinued operations. The denominator for basic EPS is the weighted-average number of common shares outstanding during the period. The dilutive effect of outstanding stock options, restricted stock units (RSUs) and performance share units (PSUs) is reflected in the denominator for diluted EPS using the treasury stock method. | |||||||||||||||||
The following is a reconciliation of basic shares to diluted shares. | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Basic shares | 542 | 543 | 542 | 543 | |||||||||||||
Effect of dilutive securities | 5 | 6 | 6 | 7 | |||||||||||||
Diluted shares | 547 | 549 | 548 | 550 | |||||||||||||
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 6 million and 9 million equity awards for the three and nine months ended September 30, 2014, respectively, and 6 million and 5 million equity awards for the three and nine months ended September 30, 2013, because their inclusion would have had an anti-dilutive effect on diluted EPS. Refer to Note 8 for additional information regarding items impacting basic shares. |
Acquisitions_and_Collaboration
Acquisitions and Collaborations | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Acquisitions and Collaborations | ' | ||||||||
4. ACQUISITIONS AND COLLABORATIONS | |||||||||
2014 Acquisitions | |||||||||
The following table summarizes the fair value of consideration transferred and the recognized amounts of the assets acquired and liabilities assumed as of the acquisition date for the company’s significant acquisitions during the first nine months of 2014. | |||||||||
(in millions) | Chatham | AesRx | |||||||
Consideration transferred | |||||||||
Cash | $ 70 | $15 | |||||||
Contingent payments | 77 | 65 | |||||||
Fair value of consideration transferred | $147 | $80 | |||||||
Assets acquired and liabilities assumed | |||||||||
Other intangible assets – IPR&D | $ 74 | $78 | |||||||
Total identifiable net assets | 74 | 78 | |||||||
Goodwill | 73 | 2 | |||||||
Total assets acquired and liabilities assumed | $147 | $80 | |||||||
While the valuations of consideration transferred and total assets acquired and liabilities assumed are substantially complete, measurement period adjustments may be recorded in the future as the company finalizes its fair value estimates. Pro forma financial information has not been included because these acquisitions, individually and in the aggregate, did not have a material impact on the company’s financial position or results of operations as of and for the three and nine months ended September 30, 2014. | |||||||||
Additional information regarding the above acquisitions has been provided below. | |||||||||
Chatham Therapeutics, LLC | |||||||||
In April 2014, Baxter acquired all of the outstanding membership interests in Chatham Therapeutics, LLC (Chatham Therapeutics), obtaining Chatham Therapeutics’ gene therapy programs related to the development and commercialization of treatments for hemophilia. | |||||||||
Baxter made an initial payment of $70 million, and may make additional payments of up to $560 million in payments related to the achievement of development, regulatory and first commercial sale milestones, in addition to sales milestones of up to $780 million. The estimated fair value of the contingent payment liabilities at the acquisition date was $77 million, which was recorded in other long-term liabilities as part of the consideration transferred, and based on the probability of achieving the specified milestones and the discounting of expected future cash flows. | |||||||||
Baxter allocated $74 million of the total consideration to acquired IPR&D, which will be accounted for as an indefinite-lived intangible asset, with the residual consideration of $73 million recorded as goodwill. The acquired IPR&D primarily relates to Chatham Therapeutics’ hemophilia A (FVIII) program, which was in preclinical stage at the time of the acquisition and is expected to be completed in approximately 10 years. The value of the IPR&D was calculated using cash flow projections adjusted for the inherent technical, regulatory, commercial and obsolescence risks in such activities, discounted at a rate of 12%. Additional R&D will be required prior to technological feasibility and, as of the acquisition date, incremental R&D costs are projected to be in excess of $130 million. The goodwill, which may be deductible for tax purposes depending on the ultimate resolution of the contingent payment liabilities, includes the value of potential future technologies as well as the overall strategic benefits of the acquisition to Baxter in the hemophilia market and is included in the BioScience segment. | |||||||||
AesRx, LLC | |||||||||
In June 2014, Baxter acquired all of the outstanding membership interests in AesRx, LLC (AesRx), obtaining AesRx’s program related to the development and commercialization of treatments for sickle cell disease. | |||||||||
Baxter made an initial payment of $15 million, and may make additional payments of up to $278 million related to the achievement of development and regulatory milestones, in addition to sales milestones of up to $550 million. The estimated fair value of the contingent payment liabilities at the acquisition date was $65 million, which was recorded in other long-term liabilities as part of the consideration transferred, and based on the probability of achieving the specified milestones and the discounting of expected future cash flows. | |||||||||
Baxter allocated $78 million of the total consideration to acquired IPR&D, which will be accounted for as indefinite-lived intangible assets, with the residual consideration of $2 million recorded as goodwill. The acquired IPR&D relates to AesRx’s sickle cell disease program, which was in Phase II clinical trials at the time of the acquisition, and is expected to be completed in approximately five years. The value of IPR&D was calculated using cash flow projections adjusted for the inherent technical, regulatory, commercial and obsolescence risks in such activities, discounted at a rate of 15.5%. Additional R&D will be required prior to technological feasibility and, as of the acquisition date, incremental R&D costs are projected to be in excess of $40 million. | |||||||||
Gambro AB Acquisition | |||||||||
On September 6, 2013, Baxter acquired 100 percent of the voting equity interests in Indap Holding AB, the holding company for Gambro AB (Gambro), a privately held dialysis product company based in Lund, Sweden. | |||||||||
In the third quarter of 2014, the company finalized its valuation of the acquisition date assets acquired and liabilities assumed. The measurement period adjustments in 2014 include a $14 million increase to property, plant and equipment and $4 million of working capital adjustments. The adjustments resulted in a corresponding decrease in goodwill of $10 million and a decrease to the fair value of consideration transferred of $4 million. | |||||||||
These adjustments did not have a material impact on Baxter’s results of operations for the nine months of 2014. The following table summarizes the updated and final fair value of the consideration transferred and the amounts recognized for assets acquired and liabilities assumed as of the acquisition date. | |||||||||
(in millions) | |||||||||
Consideration transferred | |||||||||
Cash | $3,700 | ||||||||
Fair value of consideration transferred | $3,700 | ||||||||
Assets acquired and liabilities assumed | |||||||||
Cash | $ 88 | ||||||||
Accounts receivable | 488 | ||||||||
Inventories | 368 | ||||||||
Prepaid expenses and other | 54 | ||||||||
Property, plant, and equipment | 740 | ||||||||
Other intangible assets | 1,290 | ||||||||
Other assets | 11 | ||||||||
Current-maturities of long-term debt and lease obligations | (2 | ) | |||||||
Accounts payable and accrued liabilities | (345 | ) | |||||||
Long-term debt and lease obligations | (261 | ) | |||||||
Other long-term liabilities (including pension obligations of $209) | (341 | ) | |||||||
Total identifiable net assets | 2,090 | ||||||||
Goodwill | 1,610 | ||||||||
Total assets acquired and liabilities assumed | $3,700 | ||||||||
Pro forma impact of acquisition | |||||||||
The following table presents supplemental pro forma information as if the acquisition of Gambro had occurred on January 1, 2012 for the three and nine months ended September 30, 2013. | |||||||||
Unaudited Pro Forma Consolidated Results | |||||||||
(in millions, except per share information) | Three months ended | Nine months ended | |||||||
September 30, 2013 | September 30, 2013 | ||||||||
Net sales | $3,974 | $11,687 | |||||||
Income from continuing operations | 531 | 1,630 | |||||||
Basic EPS from continuing operations | $ 0.98 | $ 3.00 | |||||||
Diluted EPS from continuing operations | $ 0.97 | $ 2.96 | |||||||
The unaudited pro forma consolidated results were prepared using the acquisition method of accounting and are based on the historical information of Baxter and Gambro. The unaudited pro forma consolidated results are not necessarily indicative of what the consolidated results of operations would have been had we completed the acquisition on January 1, 2012. In addition, the unaudited pro forma consolidated results are not projections of future results of operations of the combined company nor do they reflect the expected realization of any cost savings or synergies associated with the acquisition. The unaudited pro forma consolidated results reflect primarily the following pro forma pre-tax adjustments: | |||||||||
• | Conversion of Gambro’s historical results of operations from International Financial Reporting Standards (IFRS) to GAAP. | ||||||||
• | Elimination of Gambro’s historical intangible asset amortization expense and property, plant and equipment depreciation expense. | ||||||||
• | Addition of amortization expense related to the fair value of identifiable intangible assets acquired. | ||||||||
• | Addition of depreciation expense related to the fair value of property, plant and equipment acquired. | ||||||||
• | Elimination of a $15 million charge related to the fair value of acquisition-date inventory from the three and nine months ended September 30, 2013. | ||||||||
• | Elimination of Gambro’s historical interest expense and addition of interest expense associated with debt that was issued in 2013 to partially finance the acquisition. | ||||||||
• | Elimination of $135 million of acquisition, integration and currency-related charges from the first nine months of 2013. These costs were directly attributable to the acquisition and non-recurring in nature, and included acquisition and integration related charges incurred by Baxter, in addition to post-acquisition restructuring costs and losses from foreign currency hedging activity related to the acquisition. | ||||||||
Collaborations | |||||||||
Merrimack Pharmaceuticals, Inc. | |||||||||
In September 2014, Baxter entered into an exclusive license and collaboration agreement with Merrimack Pharmaceuticals, Inc. (Merrimack) relating to the development and commercialization of MM-398 (nanoliposomal irinotecan injection), also known as “nal-IRI”. The arrangement includes all potential indications for MM-398 across all markets with the exception of the United States and Taiwan. The first indication being pursued is for the treatment of patients with metastatic pancreatic cancer who were previously treated with gemcitabine-based therapy. In the third quarter of 2014, Baxter recognized a R&D charge of $100 million related to the upfront cash payment associated with this collaboration. Baxter may make additional payments of up to $620 million related to the achievement of development and regulatory milestones, in addition to sales milestones of up to $250 million and royalty payments. | |||||||||
Other collaborations | |||||||||
Baxter recognized R&D charges of $38 million and $98 million for the third quarter and first nine months of 2014, respectively, primarily related to milestone payments pursuant to collaboration arrangements with Coherus Biosciences, Inc. and CTI BioPharma Corp. (formerly known as Cell Therapeutics, Inc.). Refer to the 2013 Annual Report for further discussion of the company’s collaboration arrangements. |
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets, Net | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Goodwill and Other Intangible Assets, Net | ' | ||||||||||||||||
5. GOODWILL AND OTHER INTANGIBLE ASSETS, NET | |||||||||||||||||
Goodwill | |||||||||||||||||
The following is a reconciliation of goodwill by business segment. | |||||||||||||||||
(in millions) | BioScience | Medical Products | Total | ||||||||||||||
Balance as of December 31, 2013 | $ 991 | $3,214 | $4,205 | ||||||||||||||
Additions | 75 | 4 | 79 | ||||||||||||||
Currency translation and other adjustments | (28 | ) | (240 | ) | (268 | ) | |||||||||||
Balance as of September 30, 2014 | $1,038 | $2,978 | $4,016 | ||||||||||||||
Goodwill additions are primarily related to the acquisition of Chatham Therapeutics in the second quarter of 2014. The decrease in goodwill was primarily driven by currency translation. | |||||||||||||||||
As of September 30, 2014, there were no accumulated goodwill impairment losses. | |||||||||||||||||
Other intangible assets, net | |||||||||||||||||
The following is a summary of the company’s other intangible assets. | |||||||||||||||||
(in millions) | Developed technology, | Other amortized | Indefinite-lived | Total | |||||||||||||
including patents | intangible assets | intangible assets | |||||||||||||||
September 30, 2014 | |||||||||||||||||
Gross other intangible assets | $2,033 | $437 | $591 | $3,061 | |||||||||||||
Accumulated amortization | (736 | ) | (140 | ) | — | (876 | ) | ||||||||||
Other intangible assets, net | $1,297 | $297 | $591 | $2,185 | |||||||||||||
December 31, 2013 | |||||||||||||||||
Gross other intangible assets | $2,144 | $494 | $465 | $3,103 | |||||||||||||
Accumulated amortization | (665 | ) | (144 | ) | — | (809 | ) | ||||||||||
Other intangible assets, net | $1,479 | $350 | $465 | $2,294 | |||||||||||||
The amortization expense for these intangible assets was $45 million and $33 million in the three months ended September 30, 2014 and 2013, respectively, and $135 million and $83 million for the nine months ended September 30, 2014 and 2013, respectively. The anticipated annual amortization expense for intangible assets recorded as of September 30, 2014 is $180 million in 2014, $176 million in 2015, $172 million in 2016, $155 million in 2017, $151 million in 2018 and $136 million in 2019. | |||||||||||||||||
The decrease in other intangible assets, net was primarily driven by currency translation, which was partially offset by indefinite-lived intangible asset additions related to the acquisitions of Chatham Therapeutics and AesRx in the second quarter of 2014. |
Infusion_Pump_and_Business_Opt
Infusion Pump and Business Optimization Charges | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Infusion Pump and Business Optimization Charges | ' | ||||
6. INFUSION PUMP AND BUSINESS OPTIMIZATION CHARGES | |||||
Infusion pump charges | |||||
The company is undertaking a field corrective action with respect to the SIGMA Spectrum Infusion Pump, which is predominantly sold in the United States. The United States Food and Drug Administration (FDA) categorized the action as a Class 1 recall during the second quarter of 2014 and the company recorded a charge of $93 million related primarily to cash costs associated with remediation efforts. Remediation is expected to include software-related corrections and in a limited number of cases a replacement pump. The company expects to complete remediation by March 2016. As of September 30, 2014, the company believes the reserve to be adequate; however, it is possible that substantial additional cash and non-cash charges may be required in future periods based on new information or changes in estimates. | |||||
From 2005 through 2013, the company recorded total charges and adjustments of $888 million related to COLLEAGUE and SYNDEO infusion pumps, including $725 million of cash costs and $163 million principally related to asset impairments. The company had $83 million of the cash reserves remaining as of December 31, 2013. During the first nine months of 2014, the company utilized $26 million of the cash reserves, with a remaining cash reserve of $57 million as of September 30, 2014. The reserve for COLLEAGUE and SYNDEO remediation activities in the United States has been substantially utilized, with remaining reserves primarily related to remediation activities outside of the United States continuing to be utilized through 2015. | |||||
Business optimization charges | |||||
From 2009 through 2013 the company recorded total charges of $992 million (of which $114 million related to discontinued operations) primarily related to costs associated with optimizing the company’s overall cost structure on a global basis, as the company streamlined its international operations, rationalized its manufacturing facilities, enhanced its general and administrative infrastructure and re-aligned certain R&D activities. The total charges included cash costs of $689 million, principally pertaining to severance and other employee-related costs, and $303 million related to asset impairments. The company had $288 million of the cash reserves remaining as of December 31, 2013. Refer to the 2013 Annual Report for further information about these charges. | |||||
The company recorded charges of $28 million and $61 million (of which $8 million related to discontinued operations) in the three and nine months ended September 30, 2014, which primarily include severance and employee-related costs associated with the formation of a new R&D center in Cambridge, Massachusetts as well as Gambro post-acquisition restructuring activities. In the nine months ended September 30, 2014, the company recorded an adjustment of $37 million to previous business optimization charges that are no longer probable of being utilized. | |||||
The following table summarizes cash activity in the reserves related to the company’s business optimization initiatives. | |||||
(in millions) | |||||
Reserves as of December 31, 2013 | $ | 288 | |||
Charges | 60 | ||||
Reserve adjustments | (35 | ) | |||
Utilization | (92 | ) | |||
Reserves as of September 30, 2014 | $ | 221 | |||
The reserves are expected to be substantially utilized by the end of 2015. The company believes that these reserves are adequate. However, adjustments may be recorded in the future as the programs are completed. |
Debt_Financial_Instruments_and
Debt, Financial Instruments and Fair Value Measurements | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Debt, Financial Instruments and Fair Value Measurements | ' | ||||||||||||||||||||
7. DEBT, FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | |||||||||||||||||||||
Securitization arrangement | |||||||||||||||||||||
The following is a summary of the activity relating to the company’s securitization arrangement in Japan. | |||||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Sold receivables at beginning of period | $106 | $129 | $114 | $157 | |||||||||||||||||
Proceeds from sales of receivables | 117 | 125 | 357 | 380 | |||||||||||||||||
Cash collections (remitted to the owners of the receivables) | (119 | ) | (130 | ) | (368 | ) | (394 | ) | |||||||||||||
Effect of currency exchange rate changes | (5 | ) | (6 | ) | (4 | ) | (25 | ) | |||||||||||||
Sold receivables at end of period | $ 99 | $118 | $ 99 | $118 | |||||||||||||||||
The net losses relating to the sales of receivables were immaterial for each period. Refer to the 2013 Annual Report for further information regarding the company’s securitization agreements. | |||||||||||||||||||||
Credit facilities and commercial paper | |||||||||||||||||||||
As of September 30, 2014, there were no outstanding borrowings under the company’s primary and Euro-denominated revolving credit facilities. As of December 31, 2013, there were no outstanding borrowings under the company’s primary revolving credit facility and $124 million outstanding under the Euro-denominated revolving credit facility. Refer to the 2013 Annual Report for further discussion of the company’s credit facilities. | |||||||||||||||||||||
In July 2014, the company amended its primary and Euro-denominated revolving credit facilities to extend the termination date of the facilities to December 31, 2015. There were no other material changes to the terms of the facilities as a result of the amendments. | |||||||||||||||||||||
During the first nine months of 2014, the company issued and redeemed commercial paper, of which $350 million was outstanding as of September 30, 2014 with a weighted-average interest rate of 0.23%. This commercial paper is classified as short-term debt. The company did not have any commercial paper outstanding as of December 31, 2013. | |||||||||||||||||||||
Concentrations of credit risk | |||||||||||||||||||||
The company invests excess cash in certificates of deposit or money market funds and diversifies the concentration of cash among different financial institutions. With respect to financial instruments, where appropriate, the company has diversified its selection of counterparties, and has arranged collateralization and master-netting agreements to minimize the risk of loss. | |||||||||||||||||||||
The company continues to do business with foreign governments in certain countries, including Greece, Spain, Portugal and Italy, that have experienced a deterioration in credit and economic conditions. As of September 30, 2014, the company’s net accounts receivable from the public sector in Greece, Spain, Portugal and Italy totaled $417 million (of which $42 million related to Greece). | |||||||||||||||||||||
Global economic conditions and liquidity issues in certain countries have resulted, and may continue to result, in delays in the collection of receivables and credit losses. Governmental actions and customer-specific factors may also require the company to re-evaluate the collectibility of its receivables and the company could potentially incur additional credit losses. These conditions may also impact the stability of the Euro. | |||||||||||||||||||||
Derivatives and hedging activities | |||||||||||||||||||||
The company operates on a global basis and is exposed to the risk that its earnings, cash flows and equity could be adversely impacted by fluctuations in foreign exchange and interest rates. The company’s hedging policy attempts to manage these risks to an acceptable level based on the company’s judgment of the appropriate trade-off between risk, opportunity and costs. | |||||||||||||||||||||
The company is primarily exposed to foreign exchange risk with respect to recognized assets and liabilities, forecasted transactions and net assets denominated in the Euro, Japanese Yen, British Pound, Australian Dollar, Canadian Dollar, Brazilian Real, Colombian Peso, and Swedish Krona. The company manages its foreign currency exposures on a consolidated basis, which allows the company to net exposures and take advantage of any natural offsets. In addition, the company uses derivative and nonderivative instruments to further reduce the net exposure to foreign exchange. Gains and losses on the hedging instruments offset losses and gains on the hedged transactions and reduce the earnings and equity volatility resulting from foreign exchange. Financial market and currency volatility may limit the company’s ability to cost-effectively hedge these exposures. | |||||||||||||||||||||
The company is also exposed to the risk that its earnings and cash flows could be adversely impacted by fluctuations in interest rates. The company’s policy is to manage interest costs using a mix of fixed- and floating-rate debt that the company believes is appropriate. To manage this mix in a cost-efficient manner, the company periodically enters into interest rate swaps in which the company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional amount. | |||||||||||||||||||||
The company does not hold any instruments for trading purposes and none of the company’s 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. Based upon the exposure being hedged, the company designates its hedging instruments as cash flow or fair value hedges. | |||||||||||||||||||||
Cash Flow Hedges | |||||||||||||||||||||
The company 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. The company periodically uses forward-starting interest rate swaps and treasury rate locks to hedge the risk to earnings associated with movements in interest rates relating to anticipated issuances of debt. Certain other firm commitments and forecasted transactions are also periodically hedged. | |||||||||||||||||||||
For each derivative instrument that is designated and effective as a cash flow hedge, the gain or loss on the derivative is accumulated in accumulated other comprehensive income (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 net sales, cost of sales, and net interest expense, and primarily relate to forecasted third-party sales denominated in foreign currencies, forecasted intercompany sales denominated in foreign currencies, and anticipated issuances of debt, respectively. | |||||||||||||||||||||
The notional amounts of foreign exchange contracts were $1.2 billion and $2.1 billion as of September 30, 2014 and December 31, 2013, respectively. There were no interest rate contacts designated as cash flow hedges outstanding as of September 30, 2014 and December 31, 2013. The maximum term over which the company has cash flow hedge contracts in place related to forecasted transactions as of September 30, 2014 is 15 months. | |||||||||||||||||||||
Fair Value Hedges | |||||||||||||||||||||
The company uses interest rate swaps to convert a portion of its fixed-rate debt into variable-rate debt. These instruments hedge the company’s 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 the loss or gain on the underlying hedged item. Fair value hedges are classified in net interest expense, as they hedge the interest rate risk associated with certain of the company’s fixed-rate debt. | |||||||||||||||||||||
The total notional amount of interest rate contracts designated as fair value hedges was $2.9 billion and $1.2 billion as of September 30, 2014 and December 31, 2013, respectively. | |||||||||||||||||||||
Dedesignations | |||||||||||||||||||||
If it is determined that a derivative or nonderivative hedging instrument is no longer highly effective as a hedge, the company discontinues hedge accounting prospectively. If the company removes the cash flow hedge designation because the hedged forecasted transactions are no longer probable of occurring, any gains or losses are immediately reclassified from AOCI to earnings. Gains or losses relating to terminations of effective cash flow hedges in which the forecasted transactions are still probable of occurring are deferred and recognized consistent with the loss or income recognition of the underlying hedged items. | |||||||||||||||||||||
There were no hedge dedesignations in the first nine months of 2014 resulting from changes in the company’s assessment of the probability that the hedged forecasted transactions would occur. In the first nine months of 2013, the company had $1 billion of interest rate contracts designated as cash flow hedges that matured or were terminated, resulting in a net gain of $5 million that was deferred in AOCI. In the second quarter of 2013, the company determined that certain forecasted transactions associated with these contracts were no longer probable of occurring and therefore dedesignated the hedge relationship, which, together with ineffectiveness, resulted in the immediate reclassification of a net gain of $11 million from AOCI to net interest expense. The remaining deferred net loss of $6 million from the matured or terminated interest rate contracts is being amortized to net interest expense against the related accrued interest payments. | |||||||||||||||||||||
If the company terminates a fair value hedge, an amount equal to the cumulative fair value adjustment to the hedged items 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 nine months of 2014 and 2013. | |||||||||||||||||||||
Undesignated Derivative Instruments | |||||||||||||||||||||
The company uses forward contracts to hedge earnings from the effects of foreign exchange relating to certain of the company’s intercompany and third-party receivables and payables denominated in a foreign currency. These derivative instruments are generally not formally designated as hedges, and the change in fair value, which substantially offsets the change in book value of the hedged items, is recorded directly to other (income) expense, net. The terms of these instruments generally do not exceed one month. | |||||||||||||||||||||
The total notional amount of undesignated derivative instruments was $443 million as of September 30, 2014 and $381 million as of December 31, 2013. In the fourth quarter of 2012 and the first quarter of 2013, the company entered into option contracts with a total notional amount of $3.7 billion to hedge anticipated foreign currency cash outflows associated with the planned acquisition of Gambro. These contracts matured in June 2013, and in the second quarter of 2013, the company entered into undesignated forward contracts with a total notional amount of $1.5 billion also to hedge anticipated foreign currency cash outflows associated with the planned acquisition of Gambro. These contracts matured in the third quarter of 2013. | |||||||||||||||||||||
The company recorded gains of $49 million and losses of $23 million in the three and nine months ended September 30, 2013, respectively, associated with the Gambro-related option and forward contracts. | |||||||||||||||||||||
Gains and Losses on Derivative Instruments | |||||||||||||||||||||
The following table summarizes the income statement locations and gains and losses on the company’s derivative instruments for the three months ended September 30, 2014 and 2013. | |||||||||||||||||||||
Gain (loss) recognized in OCI | Location of gain (loss) | Gain (loss) reclassified from AOCI | |||||||||||||||||||
into income | |||||||||||||||||||||
(in millions) | 2014 | 2013 | in income statement | 2014 | 2013 | ||||||||||||||||
Cash flow hedges | |||||||||||||||||||||
Interest rate contracts | $— | $— | Net interest expense | $— | $(1 | ) | |||||||||||||||
Foreign exchange contracts | 1 | (1 | ) | Net sales | — | — | |||||||||||||||
Foreign exchange contracts | 30 | 7 | Cost of sales | (3 | ) | 9 | |||||||||||||||
Total | $31 | $ 6 | $ (3 | ) | $ 8 | ||||||||||||||||
Gain (loss) recognized in income | |||||||||||||||||||||
(in millions) | Location of gain (loss) in income statement | 2014 | 2013 | ||||||||||||||||||
Fair value hedges | |||||||||||||||||||||
Interest rate contracts | Net interest expense | $(17 | ) | $ 1 | |||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Other (income) expense, net | $ 9 | $51 | ||||||||||||||||||
The following table summarizes the income statement locations and gains and losses on the company’s derivative instruments for the nine months ended September 30, 2014 and 2013. | |||||||||||||||||||||
Gain (loss) recognized in OCI | Location of gain (loss) | Gain (loss) reclassified from AOCI | |||||||||||||||||||
into income | |||||||||||||||||||||
(in millions) | 2014 | 2013 | in income statement | 2014 | 2013 | ||||||||||||||||
Cash flow hedges | |||||||||||||||||||||
Interest rate contracts | $— | $26 | Net interest expense | $(1 | ) | $10 | |||||||||||||||
Foreign exchange contracts | 1 | (1 | ) | Net sales | 1 | (1 | ) | ||||||||||||||
Foreign exchange contracts | 24 | 43 | Cost of sales | (1 | ) | 27 | |||||||||||||||
Total | $25 | $68 | $(1 | ) | $36 | ||||||||||||||||
Gain (loss) recognized in income | |||||||||||||||||||||
(in millions) | Location of gain (loss) in income statement | 2014 | 2013 | ||||||||||||||||||
Fair value hedges | |||||||||||||||||||||
Interest rate contracts | Net interest expense | $ 14 | $(25 | ) | |||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Other (income) expense, net | $ (1 | ) | $ 6 | |||||||||||||||||
For the company’s fair value hedges, equal and offsetting gains of $17 million and losses of $14 million were recognized in net interest expense in the third quarter and first nine months of 2014, respectively, and equal and offsetting losses of $1 million and gains of $25 million were recognized in net interest expense in the third quarter and first nine months of 2013, respectively, as adjustments to the underlying hedged item, fixed-rate debt. Ineffectiveness related to the company’s cash flow and fair value hedges for the nine months ended September 30, 2014 was not material. | |||||||||||||||||||||
As of September 30, 2014, $16 million of deferred, net after-tax losses 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. | |||||||||||||||||||||
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 September 30, 2014. | |||||||||||||||||||||
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 long-term assets | $42 | Other long-term liabilities | $7 | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | 39 | |||||||||||||||||||
Foreign exchange contracts | Other long-term assets | 4 | Accounts payable | 1 | |||||||||||||||||
and accrued liabilities | |||||||||||||||||||||
Total derivative instruments designated as hedges | $85 | $8 | |||||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | $— | Accounts payable | $1 | |||||||||||||||||
and accrued liabilities | |||||||||||||||||||||
Total derivative instruments | $85 | $9 | |||||||||||||||||||
The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2013. | |||||||||||||||||||||
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 long-term assets | $35 | Other long-term liabilities | $14 | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | 37 | Accounts payable | 7 | |||||||||||||||||
and accrued liabilities | |||||||||||||||||||||
Total derivative instruments designated as hedges | $72 | $21 | |||||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | $— | Accounts payable | $ 1 | |||||||||||||||||
and accrued liabilities | |||||||||||||||||||||
Total derivative instruments | $72 | $22 | |||||||||||||||||||
While the company’s derivatives are all subject to master netting arrangements, the company presents its assets and liabilities related to derivative instruments on a gross basis within the condensed consolidated balance sheets. Additionally, the company is not required to post collateral for any of its outstanding derivatives. | |||||||||||||||||||||
The following table provides information on the company’s derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty: | |||||||||||||||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||||||
(in millions) | Asset | Liability | Asset | Liability | |||||||||||||||||
Gross amounts recognized in the consolidated balance sheet | $ 85 | $ 9 | $ 72 | $ 22 | |||||||||||||||||
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet | (9 | ) | (9 | ) | (17 | ) | (17 | ) | |||||||||||||
Total | $ 76 | $— | $ 55 | $ 5 | |||||||||||||||||
Fair value measurements | |||||||||||||||||||||
The following tables summarize the bases used to measure financial assets and liabilities that are carried at fair value on a recurring basis in the condensed consolidated balance sheets. | |||||||||||||||||||||
Basis of fair value measurement | |||||||||||||||||||||
(in millions) | Balance as of | Quoted prices in | Significant other | Significant | |||||||||||||||||
active markets for | observable inputs | unobservable | |||||||||||||||||||
September 30, 2014 | identical assets | ||||||||||||||||||||
(Level 2) | inputs | ||||||||||||||||||||
(Level 1) | |||||||||||||||||||||
(Level 3) | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Foreign currency hedges | $ 43 | $ — | $ 43 | $ — | |||||||||||||||||
Interest rate hedges | 42 | — | 42 | — | |||||||||||||||||
Available-for-sale securities | |||||||||||||||||||||
Equity securities | 94 | 94 | — | — | |||||||||||||||||
Foreign government debt securities | 18 | — | 18 | — | |||||||||||||||||
Total assets | $197 | $ 94 | $103 | $ — | |||||||||||||||||
Liabilities | |||||||||||||||||||||
Foreign currency hedges | $ 2 | $ — | $ 2 | $ — | |||||||||||||||||
Interest rate hedges | 7 | — | 7 | — | |||||||||||||||||
Contingent payments related to acquisitions | 514 | — | — | 514 | |||||||||||||||||
Total liabilities | $523 | $ — | $ 9 | $514 | |||||||||||||||||
Basis of fair value measurement | |||||||||||||||||||||
(in millions) | Balance as of | Quoted prices in | Significant other | Significant | |||||||||||||||||
December 31, 2013 | active markets for | observable inputs | unobservable | ||||||||||||||||||
identical assets | |||||||||||||||||||||
(Level 2) | inputs | ||||||||||||||||||||
(Level 1) | |||||||||||||||||||||
(Level 3) | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Foreign currency hedges | $ 37 | $ — | $37 | $ — | |||||||||||||||||
Interest rate hedges | 35 | — | 35 | — | |||||||||||||||||
Available-for-sale securities | |||||||||||||||||||||
Equity securities | 102 | 102 | — | — | |||||||||||||||||
Foreign government debt securities | 18 | — | 18 | — | |||||||||||||||||
Total assets | $192 | $102 | $90 | $ — | |||||||||||||||||
Liabilities | |||||||||||||||||||||
Foreign currency hedges | $ 8 | $ — | $ 8 | $ — | |||||||||||||||||
Interest rate hedges | 14 | — | 14 | — | |||||||||||||||||
Contingent payments related to acquisitions | 340 | — | — | 340 | |||||||||||||||||
Total liabilities | $362 | $ — | $22 | $340 | |||||||||||||||||
As of September 30, 2014, cash and equivalents of $2.1 billion included money market funds of $9 million, which would be 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 the company 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 are considered observable and vary depending on the type of derivative, and include contractual terms, interest rate yield curves, foreign exchange rates and volatility. The fair values of foreign government debt securities are obtained from pricing services or broker/dealers who use proprietary pricing applications, which include observable market information for like or same securities. | |||||||||||||||||||||
Contingent payments related to acquisitions consist of development and commercial milestone payments, in addition to sales-based payments, and are valued using discounted cash flow techniques. The fair value of development and commercial milestone payments reflects management’s expectations of probability of payment, and increases as the probability of payment increases or expectation of timing of payments is accelerated. As of September 30, 2014, management’s expected weighted-average probability of payment for development and commercial milestone payments decreased from 64% as of December 31, 2013 to 27% largely due to the contingent payments related to the acquisitions completed in the second quarter of 2014, which include early stage R&D projects. 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 increase or expectation of timing of payment is accelerated. | |||||||||||||||||||||
At September 30, 2014, the company held available-for-sale equity securities that had an amortized cost basis and fair value of $116 million and $94 million, respectively. The company had net unrealized losses of $22 million, comprised of unrealized losses of $49 million and unrealized gains of $27 million. At December 31, 2013, the amortized cost basis and fair value of the available-for-sale equity securities was $111 million and $102 million, respectively. The company had net unrealized losses of $9 million, comprised of unrealized losses of $31 million and unrealized gains of $22 million. | |||||||||||||||||||||
Unrealized losses on equity securities of $45 million and $30 million as of September 30, 2014 and December 31, 2013, respectively, relate to Baxter’s holdings in the common stock of Onconova Therapeutics, Inc. (Onconova). The amortized cost basis was $56 million and $60 million as of September 30, 2014 and December 31, 2013, respectively. Onconova common stock has been in a loss position for less than 12 months and Baxter believes the losses are temporary in nature due to future development opportunities for Onconova’s most advanced product candidate, rigosertib, in addition to its other candidates in clinical trials and pre-clinical stages. | |||||||||||||||||||||
The following table is a reconciliation of the fair value measurements that use significant unobservable inputs (Level 3), which consists of contingent payments related to acquisitions. | |||||||||||||||||||||
(in millions) | Contingent | ||||||||||||||||||||
payments | |||||||||||||||||||||
Fair value as of December 31, 2013 | $340 | ||||||||||||||||||||
Additions | 142 | ||||||||||||||||||||
Net losses recognized in earnings | 42 | ||||||||||||||||||||
CTA | (10 | ) | |||||||||||||||||||
Fair value as of September 30, 2014 | $514 | ||||||||||||||||||||
The company’s additions in 2014 relate to the contingent payment liabilities of $77 million associated with the acquisition of Chatham Therapeutics and $65 million associated with the acquisition of AesRx. The net loss recognized in earnings primarily relates to an increase in the estimated fair value of contingent payment liabilities for certain milestones associated with the 2013 acquisition of the investigational hemophilia compound OBI-1 and related assets from Inspiration BioPharmaceuticals and Ipsen Pharma S.A.S. The loss was reported in other (income) expense, net. The contingent liabilities were increased based on updated information indicating that the probability of achieving certain sales levels, and the resulting sales-based payments, was higher than previously expected. | |||||||||||||||||||||
Book Values and Fair Values of Financial Instruments | |||||||||||||||||||||
In addition to the financial instruments that the company is required to recognize at fair value on the condensed consolidated balance sheets, the company has certain financial instruments that are recognized at historical cost or some basis other than fair value. For these financial instruments, the following table provides the values recognized on the condensed consolidated balance sheets and the approximate fair values as of September 30, 2014 and December 31, 2013. | |||||||||||||||||||||
Book values | Approximate fair values | ||||||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Assets | |||||||||||||||||||||
Long-term insurance receivables | $ | 2 | $ | 2 | $ | 2 | $ | 2 | |||||||||||||
Investments | 54 | 53 | 54 | 53 | |||||||||||||||||
Liabilities | |||||||||||||||||||||
Short-term debt | 392 | 181 | 392 | 181 | |||||||||||||||||
Current maturities of long-term debt and lease obligations | 1,123 | 859 | 1,135 | 862 | |||||||||||||||||
Long-term debt and lease obligations | 7,753 | 8,126 | 8,211 | 8,298 | |||||||||||||||||
Long-term litigation liabilities | 53 | 72 | 52 | 70 | |||||||||||||||||
The following tables summarize the bases used to measure the approximate fair value of the financial instruments as of September 30, 2014 and December 31, 2013. | |||||||||||||||||||||
Basis of fair value measurement | |||||||||||||||||||||
(in millions) | Fair value as of | Quoted prices in | Significant other | Significant | |||||||||||||||||
September 30, 2014 | active markets for | observable inputs | unobservable | ||||||||||||||||||
identical assets | (Level 2) | inputs | |||||||||||||||||||
(Level 1) | (Level 3) | ||||||||||||||||||||
Assets | |||||||||||||||||||||
Long-term insurance receivables | $ 2 | $— | $ — | $ 2 | |||||||||||||||||
Investments | 54 | — | 18 | 36 | |||||||||||||||||
Total assets | $ 56 | $— | $ 18 | $38 | |||||||||||||||||
Liabilities | |||||||||||||||||||||
Short-term debt | $ 392 | $— | $ 392 | $— | |||||||||||||||||
Current maturities of long-term debt and lease obligations | 1,135 | — | 1,135 | — | |||||||||||||||||
Long-term debt and lease obligations | 8,211 | — | 8,211 | — | |||||||||||||||||
Long-term litigation liabilities | 52 | — | — | 52 | |||||||||||||||||
Total liabilities | $9,790 | $— | $9,738 | $52 | |||||||||||||||||
Basis of fair value measurement | |||||||||||||||||||||
(in millions) | Fair value as of | Quoted prices in | Significant other | Significant | |||||||||||||||||
December 31, 2013 | active markets for | observable inputs | unobservable | ||||||||||||||||||
identical assets | (Level 2) | inputs | |||||||||||||||||||
(Level 1) | (Level 3) | ||||||||||||||||||||
Assets | |||||||||||||||||||||
Long-term insurance receivables | $ 2 | $— | $ — | $ 2 | |||||||||||||||||
Investments | 53 | — | 17 | 36 | |||||||||||||||||
Total assets | $ 55 | $— | $ 17 | $38 | |||||||||||||||||
Liabilities | |||||||||||||||||||||
Short-term debt | $ 181 | $— | $ 181 | $— | |||||||||||||||||
Current maturities of long-term debt and lease obligations | 862 | — | 862 | — | |||||||||||||||||
Long-term debt and lease obligations | 8,298 | — | 8,298 | — | |||||||||||||||||
Long-term litigation liabilities | 70 | — | — | 70 | |||||||||||||||||
Total liabilities | $9,411 | $— | $9,341 | $70 | |||||||||||||||||
The estimated fair values of long-term insurance receivables and long-term litigation liabilities were computed by discounting the expected cash flows based on currently available information, which in many cases does not include final orders or settlement agreements. The discount factors used in the calculations reflect the non-performance risk of the insurance providers and the company, respectively. | |||||||||||||||||||||
Investments in 2014 and 2013 included certain cost method investments and held-to-maturity debt securities. | |||||||||||||||||||||
The fair value of held-to-maturity debt securities is calculated using a discounted cash flow model that incorporates observable inputs, including interest rate yields, which represents a Level 2 basis of fair value measurement. | |||||||||||||||||||||
In determining the fair value of cost method investments, the company takes into consideration recent transactions, as well as the financial information of the investee, which represents a Level 3 basis of fair value measurement. | |||||||||||||||||||||
The estimated fair values of current and long-term debt were computed by multiplying price by the notional amount of the respective debt instrument. Price is calculated using the stated terms of the respective debt instrument and yield curves commensurate with the company’s credit risk. The carrying values of the other financial instruments approximate their fair values due to the short-term maturities of most of these assets and liabilities. | |||||||||||||||||||||
In the first nine months of 2014, the company recorded $80 million of income related to equity method investments, which primarily represented gains from the sale of certain investments as well as distributions from funds that sold portfolio companies. |
Shareholders_Equity
Shareholders' Equity | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Shareholders' Equity | ' | ||||||||
8. SHAREHOLDERS’ EQUITY | |||||||||
Stock-based compensation | |||||||||
Stock compensation expense totaled $43 million and $39 million for the three months ended September 30, 2014 and 2013, respectively, and $115 million and $111 million for the nine months ended September 30, 2014 and 2013, respectively. Over 70% of stock compensation expense is classified in marketing and administrative expenses with the remainder classified in cost of sales and R&D expenses. | |||||||||
In the first nine months of 2014, the company awarded stock compensation grants, which consisted of 6.8 million stock options, 1.4 million RSUs and 335,000 PSUs. | |||||||||
Stock Options | |||||||||
The fair value of stock options is determined using the Black-Scholes model. The company’s expected volatility assumption is based on a weighted average of the historical volatility of Baxter’s stock and the implied volatility from traded options on Baxter’s stock, with historical volatility more heavily weighted. | |||||||||
The weighted-average assumptions used in estimating the fair value of stock options granted during the period, along with the weighted-average grant-date fair values, were as follows: | |||||||||
Nine months ended | |||||||||
September 30, | |||||||||
2014 | 2013 | ||||||||
Expected volatility | 24% | 25% | |||||||
Expected life (in years) | 5.5 | 5.5 | |||||||
Risk-free interest rate | 1.70% | 0.90% | |||||||
Dividend yield | 2.80% | 2.60% | |||||||
Fair value per stock option | $12 | $12 | |||||||
The total intrinsic value of stock options exercised was $21 million and $60 million during the third quarters of 2014 and 2013, respectively, and $99 million and $167 million during the nine months ended September 30, 2014 and 2013, respectively. | |||||||||
As of September 30, 2014, the unrecognized compensation cost related to all unvested stock options of $79 million is expected to be recognized as expense over a weighted-average period of 1.6 years. | |||||||||
Restricted Stock Units | |||||||||
The fair value of RSUs is determined based on the quoted price of the company’s common stock on the date of the grant. As of September 30, 2014, the unrecognized compensation cost related to all unvested RSUs of $106 million is expected to be recognized as expense over a weighted-average period of 1.8 years. | |||||||||
Performance Share Units | |||||||||
As part of an overall periodic evaluation of the company’s stock compensation programs, the company changed the vesting condition for 50% of the PSUs granted to senior management beginning with its 2013 annual equity awards. The vesting condition for these PSUs is based on return on invested capital, with annual performance targets set at the beginning of the year for each tranche of the award during the three-year service period. The holder of these PSUs is entitled to receive a number of shares of common stock equal to a percentage, ranging from 0% to 200%, of the PSU granted, depending on the actual results compared to the annual performance targets. | |||||||||
Compensation cost for these PSUs is measured based on the fair value of the awards on the date that the specific vesting terms for each tranche of the award are established. The fair value of the awards is determined based on the quoted price of the company’s stock on the grant date for each tranche of the award. The compensation cost for these PSUs is adjusted at each reporting date to reflect the estimated probability of achieving the vesting condition. The probability of achieving the vesting conditions has not materially changed during the third quarter of 2014. | |||||||||
The fair value of the remaining PSUs is determined using a Monte Carlo model. A Monte Carlo model uses stock price volatility and other variables to estimate the probability of satisfying the market conditions and the resulting fair value of the award. The assumptions used in estimating the fair value of these PSUs granted during the period, along with the grant-date fair values, were as follows: | |||||||||
Nine months ended | |||||||||
September 30, | |||||||||
2014 | 2013 | ||||||||
Baxter volatility | 20% | 21% | |||||||
Peer group volatility | 13% – 58% | 13% – 38% | |||||||
Correlation of returns | 0.23 – 0.66 | 0.37 – 0.62 | |||||||
Risk-free interest rate | 0.70% | 0.30% | |||||||
Fair value per PSU | $57 | $67 | |||||||
As of September 30, 2014, the unrecognized compensation cost related to all granted unvested PSUs of $17 million is expected to be recognized as expense over a weighted-average period of 1.2 years. | |||||||||
Stock repurchases | |||||||||
As authorized by the board of directors, the company repurchases its stock depending upon the company’s cash flows, net debt level and market conditions. During the three and nine months ended September 30, 2014, the company repurchased 0.7 million shares and 7.0 million shares for $50 million and $500 million, respectively, under the board of directors’ July 2012 $2.0 billion share repurchase authorization. As of September 30, 2014, $521 million remained available under the July 2012 authorization. |
Retirement_and_Other_Benefit_P
Retirement and Other Benefit Programs | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Retirement and Other Benefit Programs | ' | ||||||||||||||||
9. RETIREMENT AND OTHER BENEFIT PROGRAMS | |||||||||||||||||
The following is a summary of net periodic benefit cost relating to the company’s pension and other postemployment benefit (OPEB) plans. | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Pension benefits | |||||||||||||||||
Service cost | $33 | $34 | $ 99 | $101 | |||||||||||||
Interest cost | 62 | 52 | 182 | 154 | |||||||||||||
Expected return on plan assets | (68 | ) | (63 | ) | (202 | ) | (190 | ) | |||||||||
Amortization of net losses and other deferred amounts | 37 | 61 | 109 | 184 | |||||||||||||
Net periodic pension benefit cost | $64 | $84 | $188 | $249 | |||||||||||||
OPEB | |||||||||||||||||
Service cost | $ 1 | $ 2 | $ 4 | $ 7 | |||||||||||||
Interest cost | 6 | 6 | 20 | 19 | |||||||||||||
Amortization of net loss and prior service credit | (1 | ) | 3 | (1 | ) | 7 | |||||||||||
Net periodic OPEB cost | $ 6 | $11 | $ 23 | $ 33 | |||||||||||||
In the third quarter of 2014, a change was made to postemployment medical benefits for retirees who are age 65 or older. Effective January 1, 2015, Baxter will exit sponsorship and provide eligible retirees and their dependents a subsidy to be utilized on a medical insurance exchange. This change was accounted for as a significant plan amendment. Accordingly, the postemployment benefit obligation was remeasured using a discount rate of 4.30% as of July 31, 2014. The remeasurement resulted in a reduction to the postemployment benefit obligation of $80 million, with an offset to AOCI. The $80 million recognized in AOCI will be amortized as a reduction to net periodic benefit cost over approximately 11 years. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Accumulated Other Comprehensive Income | ' | ||||||||||||||||||||
10. ACCUMULATED OTHER COMPREHENSIVE INCOME | |||||||||||||||||||||
Comprehensive income includes all changes in shareholders’ equity that do not arise from transactions with shareholders, and consists of net income, currency translation adjustments (CTA), pension and other employee benefits, unrealized gains and losses on cash flow hedges and unrealized gains and losses on available-for-sale equity securities. The following is a net-of-tax summary of the changes in AOCI by component for the nine months ended September 30, 2014 and 2013. | |||||||||||||||||||||
(in millions) | Currency | Pension and | Hedging | Other | Total | ||||||||||||||||
translation | other employee | activities | |||||||||||||||||||
adjustments | benefits | ||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||
Balance as of December 31, 2013 | $ (991 | ) | $(1,027 | ) | $10 | $32 | $(1,976 | ) | |||||||||||||
Other comprehensive income before reclassifications | (815 | ) | 60 | 14 | (11 | ) | (752 | ) | |||||||||||||
Amounts reclassified from AOCI (a) | — | 72 | 1 | 1 | 74 | ||||||||||||||||
Net other comprehensive (loss) income | (815 | ) | 132 | 15 | (10 | ) | (678 | ) | |||||||||||||
Balance as of September 30, 2014 | $(1,806 | ) | $ (895 | ) | $25 | $22 | $(2,654 | ) | |||||||||||||
(in millions) | Currency | Pension and | Hedging | Other | Total | ||||||||||||||||
translation | other employee | activities | |||||||||||||||||||
adjustments | benefits | ||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||
Balance as of December 31, 2012 | $(1,227 | ) | $(1,619 | ) | $ (5 | ) | $41 | $(2,810 | ) | ||||||||||||
Other comprehensive income before reclassifications | 58 | (5 | ) | 44 | 12 | 109 | |||||||||||||||
Amounts reclassified from AOCI (a) | — | 124 | (23 | ) | — | 101 | |||||||||||||||
Net other comprehensive income | 58 | 119 | 21 | 12 | 210 | ||||||||||||||||
Balance as of September 30, 2013 | $(1,169 | ) | $(1,500 | ) | $16 | $53 | $(2,600 | ) | |||||||||||||
(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 and nine months ended September 30, 2014 and 2013. | |||||||||||||||||||||
Amounts reclassified from AOCI (a) | |||||||||||||||||||||
(in millions) | Three months ended | Nine months ended | Location of impact in income statement | ||||||||||||||||||
30-Sep-14 | September 30, 2014 | ||||||||||||||||||||
Amortization of pension and other employee benefits items | |||||||||||||||||||||
Actuarial losses and other | $(36 | )(b) | $(108 | )(b) | |||||||||||||||||
(36 | ) | (108 | ) | Total before tax | |||||||||||||||||
13 | 36 | Tax benefit | |||||||||||||||||||
$(23 | ) | $ (72 | ) | Net of tax | |||||||||||||||||
Gains (losses) on hedging activities | |||||||||||||||||||||
Interest rate contracts | $ — | $ (1 | ) | Net interest expense | |||||||||||||||||
Foreign exchange contracts | — | 1 | Net sales | ||||||||||||||||||
Foreign exchange contracts | (3 | ) | (1 | ) | Cost of sales | ||||||||||||||||
(3 | ) | (1 | ) | Total before tax | |||||||||||||||||
1 | — | Tax expense | |||||||||||||||||||
$ (2 | ) | $ (1 | ) | Net of tax | |||||||||||||||||
Gains (losses) on available-for-sale securities | |||||||||||||||||||||
Equity securities | $ (3 | ) | $ (1 | ) | Other (income) expense, net | ||||||||||||||||
(3 | ) | (1 | ) | Total before tax | |||||||||||||||||
1 | — | Tax benefit | |||||||||||||||||||
$ (2 | ) | $ (1 | ) | Net of tax | |||||||||||||||||
Total reclassification for the period | $(27 | ) | $ (74 | ) | Total net of tax | ||||||||||||||||
Amounts reclassified from AOCI (a) | |||||||||||||||||||||
(in millions) | Three months ended | Nine months ended | Location of impact in income statement | ||||||||||||||||||
30-Sep-13 | September 30, 2013 | ||||||||||||||||||||
Amortization of pension and other employee benefits items | |||||||||||||||||||||
Actuarial losses and other | $(64 | )(b) | $(191 | )(b) | |||||||||||||||||
(64 | ) | (191 | ) | Total before tax | |||||||||||||||||
23 | 67 | Tax benefit | |||||||||||||||||||
$(41 | ) | $(124 | ) | Net of tax | |||||||||||||||||
Gains (losses) on hedging activities | |||||||||||||||||||||
Interest rate contracts | $ (1 | ) | $ 10 | Net interest expense | |||||||||||||||||
Foreign exchange contracts | — | (1 | ) | Net sales | |||||||||||||||||
Foreign exchange contracts | 9 | 27 | Cost of sales | ||||||||||||||||||
8 | 36 | Total before tax | |||||||||||||||||||
(3 | ) | (13 | ) | Tax expense | |||||||||||||||||
$ 5 | $ 23 | Net of tax | |||||||||||||||||||
Total reclassification for the period | $(36 | ) | $(101 | ) | Total net of tax | ||||||||||||||||
(a) | Amounts in parentheses indicate reductions to net income. | ||||||||||||||||||||
(b) | These AOCI components are included in the computation of net periodic benefit cost disclosed in Note 9. | ||||||||||||||||||||
Refer to Note 9 for additional information regarding the amortization of pension and other employee benefits items and Note 7 for additional information regarding hedging activity. |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Taxes | ' |
11. INCOME TAXES | |
Effective tax rate | |
The company’s effective income tax rate for continuing operations was 23.7% and 20.5% in the three months ended September 30, 2014 and 2013, respectively, and 22.8% and 20.7% in the nine months ended September 30, 2014 and 2013, respectively. The company’s effective income tax rate differs from the U.S. federal statutory rate each year due to certain operations that are subject to tax incentives, state and local taxes, and foreign taxes that are different than the U.S. federal statutory rate. In addition, the effective tax rate can be impacted each period by discrete factors and events. | |
The effective income tax rate increased during the three and nine months ended September 30, 2014 compared to the prior periods primarily as a result of a non-deductible charge to account for an additional year of the Branded Prescription Drug Fee in accordance with final regulations issued in the third quarter by the Internal Revenue Service. The tax effect of this charge was recorded discretely during the three month period ended September 30, 2014. Additionally, the tax rate for the nine month period ended September 30, 2013 was reduced due to a tax benefit from the settlement of the bilateral Advance Pricing Agreement proceedings that the company initiated between the United States government and the government of Switzerland with respect to intellectual property, product and service transfer pricing arrangements, which was partially offset by other tax charges mainly related to the company’s joint venture in Turkey. Partially offsetting the increase in the effective tax rate attributable to the foregoing items was an increase during the three and nine months ended September 30, 2014 in income earned in foreign jurisdictions with rates of tax lower than the U.S. rate. |
Legal_Proceedings
Legal Proceedings | 9 Months Ended |
Sep. 30, 2014 | |
Legal Proceedings | ' |
12. LEGAL PROCEEDINGS | |
Baxter is involved in product liability, patent, commercial, and other legal matters that arise in the normal course of the company’s business. The company records 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 September 30, 2014, the company’s total recorded reserves with respect to legal matters were $76 million and the total related receivables were $6 million. | |
Baxter has established reserves for certain of the matters discussed below. The company is 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 the liability of the company in connection with the claims cannot be estimated with any certainty and although the resolution in any reporting period of one or more of these matters could have a significant impact on the company’s 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 the company’s consolidated financial position. While the company believes that it has valid defenses in these matters, litigation is inherently uncertain, excessive verdicts do occur, and the company may incur material judgments or enter into material settlements of claims. | |
In addition to the matters described below, the company remains 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 the company’s operations and monetary sanctions, including significant civil or criminal penalties. With respect to intellectual property, the company may become exposed to significant litigation concerning the scope of the company’s 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. | |
General litigation | |
Baxter is a defendant in a number of suits alleging that certain of the company’s current and former executive officers and its board of directors failed to adequately oversee the operations of the company and issued materially false and misleading statements regarding the company’s plasma-based therapies business, the company’s remediation of its COLLEAGUE infusion pumps, its heparin product, and other quality issues. Plaintiffs allege these actions damaged the company and its shareholders by resulting in a decline in stock price in the second quarter of 2010, payment of excess compensation to the board of directors and certain of the company’s current and former executive officers, and other damage to the company. In January 2014, an independent special litigation committee was established by the company’s board of directors to determine whether it was in the best interests of the company and its shareholders to pursue or otherwise resolve the claims raised in and arising from this matter. The company and the plaintiffs in the consolidated derivative suit filed in the U.S.D.C. for the Northern District of Illinois have entered into a revised memorandum of understanding outlining the terms of a settlement of that suit, including the establishment of a Regulatory Council for the Medical Products business, $12 million to be spent on quality and regulatory compliance initiatives over the next three years, and the payment of legal fees (which have been reserved). The settlement has been approved by the board of directors and separately by its special litigation committee, and has been preliminarily approved by the court (see Notice to Shareholders under Part II, Item 5 of this Form 10-Q). Two other derivative actions were previously filed in state courts, one in Lake County, Illinois and one in the Delaware Chancery Court, and both matters have been stayed pending the resolution of the federal action. In addition, a consolidated alleged class action is pending in the U.S.D.C. for the Northern District of Illinois against the company and certain of its current executive officers seeking to recover the lost value of investors’ stock and the parties are currently proceeding with discovery. In April 2013, the company filed its opposition to the plaintiff’s motion to certify a class action. | |
The company was a defendant, along with others, in a number of lawsuits consolidated for pretrial proceedings in the U.S.D.C. for the Northern District of Illinois alleging that Baxter and certain of its competitors conspired to restrict output and artificially increase the price of plasma-derived therapies since 2003. The company settled with the direct purchaser plaintiffs for $64 million, which was paid during the first quarter of 2014. | |
Other | |
In May 2014, the company received a formal demand for information from the United States Attorney for the Western District of Pennsylvania for information related to alleged “off-label” sales of its pulmonary treatments. The company is fully cooperating with this request. | |
In the fourth quarter of 2012, the company received two investigative demands from the United States Attorney for the Western District of North Carolina for information regarding its quality and manufacturing practices and procedures at its North Cove facility. The company is fully cooperating with this investigation. |
Segment_Information
Segment Information | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Segment Information | ' | ||||||||||||||||
13. SEGMENT INFORMATION | |||||||||||||||||
Baxter’s two segments, BioScience and Medical Products, are strategic businesses that are managed separately because each business develops, manufactures and markets distinct products and services. The segments and a description of their products and services are as follows: | |||||||||||||||||
The BioScience business processes recombinant and plasma-based proteins to treat hemophilia and other bleeding disorders; plasma-based therapies to treat immune deficiencies, alpha-1 antitrypsin deficiency, burns and shock, and other chronic and acute blood-related conditions; and biosurgery products. | |||||||||||||||||
The Medical Products business manufactures intravenous (IV) solutions and administration sets, premixed drugs and drug-reconstitution systems, pre-filled vials and syringes for injectable drugs, IV nutrition products, infusion pumps, and inhalation anesthetics. The business also provides products and services related to pharmacy compounding, drug formulation and packaging technologies. In addition, Baxter has a comprehensive portfolio of renal therapies to meet the needs of patients across the treatment continuum. The portfolio includes innovative technologies and therapies for peritoneal dialysis (PD), in-center hemodialysis (HD), home HD, continuous renal replacement therapy (CRRT) and additional dialysis services. The financial information for the three and nine months ended September 30, 2014 includes the results of Gambro. The financial information for the three and nine months ended September 30, 2013 includes the results of Gambro from the September 6, 2013 acquisition date. | |||||||||||||||||
The operating results of the Vaccines franchise, previously reported within the BioScience segment, have been reflected as discontinued operations for the three and nine months ended September 30, 2014 and 2013. The assets and liabilities of the Vaccines franchise have been classified as held for sale as of September 30, 2014. Refer to Note 1 for additional information regarding the presentation of the Vaccines franchise. | |||||||||||||||||
The company uses more than one measurement and multiple views of data to measure segment performance and to allocate resources to the segments. However, the dominant measurements are consistent with the company’s condensed consolidated financial statements and, accordingly, are reported on the same basis in this report. The company evaluates the performance of its segments and allocates resources to them primarily based on pre-tax income along with cash flows and overall economic returns. Intersegment sales are eliminated in consolidation. | |||||||||||||||||
Certain items are maintained at Corporate and are not allocated to a segment. They primarily include most of the company’s debt and cash and equivalents and related net interest expense, certain foreign exchange fluctuations (principally relating to intercompany receivables, payables and loans denominated in a foreign currency) and the majority of the foreign currency hedging activities, corporate headquarters costs, stock compensation expense, certain non-strategic investments and related income and expense, certain employee benefit plan costs, certain nonrecurring gains and losses and certain other charges (such as business optimization and asset impairment). With respect to depreciation and amortization and expenditures for long-lived assets, the difference between the segment totals and the consolidated totals principally relate to assets maintained at Corporate. | |||||||||||||||||
Financial information for the company’s segments is as follows. | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Net sales | |||||||||||||||||
BioScience | $1,673 | $1,556 | $ 4,819 | $ 4,542 | |||||||||||||
Medical Products | 2,524 | 2,154 | 7,380 | 6,103 | |||||||||||||
Total net sales | $4,197 | $3,710 | $12,199 | $10,645 | |||||||||||||
Pre-tax income from continuing operations | |||||||||||||||||
BioScience | $ 457 | $ 597 | $ 1,510 | $ 1,755 | |||||||||||||
Medical Products | 370 | 343 | 921 | 1,038 | |||||||||||||
Total pre-tax income from continuing operations from segments | $ 827 | $ 940 | $ 2,431 | $ 2,793 | |||||||||||||
As of September 30, | |||||||||||||||||
(in millions) | 2014 | ||||||||||||||||
Total assets | |||||||||||||||||
BioScience | $ 9,800 | ||||||||||||||||
Medical Products | 12,011 | ||||||||||||||||
Assets held for sale | 157 | ||||||||||||||||
Other | 3,595 | ||||||||||||||||
Total assets | $25,563 | ||||||||||||||||
The following is a reconciliation of segment pre-tax income from continuing operations to income before income taxes from continuing operations per the condensed consolidated statements of income. | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Total pre-tax income from continuing operations from segments | $827 | $940 | $2,431 | $2,793 | |||||||||||||
Unallocated amounts | |||||||||||||||||
Stock compensation | (43 | ) | (39 | ) | (115 | ) | (111 | ) | |||||||||
Net interest expense | (31 | ) | (45 | ) | (116 | ) | (87 | ) | |||||||||
Business optimization items | (28 | ) | — | (16 | ) | 2 | |||||||||||
Certain foreign currency fluctuations and hedging activities | 8 | 21 | 34 | 63 | |||||||||||||
Certain tax and legal reserves | — | (104 | ) | — | (104 | ) | |||||||||||
Other Corporate items | (147 | ) | (109 | ) | (377 | ) | (534 | ) | |||||||||
Income from continuing operations before income taxes | $586 | $664 | $1,841 | $2,022 | |||||||||||||
Basis_of_Presentation_Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
New accounting standards | ' |
New accounting standards | |
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU No. 2014-09 will be effective for the company beginning on January 1, 2017. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The company is currently evaluating the impact of adopting the new revenue standard on its consolidated financial statements. |
Basis_of_Presentation_Tables
Basis of Presentation (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Summary of Operating Results Reflected as Discontinued Operations and Assets and Liabilities Classified as Held for Sale Associated with Franchise Vaccines | ' | ||||||||||||||||
Following is a summary of the operating results of the Vaccines franchise, which have been reflected as discontinued operations for the three and nine months ended September 30, 2014 and 2013. The assets and liabilities of the Vaccines franchise have been classified as held for sale as of September 30, 2014. | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Net sales | $54 | $64 | $267 | $246 | |||||||||||||
Income before income taxes | 23 | 18 | 138 | 96 | |||||||||||||
Income tax expense | 2 | 2 | 16 | 13 | |||||||||||||
Net income | $21 | $16 | $122 | $ 83 | |||||||||||||
As of September 30, | |||||||||||||||||
(in millions) | 2014 | ||||||||||||||||
Assets | |||||||||||||||||
Inventories | $ 87 | ||||||||||||||||
Property, plant and equipment, net | 53 | ||||||||||||||||
Goodwill and other intangible assets, net | 17 | ||||||||||||||||
Assets held for sale | $157 | ||||||||||||||||
Liabilities | |||||||||||||||||
Accrued liabilities and other long-term liabilities | $ 15 | ||||||||||||||||
Liabilities held for sale | $ 15 | ||||||||||||||||
Supplemental_Financial_Informa1
Supplemental Financial Information (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Net Interest Expense | ' | ||||||||||||||||
Net interest expense | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Interest expense, net of capitalized interest | $36 | $51 | $131 | $106 | |||||||||||||
Interest income | (5 | ) | (6 | ) | (15 | ) | (19 | ) | |||||||||
Net interest expense | $31 | $45 | $116 | $ 87 | |||||||||||||
Inventories | ' | ||||||||||||||||
Inventories | |||||||||||||||||
September 30, | December 31, | ||||||||||||||||
(in millions) | 2014 | 2013 | |||||||||||||||
Raw materials | $ 920 | $ 920 | |||||||||||||||
Work in process | 1,115 | 1,136 | |||||||||||||||
Finished goods | 1,669 | 1,443 | |||||||||||||||
Inventories | $3,704 | $3,499 | |||||||||||||||
Property, Plant and Equipment, Net | ' | ||||||||||||||||
Property, plant and equipment, net | |||||||||||||||||
September 30, | December 31, | ||||||||||||||||
(in millions) | 2014 | 2013 | |||||||||||||||
Property, plant and equipment, at cost | $14,508 | $13,795 | |||||||||||||||
Accumulated depreciation | (6,060 | ) | (5,963 | ) | |||||||||||||
Property, plant and equipment (PP&E), net | $ 8,448 | $ 7,832 | |||||||||||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Reconciliation of Basic Shares to Diluted Shares | ' | ||||||||||||||||
The following is a reconciliation of basic shares to diluted shares. | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Basic shares | 542 | 543 | 542 | 543 | |||||||||||||
Effect of dilutive securities | 5 | 6 | 6 | 7 | |||||||||||||
Diluted shares | 547 | 549 | 548 | 550 | |||||||||||||
Acquisitions_and_Collaboration1
Acquisitions and Collaborations (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Summary of Fair Value of Consideration Transferred and Amounts Recognized for Assets Acquired and Liabilities Assumed | ' | ||||||||
The following table summarizes the fair value of consideration transferred and the recognized amounts of the assets acquired and liabilities assumed as of the acquisition date for the company’s significant acquisitions during the first nine months of 2014. | |||||||||
(in millions) | Chatham | AesRx | |||||||
Consideration transferred | |||||||||
Cash | $ 70 | $15 | |||||||
Contingent payments | 77 | 65 | |||||||
Fair value of consideration transferred | $147 | $80 | |||||||
Assets acquired and liabilities assumed | |||||||||
Other intangible assets – IPR&D | $ 74 | $78 | |||||||
Total identifiable net assets | 74 | 78 | |||||||
Goodwill | 73 | 2 | |||||||
Total assets acquired and liabilities assumed | $147 | $80 | |||||||
Supplemental Pro Forma Information | ' | ||||||||
The following table presents supplemental pro forma information as if the acquisition of Gambro had occurred on January 1, 2012 for the three and nine months ended September 30, 2013. | |||||||||
Unaudited Pro Forma Consolidated Results | |||||||||
(in millions, except per share information) | Three months ended | Nine months ended | |||||||
September 30, 2013 | September 30, 2013 | ||||||||
Net sales | $3,974 | $11,687 | |||||||
Income from continuing operations | 531 | 1,630 | |||||||
Basic EPS from continuing operations | $ 0.98 | $ 3.00 | |||||||
Diluted EPS from continuing operations | $ 0.97 | $ 2.96 | |||||||
Gambro AB | ' | ||||||||
Summary of Fair Value of Consideration Transferred and Amounts Recognized for Assets Acquired and Liabilities Assumed | ' | ||||||||
The following table summarizes the updated and final fair value of the consideration transferred and the amounts recognized for assets acquired and liabilities assumed as of the acquisition date. | |||||||||
(in millions) | |||||||||
Consideration transferred | |||||||||
Cash | $3,700 | ||||||||
Fair value of consideration transferred | $3,700 | ||||||||
Assets acquired and liabilities assumed | |||||||||
Cash | $ 88 | ||||||||
Accounts receivable | 488 | ||||||||
Inventories | 368 | ||||||||
Prepaid expenses and other | 54 | ||||||||
Property, plant, and equipment | 740 | ||||||||
Other intangible assets | 1,290 | ||||||||
Other assets | 11 | ||||||||
Current-maturities of long-term debt and lease obligations | (2 | ) | |||||||
Accounts payable and accrued liabilities | (345 | ) | |||||||
Long-term debt and lease obligations | (261 | ) | |||||||
Other long-term liabilities (including pension obligations of $209) | (341 | ) | |||||||
Total identifiable net assets | 2,090 | ||||||||
Goodwill | 1,610 | ||||||||
Total assets acquired and liabilities assumed | $3,700 | ||||||||
Goodwill_and_Other_Intangible_1
Goodwill and Other Intangible Assets, Net (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Goodwill | ' | ||||||||||||||||
The following is a reconciliation of goodwill by business segment. | |||||||||||||||||
(in millions) | BioScience | Medical Products | Total | ||||||||||||||
Balance as of December 31, 2013 | $ 991 | $3,214 | $4,205 | ||||||||||||||
Additions | 75 | 4 | 79 | ||||||||||||||
Currency translation and other adjustments | (28 | ) | (240 | ) | (268 | ) | |||||||||||
Balance as of September 30, 2014 | $1,038 | $2,978 | $4,016 | ||||||||||||||
Other Intangible Assets, Net | ' | ||||||||||||||||
The following is a summary of the company’s other intangible assets. | |||||||||||||||||
(in millions) | Developed technology, | Other amortized | Indefinite-lived | Total | |||||||||||||
including patents | intangible assets | intangible assets | |||||||||||||||
September 30, 2014 | |||||||||||||||||
Gross other intangible assets | $2,033 | $437 | $591 | $3,061 | |||||||||||||
Accumulated amortization | (736 | ) | (140 | ) | — | (876 | ) | ||||||||||
Other intangible assets, net | $1,297 | $297 | $591 | $2,185 | |||||||||||||
December 31, 2013 | |||||||||||||||||
Gross other intangible assets | $2,144 | $494 | $465 | $3,103 | |||||||||||||
Accumulated amortization | (665 | ) | (144 | ) | — | (809 | ) | ||||||||||
Other intangible assets, net | $1,479 | $350 | $465 | $2,294 | |||||||||||||
Infusion_Pump_and_Business_Opt1
Infusion Pump and Business Optimization Charges (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Business Optimization Charge | ' | ||||
The following table summarizes cash activity in the reserves related to the company’s business optimization initiatives. | |||||
(in millions) | |||||
Reserves as of December 31, 2013 | $ | 288 | |||
Charges | 60 | ||||
Reserve adjustments | (35 | ) | |||
Utilization | (92 | ) | |||
Reserves as of September 30, 2014 | $ | 221 | |||
Debt_Financial_Instruments_and1
Debt, Financial Instruments and Fair Value Measurements (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Summary of Activity Relating to Securitization Arrangement | ' | ||||||||||||||||||||
The following is a summary of the activity relating to the company’s securitization arrangement in Japan. | |||||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Sold receivables at beginning of period | $106 | $129 | $114 | $157 | |||||||||||||||||
Proceeds from sales of receivables | 117 | 125 | 357 | 380 | |||||||||||||||||
Cash collections (remitted to the owners of the receivables) | (119 | ) | (130 | ) | (368 | ) | (394 | ) | |||||||||||||
Effect of currency exchange rate changes | (5 | ) | (6 | ) | (4 | ) | (25 | ) | |||||||||||||
Sold receivables at end of period | $ 99 | $118 | $ 99 | $118 | |||||||||||||||||
Summary of Gains and Losses on Derivative Instruments | ' | ||||||||||||||||||||
The following table summarizes the income statement locations and gains and losses on the company’s derivative instruments for the three months ended September 30, 2014 and 2013. | |||||||||||||||||||||
Gain (loss) recognized in OCI | Location of gain (loss) | Gain (loss) reclassified from AOCI | |||||||||||||||||||
into income | |||||||||||||||||||||
(in millions) | 2014 | 2013 | in income statement | 2014 | 2013 | ||||||||||||||||
Cash flow hedges | |||||||||||||||||||||
Interest rate contracts | $— | $— | Net interest expense | $— | $(1 | ) | |||||||||||||||
Foreign exchange contracts | 1 | (1 | ) | Net sales | — | — | |||||||||||||||
Foreign exchange contracts | 30 | 7 | Cost of sales | (3 | ) | 9 | |||||||||||||||
Total | $31 | $ 6 | $ (3 | ) | $ 8 | ||||||||||||||||
Gain (loss) recognized in income | |||||||||||||||||||||
(in millions) | Location of gain (loss) in income statement | 2014 | 2013 | ||||||||||||||||||
Fair value hedges | |||||||||||||||||||||
Interest rate contracts | Net interest expense | $(17 | ) | $ 1 | |||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Other (income) expense, net | $ 9 | $51 | ||||||||||||||||||
The following table summarizes the income statement locations and gains and losses on the company’s derivative instruments for the nine months ended September 30, 2014 and 2013. | |||||||||||||||||||||
Gain (loss) recognized in OCI | Location of gain (loss) | Gain (loss) reclassified from AOCI | |||||||||||||||||||
into income | |||||||||||||||||||||
(in millions) | 2014 | 2013 | in income statement | 2014 | 2013 | ||||||||||||||||
Cash flow hedges | |||||||||||||||||||||
Interest rate contracts | $— | $26 | Net interest expense | $(1 | ) | $10 | |||||||||||||||
Foreign exchange contracts | 1 | (1 | ) | Net sales | 1 | (1 | ) | ||||||||||||||
Foreign exchange contracts | 24 | 43 | Cost of sales | (1 | ) | 27 | |||||||||||||||
Total | $25 | $68 | $(1 | ) | $36 | ||||||||||||||||
Gain (loss) recognized in income | |||||||||||||||||||||
(in millions) | Location of gain (loss) in income statement | 2014 | 2013 | ||||||||||||||||||
Fair value hedges | |||||||||||||||||||||
Interest rate contracts | Net interest expense | $ 14 | $(25 | ) | |||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Other (income) expense, net | $ (1 | ) | $ 6 | |||||||||||||||||
Classification and Fair Value Amounts of Derivative Instruments | ' | ||||||||||||||||||||
The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of September 30, 2014. | |||||||||||||||||||||
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 long-term assets | $42 | Other long-term liabilities | $7 | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | 39 | |||||||||||||||||||
Foreign exchange contracts | Other long-term assets | 4 | Accounts payable | 1 | |||||||||||||||||
and accrued liabilities | |||||||||||||||||||||
Total derivative instruments designated as hedges | $85 | $8 | |||||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | $— | Accounts payable | $1 | |||||||||||||||||
and accrued liabilities | |||||||||||||||||||||
Total derivative instruments | $85 | $9 | |||||||||||||||||||
The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2013. | |||||||||||||||||||||
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 long-term assets | $35 | Other long-term liabilities | $14 | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | 37 | Accounts payable | 7 | |||||||||||||||||
and accrued liabilities | |||||||||||||||||||||
Total derivative instruments designated as hedges | $72 | $21 | |||||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | $— | Accounts payable | $ 1 | |||||||||||||||||
and accrued liabilities | |||||||||||||||||||||
Total derivative instruments | $72 | $22 | |||||||||||||||||||
Derivative Positions Presented on Net Basis | ' | ||||||||||||||||||||
The following table provides information on the company’s derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty: | |||||||||||||||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||||||
(in millions) | Asset | Liability | Asset | Liability | |||||||||||||||||
Gross amounts recognized in the consolidated balance sheet | $ 85 | $ 9 | $ 72 | $ 22 | |||||||||||||||||
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet | (9 | ) | (9 | ) | (17 | ) | (17 | ) | |||||||||||||
Total | $ 76 | $— | $ 55 | $ 5 | |||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ||||||||||||||||||||
The following tables summarize the bases used to measure financial assets and liabilities that are carried at fair value on a recurring basis in the condensed consolidated balance sheets. | |||||||||||||||||||||
Basis of fair value measurement | |||||||||||||||||||||
(in millions) | Balance as of | Quoted prices in | Significant other | Significant | |||||||||||||||||
September 30, 2014 | active markets for | observable inputs | unobservable | ||||||||||||||||||
identical assets | (Level 2) | inputs | |||||||||||||||||||
(Level 1) | (Level 3) | ||||||||||||||||||||
Assets | |||||||||||||||||||||
Foreign currency hedges | $ 43 | $ — | $ 43 | $ — | |||||||||||||||||
Interest rate hedges | 42 | — | 42 | — | |||||||||||||||||
Available-for-sale securities | |||||||||||||||||||||
Equity securities | 94 | 94 | — | — | |||||||||||||||||
Foreign government debt securities | 18 | — | 18 | — | |||||||||||||||||
Total assets | $197 | $ 94 | $103 | $ — | |||||||||||||||||
Liabilities | |||||||||||||||||||||
Foreign currency hedges | $ 2 | $ — | $ 2 | $ — | |||||||||||||||||
Interest rate hedges | 7 | — | 7 | — | |||||||||||||||||
Contingent payments related to acquisitions | 514 | — | — | 514 | |||||||||||||||||
Total liabilities | $523 | $ — | $ 9 | $514 | |||||||||||||||||
Basis of fair value measurement | |||||||||||||||||||||
(in millions) | Balance as of | Quoted prices in | Significant other | Significant | |||||||||||||||||
December 31, 2013 | active markets for | observable inputs | unobservable | ||||||||||||||||||
identical assets | (Level 2) | inputs | |||||||||||||||||||
(Level 1) | (Level 3) | ||||||||||||||||||||
Assets | |||||||||||||||||||||
Foreign currency hedges | $ 37 | $ — | $37 | $ — | |||||||||||||||||
Interest rate hedges | 35 | — | 35 | — | |||||||||||||||||
Available-for-sale securities | |||||||||||||||||||||
Equity securities | 102 | 102 | — | — | |||||||||||||||||
Foreign government debt securities | 18 | — | 18 | — | |||||||||||||||||
Total assets | $192 | $102 | $90 | $ — | |||||||||||||||||
Liabilities | |||||||||||||||||||||
Foreign currency hedges | $ 8 | $ — | $ 8 | $ — | |||||||||||||||||
Interest rate hedges | 14 | — | 14 | — | |||||||||||||||||
Contingent payments related to acquisitions | 340 | — | — | 340 | |||||||||||||||||
Total liabilities | $362 | $ — | $22 | $340 | |||||||||||||||||
Reconciliation of Fair Value Measurements that Use Significant Unobservable Inputs | ' | ||||||||||||||||||||
The following table is a reconciliation of the fair value measurements that use significant unobservable inputs (Level 3), which consists of contingent payments related to acquisitions. | |||||||||||||||||||||
(in millions) | Contingent | ||||||||||||||||||||
payments | |||||||||||||||||||||
Fair value as of December 31, 2013 | $340 | ||||||||||||||||||||
Additions | 142 | ||||||||||||||||||||
Net losses recognized in earnings | 42 | ||||||||||||||||||||
CTA | (10 | ) | |||||||||||||||||||
Fair value as of September 30, 2014 | $514 | ||||||||||||||||||||
Book Values and Fair Values of Financial Instruments | ' | ||||||||||||||||||||
For these financial instruments, the following table provides the values recognized on the condensed consolidated balance sheets and the approximate fair values as of September 30, 2014 and December 31, 2013. | |||||||||||||||||||||
Book values | Approximate fair values | ||||||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Assets | |||||||||||||||||||||
Long-term insurance receivables | $ | 2 | $ | 2 | $ | 2 | $ | 2 | |||||||||||||
Investments | 54 | 53 | 54 | 53 | |||||||||||||||||
Liabilities | |||||||||||||||||||||
Short-term debt | 392 | 181 | 392 | 181 | |||||||||||||||||
Current maturities of long-term debt and lease obligations | 1,123 | 859 | 1,135 | 862 | |||||||||||||||||
Long-term debt and lease obligations | 7,753 | 8,126 | 8,211 | 8,298 | |||||||||||||||||
Long-term litigation liabilities | 53 | 72 | 52 | 70 | |||||||||||||||||
Summarization of Bases Used to Measure Fair Value of Financial Instruments | ' | ||||||||||||||||||||
The following tables summarize the bases used to measure the approximate fair value of the financial instruments as of September 30, 2014 and December 31, 2013. | |||||||||||||||||||||
Basis of fair value measurement | |||||||||||||||||||||
(in millions) | Fair value as of | Quoted prices in | Significant other | Significant | |||||||||||||||||
September 30, 2014 | active markets for | observable inputs | unobservable | ||||||||||||||||||
identical assets | (Level 2) | inputs | |||||||||||||||||||
(Level 1) | (Level 3) | ||||||||||||||||||||
Assets | |||||||||||||||||||||
Long-term insurance receivables | $ 2 | $— | $ — | $ 2 | |||||||||||||||||
Investments | 54 | — | 18 | 36 | |||||||||||||||||
Total assets | $ 56 | $— | $ 18 | $38 | |||||||||||||||||
Liabilities | |||||||||||||||||||||
Short-term debt | $ 392 | $— | $ 392 | $— | |||||||||||||||||
Current maturities of long-term debt and lease obligations | 1,135 | — | 1,135 | — | |||||||||||||||||
Long-term debt and lease obligations | 8,211 | — | 8,211 | — | |||||||||||||||||
Long-term litigation liabilities | 52 | — | — | 52 | |||||||||||||||||
Total liabilities | $9,790 | $— | $9,738 | $52 | |||||||||||||||||
Basis of fair value measurement | |||||||||||||||||||||
(in millions) | Fair value as of | Quoted prices in | Significant other | Significant | |||||||||||||||||
December 31, 2013 | active markets for | observable inputs | unobservable | ||||||||||||||||||
identical assets | (Level 2) | inputs | |||||||||||||||||||
(Level 1) | (Level 3) | ||||||||||||||||||||
Assets | |||||||||||||||||||||
Long-term insurance receivables | $ 2 | $— | $ — | $ 2 | |||||||||||||||||
Investments | 53 | — | 17 | 36 | |||||||||||||||||
Total assets | $ 55 | $— | $ 17 | $38 | |||||||||||||||||
Liabilities | |||||||||||||||||||||
Short-term debt | $ 181 | $— | $ 181 | $— | |||||||||||||||||
Current maturities of long-term debt and lease obligations | 862 | — | 862 | — | |||||||||||||||||
Long-term debt and lease obligations | 8,298 | — | 8,298 | — | |||||||||||||||||
Long-term litigation liabilities | 70 | — | — | 70 | |||||||||||||||||
Total liabilities | $9,411 | $— | $9,341 | $70 | |||||||||||||||||
Shareholders_Equity_Tables
Shareholders' Equity (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Stock Options Fair Value Assumptions | ' | ||||||||
The weighted-average assumptions used in estimating the fair value of stock options granted during the period, along with the weighted-average grant-date fair values, were as follows: | |||||||||
Nine months ended | |||||||||
September 30, | |||||||||
2014 | 2013 | ||||||||
Expected volatility | 24% | 25% | |||||||
Expected life (in years) | 5.5 | 5.5 | |||||||
Risk-free interest rate | 1.70% | 0.90% | |||||||
Dividend yield | 2.80% | 2.60% | |||||||
Fair value per stock option | $12 | $12 | |||||||
Performance Stock Units Fair Value | ' | ||||||||
The assumptions used in estimating the fair value of these PSUs granted during the period, along with the grant-date fair values, were as follows: | |||||||||
Nine months ended | |||||||||
September 30, | |||||||||
2014 | 2013 | ||||||||
Baxter volatility | 20% | 21% | |||||||
Peer group volatility | 13% – 58% | 13% – 38% | |||||||
Correlation of returns | 0.23 – 0.66 | 0.37 – 0.62 | |||||||
Risk-free interest rate | 0.70% | 0.30% | |||||||
Fair value per PSU | $57 | $67 |
Retirement_and_Other_Benefit_P1
Retirement and Other Benefit Programs (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Net Periodic Benefit Cost Relating to Pension and Other Postemployement Benefit | ' | ||||||||||||||||
The following is a summary of net periodic benefit cost relating to the company’s pension and other postemployment benefit (OPEB) plans. | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Pension benefits | |||||||||||||||||
Service cost | $33 | $34 | $ 99 | $101 | |||||||||||||
Interest cost | 62 | 52 | 182 | 154 | |||||||||||||
Expected return on plan assets | (68 | ) | (63 | ) | (202 | ) | (190 | ) | |||||||||
Amortization of net losses and other deferred amounts | 37 | 61 | 109 | 184 | |||||||||||||
Net periodic pension benefit cost | $64 | $84 | $188 | $249 | |||||||||||||
OPEB | |||||||||||||||||
Service cost | $ 1 | $ 2 | $ 4 | $ 7 | |||||||||||||
Interest cost | 6 | 6 | 20 | 19 | |||||||||||||
Amortization of net loss and prior service credit | (1 | ) | 3 | (1 | ) | 7 | |||||||||||
Net periodic OPEB cost | $ 6 | $11 | $ 23 | $ 33 | |||||||||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Summary of Changes in AOCI by Component | ' | ||||||||||||||||||||
The following is a net-of-tax summary of the changes in AOCI by component for the nine months ended September 30, 2014 and 2013. | |||||||||||||||||||||
(in millions) | Currency | Pension and | Hedging | Other | Total | ||||||||||||||||
translation | other employee | activities | |||||||||||||||||||
adjustments | benefits | ||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||
Balance as of December 31, 2013 | $ (991 | ) | $(1,027 | ) | $10 | $32 | $(1,976 | ) | |||||||||||||
Other comprehensive income before reclassifications | (815 | ) | 60 | 14 | (11 | ) | (752 | ) | |||||||||||||
Amounts reclassified from AOCI (a) | — | 72 | 1 | 1 | 74 | ||||||||||||||||
Net other comprehensive (loss) income | (815 | ) | 132 | 15 | (10 | ) | (678 | ) | |||||||||||||
Balance as of September 30, 2014 | $(1,806 | ) | $ (895 | ) | $25 | $22 | $(2,654 | ) | |||||||||||||
(in millions) | Currency | Pension and | Hedging | Other | Total | ||||||||||||||||
translation | other employee | activities | |||||||||||||||||||
adjustments | benefits | ||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||
Balance as of December 31, 2012 | $(1,227 | ) | $(1,619 | ) | $ (5 | ) | $41 | $(2,810 | ) | ||||||||||||
Other comprehensive income before reclassifications | 58 | (5 | ) | 44 | 12 | 109 | |||||||||||||||
Amounts reclassified from AOCI (a) | — | 124 | (23 | ) | — | 101 | |||||||||||||||
Net other comprehensive income | 58 | 119 | 21 | 12 | 210 | ||||||||||||||||
Balance as of September 30, 2013 | $(1,169 | ) | $(1,500 | ) | $16 | $53 | $(2,600 | ) | |||||||||||||
(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 and nine months ended September 30, 2014 and 2013. | |||||||||||||||||||||
Amounts reclassified from AOCI (a) | |||||||||||||||||||||
(in millions) | Three months ended | Nine months ended | Location of impact in income statement | ||||||||||||||||||
30-Sep-14 | September 30, 2014 | ||||||||||||||||||||
Amortization of pension and other employee benefits items | |||||||||||||||||||||
Actuarial losses and other | $(36 | )(b) | $(108 | )(b) | |||||||||||||||||
(36 | ) | (108 | ) | Total before tax | |||||||||||||||||
13 | 36 | Tax benefit | |||||||||||||||||||
$(23 | ) | $ (72 | ) | Net of tax | |||||||||||||||||
Gains (losses) on hedging activities | |||||||||||||||||||||
Interest rate contracts | $ — | $ (1 | ) | Net interest expense | |||||||||||||||||
Foreign exchange contracts | — | 1 | Net sales | ||||||||||||||||||
Foreign exchange contracts | (3 | ) | (1 | ) | Cost of sales | ||||||||||||||||
(3 | ) | (1 | ) | Total before tax | |||||||||||||||||
1 | — | Tax expense | |||||||||||||||||||
$ (2 | ) | $ (1 | ) | Net of tax | |||||||||||||||||
Gains (losses) on available-for-sale securities | |||||||||||||||||||||
Equity securities | $ (3 | ) | $ (1 | ) | Other (income) expense, net | ||||||||||||||||
(3 | ) | (1 | ) | Total before tax | |||||||||||||||||
1 | — | Tax benefit | |||||||||||||||||||
$ (2 | ) | $ (1 | ) | Net of tax | |||||||||||||||||
Total reclassification for the period | $(27 | ) | $ (74 | ) | Total net of tax | ||||||||||||||||
Amounts reclassified from AOCI (a) | |||||||||||||||||||||
(in millions) | Three months ended | Nine months ended | Location of impact in income statement | ||||||||||||||||||
30-Sep-13 | September 30, 2013 | ||||||||||||||||||||
Amortization of pension and other employee benefits items | |||||||||||||||||||||
Actuarial losses and other | $(64 | )(b) | $(191 | )(b) | |||||||||||||||||
(64 | ) | (191 | ) | Total before tax | |||||||||||||||||
23 | 67 | Tax benefit | |||||||||||||||||||
$(41 | ) | $(124 | ) | Net of tax | |||||||||||||||||
Gains (losses) on hedging activities | |||||||||||||||||||||
Interest rate contracts | $ (1 | ) | $ 10 | Net interest expense | |||||||||||||||||
Foreign exchange contracts | — | (1 | ) | Net sales | |||||||||||||||||
Foreign exchange contracts | 9 | 27 | Cost of sales | ||||||||||||||||||
8 | 36 | Total before tax | |||||||||||||||||||
(3 | ) | (13 | ) | Tax expense | |||||||||||||||||
$ 5 | $ 23 | Net of tax | |||||||||||||||||||
Total reclassification for the period | $(36 | ) | $(101 | ) | Total net of tax | ||||||||||||||||
(a) | Amounts in parentheses indicate reductions to net income. | ||||||||||||||||||||
(b) | These AOCI components are included in the computation of net periodic benefit cost disclosed in Note 9. |
Segment_Information_Tables
Segment Information (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Segment Information | ' | ||||||||||||||||
Financial information for the company’s segments is as follows. | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Net sales | |||||||||||||||||
BioScience | $1,673 | $1,556 | $ 4,819 | $ 4,542 | |||||||||||||
Medical Products | 2,524 | 2,154 | 7,380 | 6,103 | |||||||||||||
Total net sales | $4,197 | $3,710 | $12,199 | $10,645 | |||||||||||||
Pre-tax income from continuing operations | |||||||||||||||||
BioScience | $ 457 | $ 597 | $ 1,510 | $ 1,755 | |||||||||||||
Medical Products | 370 | 343 | 921 | 1,038 | |||||||||||||
Total pre-tax income from continuing operations from segments | $ 827 | $ 940 | $ 2,431 | $ 2,793 | |||||||||||||
As of September 30, | |||||||||||||||||
(in millions) | 2014 | ||||||||||||||||
Total assets | |||||||||||||||||
BioScience | $ 9,800 | ||||||||||||||||
Medical Products | 12,011 | ||||||||||||||||
Assets held for sale | 157 | ||||||||||||||||
Other | 3,595 | ||||||||||||||||
Total assets | $25,563 | ||||||||||||||||
Pre- Tax Income From Continuing Operations Reconciliation | ' | ||||||||||||||||
The following is a reconciliation of segment pre-tax income from continuing operations to income before income taxes from continuing operations per the condensed consolidated statements of income. | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Total pre-tax income from continuing operations from segments | $827 | $940 | $2,431 | $2,793 | |||||||||||||
Unallocated amounts | |||||||||||||||||
Stock compensation | (43 | ) | (39 | ) | (115 | ) | (111 | ) | |||||||||
Net interest expense | (31 | ) | (45 | ) | (116 | ) | (87 | ) | |||||||||
Business optimization items | (28 | ) | — | (16 | ) | 2 | |||||||||||
Certain foreign currency fluctuations and hedging activities | 8 | 21 | 34 | 63 | |||||||||||||
Certain tax and legal reserves | — | (104 | ) | — | (104 | ) | |||||||||||
Other Corporate items | (147 | ) | (109 | ) | (377 | ) | (534 | ) | |||||||||
Income from continuing operations before income taxes | $586 | $664 | $1,841 | $2,022 | |||||||||||||
Summary_of_Operating_Results_o
Summary of Operating Results of Vaccines Franchise Reflected as Discontinued Operations (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ' | ' | ' | ' |
Net income | $21 | $16 | $122 | $83 |
Vaccines Franchise | ' | ' | ' | ' |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ' | ' | ' | ' |
Net sales | 54 | 64 | 267 | 246 |
Income before income taxes | 23 | 18 | 138 | 96 |
Income tax expense | 2 | 2 | 16 | 13 |
Net income | $21 | $16 | $122 | $83 |
Summary_of_Assets_and_Liabilit
Summary of Assets and Liabilities Associated with Franchise Vaccines Classified as Held for Sale (Detail) (USD $) | Sep. 30, 2014 |
In Millions, unless otherwise specified | |
Assets | ' |
Assets held for sale | $157 |
Vaccines Franchise | ' |
Assets | ' |
Inventories | 87 |
Property, plant and equipment, net | 53 |
Goodwill and other intangible assets, net | 17 |
Assets held for sale | 157 |
Liabilities | ' |
Accrued liabilities and other long-term liabilities | 15 |
Liabilities held for sale | $15 |
Net_Interest_Expense_Detail
Net Interest Expense (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Interest Income Expense Net | ' | ' | ' | ' |
Interest expense, net of capitalized interest | $36 | $51 | $131 | $106 |
Interest income | -5 | -6 | -15 | -19 |
Net interest expense | $31 | $45 | $116 | $87 |
Inventories_Detail
Inventories (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Inventory | ' | ' |
Raw materials | $920 | $920 |
Work in process | 1,115 | 1,136 |
Finished goods | 1,669 | 1,443 |
Inventories | $3,704 | $3,499 |
Property_Plant_and_Equipment_N
Property, Plant and Equipment ,Net (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Property, Plant and Equipment, Net | ' | ' |
Property, plant and equipment, at cost | $14,508 | $13,795 |
Accumulated depreciation | -6,060 | -5,963 |
Property, plant and equipment (PP&E), net | $8,448 | $7,832 |
Reconciliation_of_Basic_Shares
Reconciliation of Basic Shares to Diluted Shares (Detail) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Reconciliation of Basic Shares to Diluted Shares | ' | ' | ' | ' |
Basic shares | 542 | 543 | 542 | 543 |
Effect of dilutive securities | 5 | 6 | 6 | 7 |
Diluted shares | 547 | 549 | 548 | 550 |
Earnings_Per_Share_Additional_
Earnings Per Share - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Reconciliation of Basic Shares to Diluted Shares | ' | ' | ' | ' |
Anti-dilutive securities excluded from computation of EPS | 6 | 6 | 9 | 5 |
Summary_of_Fair_Value_of_Consi
Summary of Fair Value of Consideration Transferred and Recognized Amounts of Assets Acquired and Liabilities Assumed (Detail) (USD $) | 9 Months Ended | 1 Months Ended | |||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Apr. 30, 2014 | Jun. 30, 2014 |
Chatham Therapeutics | AesRx LLC | ||||
Consideration transferred | ' | ' | ' | ' | ' |
Cash | $323 | $3,772 | ' | $70 | $15 |
Contingent payments | ' | ' | ' | 77 | 65 |
Fair value of consideration transferred | ' | ' | ' | 147 | 80 |
Assets acquired and liabilities assumed | ' | ' | ' | ' | ' |
Other intangible assets - IPR&D | ' | ' | ' | 74 | 78 |
Total identifiable net assets | ' | ' | ' | 74 | 78 |
Goodwill | 4,016 | ' | 4,205 | 73 | 2 |
Total assets acquired and liabilities assumed | ' | ' | ' | $147 | $80 |
Acquisitions_and_Collaboration2
Acquisitions and Collaborations - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | 1 Months Ended | 3 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 06, 2013 | Sep. 06, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 06, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2014 | Apr. 30, 2014 | Apr. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
Indap Holding AB | Gambro AB | Gambro AB | Gambro AB | Gambro AB | Gambro AB | Gambro AB | Chatham Therapeutics | Chatham Therapeutics | Chatham Therapeutics | Chatham Therapeutics | AesRx LLC | AesRx LLC | AesRx LLC | AesRx LLC | Merrimack Pharmaceuticals Inc. | Merrimack Pharmaceuticals Inc. | Merrimack Pharmaceuticals Inc. | Coherus Biosciences, Inc. and Cell Therapeutics Inc. | Coherus Biosciences, Inc. and Cell Therapeutics Inc. | ||||||
Fair Value Adjustment to Inventory | Fair Value Adjustment to Inventory | Minimum | Development, regulatory and commercial milestones | Sales Milestone | Minimum | Development, regulatory and commercial milestones | Sales Milestone | Development, regulatory and commercial milestones | Sales Milestone | ||||||||||||||||
Maximum | Maximum | Maximum | Maximum | Maximum | Maximum | ||||||||||||||||||||
Acquisitions And Collaborations [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash | ' | ' | $323 | $3,772 | ' | ' | $3,700 | ' | ' | ' | ' | ' | $70 | ' | ' | ' | $15 | ' | ' | ' | ' | ' | ' | ' | ' |
Business collaboration contingent consideration potential cash payment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 560 | 780 | ' | ' | 278 | 550 | ' | 620 | 250 | ' | ' |
Contingent payments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 77 | ' | ' | ' | 65 | ' | ' | ' | ' | ' | ' | ' | ' |
Other intangible assets - IPR&D | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 74 | ' | ' | ' | 78 | ' | ' | ' | ' | ' | ' | ' | ' |
Acquired IPR&D completion period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '10 years | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill | 4,016 | ' | 4,016 | ' | 4,205 | ' | ' | ' | ' | 1,610 | ' | ' | 73 | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' |
Cash flow projections discount rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12.00% | ' | ' | ' | 15.50% | ' | ' | ' | ' | ' | ' | ' | ' |
Incremental research and development costs projected | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 130 | ' | ' | ' | 40 | ' | ' | ' | ' | ' | ' | ' |
Percentage of voting interest acquired | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Measurement period adjustments, property, plant and equipment | ' | ' | ' | ' | ' | ' | ' | 14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Measurement period adjustments, working capital adjustments | ' | ' | ' | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Measurement period adjustments, goodwill | ' | ' | ' | ' | ' | ' | ' | -10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Change in consideration transferred | ' | ' | ' | ' | ' | ' | ' | -4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Elimination of acquisition costs | ' | ' | ' | ' | ' | ' | ' | ' | 135 | ' | 15 | 15 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Research and development charges | $455 | $277 | $1,086 | $769 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $100 | ' | ' | $38 | $98 |
Summary_of_Fair_Value_of_Consi1
Summary of Fair Value of Consideration Transferred and Amounts Recognized for Assets Acquired and Liabilities Assumed (Detail) (USD $) | 9 Months Ended | 0 Months Ended | |||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 06, 2013 | Sep. 06, 2013 |
Gambro AB | Gambro AB | ||||
Consideration transferred | ' | ' | ' | ' | ' |
Cash | $323 | $3,772 | ' | $3,700 | ' |
Fair value of consideration transferred | ' | ' | ' | 3,700 | ' |
Assets acquired and liabilities assumed | ' | ' | ' | ' | ' |
Cash | ' | ' | ' | ' | 88 |
Accounts receivable | ' | ' | ' | ' | 488 |
Inventories | ' | ' | ' | ' | 368 |
Prepaid expenses and other | ' | ' | ' | ' | 54 |
Property, plant, and equipment | ' | ' | ' | ' | 740 |
Other intangible assets | ' | ' | ' | ' | 1,290 |
Other assets | ' | ' | ' | ' | 11 |
Current-maturities of long-term debt and lease obligations | ' | ' | ' | ' | -2 |
Accounts payable and accrued liabilities | ' | ' | ' | ' | -345 |
Long-term debt and lease obligations | ' | ' | ' | ' | -261 |
Other long-term liabilities | ' | ' | ' | ' | -341 |
Total identifiable net assets | ' | ' | ' | ' | 2,090 |
Goodwill | 4,016 | ' | 4,205 | ' | 1,610 |
Total assets acquired and liabilities assumed | ' | ' | ' | ' | $3,700 |
Summary_of_Fair_Value_of_Consi2
Summary of Fair Value of Consideration Transferred and Amounts Recognized for Assets Acquired and Liabilities Assumed (Parenthetical) (Detail) (Gambro AB, USD $) | Sep. 06, 2013 |
In Millions, unless otherwise specified | |
Gambro AB | ' |
Business Acquisition [Line Items] | ' |
Other long-term liabilities, pension obligations | $209 |
Supplemental_Pro_Forma_Informa
Supplemental Pro Forma Information (Detail) (Gambro AB, USD $) | 3 Months Ended | 9 Months Ended |
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 |
Gambro AB | ' | ' |
Business Acquisition, Pro Forma Information [Line Items] | ' | ' |
Net sales | $3,974 | $11,687 |
Income from continuing operations | $531 | $1,630 |
Basic EPS from continuing operations | $0.98 | $3 |
Diluted EPS from continuing operations | $0.97 | $2.96 |
Goodwill_Detail
Goodwill (Detail) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2014 |
Goodwill [Line Items] | ' |
Goodwill, beginning balance | $4,205 |
Additions | 79 |
Currency translation and other adjustments | -268 |
Goodwill, ending balance | 4,016 |
BioScience | ' |
Goodwill [Line Items] | ' |
Goodwill, beginning balance | 991 |
Additions | 75 |
Currency translation and other adjustments | -28 |
Goodwill, ending balance | 1,038 |
Medical Products | ' |
Goodwill [Line Items] | ' |
Goodwill, beginning balance | 3,214 |
Additions | 4 |
Currency translation and other adjustments | -240 |
Goodwill, ending balance | $2,978 |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets, Net - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Goodwill And Other Intangible Asset [Line Items] | ' | ' | ' | ' |
Accumulated goodwill impairment losses | $0 | ' | $0 | ' |
Amortization expense | 45,000,000 | 33,000,000 | 135,000,000 | 83,000,000 |
Anticipated annual amortization expense of other intangible assets for 2014 | 180,000,000 | ' | 180,000,000 | ' |
Anticipated annual amortization expense of other intangible assets for 2015 | 176,000,000 | ' | 176,000,000 | ' |
Anticipated annual amortization expense of other intangible assets for 2016 | 172,000,000 | ' | 172,000,000 | ' |
Anticipated annual amortization expense of other intangible assets for 2017 | 155,000,000 | ' | 155,000,000 | ' |
Anticipated annual amortization expense of other intangible assets for 2018 | 151,000,000 | ' | 151,000,000 | ' |
Anticipated annual amortization expense of other intangible assets for 2019 | $136,000,000 | ' | $136,000,000 | ' |
Other_Intangible_Assets_Net_De
Other Intangible Assets, Net (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Intangible Asset Excluding Goodwill [Line Items] | ' | ' |
Gross other intangible assets | $3,061 | $3,103 |
Accumulated amortization | -876 | -809 |
Other intangible assets, net | 2,185 | 2,294 |
Developed technology, including patents | ' | ' |
Intangible Asset Excluding Goodwill [Line Items] | ' | ' |
Gross other intangible assets | 2,033 | 2,144 |
Accumulated amortization | -736 | -665 |
Other intangible assets, net | 1,297 | 1,479 |
Other Intangible Assets | ' | ' |
Intangible Asset Excluding Goodwill [Line Items] | ' | ' |
Gross other intangible assets | 437 | 494 |
Accumulated amortization | -140 | -144 |
Other intangible assets, net | 297 | 350 |
Indefinite Lived Intangible Assets | ' | ' |
Intangible Asset Excluding Goodwill [Line Items] | ' | ' |
Gross other intangible assets | 591 | 465 |
Accumulated amortization | 0 | 0 |
Other intangible assets, net | $591 | $465 |
Infusion_Pump_and_Business_Opt2
Infusion Pump and Business Optimization Charges - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 60 Months Ended | 108 Months Ended | 60 Months Ended | 9 Months Ended | 60 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Jun. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
Discontinued Operations | Cash | Cash | Non Cash | Previous Business Optimization | Severance and employee-related costs | Severance and employee-related costs | Severance and employee-related costs | |||||
Discontinued Operations | ||||||||||||
Infusion Pump Charges | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Infusion pump and other product-related charges | $93 | $93 | ' | $888 | ' | ' | ' | ' | ' | ' | ' | ' |
Infusion pump charges related to cash | ' | ' | ' | 725 | ' | ' | ' | ' | ' | ' | ' | ' |
Infusion pump charges related asset impairments | ' | ' | ' | 163 | ' | ' | ' | ' | ' | ' | ' | ' |
Infusion pump utilization | ' | 26 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Infusion pump cash reserves | ' | 57 | 83 | 83 | ' | ' | ' | ' | ' | ' | ' | ' |
Business Optimization Charges | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Costs associated with optimizing the cost structure | ' | ' | 992 | ' | 114 | 60 | 689 | 303 | ' | 28 | 61 | 8 |
Cash reserves | ' | ' | ' | ' | ' | 221 | 288 | ' | ' | ' | ' | ' |
Business optimization reserve, total adjustments | ' | ' | ' | ' | ' | ($35) | ' | ' | $37 | ' | ' | ' |
Business_Optimization_Charges_
Business Optimization Charges (Detail) (USD $) | 9 Months Ended | 60 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
Business Optimization Initiatives | ' | ' |
Charges | ' | $992 |
Cash | ' | ' |
Business Optimization Initiatives | ' | ' |
Reserve, beginning balance | 288 | ' |
Charges | 60 | 689 |
Reserve adjustments | -35 | ' |
Utilization | -92 | ' |
Reserve, ending balance | $221 | $288 |
Summary_of_Activity_Relating_t
Summary of Activity Relating to Securitization Arrangement (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Accounts Receivable Securitization [Line Items] | ' | ' | ' | ' |
Sold receivables at beginning of period | $106 | $129 | $114 | $157 |
Proceeds from sales of receivables | 117 | 125 | 357 | 380 |
Cash collections (remitted to the owners of the receivables) | -119 | -130 | -368 | -394 |
Effect of currency exchange rate changes | -5 | -6 | -4 | -25 |
Sold receivables at end of period | $99 | $118 | $99 | $118 |
Debt_Financial_Instruments_and2
Debt, Financial Instruments and Fair Value Measurements - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||||||||||||||||||||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Apr. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2013 | Mar. 31, 2013 |
Countries With Liquidity Issues | Countries With Liquidity Issues | Fair Value, Inputs, Level 2 | Equity Securities | Equity Securities | Gambro AB | Gambro AB | Gambro AB | Onconova Therapeutics, Inc. | Onconova Therapeutics, Inc. | Chatham Therapeutics | AesRx LLC | Commercial Paper | Fair value hedges | Fair value hedges | Domestic Line of Credit | Domestic Line of Credit | Foreign Line of Credit | Foreign Line of Credit | Foreign exchange contract | Foreign exchange contract | Interest rate contract | Interest rate contract | Interest rate contract | Terminated Fair Value Hedge | Terminated Fair Value Hedge | Total notional amount of undesignated derivative instruments | Total notional amount of undesignated derivative instruments | Total notional amount of undesignated derivative instruments | Total notional amount of undesignated derivative instruments | ||||||||
Greece | Gambro AB | Gambro AB | |||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of Credit Facility Amount Outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0 | $0 | $0 | $124 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commercial paper outstanding | 350 | ' | ' | 350 | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, weighted average interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.23% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total accounts receivable from certain countries with liquidity issues | ' | ' | ' | ' | ' | ' | ' | 417 | 42 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Derivative notional amount | 0 | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,900 | 1,200 | ' | ' | ' | ' | 1,200 | 2,100 | 0 | 0 | 1,000 | 0 | 0 | 443 | 381 | 1,500 | 3,700 |
Maximum length of time hedge in cash flow hedge | ' | ' | ' | '15 months | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gain on Cash Flow Hedge | ' | ' | ' | ' | 5 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gain on Interest rate contracts designated as cash flow hedge | ' | ' | 11 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Remaining deferred net loss to be amortized to net interest expense | ' | ' | 6 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contract maturity period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '2013-06 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Derivative gain (losses) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 49 | ' | -23 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gains (losses) on hedged item in fair value hedge | 17 | -1 | ' | -14 | 25 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred, net after-tax losses on derivative instruments | ' | ' | ' | 16 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash and equivalents | 2,078 | 2,376 | ' | 2,078 | 2,376 | 2,733 | 3,270 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Money market funds, at carrying value | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average probability | ' | ' | ' | 27.00% | ' | 64.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Available for sale equity securities amortized cost basis | 116 | ' | ' | 116 | ' | 111 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 56 | 60 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Available for sale equity securities fair value | 94 | ' | ' | 94 | ' | 102 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Available for sale equity securities net unrealized gain (loss) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -22 | -9 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Available for sale equity securities cumulative unrealized losses | -49 | ' | ' | -49 | ' | -31 | ' | ' | ' | ' | ' | ' | ' | ' | ' | -45 | -30 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Available for sale equity securities cumulative unrealized gain | 27 | ' | ' | 27 | ' | 22 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contingent payments related to acquisitions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 77 | 65 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Equity income recognized from equity method investments | ' | ' | ' | $80 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Summary_of_Gains_and_Losses_on
Summary of Gains and Losses on Derivative Instruments (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' | ||||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | ($3) | [1] | $8 | [1] | ($1) | [1] | $36 | [1] |
Other (income) expense, net | Not Designated as Hedging Instrument | ' | ' | ' | ' | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' | ||||
Gain (loss) recognized in income, undesignated derivative instruments | 9 | 51 | -1 | 6 | ||||
Interest rate contract | Interest Expense | ' | ' | ' | ' | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' | ||||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | ' | -1 | [1] | -1 | [1] | 10 | [1] | |
Cash Flow Hedges | ' | ' | ' | ' | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' | ||||
Gain (loss) recognized in OCI | 31 | 6 | 25 | 68 | ||||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | -3 | 8 | -1 | 36 | ||||
Cash Flow Hedges | Interest rate contract | ' | ' | ' | ' | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' | ||||
Gain (loss) recognized in OCI | ' | ' | ' | 26 | ||||
Cash Flow Hedges | Interest rate contract | Interest Expense | ' | ' | ' | ' | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' | ||||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | ' | -1 | -1 | 10 | ||||
Cash Flow Hedges | Foreign Exchange Contracts One | ' | ' | ' | ' | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' | ||||
Gain (loss) recognized in OCI | 1 | -1 | 1 | -1 | ||||
Cash Flow Hedges | Foreign Exchange Contracts One | Net Sales | ' | ' | ' | ' | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' | ||||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | ' | ' | 1 | -1 | ||||
Cash Flow Hedges | Foreign Exchange Contracts Two | ' | ' | ' | ' | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' | ||||
Gain (loss) recognized in OCI | 30 | 7 | 24 | 43 | ||||
Cash Flow Hedges | Foreign Exchange Contracts Two | Cost of Sales | ' | ' | ' | ' | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' | ||||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | -3 | 9 | -1 | 27 | ||||
Fair value hedges | Interest Expense | ' | ' | ' | ' | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' | ||||
Gain (loss) recognized in income, fair value hedges | ($17) | $1 | $14 | ($25) | ||||
[1] | Amounts in parentheses indicate reductions to net income. |
Classification_and_Fair_Value_
Classification and Fair Value Amounts of Derivative Instruments (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Derivatives, Fair Value [Line Items] | ' | ' |
Derivative asset, fair value | $85 | $72 |
Derivative liability, fair value | 9 | 22 |
Designated as Hedging Instrument | ' | ' |
Derivatives, Fair Value [Line Items] | ' | ' |
Derivative asset, fair value | 85 | 72 |
Derivative liability, fair value | 8 | 21 |
Designated as Hedging Instrument | Interest rate contract | Other Long Term Liabilities | ' | ' |
Derivatives, Fair Value [Line Items] | ' | ' |
Derivative liability, fair value | 7 | 14 |
Designated as Hedging Instrument | Interest rate contract | Other Long -Term Assets | ' | ' |
Derivatives, Fair Value [Line Items] | ' | ' |
Derivative asset, fair value | 42 | 35 |
Designated as Hedging Instrument | Foreign exchange contract | Accounts Payable And Accrued Liabilities | ' | ' |
Derivatives, Fair Value [Line Items] | ' | ' |
Derivative liability, fair value | 1 | 7 |
Designated as Hedging Instrument | Foreign exchange contract | Other Long -Term Assets | ' | ' |
Derivatives, Fair Value [Line Items] | ' | ' |
Derivative asset, fair value | 4 | ' |
Designated as Hedging Instrument | Foreign exchange contract | Prepaid Expense And Other | ' | ' |
Derivatives, Fair Value [Line Items] | ' | ' |
Derivative asset, fair value | 39 | 37 |
Not Designated as Hedging Instrument | Foreign exchange contract | Accounts Payable And Accrued Liabilities | ' | ' |
Derivatives, Fair Value [Line Items] | ' | ' |
Derivative liability, fair value | $1 | $1 |
Derivative_Positions_Presented
Derivative Positions Presented On Net Basis (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Derivatives, Fair Value [Line Items] | ' | ' |
Gross amounts recognized in the consolidated balance sheet, asset | $85 | $72 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, asset | -9 | -17 |
Total | 76 | 55 |
Gross amounts recognized in the consolidated balance sheet, liability | 9 | 22 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, liability | -9 | -17 |
Total | $0 | $5 |
Financial_Assets_and_Liabiliti
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Equity securities | $94 | $102 |
Fair Value, Measurements, Recurring | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Foreign currency hedges, assets at fair value | 43 | 37 |
Interest rate hedges, assets at fair value | 42 | 35 |
Equity securities | 94 | 102 |
Foreign government debt securities | 18 | 18 |
Total assets | 197 | 192 |
Foreign currency hedges, liabilities at fair value | 2 | 8 |
Interest rate hedges, liabilities at fair value | 7 | 14 |
Contingent payments related to acquisitions | 514 | 340 |
Total liabilities | 523 | 362 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Equity securities | 94 | 102 |
Total assets | 94 | 102 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Foreign currency hedges, assets at fair value | 43 | 37 |
Interest rate hedges, assets at fair value | 42 | 35 |
Foreign government debt securities | 18 | 18 |
Total assets | 103 | 90 |
Foreign currency hedges, liabilities at fair value | 2 | 8 |
Interest rate hedges, liabilities at fair value | 7 | 14 |
Total liabilities | 9 | 22 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Contingent payments related to acquisitions | 514 | 340 |
Total liabilities | $514 | $340 |
Reconciliation_of_Fair_Value_M
Reconciliation of Fair Value Measurements that Use Significant Unobservable Inputs (Detail) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Contingent payments, Fair value as of beginning of period | $340 |
Contingent payments, additions | 142 |
Contingent payments, net losses recognized in earnings | 42 |
Contingent payments, CTA | -10 |
Contingent payments, Fair value as of end of period | $514 |
Book_Values_and_Fair_Values_of
Book Values and Fair Values of Financial Instruments (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ' | ' |
Long-term debt and lease obligations | $7,753 | $8,126 |
Book Values | ' | ' |
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ' | ' |
Long-term insurance receivables | 2 | 2 |
Investments | 54 | 53 |
Short-term debt | 392 | 181 |
Current maturities of long-term debt and lease obligations | 1,123 | 859 |
Long-term debt and lease obligations | 7,753 | 8,126 |
Long-term litigation liabilities | 53 | 72 |
Approximate fair values | ' | ' |
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ' | ' |
Long-term insurance receivables | 2 | 2 |
Investments | 54 | 53 |
Short-term debt | 392 | 181 |
Current maturities of long-term debt and lease obligations | 1,135 | 862 |
Long-term debt and lease obligations | 8,211 | 8,298 |
Long-term litigation liabilities | $52 | $70 |
Summarization_of_Bases_Used_to
Summarization of Bases Used to Measure Fair Value of Financial Instruments (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Long-term debt and lease obligations | $7,753 | $8,126 |
Approximate fair values | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Long-term insurance receivables | 2 | 2 |
Investments | 54 | 53 |
Total assets | 56 | 55 |
Short-term debt | 392 | 181 |
Current maturities of long-term debt and lease obligations | 1,135 | 862 |
Long-term debt and lease obligations | 8,211 | 8,298 |
Long-term litigation liabilities | 52 | 70 |
Total liabilities | 9,790 | 9,411 |
Fair Value, Inputs, Level 2 | Approximate fair values | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Investments | 18 | 17 |
Total assets | 18 | 17 |
Short-term debt | 392 | 181 |
Current maturities of long-term debt and lease obligations | 1,135 | 862 |
Long-term debt and lease obligations | 8,211 | 8,298 |
Total liabilities | 9,738 | 9,341 |
Fair Value, Inputs, Level 3 | Approximate fair values | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Long-term insurance receivables | 2 | 2 |
Investments | 36 | 36 |
Total assets | 38 | 38 |
Long-term litigation liabilities | 52 | 70 |
Total liabilities | $52 | $70 |
Shareholders_Equity_Additional
Shareholders' Equity - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2012 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Stockholders Equity Note [Line Items] | ' | ' | ' | ' | ' |
Stock compensation expense | ' | $43,000,000 | $39,000,000 | $115,000,000 | $111,000,000 |
Stock based compensation in marketing and administrative expenses | ' | 70.00% | 70.00% | 70.00% | 70.00% |
Stock Options granted | ' | ' | ' | 6,800,000 | ' |
Share repurchases | ' | 700,000 | ' | 7,000,000 | ' |
Value of share repurchases | ' | 50,000,000 | ' | 500,000,000 | ' |
Stock repurchase program, authorized amount | 2,000,000,000 | ' | ' | ' | ' |
Remaining value available under stock repurchase programs | ' | ' | ' | 521,000,000 | ' |
Minimum | ' | ' | ' | ' | ' |
Stockholders Equity Note [Line Items] | ' | ' | ' | ' | ' |
Common shares received as a percentage of performance shares | ' | ' | ' | 0.00% | ' |
Maximum | ' | ' | ' | ' | ' |
Stockholders Equity Note [Line Items] | ' | ' | ' | ' | ' |
Common shares received as a percentage of performance shares | ' | ' | ' | 200.00% | ' |
Senior Management | Performance Based Awards With Market Conditions | ' | ' | ' | ' | ' |
Stockholders Equity Note [Line Items] | ' | ' | ' | ' | ' |
Performance condition to percentage of market basis | ' | ' | ' | 50.00% | ' |
Restricted Stock Units | ' | ' | ' | ' | ' |
Stockholders Equity Note [Line Items] | ' | ' | ' | ' | ' |
Awards Granted | ' | ' | ' | 1,400,000 | ' |
Unrecognized compensation cost related to all unvested | ' | 106,000,000 | ' | 106,000,000 | ' |
Weighted-average period for all unvested | ' | ' | ' | '1 year 9 months 18 days | ' |
Performance Shares | ' | ' | ' | ' | ' |
Stockholders Equity Note [Line Items] | ' | ' | ' | ' | ' |
Awards Granted | ' | ' | ' | 335,000 | ' |
Unrecognized compensation cost related to all unvested | ' | 17,000,000 | ' | 17,000,000 | ' |
Weighted-average period for all unvested | ' | ' | ' | '1 year 2 months 12 days | ' |
Employee Stock Option | ' | ' | ' | ' | ' |
Stockholders Equity Note [Line Items] | ' | ' | ' | ' | ' |
Total intrinsic value of stock options exercised | ' | 21,000,000 | 60,000,000 | 99,000,000 | 167,000,000 |
Unrecognized compensation cost related to all unvested | ' | $79,000,000 | ' | $79,000,000 | ' |
Weighted-average period for all unvested | ' | ' | ' | '1 year 7 months 6 days | ' |
Stock_Options_Fair_Value_Assum
Stock Options Fair Value Assumptions (Detail) (Employee Stock Option, USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Employee Stock Option | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Expected volatility | 24.00% | 25.00% |
Expected life (in years) | '5 years 6 months | '5 years 6 months |
Risk-free interest rate | 1.70% | 0.90% |
Dividend yield | 2.80% | 2.60% |
Fair value per stock option | $12 | $12 |
Performance_Stock_Units_Fair_V
Performance Stock Units Fair Value Assumptions (Detail) (Performance Shares, USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Performance Shares | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Baxter volatility | 20.00% | 21.00% |
Peer group volatility | ' | ' |
Peer group volatility minimum | 13.00% | 13.00% |
Peer group volatility maximum | 58.00% | 38.00% |
Correlation of returns | ' | ' |
Correlation of returns minimum | 0.23 | 0.37 |
Correlation of returns maximum | 0.66 | 0.62 |
Risk-free interest rate | 0.70% | 0.30% |
Fair value per PSU | $57 | $67 |
Net_Periodic_Benefit_Cost_Deta
Net Periodic Benefit Cost (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Pension Plans, Defined Benefit | ' | ' | ' | ' |
Net periodic benefit cost | ' | ' | ' | ' |
Service cost | $33 | $34 | $99 | $101 |
Interest cost | 62 | 52 | 182 | 154 |
Expected return on plan assets | -68 | -63 | -202 | -190 |
Amortization of net loss and prior service credit/other deferred amounts | 37 | 61 | 109 | 184 |
Net periodic benefit cost | 64 | 84 | 188 | 249 |
Other Postretirement Benefit Plans, Defined Benefit | ' | ' | ' | ' |
Net periodic benefit cost | ' | ' | ' | ' |
Service cost | 1 | 2 | 4 | 7 |
Interest cost | 6 | 6 | 20 | 19 |
Amortization of net loss and prior service credit/other deferred amounts | -1 | 3 | -1 | 7 |
Net periodic benefit cost | $6 | $11 | $23 | $33 |
Retirement_and_Other_Benefit_P2
Retirement and Other Benefit Programs - Additional Information (Detail) (Postemployment medical benefits, USD $) | 3 Months Ended | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Jul. 31, 2014 |
Y | |||
Postemployment medical benefits | ' | ' | ' |
Defined Benefit Plan Disclosure [Line Items] | ' | ' | ' |
Plan amendment, description | ' | 'A change was made to postemployment medical benefits for retirees who are age 65 or older. Effective January 1, 2015, Baxter will exit sponsorship and provide eligible retirees and their dependents a subsidy to be utilized on a medical insurance exchange. | ' |
Retirees minimum qualifying age | 65 | ' | ' |
Postemployment benefit obligation re-measured, discount rate used | ' | ' | 4.30% |
Reduction to postemployment benefit obligation due to plan amendment | ($80) | ($80) | ' |
Amount recognized in AOCI, amortization period | '11 years | ' | ' |
Summary_of_Changes_in_AOCI_by_
Summary of Changes in AOCI by Component (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | ' | ' | ' | ||||
Currency translation adjustment, Beginning Balance | ' | ' | ($991) | ($1,227) | ||||
Currency translation adjustment, other comprehensive income (loss) before reclassifications | ' | ' | -815 | 58 | ||||
Currency translation adjustment, amounts reclassified from AOCI | ' | ' | 0 | [1] | 0 | [1] | ||
Currency translation adjustment, net other comprehensive (loss) income | -608 | 112 | -815 | 58 | ||||
Currency translation adjustment, Ending Balance | -1,806 | -1,169 | -1,806 | -1,169 | ||||
Pension and other employee benefit, Beginning Balance | ' | ' | -1,027 | -1,619 | ||||
Pension and other employee benefit, Other comprehensive income (loss) before reclassifications | ' | ' | 60 | -5 | ||||
Pension and other employee benefit, Amounts reclassified from AOCI | 23 | [2] | 41 | [2] | 72 | [1],[2] | 124 | [1],[2] |
Pension and other employee benefit, Net other comprehensive (loss) income | 81 | 42 | 132 | 119 | ||||
Pension and other employee benefit, Ending Balance | -895 | -1,500 | -895 | -1,500 | ||||
Hedging activities, Beginning Balance | ' | ' | 10 | -5 | ||||
Hedging activities, Other comprehensive income (loss) before reclassifications | ' | ' | 14 | 44 | ||||
Hedging activities, Amounts reclassified from AOCI | 2 | [2] | -5 | [2] | 1 | [1],[2] | -23 | [1],[2] |
Hedging activities, Net other comprehensive (loss) income | 21 | -2 | 15 | 21 | ||||
Hedging activities, Ending Balance | 25 | 16 | 25 | 16 | ||||
Other, Beginning Balance | ' | ' | 32 | 41 | ||||
Other, Other comprehensive income (loss) before reclassifications | ' | ' | -11 | 12 | ||||
Other, Amounts reclassified from AOCI | 2 | [2] | ' | 1 | [1],[2] | ' | ||
Other, Net other comprehensive (loss) income | -3 | 13 | -10 | 12 | ||||
Other, Ending Balance | 22 | 53 | 22 | 53 | ||||
Total, Beginning Balance | ' | ' | -1,976 | -2,810 | ||||
Total, Other comprehensive income (loss) before reclassifications | ' | ' | -752 | 109 | ||||
Total, Amounts reclassified from AOCI | 27 | [2] | 36 | [2] | 74 | [1],[2] | 101 | [1],[2] |
Total other comprehensive (loss) income, net of tax | -509 | 165 | -678 | 210 | ||||
Total, Ending Balance | ($2,654) | ($2,600) | ($2,654) | ($2,600) | ||||
[1] | See table below for details about these reclassifications. | |||||||
[2] | Amounts in parentheses indicate reductions to net income. |
Summary_of_Amounts_Reclassific
Summary of Amounts Reclassification from AOCI to Net Income (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ' | ' | ||||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | ($3) | [1] | $8 | [1] | ($1) | [1] | $36 | [1] |
Gains (losses) on hedging activities reclassified from AOCI to net income, tax expense | 1 | [1] | -3 | [1] | ' | -13 | [1] | |
Gains (loss) on hedging activities reclassified from AOCI to net income, net of tax | -2 | [1] | 5 | [1] | -1 | [1],[2] | 23 | [1],[2] |
Total reclassification for the period | -27 | [1] | -36 | [1] | -74 | [1],[2] | -101 | [1],[2] |
Amortization of pension and other employee benefits items Actuarial losses and other reclassified from AOCI to net income, before tax | -36 | [1] | -64 | [1] | -108 | [1] | -191 | [1] |
Amortization of pension and other employee benefits items Actuarial losses and other reclassified from AOCI to net income, tax benefit | 13 | [1] | 23 | [1] | 36 | [1] | 67 | [1] |
Amortization of pension and other employee benefits items Actuarial losses and other reclassified from AOCI to net income, net of tax | -23 | [1] | -41 | [1] | -72 | [1],[2] | -124 | [1],[2] |
Gains (loss) on available for sale securities reclassified from AOCI to net income, before tax | -3 | [1] | ' | -1 | [1] | ' | ||
Gains (loss) on available for sale securities reclassified from AOCI to net income, tax benefit | 1 | [1] | ' | ' | ' | |||
Other Available-for-sale securities reclassified from AOCI to net income, net of tax | -2 | [1] | ' | -1 | [1],[2] | ' | ||
Other (income) expense, net | Equity securities | ' | ' | ' | ' | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ' | ' | ||||
Gains (loss) on available for sale securities reclassified from AOCI to net income, before tax | -3 | [1] | ' | -1 | [1] | ' | ||
Interest rate contract | Interest Expense | ' | ' | ' | ' | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ' | ' | ||||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | ' | -1 | [1] | -1 | [1] | 10 | [1] | |
Foreign exchange contract | Net Sales | ' | ' | ' | ' | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ' | ' | ||||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | ' | ' | 1 | [1] | -1 | [1] | ||
Foreign exchange contract | Cost of Sales | ' | ' | ' | ' | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ' | ' | ||||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | -3 | [1] | 9 | [1] | -1 | [1] | 27 | [1] |
Actuarial losses and other | ' | ' | ' | ' | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ' | ' | ||||
Amortization of pension and other employee benefits items Actuarial losses and other reclassified from AOCI to net income, before tax | ($36) | [1],[3] | ($64) | [1],[3] | ($108) | [1],[3] | ($191) | [1],[3] |
[1] | Amounts in parentheses indicate reductions to net income. | |||||||
[2] | See table below for details about these reclassifications. | |||||||
[3] | These AOCI components are included in the computation of net periodic benefit cost disclosed in Note 9. |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Taxes [Line Items] | ' | ' | ' | ' |
Effective income tax rate | 23.70% | 20.50% | 22.80% | 20.70% |
Legal_Proceedings_Additional_I
Legal Proceedings - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended |
In Millions, unless otherwise specified | Jan. 31, 2014 | Mar. 31, 2014 | Sep. 30, 2014 |
Loss Contingencies [Line Items] | ' | ' | ' |
Settlement amount | $12 | $64 | $76 |
Litigation related receivables | ' | ' | $6 |
Other Litigation Cases | ' | ' | ' |
Loss Contingencies [Line Items] | ' | ' | ' |
Number of derivative actions filed in state court | ' | ' | 2 |
Illinois State | ' | ' | ' |
Loss Contingencies [Line Items] | ' | ' | ' |
Number of derivative actions filed in state court | ' | ' | 1 |
Delaware | ' | ' | ' |
Loss Contingencies [Line Items] | ' | ' | ' |
Number of derivative actions filed in state court | ' | ' | 1 |
Segment_Information_Additional
Segment Information - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2014 | |
Segment | |
Segment Information [Line Items] | ' |
Number of segments | 2 |
Segment_Information_Detail
Segment Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Segment Information [Line Items] | ' | ' | ' | ' |
Net sales | $4,197 | $3,710 | $12,199 | $10,645 |
Pre-tax income from continuing operations | 827 | 940 | 2,431 | 2,793 |
BioScience | ' | ' | ' | ' |
Segment Information [Line Items] | ' | ' | ' | ' |
Net sales | 1,673 | 1,556 | 4,819 | 4,542 |
Pre-tax income from continuing operations | 457 | 597 | 1,510 | 1,755 |
Medical Products | ' | ' | ' | ' |
Segment Information [Line Items] | ' | ' | ' | ' |
Net sales | 2,524 | 2,154 | 7,380 | 6,103 |
Pre-tax income from continuing operations | $370 | $343 | $921 | $1,038 |
Segment_Information_Related_to
Segment Information Related to Total Assets (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Segment Information [Line Items] | ' | ' |
Total assets | $25,563 | $25,869 |
Assets held for sale | 157 | ' |
BioScience | ' | ' |
Segment Information [Line Items] | ' | ' |
Total assets | 9,800 | ' |
Medical Products | ' | ' |
Segment Information [Line Items] | ' | ' |
Total assets | 12,011 | ' |
Other | ' | ' |
Segment Information [Line Items] | ' | ' |
Total assets | $3,595 | ' |
Pre_Tax_Income_From_Continuing
Pre- Tax Income From Continuing Operations Reconciliation (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ' | ' | ' | ' |
Income from continuing operations before income taxes | $586 | $664 | $1,841 | $2,022 |
Operating Segments | ' | ' | ' | ' |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ' | ' | ' | ' |
Income from continuing operations before income taxes | 827 | 940 | 2,431 | 2,793 |
Corporate, Non-Segment | Unallocated Amount To Segment Stock Compensation | ' | ' | ' | ' |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ' | ' | ' | ' |
Income from continuing operations before income taxes | -43 | -39 | -115 | -111 |
Corporate, Non-Segment | Unallocated Amount To Segment Net Interest Expense | ' | ' | ' | ' |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ' | ' | ' | ' |
Income from continuing operations before income taxes | -31 | -45 | -116 | -87 |
Corporate, Non-Segment | Unallocated Amount To Segment Business Optimization Items | ' | ' | ' | ' |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ' | ' | ' | ' |
Income from continuing operations before income taxes | -28 | ' | -16 | 2 |
Corporate, Non-Segment | Unallocated Amount To Segment Certain Foreign Currency Fluctuations and Hedging Activities | ' | ' | ' | ' |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ' | ' | ' | ' |
Income from continuing operations before income taxes | 8 | 21 | 34 | 63 |
Corporate, Non-Segment | Unallocated Amount to Segment Certain Tax and Legal Reserves | ' | ' | ' | ' |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ' | ' | ' | ' |
Income from continuing operations before income taxes | ' | -104 | ' | -104 |
Corporate, Non-Segment | Unallocated Amount to Segment Other Corporate Items | ' | ' | ' | ' |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ' | ' | ' | ' |
Income from continuing operations before income taxes | ($147) | ($109) | ($377) | ($534) |