Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Jan. 31, 2015 | Jun. 30, 2014 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | BAX | ||
Entity Registrant Name | BAXTER INTERNATIONAL INC | ||
Entity Central Index Key | 10456 | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 542,581,466 | ||
Entity Public Float | $39,000,000,000 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Current assets | ||||
Cash and equivalents | $2,925 | $2,733 | ||
Accounts and other current receivables, net | 2,803 | 2,911 | ||
Inventories | 3,559 | 3,499 | ||
Short-term deferred income taxes | 501 | 504 | ||
Prepaid expenses and other | 563 | 548 | ||
Total current assets | 10,351 | 10,195 | ||
Property, plant and equipment, net | 8,698 | 7,832 | ||
Other assets | ||||
Goodwill | 3,874 | 4,205 | ||
Other intangible assets, net | 2,079 | 2,294 | ||
Other | 915 | 698 | ||
Total other assets | 6,868 | 7,197 | ||
Total assets | 25,917 | 25,224 | ||
Current liabilities | ||||
Short-term debt | 913 | 181 | ||
Current maturities of long-term debt and lease obligations | 786 | [1] | 859 | [1] |
Accounts payable and accrued liabilities | 4,343 | 4,208 | ||
Total current liabilities | 6,042 | 5,248 | ||
Long-term debt and lease obligations | 7,606 | [1] | 8,126 | [1] |
Other long-term liabilities | 4,113 | 3,364 | ||
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, 141,116,857 shares in 2014 and 140,456,989 shares in 2013 | -7,993 | -7,914 | ||
Additional contributed capital | 5,853 | 5,818 | ||
Retained earnings | 13,227 | 11,852 | ||
Accumulated other comprehensive loss | -3,650 | -1,976 | ||
Total Baxter International Inc. (Baxter) shareholders' equity | 8,120 | 8,463 | ||
Noncontrolling interests | 36 | 23 | ||
Total equity | 8,156 | 8,486 | ||
Total liabilities and equity | $25,917 | $25,224 | ||
[1] | Book values include any discounts, premiums and adjustments related to hedging instruments. |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 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 | 141,116,857 | 140,456,989 |
CONSOLIDATED_STATEMENTS_OF_INC
CONSOLIDATED STATEMENTS OF INCOME (USD $) | 12 Months Ended | ||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Net sales | $16,671 | $14,967 | $13,936 | ||
Cost of sales | 8,514 | 7,495 | 6,802 | ||
Gross margin | 8,157 | 7,472 | 7,134 | ||
Marketing and administrative expenses | 4,029 | 3,642 | 3,283 | ||
Research and development expenses | 1,421 | 1,165 | 1,081 | ||
Net interest expense | 145 | 128 | 87 | ||
Other expense (income), net | 123 | -9 | -155 | ||
Income from continuing operations before income taxes | 2,439 | 2,546 | 2,838 | ||
Income tax expense | 493 | 534 | 555 | ||
Income from continuing operations | 1,946 | [1] | 2,012 | [2] | 2,283 |
Income from discontinued operations, net of tax | 551 | 0 | 43 | ||
Net income | $2,497 | [1] | $2,012 | [2] | $2,326 |
Income from continuing operations per common share | |||||
Basic | $3.59 | $3.70 | $4.14 | ||
Diluted | $3.56 | $3.66 | $4.11 | ||
Income from discontinued operations per common share | |||||
Basic | $1.02 | $0 | $0.08 | ||
Diluted | $1 | $0 | $0.07 | ||
Net income per common share | |||||
Basic | $4.61 | $3.70 | $4.22 | ||
Diluted | $4.56 | $3.66 | $4.18 | ||
Weighted-average number of common shares outstanding | |||||
Basic | 542 | 543 | 551 | ||
Diluted | 547 | 549 | 556 | ||
[1] | The first quarter of 2014 included charges of $69 million related business optimization, Gambro integration costs, tax and legal reserves, and milestone payments associated with the company's collaboration arrangements. The second quarter of 2014 included charges of $177 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, and milestone payments associated with the company's collaboration arrangements. The third quarter of 2014 included charges of $283 million related to business optimization, Gambro integration costs, separation-related costs, the Branded Prescription Drug Fee, and upfront and milestone payments associated with the company's collaboration arrangements. The fourth quarter of 2014 included $275 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, an other-than-temporary impairment loss, and milestone payments associated with the company's collaboration arrangements. | ||||
[2] | The first quarter of 2013 included charges of $45 million related Gambro acquisition costs and currency-related items. The second quarter of 2013 included charges of $76 million related to business optimization and Gambro acquisition costs. The third quarter of 2013 included charges of $152 million related to Gambro acquisition and integration costs, reserve items and adjustments, and an upfront payment associated with one of the company's collaboration arrangements. The fourth quarter of 2013 included $371 million related to business optimization, Gambro acquisition and integration costs, product-related items, and upfront and milestone payments associated with the company's collaboration arrangements. |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 12 Months Ended | ||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Net income | $2,497 | [1] | $2,012 | [2] | $2,326 |
Other comprehensive (loss) income, net of tax: | |||||
Currency translation adjustments, net of tax (benefit) expense of ($132) in 2014, $41 in 2013 and $22 in 2012 | -1,332 | 236 | -98 | ||
Pension and other employee benefits, net of tax (benefit) expense of ($193) in 2014, $309 in 2013 and ($1) in 2012 | -400 | 592 | -111 | ||
Hedging activities, net of tax expense(benefit) of $14 in 2014, $7 in 2013 and ($6) in 2012 | 24 | 15 | -7 | ||
Other, net of tax benefit of ($2) in 2014, ($3) in 2013 and ($2) in 2012 | 34 | -9 | -3 | ||
Total other comprehensive (loss) income, net of tax | -1,674 | 834 | -219 | ||
Comprehensive income | $823 | $2,846 | $2,107 | ||
[1] | The first quarter of 2014 included charges of $69 million related business optimization, Gambro integration costs, tax and legal reserves, and milestone payments associated with the company's collaboration arrangements. The second quarter of 2014 included charges of $177 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, and milestone payments associated with the company's collaboration arrangements. The third quarter of 2014 included charges of $283 million related to business optimization, Gambro integration costs, separation-related costs, the Branded Prescription Drug Fee, and upfront and milestone payments associated with the company's collaboration arrangements. The fourth quarter of 2014 included $275 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, an other-than-temporary impairment loss, and milestone payments associated with the company's collaboration arrangements. | ||||
[2] | The first quarter of 2013 included charges of $45 million related Gambro acquisition costs and currency-related items. The second quarter of 2013 included charges of $76 million related to business optimization and Gambro acquisition costs. The third quarter of 2013 included charges of $152 million related to Gambro acquisition and integration costs, reserve items and adjustments, and an upfront payment associated with one of the company's collaboration arrangements. The fourth quarter of 2013 included $371 million related to business optimization, Gambro acquisition and integration costs, product-related items, and upfront and milestone payments associated with the company's collaboration arrangements. |
CONSOLIDATED_STATEMENTS_OF_COM1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Tax (benefit) expense on currency translation adjustments | ($132) | $41 | $22 |
Tax(benefit)expense pension and other employee benefits | -193 | 309 | -1 |
Tax expense (benefit) on hedging activities | 14 | 7 | -6 |
Tax (benefit) on Other | ($2) | ($3) | ($2) |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Cash flows from operations | |||||
Net income | $2,497 | [1] | $2,012 | [2] | $2,326 |
Adjustments | |||||
Depreciation and amortization | 1,005 | 823 | 712 | ||
Deferred income taxes | -78 | -224 | -17 | ||
Stock compensation | 159 | 150 | 130 | ||
Realized excess tax benefits from stock issued under employee benefit plans | -24 | -34 | -24 | ||
Business optimization charges | 27 | 282 | 150 | ||
Net periodic pension benefit and OPEB costs | 275 | 381 | 477 | ||
Gain on sale of discontinued operations | -466 | ||||
Infusion pump and other product-related charges | 93 | 17 | |||
Losses (gains) related to contingent payment liabilities | 122 | -17 | -108 | ||
Other | 269 | 54 | 66 | ||
Changes in balance sheet items | |||||
Accounts and other current receivables, net | -125 | -36 | -41 | ||
Inventories | -439 | -311 | -129 | ||
Accounts payable and accrued liabilities | 115 | 361 | 40 | ||
Business optimization and infusion pump payments | -161 | -125 | -283 | ||
Other | -54 | -135 | -193 | ||
Cash flows from operations | 3,215 | 3,198 | 3,106 | ||
Cash flows from investing activities | |||||
Capital expenditures (including additions to the pool of equipment placed with or leased to customers of $151 in 2014, $148 in 2013 and $150 in 2012) | -1,898 | -1,525 | -1,161 | ||
Acquisitions and investments, net of cash acquired | -409 | -3,851 | -515 | ||
Divestitures and other investing activities | 765 | 14 | 107 | ||
Cash flows from investing activities | -1,542 | -5,362 | -1,569 | ||
Cash flows from financing activities | |||||
Issuances of debt | 41 | 3,636 | 1,037 | ||
Payments of obligations | -1,029 | -540 | -22 | ||
Increase (decrease) in debt with original maturities of three months or less, net | 875 | -250 | |||
Cash dividends on common stock | -1,095 | -1,023 | -804 | ||
Proceeds and realized excess tax benefits from stock issued under employee benefit plans | 369 | 508 | 512 | ||
Purchases of treasury stock | -550 | -913 | -1,480 | ||
Other | -13 | -23 | -108 | ||
Cash flows from financing activities | -1,402 | 1,645 | -1,115 | ||
Effect of foreign exchange rate changes on cash and equivalents | -79 | -18 | -57 | ||
Increase (decrease) in cash and equivalents | 192 | -537 | 365 | ||
Cash and equivalents at beginning of year | 2,733 | 3,270 | 2,905 | ||
Cash and equivalents at end of year | 2,925 | 2,733 | 3,270 | ||
Other supplemental information | |||||
Interest paid, net of portion capitalized | 208 | 200 | 135 | ||
Income taxes paid | $726 | $648 | $415 | ||
[1] | The first quarter of 2014 included charges of $69 million related business optimization, Gambro integration costs, tax and legal reserves, and milestone payments associated with the company's collaboration arrangements. The second quarter of 2014 included charges of $177 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, and milestone payments associated with the company's collaboration arrangements. The third quarter of 2014 included charges of $283 million related to business optimization, Gambro integration costs, separation-related costs, the Branded Prescription Drug Fee, and upfront and milestone payments associated with the company's collaboration arrangements. The fourth quarter of 2014 included $275 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, an other-than-temporary impairment loss, and milestone payments associated with the company's collaboration arrangements. | ||||
[2] | The first quarter of 2013 included charges of $45 million related Gambro acquisition costs and currency-related items. The second quarter of 2013 included charges of $76 million related to business optimization and Gambro acquisition costs. The third quarter of 2013 included charges of $152 million related to Gambro acquisition and integration costs, reserve items and adjustments, and an upfront payment associated with one of the company's collaboration arrangements. The fourth quarter of 2013 included $371 million related to business optimization, Gambro acquisition and integration costs, product-related items, and upfront and milestone payments associated with the company's collaboration arrangements. |
CONSOLIDATED_STATEMENTS_OF_CAS1
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Additions to the Investing Activities pool of equipment placed with or leased to customers | $151 | $148 | $150 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) | Total | Common Stock | Common Stock Held In Treasury | Additional Contributed Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Shareholders' Equity | Noncontrolling Interest | |
In Millions, except Share data | |||||||||
Beginning of year at Dec. 31, 2011 | $683 | ($6,719) | $5,783 | $9,429 | ($2,591) | $243 | |||
Beginning of year at Dec. 31, 2011 | 123,000,000 | ||||||||
Balance, beginning at Dec. 31, 2011 | 683,000,000 | ||||||||
Net income | 2,326 | 2,326 | |||||||
Purchases of common stock | -1,500 | -1,480 | |||||||
Elimination of SIGMA noncontrolling ownership interest | -159 | ||||||||
Other comprehensive (loss) income | -219 | -219 | |||||||
Dividends declared on common stock | -866 | ||||||||
Stock issued under employee benefit plans and other | 607 | 17 | |||||||
Change in noncontrolling interests | -44 | ||||||||
Stock issued under employee benefit plans | -1 | ||||||||
Exercise of SIGMA purchase option | -31 | ||||||||
Purchases of common stock | 25,000,000 | 25,000,000 | |||||||
Stock issued under employee benefit plans and other | -11,000,000 | ||||||||
End of year at Dec. 31, 2012 | 6,978 | 683 | -7,592 | 5,769 | 10,888 | -2,810 | 6,938 | 40 | |
End of year at Dec. 31, 2012 | 137,000,000 | ||||||||
End of year at Dec. 31, 2012 | 683,000,000 | ||||||||
Net income | 2,012 | [1] | 2,012 | ||||||
Purchases of common stock | -900 | -913 | |||||||
Other comprehensive (loss) income | 834 | 834 | |||||||
Dividends declared on common stock | -1,048 | ||||||||
Stock issued under employee benefit plans and other | 591 | 45 | |||||||
Change in noncontrolling interests | -17 | ||||||||
Exercise of SIGMA purchase option | 4 | ||||||||
Purchases of common stock | 13,000,000 | 13,000,000 | |||||||
Stock issued under employee benefit plans and other | -10,000,000 | ||||||||
End of year at Dec. 31, 2013 | 8,486 | 683 | -7,914 | 5,818 | 11,852 | -1,976 | 8,463 | 23 | |
End of year at Dec. 31, 2013 | 140,456,989 | 140,000,000 | |||||||
End of year at Dec. 31, 2013 | 683,494,944 | 683,000,000 | |||||||
Net income | 2,497 | [2] | 2,497 | ||||||
Purchases of common stock | -600 | -550 | |||||||
Other comprehensive (loss) income | -1,674 | -1,674 | |||||||
Dividends declared on common stock | -1,116 | ||||||||
Stock issued under employee benefit plans and other | 471 | 35 | |||||||
Change in noncontrolling interests | 13 | ||||||||
Stock issued under employee benefit plans | -6 | ||||||||
Purchases of common stock | 8,000,000 | 8,000,000 | |||||||
Stock issued under employee benefit plans and other | -7,000,000 | ||||||||
End of year at Dec. 31, 2014 | $8,156 | $683 | ($7,993) | $5,853 | $13,227 | ($3,650) | $8,120 | $36 | |
End of year at Dec. 31, 2014 | 141,116,857 | 141,000,000 | |||||||
End of year at Dec. 31, 2014 | 683,494,944 | 683,000,000 | |||||||
[1] | The first quarter of 2013 included charges of $45 million related Gambro acquisition costs and currency-related items. The second quarter of 2013 included charges of $76 million related to business optimization and Gambro acquisition costs. The third quarter of 2013 included charges of $152 million related to Gambro acquisition and integration costs, reserve items and adjustments, and an upfront payment associated with one of the company's collaboration arrangements. The fourth quarter of 2013 included $371 million related to business optimization, Gambro acquisition and integration costs, product-related items, and upfront and milestone payments associated with the company's collaboration arrangements. | ||||||||
[2] | The first quarter of 2014 included charges of $69 million related business optimization, Gambro integration costs, tax and legal reserves, and milestone payments associated with the company's collaboration arrangements. The second quarter of 2014 included charges of $177 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, and milestone payments associated with the company's collaboration arrangements. The third quarter of 2014 included charges of $283 million related to business optimization, Gambro integration costs, separation-related costs, the Branded Prescription Drug Fee, and upfront and milestone payments associated with the company's collaboration arrangements. The fourth quarter of 2014 included $275 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, an other-than-temporary impairment loss, and milestone payments associated with the company's collaboration arrangements. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Summary of Significant Accounting Policies | NOTE 1 | ||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||
Nature of Operations | |||||||||||||
Baxter International Inc. (Baxter or the company), through its subsidiaries, develops, manufactures and markets products that save and sustain the lives of people with hemophilia, immune disorders, cancer, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. As a global, diversified healthcare company, Baxter applies a unique combination of expertise in medical devices, pharmaceuticals and biotechnology to create products that advance patient care worldwide. The company operates in two segments, BioScience and Medical Products, which are described in Note 17. | |||||||||||||
In March 2014, Baxter announced plans to create two separate, independent global healthcare companies – one focused on lifesaving medical products and the other on developing and marketing innovative biopharmaceuticals. The transition is intended to take the form of a tax-free distribution to Baxter shareholders of more than 80% of the 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 in the United States, and the effectiveness of the Form 10 registration statement filed with the United States Securities and Exchange Commission. Upon separation, the historical results of the biopharmaceuticals business will be presented as discontinued operations. | |||||||||||||
Use of Estimates | |||||||||||||
The preparation of the financial statements in conformity with generally accepted accounting principles (GAAP) requires the company to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. | |||||||||||||
Basis of Presentation | |||||||||||||
The consolidated financial statements include the accounts of Baxter and its majority-owned subsidiaries, any other subsidiaries that Baxter controls, and variable interest entities (VIEs) in which Baxter is the primary beneficiary, after elimination of intercompany transactions. During 2012, the company exercised its option to purchase the remaining equity of Sigma International General Medical Apparatus, LLC (SIGMA), which Baxter previously consolidated as the primary beneficiary of a VIE. The company has not subsequently entered into any new arrangements in which it determined that it was the primary beneficiary of a VIE, and there were no VIEs consolidated by the company as of December 31, 2013 and 2014. Refer to Note 3 for additional information about the SIGMA option exercise. | |||||||||||||
On September 6, 2013, Baxter acquired Indap Holding AB, the holding company for Gambro AB (Gambro), a privately held dialysis product company based in Lund, Sweden, for cash consideration of $3.7 billion. Beginning September 6, 2013, Baxter’s financial statements include the assets, liabilities, and operating results of Gambro. Refer to Note 5 for additional information about the Gambro acquisition. | |||||||||||||
In the third quarter of 2014, the company committed to a plan to divest its Vaccines franchise. Refer to Note 2 for a summary of the operating results of the Vaccines franchise reflected as discontinued operations. | |||||||||||||
Revision of 2013 Tax Balances | |||||||||||||
The company identified and corrected prior period errors in the presentation of its current and deferred income tax assets and liabilities as of December 31, 2013 in the consolidated balance sheet with no impact to total equity. The company assessed the impact of these errors and concluded that these errors were not material to previously issued financial statements. The company has revised its previously reported consolidated balance sheet as of December 31, 2013 as reflected below. | |||||||||||||
as of December 31, 2013 (in millions) | As Reported | Adjustments | As Revised | ||||||||||
Short-term deferred income taxes | $ 393 | $ 111 | $ 504 | ||||||||||
Prepaid expense and other | 468 | 80 | 548 | ||||||||||
Other assets | 1,534 | (836 | ) | 698 | |||||||||
Accounts payable and accrued liabilities | 4,866 | (658 | ) | 4,208 | |||||||||
Other long-term liabilities | 3,351 | 13 | 3,364 | ||||||||||
Revenue Recognition | |||||||||||||
The company recognizes revenues from product sales and services when earned. Specifically, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred (or services have been rendered), the price is fixed or determinable, and collectibility is reasonably assured. For product sales, revenue is not recognized until title and risk of loss have transferred to the customer. The shipping terms for the majority of the company’s revenue arrangements are FOB destination. The recognition of revenue is delayed if there are significant post-delivery obligations, such as training, installation or other services. Provisions for discounts, rebates to customers, chargebacks to wholesalers and returns are provided for at the time the related sales are recorded, and are reflected as a reduction to gross sales to arrive at net sales. | |||||||||||||
The company sometimes enters into arrangements in which it commits to delivering multiple products or services to its customers. In these cases, total arrangement consideration is allocated to the deliverables based on their relative selling prices. Then the allocated consideration is recognized as revenue in accordance with the principles described above. Selling prices are determined by applying a selling price hierarchy. Selling prices are determined using vendor specific objective evidence (VSOE), if it exists. Otherwise, selling prices are determined using third party evidence (TPE). If neither VSOE nor TPE is available, the company uses its best estimate of selling prices. | |||||||||||||
Accounts Receivable and Allowance for Doubtful Accounts | |||||||||||||
In the normal course of business, the company provides credit to its customers, performs credit evaluations of these customers and maintains reserves for potential credit losses. In determining the amount of the allowance for doubtful accounts, the company considers, among other items, historical credit losses, the past-due status of receivables, payment histories and other customer-specific information. Receivables are written off when the company determines they are uncollectible. The allowance for doubtful accounts was $139 million at December 31, 2014 and $169 million at December 31, 2013. | |||||||||||||
Product Warranties | |||||||||||||
The company provides for the estimated costs relating to product warranties at the time the related revenue is recognized. The cost is determined based on actual company experience for the same or similar products, as well as other relevant information. Product warranty liabilities are adjusted based on changes in estimates. | |||||||||||||
Cash and Equivalents | |||||||||||||
Cash and equivalents include cash, certificates of deposit and money market funds with an original maturity of three months or less. | |||||||||||||
Inventories | |||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Raw materials | $ | 910 | $ | 920 | |||||||||
Work in process | 1,126 | 1,136 | |||||||||||
Finished goods | 1,523 | 1,443 | |||||||||||
Inventories | $ | 3,559 | $ | 3,499 | |||||||||
Inventories are stated at the lower of cost (first-in, first-out method) or market value. Market value for raw materials is based on replacement costs, and market value for work in process and finished goods is based on net realizable value. The company reviews inventories on hand at least quarterly and records provisions for estimated excess, slow-moving and obsolete inventory, as well as inventory with a carrying value in excess of net realizable value. | |||||||||||||
Property, Plant and Equipment, Net | |||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Land | $ | 225 | $ | 220 | |||||||||
Buildings and leasehold improvements | 2,673 | 2,670 | |||||||||||
Machinery and equipment | 7,687 | 7,360 | |||||||||||
Equipment with customers | 1,353 | 1,361 | |||||||||||
Construction in progress | 2,870 | 2,184 | |||||||||||
Total property, plant and equipment, at cost | 14,808 | 13,795 | |||||||||||
Accumulated depreciation | (6,110 | ) | (5,963 | ) | |||||||||
Property, plant and equipment (PP&E), net | $ | 8,698 | $ | 7,832 | |||||||||
Depreciation expense is calculated using the straight-line method over the estimated useful lives of the related assets, which range from 20 to 50 years for buildings and improvements and from three to 15 years for machinery and equipment. Leasehold improvements are amortized over the life of the related facility lease (including any renewal periods, if appropriate) or the asset, whichever is shorter. Baxter capitalizes certain computer software and software development costs incurred in connection with developing or obtaining software for internal use as part of machinery and equipment. Capitalized software costs are amortized on a straight-line basis over the estimated useful lives of the software, and are included in depreciation expense. Straight-line and accelerated methods of depreciation are used for income tax purposes. Depreciation expense was $809 million in 2014, $674 million in 2013 and $590 million in 2012. | |||||||||||||
Acquisitions | |||||||||||||
Results of operations of acquired companies are included in the company’s results of operations as of the respective acquisition dates. The purchase price of each acquisition is allocated to the net assets acquired based on estimates of their fair values at the date of the acquisition. Any purchase price in excess of these net assets is recorded as goodwill. The allocation of purchase price in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. | |||||||||||||
Contingent consideration is recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent payments are recognized in earnings. Contingent payments related to acquisitions consist of development, regulatory, and commercial milestone payments, in addition to sales-based payments, and are valued using discounted cash flow techniques. The fair value of development, regulatory, and commercial milestone payments reflects management’s expectations of probability of payment, and increases or decreases as the probability of payment or expectation of timing of payments changes. The fair value of sales-based payments is based upon probability-weighted future revenue estimates and increases or decreases as revenue estimates or expectation of timing of payments changes. | |||||||||||||
Research and Development | |||||||||||||
Research and development (R&D) costs, including R&D acquired in transactions that are not business combinations, are expensed as incurred. Pre-regulatory approval contingent milestone obligations to counterparties in collaborative arrangements are expensed when the milestone is achieved. Payments made to counterparties on or after regulatory approval are capitalized and amortized over the remaining useful life of the related product. Amounts capitalized for such payments are included in other intangible assets, net of accumulated amortization. | |||||||||||||
Acquired in-process R&D (IPR&D) is the value assigned to technology or products under development acquired in a business combination which have not received regulatory approval and have no alternative future use. Acquired IPR&D is capitalized as an indefinite-lived intangible asset. Development costs incurred after the acquisition are expensed as incurred. Upon receipt of regulatory approval of the related technology or product, the indefinite-lived intangible asset is accounted for as a finite-lived intangible asset and generally amortized on a straight-line basis over the estimated economic life of the related technology or product, subject to annual impairment reviews as discussed below. If the R&D project is abandoned, the indefinite-lived asset is charged to expense. | |||||||||||||
Collaborative Arrangements | |||||||||||||
The company enters into collaborative arrangements in the normal course of business. These collaborative arrangements take a number of forms and structures, and are designed to enhance and expedite long-term sales and profitability growth. These arrangements generally provide that Baxter obtain commercialization rights to a product under development. The agreements often require Baxter to make upfront payments and include additional contingent milestone payments relating to the achievement of specified development, regulatory and commercial milestones, as well as make royalty payments. Baxter may also be responsible for other on-going costs associated with the arrangements, including R&D cost reimbursements to the counterparty. | |||||||||||||
Royalty payments are expensed as cost of sales when they become due and payable. Any purchases of inventory from the partner during the development stage are expensed as R&D, while such purchases during the commercialization phase are capitalized as inventory and recognized as cost of sales when the related finished products are sold. | |||||||||||||
Business Optimization Charges | |||||||||||||
The company records liabilities for costs associated with exit or disposal activities in the period in which the liability is incurred. Employee termination costs are primarily recorded when actions are probable and estimable. Costs for one-time termination benefits in which the employee is required to render service until termination in order to receive the benefits are recognized ratably over the future service period. Refer to the discussion below regarding the accounting for asset impairment charges. | |||||||||||||
Goodwill | |||||||||||||
Goodwill is not amortized, but is subject to an impairment review annually and whenever indicators of impairment exist. Goodwill would be impaired if the carrying amount of a reporting unit exceeded the fair value of that reporting unit, calculated as the present value of estimated cash flows discounted using a risk-free market rate adjusted for a market participant’s view of similar companies and perceived risks in the cash flows. The implied fair value of goodwill is then determined by subtracting the fair value of all identifiable net assets other than goodwill from the fair value of the reporting unit, with an impairment charge recorded for the excess, if any, of carrying amount of goodwill over the implied fair value. | |||||||||||||
Intangible Assets Not Subject to Amortization | |||||||||||||
Indefinite-lived intangible assets, such as IPR&D acquired in business combinations and certain trademarks with indefinite lives, are subject to an impairment review annually and whenever indicators of impairment exist. Indefinite-lived intangible assets are impaired if the carrying amount of the asset exceeded the fair value of the asset. | |||||||||||||
Other Long-Lived Assets | |||||||||||||
The company reviews the carrying amounts of long-lived assets, other than goodwill and intangible assets not subject to amortization, for potential impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating recoverability, the company groups assets and liabilities at the lowest level such that the identifiable cash flows relating to the group are largely independent of the cash flows of other assets and liabilities. The company then compares the carrying amounts of the assets or asset groups with the related estimated undiscounted future cash flows. In the event impairment exists, an impairment charge is recorded as the amount by which the carrying amount of the asset or asset group exceeds the fair value. | |||||||||||||
Shipping and Handling Costs | |||||||||||||
Shipping costs, which are costs incurred to physically move product from Baxter’s premises to the customer’s premises, are classified as marketing and administrative expenses. Handling costs, which are costs incurred to store, move and prepare products for shipment, are classified as cost of sales. Approximately $340 million in 2014, $293 million in 2013 and $265 million in 2012 of shipping costs were classified in marketing and administrative expenses. | |||||||||||||
Income Taxes | |||||||||||||
Deferred taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting based on enacted tax laws and rates. The company maintains valuation allowances unless it is more likely than not that the deferred tax asset will be realized. With respect to uncertain tax positions, the company determines whether the position is more likely than not to be sustained upon examination, based on the technical merits of the position. Any tax position that meets the more likely than not recognition threshold is measured and recognized in the consolidated financial statements at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The liability relating to uncertain tax positions is classified as current in the consolidated balance sheets to the extent the company anticipates making a payment within one year. Interest and penalties associated with income taxes are classified in the income tax expense line in the consolidated statements of income. | |||||||||||||
Foreign Currency Translation | |||||||||||||
Currency translation adjustments (CTA) related to foreign operations are included in other comprehensive income (OCI). For foreign operations in highly inflationary economies, translation gains and losses are included in other expense (income), net, and were not material in 2014, 2013 and 2012. | |||||||||||||
Derivatives and Hedging Activities | |||||||||||||
All derivative instruments are recognized as either assets or liabilities at fair value in the 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. | |||||||||||||
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 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 related to forecasted third-party sales denominated in foreign currencies, forecasted intercompany sales denominated in foreign currencies and anticipated issuances of debt, respectively. | |||||||||||||
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. | |||||||||||||
For derivative instruments that are not designated as hedges, the change in fair value is recorded directly to other expense (income), net. | |||||||||||||
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 income or loss recognition of the underlying hedged items. 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. | |||||||||||||
Derivatives, including those that are not designated as a hedge, are principally classified in the operating section of the consolidated statements of cash flows in the same category as the related consolidated balance sheet account. | |||||||||||||
Refer to Note 9 for further information regarding the company’s derivative and hedging activities. | |||||||||||||
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. |
Discontinued_Operations
Discontinued Operations | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Discontinued Operations | NOTE 2 | ||||||||||||
DISCONTINUED OPERATIONS | |||||||||||||
In July 2014, the company entered into an agreement with Pfizer Inc. 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, and committed to a plan to divest the remainder of its Vaccines franchise, which includes certain R&D programs. The company completed the divestiture of the commercial vaccines business in December 2014 and received cash proceeds of $639 million and recorded an after-tax gain of $417 million. The company entered into a separate agreement for the sale of the remainder of the Vaccines franchise in December 2014, which is expected to be completed in the first quarter of 2015. As a result of the divestitures, the operations and cash flows of the Vaccines franchise will be eliminated from the ongoing operations of the company. | |||||||||||||
Following is a summary of the operating results of the Vaccines franchise, which have been reflected as discontinued operations for the years ended December 31, 2014, 2013 and 2012. | |||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
Net sales | $ | 301 | $ | 292 | $ | 254 | |||||||
Income before income taxes | 616 | 3 | 51 | ||||||||||
Income tax expense | 65 | 3 | 8 | ||||||||||
Net income | $ | 551 | $ | 0 | $ | 43 | |||||||
Supplemental_Financial_Informa
Supplemental Financial Information | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Supplemental Financial Information | NOTE 3 | ||||||||||||
SUPPLEMENTAL FINANCIAL INFORMATION | |||||||||||||
Other Long-Term Assets | |||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Deferred income taxes | $ | 273 | $ | 41 | |||||||||
Other long-term receivables | 127 | 216 | |||||||||||
Other | 515 | 441 | |||||||||||
Other long-term assets | $ | 915 | $ | 698 | |||||||||
Accounts Payable and Accrued Liabilities | |||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Accounts payable, principally trade | $ | 1,264 | $ | 1,103 | |||||||||
Income taxes payable | 336 | 382 | |||||||||||
Deferred income taxes | 9 | 21 | |||||||||||
Common stock dividends payable | 282 | 266 | |||||||||||
Employee compensation and withholdings | 716 | 667 | |||||||||||
Property, payroll and certain other taxes | 261 | 237 | |||||||||||
Infusion pump reserves | 22 | 64 | |||||||||||
Business optimization reserves | 118 | 199 | |||||||||||
Accrued rebates | 374 | 346 | |||||||||||
Other | 961 | 923 | |||||||||||
Accounts payable and accrued liabilities | $ | 4,343 | $ | 4,208 | |||||||||
Other Long-Term Liabilities | |||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Pension and other employee benefits | $ | 2,748 | $ | 2,049 | |||||||||
Litigation reserves | 53 | 72 | |||||||||||
Infusion pump reserves | — | 19 | |||||||||||
Business optimization reserves | 51 | 89 | |||||||||||
Contingent payment liabilities | 569 | 340 | |||||||||||
Other | 692 | 795 | |||||||||||
Other long-term liabilities | $ | 4,113 | $ | 3,364 | |||||||||
Net Interest Expense | |||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
Interest costs | $ | 237 | $ | 225 | $ | 165 | |||||||
Interest costs capitalized | (70 | ) | (70 | ) | (52 | ) | |||||||
Interest expense | 167 | 155 | 113 | ||||||||||
Interest income | (22 | ) | (27 | ) | (26 | ) | |||||||
Net interest expense | $ | 145 | $ | 128 | $ | 87 | |||||||
Certain of the above 2013 balance sheet amounts were revised in connection with the income tax assets and liabilities adjustments described in Note 1. | |||||||||||||
Exercise of SIGMA Option | |||||||||||||
In April 2012, the company exercised its option to purchase the remaining equity of SIGMA for a cash payment of $90 million. Since the 2009 acquisition of a 40% stake in SIGMA, the company has consolidated the financial statements of SIGMA, with the equity owned by existing SIGMA equity holders reported as noncontrolling interests. As a result, the exercise of the option was treated as an equity transaction and no additional assets were recognized by Baxter related to the additional ownership interest acquired. On the date of exercise, the carrying value of the noncontrolling interest was eliminated to reflect Baxter’s change in ownership interest in SIGMA’s equity and the carrying value of the call option was also eliminated. The exercise of the SIGMA purchase option had no direct impact on the company’s results of operations, and the payment was classified as a financing activity on the consolidated statements of cash flows. Effective as of the date of the option exercise, 100% of SIGMA’s pre-tax income has been reflected in the company’s results of operations and, as a result, the company no longer reports noncontrolling interest related to SIGMA. |
Earnings_Per_Share
Earnings Per Share | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Earnings Per Share | NOTE 4 | ||||||||||||
EARNINGS PER SHARE | |||||||||||||
The numerator for both basic and diluted earnings per share (EPS) is either net income, income from continuing operations, or 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. | |||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
Basic shares | 542 | 543 | 551 | ||||||||||
Effect of dilutive securities | 5 | 6 | 5 | ||||||||||
Diluted shares | 547 | 549 | 556 | ||||||||||
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 9 million, 5 million, and 16 million equity awards in 2014, 2013 and 2012, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS. Refer to Note 12 for additional information regarding items impacting basic shares. |
Acquisitions_and_Collaboration
Acquisitions and Collaborations | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Acquisitions and Collaborations | NOTE 5 | ||||||||||||||||
ACQUISITIONS AND COLLABORATIONS | |||||||||||||||||
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, a privately held dialysis product company based in Lund, Sweden. Gambro is a global medical technology company focused on developing, manufacturing and supplying dialysis products and therapies for patients with acute or chronic kidney disease. The transaction provides Baxter with a broad and complementary dialysis product portfolio, while further advancing the company’s geographic footprint in the dialysis business. In addition, the company has augmented its pipeline with Gambro’s next-generation monitors, dialyzers, devices and dialysis solutions. | |||||||||||||||||
The total cash consideration for the acquisition, as reduced by assumed debt of $221 million, was $3.7 billion. During 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 during 2014. | |||||||||||||||||
The following table summarizes the 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 | |||||||||||||||
The results of operations, assets and liabilities of Gambro are included in the Medical Products segment, together with the related goodwill. Goodwill includes expected synergies, as well as an expanded dialysis product portfolio and global footprint for the company’s Medical Products business, particularly the Renal franchise. The goodwill is not deductible for tax purposes. Other intangible assets included developed technology of $916 million, trademarks of $206 million, and indefinite-lived IPR&D of $168 million. Other intangible assets, excluding IPR&D, are being amortized on a straight-line basis over a weighted-average estimated useful life of approximately 15 years. The acquired IPR&D related to next generation monitors, dialyzers, fluids, and other technologies used in both chronic and acute therapies. The projects ranged in levels of completion and were expected to be completed over a five year period. The value of the IPR&D was calculated using cash flow projections adjusted for the inherent technical, regulatory, commercial and obsolescence risk in such activities, discounted at a rate of 12%. As of the acquisition date, additional research and development costs totaling approximately $85 million were projected to be required in order for the projects to obtain regulatory approval. Certain projects were completed during 2014, and there has been no material change in management’s projections since the acquisition date. | |||||||||||||||||
Long-term debt and lease obligations included $221 million of Gambro’s pre-existing Euro-denominated debt assumed by Baxter on the date of closing, which was subsequently paid off in September 2013. The debt settlement has been classified as a financing activity in the consolidated statements of cash flows. | |||||||||||||||||
The company incurred acquisition-related costs of $101 million during 2013, which were recorded in marketing and administrative expenses. | |||||||||||||||||
Actual and pro forma impact of acquisition | |||||||||||||||||
The following table presents information for Gambro that has been included in Baxter’s consolidated statements of income from the acquisition date through December 31, 2013. | |||||||||||||||||
(in millions) | Gambro’s operations | ||||||||||||||||
included in Baxter’s results | |||||||||||||||||
Net sales | $513 | ||||||||||||||||
Net loss | $ (45 | ) | |||||||||||||||
The net loss included the impact of fair value adjustments to acquisition-date inventory that was sold in 2013 (approximately $62 million on a pre-tax basis). | |||||||||||||||||
The following table presents supplemental pro forma information for the years ended December 31, 2013 and 2012 as if the acquisition of Gambro had occurred on January 1, 2012. | |||||||||||||||||
Unaudited Pro Forma Consolidated Results | |||||||||||||||||
Years ended December 31, | |||||||||||||||||
(in millions, except per share information) | 2013 | 2012 | |||||||||||||||
Net sales | $15,996 | $15,513 | |||||||||||||||
Income from continuing operations | 2,138 | 1,978 | |||||||||||||||
Basic EPS from continuing operations | $ 3.94 | $ 3.59 | |||||||||||||||
Diluted EPS from continuing operations | $ 3.89 | $ 3.56 | |||||||||||||||
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 the acquisition been completed 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 $62 million charge related to the fair value adjustment of acquisition-date inventory from the year ended December 31, 2013. | ||||||||||||||||
• | Addition of a $62 million charge related to the fair value adjustment of acquisition-date inventory to the year ended December 31, 2012. | ||||||||||||||||
• | 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 $244 million of acquisition, integration and currency-related charges from the year ended December 31, 2013 and addition of these costs to the year ended December 31, 2012. 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. | ||||||||||||||||
Other Acquisitions | |||||||||||||||||
The following table summarizes the fair value of consideration transferred and the assets acquired and liabilities assumed as of the acquisition date for the company’s other significant acquisitions in 2014, 2013 and 2012. | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
(in millions) | Chatham | AesRx | Inspiration/Ipsen | Synovis | |||||||||||||
Consideration transferred | |||||||||||||||||
Cash, net of cash acquired | $ 70 | $15 | $ 51 | $304 | |||||||||||||
Contingent payments | 77 | 65 | 269 | — | |||||||||||||
Fair value of consideration transferred | $147 | $80 | $320 | $304 | |||||||||||||
Assets acquired and liabilities assumed | |||||||||||||||||
Other intangible assets | $ 74 | $78 | $288 | $115 | |||||||||||||
Other assets, net | — | — | 25 | 25 | |||||||||||||
Total identifiable net assets | $ 74 | $78 | $313 | $140 | |||||||||||||
Goodwill | 73 | 2 | 7 | 164 | |||||||||||||
Total assets acquired and liabilities assumed | $147 | $80 | $320 | $304 | |||||||||||||
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 for the years ended December 31, 2014, 2013 and 2012. Additional information regarding the above acquisitions has been provided below. | |||||||||||||||||
Chatham Therapeutics, LLC | |||||||||||||||||
In May 2012, Baxter entered into an exclusive global license agreement with Chatham Therapeutics, LLC (Chatham Therapeutics) to develop and commercialize potential treatments for hemophilia B utilizing Chatham Therapeutics’ gene therapy technology. Baxter recognized an R&D charge of $30 million related to an upfront payment. | |||||||||||||||||
In April 2014, Baxter acquired all of the outstanding membership interests in Chatham Therapeutics, obtaining all 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, and was calculated based on the probability of achieving the specified milestones and the discounting of expected future cash flows. As of December 31, 2014, there were no significant changes to these contingent payment liabilities. | |||||||||||||||||
Baxter allocated $74 million of the total consideration to acquired IPR&D, which is being accounted for as an indefinite-lived intangible asset, with the residual consideration of $73 million recorded as goodwill. The acquired IPR&D primarily related 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 obtaining regulatory approval and, as of the acquisition date, incremental R&D costs were 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, and was calculated based on the probability of achieving the specified milestones and the discounting of expected future cash flows. As of December 31, 2014, there were no significant changes to these contingent payment liabilities. | |||||||||||||||||
Baxter allocated $78 million of the total consideration to acquired IPR&D, which is being accounted for as indefinite-lived intangible assets, with the residual consideration of $2 million recorded as goodwill. The acquired IPR&D related to AesRx’s sickle cell disease program, which was in Phase II clinical trials at the time of the acquisition, and was 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 obtaining regulatory approval and, as of the acquisition date, incremental R&D costs were projected to be in excess of $40 million. | |||||||||||||||||
Inspiration / Ipsen | |||||||||||||||||
In March 2013, Baxter acquired the investigational hemophilia compound OBIZUR and related assets from Inspiration BioPharmaceuticals, Inc. (Inspiration), and certain other OBIZUR related assets, including manufacturing operations, were acquired from Ipsen Pharma S.A.S. (Ipsen) in conjunction with Inspiration’s bankruptcy proceedings. Ipsen was Inspiration’s senior secured creditor and had been providing Inspiration with debtor-in-possession financing to fund Inspiration’s operations and the sales process. Additionally, Ipsen was the owner of certain assets acquired by Baxter in the transaction. | |||||||||||||||||
OBIZUR is a recombinant porcine factor VIII that was approved in the United States in 2014 for the treatment of patients with acquired hemophilia A, and is being investigated for the treatment of congenital hemophilia A patients with inhibitors. | |||||||||||||||||
In March 2013, Baxter made an upfront payment of $51 million for OBIZUR and the related assets, and, as of the acquisition date, may make future payments of up to $135 million related to the achievement of regulatory and sales milestones. Additionally, Baxter may make sales-based payments. The estimated fair value of contingent payment liabilities at the acquisition date was $269 million, which was recorded in other long-term liabilities, and was calculated based on the probability of achieving the specified milestones and sales-based payments and the discounting of expected future cash flows. As of December 31, 2014, the estimated fair value of the contingent payments was $386 million. Refer to Note 10 for additional information regarding the Inspiration / Ipsen contingent payment liability. | |||||||||||||||||
Goodwill of $7 million principally includes the value associated with the assembled workforce at the acquired manufacturing facility. The goodwill is deductible for tax purposes. Other intangible assets of $288 million related to acquired IPR&D activities, and the total was accounted for as an indefinite-lived intangible asset at the acquisition date. | |||||||||||||||||
The results of operations, assets and liabilities from the Inspiration / Ipsen acquisition are included in the BioScience segment, together with the related goodwill. | |||||||||||||||||
Synovis Life Technologies, Inc. | |||||||||||||||||
In February 2012, the company acquired Synovis Life Technologies, Inc. (Synovis), a publicly-traded company which developed, manufactured and marketed biological and mechanical products for soft tissue repair used in a variety of surgical procedures. | |||||||||||||||||
Goodwill of $164 million includes expected synergies and other benefits the company believes will result from the acquisition, including an expanded product portfolio and the impact of a larger sales force to support surgeons across a range of procedures. The goodwill is not deductible for tax purposes. Other intangible assets of $115 million related to developed technology and are being amortized on a straight-line basis over an estimated average useful life of 12 years. | |||||||||||||||||
The results of operations, assets and liabilities of Synovis are included in the BioScience segment, together with the related goodwill. | |||||||||||||||||
Collaborations | |||||||||||||||||
Merrimack Pharmaceuticals, Inc. | |||||||||||||||||
In September 2014, Baxter entered into a 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 2014, Baxter recognized an R&D charge of $100 million related to an upfront payment. Upon entering into the agreement, Baxter had the potential to make future payments of up to $870 million related to the achievement of development, regulatory, and commercial milestones, in addition to royalty payments. | |||||||||||||||||
CTI BioPharma Corp. | |||||||||||||||||
In November 2013, Baxter acquired approximately 16 million shares of CTI BioPharma Corp. (CTI BioPharma), which was formerly named Cell Therapeutics, Inc., common stock for $27 million. Baxter also entered into an exclusive worldwide licensing agreement with CTI BioPharma, to develop and commercialize pacritinib, a novel investigational JAK2/FLT3 inhibitor with activity against genetic mutations linked to myelofibrosis, leukemia and certain solid tumors. Pacritinib is currently in Phase III development for patients with myelofibrosis, a chronic malignant bone marrow disorder. Under the terms of the agreement, Baxter gained commercialization rights for all indications of pacritinib outside the United States and Baxter and CTI BioPharma will jointly commercialize pacritinib in the United States. CTI BioPharma is responsible for the funding of the majority of development activities as well as the manufacture of the product. In 2013, Baxter recognized an R&D charge of $33 million related to an upfront payment. Upon entering into the agreement, Baxter had the potential to make future payments of up to $302 million related to the achievement of development, regulatory, and commercial milestones, in addition to future royalty payments. | |||||||||||||||||
Coherus Biosciences, Inc. | |||||||||||||||||
In August 2013, Baxter entered into an exclusive license agreement with Coherus Biosciences, Inc. (Coherus) to develop and commercialize a biosimilar to ENBREL® (etanercept) for Europe, Canada, Brazil and certain other markets. Baxter also has the right of first refusal to certain other biosimilars in the collaboration. Under the terms of the agreement, Coherus is responsible for the development plan, preparation of regulatory filings, and manufacture of the product, subject to certain cost reimbursement by Baxter. In 2013, Baxter recognized R&D charges of $30 million related to its decision to continue to pursue development of etanercept. Upon entering into the agreement, Baxter had the potential to make future payments of up to $169 million relating to the achievement of development and regulatory milestones, in addition to future royalty payments. | |||||||||||||||||
JW Holdings Corporation | |||||||||||||||||
In July 2013, Baxter entered into a collaboration agreement with JW Holdings Corporation (JW Holdings) for parenteral nutritional products containing a novel formulation of omega 3 lipids. Baxter has exclusive rights to co-develop and distribute the products globally, with the exception of Korea. In 2013, Baxter recognized an R&D charge of $25 million related to an upfront payment. Upon entering into the agreement, Baxter had the potential to make future payments of up to $11 million relating to the achievement of regulatory milestones, in addition to future royalty payments. | |||||||||||||||||
Onconova Therapeutics, Inc. | |||||||||||||||||
In July 2012, Baxter acquired approximately three million shares of preferred stock in Onconova Therapeutics, Inc. (Onconova) for $50 million. Refer to Note 10 for additional information regarding this investment. In September 2012, Baxter entered into an exclusive license agreement with Onconova for rigosertib, a novel targeted anti-cancer compound for the treatment of a group of rare hematologic malignancies called myelodysplastic syndromes and pancreatic cancer. Baxter gained commercialization rights for the compound in Europe. Onconova is responsible for the funding of the R&D as well as the manufacture of the product. In 2012, Baxter recognized an R&D charge of $50 million related to an upfront payment. Upon entering into the agreement, Baxter had the potential to make future payments of up to $783 million related to the achievement of development, regulatory, and commercial milestones, in addition to future royalty payments. | |||||||||||||||||
Momenta Pharmaceuticals, Inc. | |||||||||||||||||
In February 2012, the company entered into an exclusive license agreement with Momenta Pharmaceuticals, Inc. (Momenta) to develop and commercialize biosimilars. The arrangement includes specified funding by Baxter, as well as other responsibilities, relating to development and commercialization activities. In 2012, Baxter recognized an R&D charge of $33 million related to an upfront payment. Upon entering into the agreement, Baxter had the potential to make future payments of up to $202 million related to the exercise of options to develop additional products and the achievement of technical, development and regulatory milestones for these products, in addition to future royalty payments and potential profit-sharing payments. | |||||||||||||||||
Unfunded Contingent Payments | |||||||||||||||||
At December 31, 2014, the company’s unfunded contingent milestone payments associated with all of its collaborative arrangements totaled $2.6 billion. This total excludes any contingent royalty and profit-sharing payments. Based on the company’s projections, any contingent payments made in the future will be more than offset over time by the estimated net future cash flows relating to the rights acquired for those payments. | |||||||||||||||||
Payments to Collaboration Partners | |||||||||||||||||
Payments to collaboration partners classified in R&D expenses were $270 million, $129 million, and $138 million in 2014, 2013, and 2012, respectively. These payments were comprised of upfront payments of $100 million, $88 million and $108 million in 2014, 2013 and 2012, respectively, and milestone payments of $118 million, $17 million and $6 million in 2014, 2013 and 2012, respectively. The remainder related to R&D cost reimbursements. Payments to collaboration partners classified in cost of sales were not significant in 2014, 2013 and 2012. |
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets, Net | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Goodwill and Other Intangible Assets, Net | NOTE 6 | ||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | |||||||||||||||||
Goodwill | |||||||||||||||||
The following is a summary of the activity in goodwill by segment. | |||||||||||||||||
(in millions) | BioScience | Medical | Total | ||||||||||||||
Products | |||||||||||||||||
December 31, 2012 | $ 975 | $ | 1,527 | $ | 2,502 | ||||||||||||
Additions | 7 | 1,622 | 1,629 | ||||||||||||||
Currency translation and other adjustments | 9 | 65 | 74 | ||||||||||||||
December 31, 2013 | 991 | 3,214 | 4,205 | ||||||||||||||
Additions | 75 | 4 | 79 | ||||||||||||||
Currency translation and other adjustments | (39 | ) | (371 | ) | (410 | ) | |||||||||||
December 31, 2014 | $1,027 | $ | 2,847 | $ | 3,874 | ||||||||||||
Goodwill additions in 2014 and 2013 were primarily related to the acquisitions of Chatham Therapeutics in the BioScience segment and Gambro in the Medical Products segment, respectively. | |||||||||||||||||
As of December 31, 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 | |||||||||||||||
December 31, 2014 | |||||||||||||||||
Gross other intangible assets | $2,278 | $ 443 | $272 | $2,993 | |||||||||||||
Accumulated amortization | (769 | ) | (145 | ) | — | (914 | ) | ||||||||||
Other intangible assets, net | $1,509 | $ 298 | $272 | $2,079 | |||||||||||||
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 | |||||||||||||
Intangible asset amortization expense was $185 million in 2014, $129 million in 2013 and $101 million in 2012. The anticipated annual amortization expense for definite-lived intangible assets recorded as of December 31, 2014 is $193 million in 2015, $189 million in 2016, $173 million in 2017, $168 million in 2018 and $155 million in 2019. | |||||||||||||||||
The decrease in indefinite-lived intangible assets and corresponding increase in developed technology was primarily driven by the acquired IPR&D from the Inspiration / Ipsen acquisition obtaining regulatory approval. These intangible assets are being amortized on a straight-line basis over an estimated useful life of approximately 15 years. The decrease in indefinite-lived intangible assets was partially offset by additions related to the acquisitions of Chatham Therapeutics and AesRx. The overall decrease in intangible assets was also driven by currency translation. |
Infusion_Pump_and_Business_Opt
Infusion Pump and Business Optimization Charges | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Infusion Pump and Business Optimization Charges | NOTE 7 | ||||||||||||
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 a replacement pump in a limited number of cases. The company expects to complete remediation by mid-2016. The company utilized $4 million of the cash reserves in the fourth quarter of 2014 and, as of December 31, 2014, the company believes the remaining reserves 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 2011, the company recorded total charges and adjustments of $925 million related to COLLEAGUE and SYNDEO infusion pumps, including $716 million of cash costs and $209 million principally related to asset impairments. | |||||||||||||
During 2012, the company recorded an adjustment of $37 million in cost of sales to reduce the COLLEAGUE infusion pump reserves as the company substantially completed its recall activities in the United States. The company also refined the original expectations for cash and non-cash activities based on expected usage of the reserves and recorded a $63 million adjustment to increase reserves for cash costs with a corresponding decrease to non-cash reserves, which had no impact on the results of operations. The net impact of these adjustments was an increase in cash reserves of $26 million during 2012. During 2013, the company further refined its expectations for cash and non-cash activities related to COLLEAGUE based on expected usage of the reserves and recorded a $17 million adjustment to decrease reserves for cash costs with a corresponding increase to non-cash reserves, which had no impact on the results of operations. During 2014, the company further refined its expectations and recorded an adjustment of $25 million in cost of sales to reduce the COLLEAGUE infusion pump reserves based on the progress of remediation activities in Canada. | |||||||||||||
The following table summarizes cash activity in the company’s COLLEAGUE and SYNDEO infusion pump reserves through December 31, 2014. | |||||||||||||
(in millions) | |||||||||||||
Charges and adjustments in 2005 through 2011 | $ | 716 | |||||||||||
Utilization in 2005 through 2011 | (440 | ) | |||||||||||
Reserves at December 31, 2011 | 276 | ||||||||||||
Reserve adjustments | 26 | ||||||||||||
Utilization | (175 | ) | |||||||||||
Reserves at December 31, 2012 | 127 | ||||||||||||
Reserve adjustments | (17 | ) | |||||||||||
Utilization | (27 | ) | |||||||||||
Reserves at December 31, 2013 | 83 | ||||||||||||
Reserve adjustments | (25 | ) | |||||||||||
Utilization | (36 | ) | |||||||||||
Reserves at December 31, 2014 | $ | 22 | |||||||||||
The reserve for remediation activities in the United States has been substantially utilized, with remaining reserves related to remediation activities outside of the United States continuing to be utilized through 2015. | |||||||||||||
As of December 31, 2014, the company believes the remaining infusion pump reserves for COLLEAGUE and SYNDEO to be adequate; however, additional adjustments may be recorded in the future as the programs are completed. | |||||||||||||
Business Optimization Charges | |||||||||||||
From 2009 through 2011, the company recorded total charges of $528 million (of which $13 million are classified as 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 $409 million, principally pertaining to severance and other employee-related costs, and $119 million of asset impairments relating to fixed assets, inventory and other assets associated with discontinued products and projects. | |||||||||||||
The company’s total charges in 2014, 2013, and 2012 are presented below. | |||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
Cash expenses | $87 | $ | 182 | $ | 98 | ||||||||
Non-cash expenses | 4 | 132 | 52 | ||||||||||
Reserve adjustments | (64 | ) | (20 | ) | — | ||||||||
Total business optimization expenses | 27 | 294 | 150 | ||||||||||
Discontinued operations | (8 | ) | (101 | ) | — | ||||||||
Business optimization expenses in continuing operations | $19 | $ | 193 | $ | 150 | ||||||||
The 2014 charges primarily included severance and other employee-related costs associated with the formation of a new R&D center in Cambridge, Massachusetts as well as Gambro post-acquisition restructuring activities. The 2013 charges included severance, other employee-related costs, and asset impairments associated with the discontinuation of certain R&D programs related to the Vaccines franchise, in addition to Gambro post-acquisition restructuring activities. In 2014 and 2013, the company refined its expectations and recorded adjustments to previous business optimization reserves that are no longer probable of being utilized. The 2012 charges included severance, other employee-related costs, and asset impairments primarily in Europe and the United States. | |||||||||||||
The business optimization charges are recorded as follows in the consolidated statements of income: | |||||||||||||
• | 2014: ($8 million) in cost of sales, $2 million in marketing and administrative expenses, and $25 million in R&D expenses (with an additional $8 million recorded in discontinued operations) | ||||||||||||
• | 2013: $52 million in cost of sales, $95 million in marketing and administrative expenses, and $46 million in R&D expenses (with an additional $101 million recorded in discontinued operations) | ||||||||||||
• | 2012: $62 million in cost of sales, $60 million in marketing and administrative expenses, and $28 million in R&D expenses | ||||||||||||
The following table summarizes cash activity in the reserves related to the company’s business optimization initiatives. | |||||||||||||
(in millions) | |||||||||||||
Charges and adjustments in 2009 through 2011 | $ | 409 | |||||||||||
Utilization in 2009 through 2011 | (183 | ) | |||||||||||
CTA | (1 | ) | |||||||||||
Reserve at December 31, 2011 | 225 | ||||||||||||
2012 charges | 98 | ||||||||||||
Utilization in 2012 | (99 | ) | |||||||||||
CTA | (4 | ) | |||||||||||
Reserve at December 31, 2012 | 220 | ||||||||||||
2013 charges | 182 | ||||||||||||
Reserve adjustments | (20 | ) | |||||||||||
Utilization in 2013 | (98 | ) | |||||||||||
CTA | 4 | ||||||||||||
Reserve at December 31, 2013 | 288 | ||||||||||||
2014 charges | 87 | ||||||||||||
Reserve adjustments | (62 | ) | |||||||||||
Utilization in 2014 | (125 | ) | |||||||||||
CTA | (19 | ) | |||||||||||
Reserve at December 31, 2014 | $ | 169 | |||||||||||
The reserves are expected to be substantially utilized by the end of 2016. The company believes the remaining reserves to be adequate; however, additional adjustments may be recorded in the future as the programs are completed. |
Debt_Credit_Facilities_and_Lea
Debt, Credit Facilities and Lease Commitments | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Debt, Credit Facilities and Lease Commitments | NOTE 8 | ||||||||||
DEBT, CREDIT FACILITIES AND LEASE COMMITMENTS | |||||||||||
Debt Outstanding | |||||||||||
At December 31, 2014 and 2013, the company had the following debt outstanding. | |||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||
Commercial paper | $ 875 | $ | — | ||||||||
Other short-term debt | 38 | 181 | |||||||||
Short-term debt | $ 913 | $ | 181 | ||||||||
as of December 31 (in millions) | Effective interest | 20142 | 20132 | ||||||||
rate in 20141 | |||||||||||
4.0% notes due 2014 | 4.10% | — | 351 | ||||||||
Floating rate notes due 2014 | 0.60% | — | 500 | ||||||||
Variable-rate loan due 2015 | 0.80% | 171 | 194 | ||||||||
4.625% notes due 2015 | 4.70% | 604 | 625 | ||||||||
5.9% notes due 2016 | 6.00% | 614 | 622 | ||||||||
0.95% notes due 2016 | 1.10% | 500 | 500 | ||||||||
1.85% notes due 2017 | 2.00% | 500 | 500 | ||||||||
Variable-rate loan due 2017 | 1.00% | 120 | 136 | ||||||||
5.375% notes due 2018 | 5.50% | 500 | 499 | ||||||||
1.85% notes due 2018 | 2.00% | 750 | 750 | ||||||||
4.5% notes due 2019 | 4.60% | 535 | 534 | ||||||||
4.25% notes due 2020 | 4.40% | 299 | 299 | ||||||||
2.40% notes due 2022 | 2.50% | 723 | 684 | ||||||||
3.2% notes due 2023 | 3.30% | 1,275 | 1,246 | ||||||||
6.625% debentures due 2028 | 6.70% | 132 | 133 | ||||||||
6.25% notes due 2037 | 6.30% | 499 | 499 | ||||||||
3.65% notes due 2042 | 3.70% | 298 | 298 | ||||||||
4.5% notes due 2043 | 4.50% | 500 | 500 | ||||||||
Other | — | 372 | 115 | ||||||||
Total debt and capital lease obligations | 8,392 | 8,985 | |||||||||
Current portion | (786 | ) | (859 | ) | |||||||
Long-term portion | $7,606 | $ | 8,126 | ||||||||
1 | Excludes the effect of any related interest rate swaps. | ||||||||||
2 | Book values include any discounts, premiums and adjustments related to hedging instruments. | ||||||||||
Significant Debt Issuances | |||||||||||
In June 2013, the company issued $500 million of floating rate senior notes maturing in December 2014, $500 million of senior notes bearing a coupon rate of 0.95% and maturing in June 2016, $750 million of senior notes bearing a coupon rate of 1.85% and maturing in June 2018, $1.25 billion of senior notes bearing a coupon rate of 3.2% and maturing in June 2023, and $500 million of senior notes bearing a coupon rate of 4.5% and maturing in June 2043. Approximately $3.0 billion of the net proceeds from the June 2013 debt issuances was used to finance the acquisition of Gambro in 2013 and the remainder was used for general corporate purposes, including the repayment of commercial paper. | |||||||||||
Commercial Paper | |||||||||||
During 2014, the company issued and redeemed commercial paper, and there was $875 million outstanding at December 31, 2014 with a weighted-average interest rate of 0.456%. There was no commercial paper outstanding at December 31, 2013. | |||||||||||
Credit Facilities | |||||||||||
The company’s primary revolving credit facility has a maximum capacity of $1.5 billion and matures in December 2015. In 2014, the company entered into an additional revolving credit facility with a maximum capacity of $1.8 billion which also matures in December 2015 and contains similar covenants as the primary revolving credit facility. The company also maintains a Euro-denominated revolving credit facility with a maximum capacity of approximately $375 million as of December 31, 2014 and matures in December 2015. As of December 31, 2014 there were no borrowings outstanding under any of these revolving credit facilities. As of December 31, 2013, there was approximately $124 million outstanding under the Euro-denominated facility and there were no outstanding borrowings under the primary revolving credit facility. The company’s facilities enable the company to borrow funds on an unsecured basis at variable interest rates, and contain various covenants, including a maximum net-debt-to-capital ratio. At December 31, 2014, the company was in compliance with the financial covenants in these agreements. The non-performance of any financial institution supporting any of the credit facilities would reduce the maximum capacity of these facilities by each institution’s respective commitment. | |||||||||||
The company also maintains other credit arrangements, which totaled $329 million at December 31, 2014 and $587 million at December 31, 2013. Borrowings outstanding under these facilities totaled $38 million at December 31, 2014 and $181million at December 31, 2013. | |||||||||||
Leases | |||||||||||
The company leases certain facilities and equipment under capital and operating leases expiring at various dates. The leases generally provide for the company to pay taxes, maintenance, insurance and certain other operating costs of the leased property. Most of the operating leases contain renewal options. Operating lease rent expense was $250 million in 2014, $214 million in 2013 and $202 million in 2012. | |||||||||||
Future Minimum Lease Payments and Debt Maturities | |||||||||||
as of and for the years ended December 31 (in millions) | Operating | Debt maturities | |||||||||
leases | and capital | ||||||||||
leases | |||||||||||
2015 | $ 222 | $ 786 | |||||||||
2016 | 187 | 1,142 | |||||||||
2017 | 163 | 644 | |||||||||
2018 | 130 | 1,275 | |||||||||
2019 | 113 | 525 | |||||||||
Thereafter | 232 | 4,097 | |||||||||
Total obligations and commitments | 1,047 | 8,469 | |||||||||
Interest on capital leases, discounts and premiums, and adjustments relating to hedging instruments | — | (77 | ) | ||||||||
Total debt and lease obligations | $1,047 | $8,392 | |||||||||
Derivative_Instruments_and_Hed
Derivative Instruments and Hedging Activity | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Derivative Instruments and Hedging Activity | NOTE 9 | ||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITY | |||||||||||||||||||||
Foreign Currency and Interest Rate Risk Management | |||||||||||||||||||||
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. | |||||||||||||||||||||
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. Cash flow hedges primarily related to forecasted intercompany sales denominated in foreign currencies, and anticipated issuances of debt. | |||||||||||||||||||||
The notional amounts of foreign exchange contracts were $917 million and $2.1 billion as of December 31, 2014 and 2013, respectively. As of December 31, 2014, $550 million of interest rate contracts designated as cash flow hedges were outstanding. The company did not have any interest rate contracts designated as cash flow hedges outstanding at December 31, 2013. The maximum term over which the company has cash flow hedge contracts in place related to forecasted transactions at December 31, 2014 is 12 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. | |||||||||||||||||||||
The total notional amount of interest rate contracts designated as fair value hedges was $2.9 billion and $1.2 billion as of December 31, 2014 and 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 2014 resulting from changes in the company’s assessment of the probability that the hedged forecasted transactions would occur. In 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 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 terms of these instruments generally do not exceed one month. | |||||||||||||||||||||
The total notional amount of undesignated derivative instruments was $434 million as of December 31, 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, which matured in 2013. | |||||||||||||||||||||
The company recorded losses of $23 million in 2013 associated with the Gambro-related option and forward contracts. | |||||||||||||||||||||
Gains and Losses on Derivative Instruments | |||||||||||||||||||||
The following tables summarize the gains and losses on the company’s derivative instruments for the years ended December 31, 2014 and 2013. | |||||||||||||||||||||
Gain (loss) | Location of gain (loss) in | Gain (loss) | |||||||||||||||||||
recognized in OCI | income statement | reclassified from | |||||||||||||||||||
AOCI into income | |||||||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Cash flow hedges | |||||||||||||||||||||
Interest rate contracts | $ (1 | ) | $26 | Net interest expense | $ (1 | ) | $10 | ||||||||||||||
Foreign exchange contracts | 1 | 1 | Net sales | 1 | (1 | ) | |||||||||||||||
Foreign exchange contracts | 51 | 36 | Cost of sales | 13 | 32 | ||||||||||||||||
Total | $51 | $63 | $13 | $41 | |||||||||||||||||
Location of gain (loss) in | Gain (loss) | ||||||||||||||||||||
income statement | recognized in income | ||||||||||||||||||||
(in millions) | 2014 | 2013 | |||||||||||||||||||
Fair value hedges | |||||||||||||||||||||
Interest rate contracts | Net interest expense | $68 | $(46 | ) | |||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Other expense (income), net | $49 | $ 11 | ||||||||||||||||||
For the company’s fair value hedges, equal and offsetting losses of $68 million and gains of $46 million were recognized in net interest expense in 2014 and 2013, respectively, as adjustments to the underlying hedged items, fixed-rate debt. Ineffectiveness related to the company’s cash flow and fair value hedges for the year ended December 31, 2014 was not material. | |||||||||||||||||||||
The following table summarizes net-of-tax activity in AOCI, a component of shareholders’ equity, related to the company’s cash flow hedges. | |||||||||||||||||||||
as of and for the years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||||||
Accumulated other comprehensive income (loss) balance at beginning of year | $ | 10 | $ | (5 | ) | $ | 2 | ||||||||||||||
Gain (loss) in fair value of derivatives during the year | 32 | 41 | (7 | ) | |||||||||||||||||
Amount reclassified to earnings during the year | (8 | ) | (26 | ) | — | ||||||||||||||||
Accumulated other comprehensive income (loss) balance at end of year | $ | 34 | $ | 10 | $ | (5 | ) | ||||||||||||||
As of December 31, 2014, $28 million of deferred, net after-tax gains on derivative instruments included in AOCI are expected to be recognized in earnings during the next 12 months, coinciding with when the hedged items are expected to impact earnings. | |||||||||||||||||||||
Fair Values of Derivative Instruments | |||||||||||||||||||||
The following table summarizes the classification and fair value amounts of derivative instruments reported in the consolidated balance sheet as of December 31, 2014. | |||||||||||||||||||||
Derivatives in asset positions | Derivatives in liability positions | ||||||||||||||||||||
(in millions) | Balance sheet location | Fair | Balance sheet location | Fair | |||||||||||||||||
value | value | ||||||||||||||||||||
Derivative instruments designated as hedges | |||||||||||||||||||||
Interest rate contracts | Prepaid expenses and other | $ | 1 | Accounts payable | $ 2 | ||||||||||||||||
and accrued liabilities | |||||||||||||||||||||
Interest rate contracts | Other long-term assets | 89 | Other long-term liabilities | — | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | 51 | Accounts payable and accrued liabilities | — | |||||||||||||||||
Total derivative instruments designated as hedges | $ | 141 | $ 2 | ||||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | $ | — | Accounts payable and accrued liabilities | $23 | ||||||||||||||||
Total derivative instruments | $ | 141 | $25 | ||||||||||||||||||
The following table summarizes the classification and fair value amounts of derivative instruments reported in the consolidated balance sheet as of December 31, 2013. | |||||||||||||||||||||
Derivatives in asset positions | Derivatives in liability positions | ||||||||||||||||||||
(in millions) | Balance sheet location | Fair | Balance sheet location | Fair | |||||||||||||||||
value | 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 and accrued liabilities | 7 | |||||||||||||||||
Total derivative instruments designated as hedges | $ | 72 | $21 | ||||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | $ | — | Accounts payable and accrued liabilities | $ 1 | ||||||||||||||||
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: | |||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||
(in millions) | Asset | Liability | Asset | Liability | |||||||||||||||||
Gross amounts recognized in the consolidated balance sheet | $141 | $ 25 | $ 72 | $ 22 | |||||||||||||||||
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet | (22 | ) | (22 | ) | (17 | ) | (17 | ) | |||||||||||||
Total | $119 | $ 3 | $ 55 | $ 5 | |||||||||||||||||
Financial_Instruments_and_Rela
Financial Instruments and Related Fair Value Measurements | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Financial Instruments and Related Fair Value Measurements | NOTE 10 | ||||||||||||||||
FINANCIAL INSTRUMENTS AND RELATED FAIR VALUE MEASUREMENTS | |||||||||||||||||
Receivable Securitizations | |||||||||||||||||
For trade receivables originated in Japan, the company has entered into agreements with financial institutions in which the entire interest in and ownership of the receivable is sold. The company continues to service the receivables in its Japanese securitization arrangement. Servicing assets or liabilities are not recognized because the company receives adequate compensation to service the sold receivables. The Japanese securitization arrangement includes limited recourse provisions, which are not material. | |||||||||||||||||
The following is a summary of the activity relating to the securitization arrangement. | |||||||||||||||||
as of and for the years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||
Sold receivables at beginning of year | $ | 114 | $ | 157 | $ | 160 | |||||||||||
Proceeds from sales of receivables | 464 | 506 | 630 | ||||||||||||||
Cash collections (remitted to the owners of the receivables) | (459 | ) | (519 | ) | (624 | ) | |||||||||||
Effect of currency exchange rate changes | (15 | ) | (30 | ) | (9 | ) | |||||||||||
Sold receivables at end of year | $ | 104 | $ | 114 | $ | 157 | |||||||||||
The net losses relating to the sales of receivables were immaterial for each year. | |||||||||||||||||
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 December 31, 2014 and 2013, the company’s net accounts receivable from the public sector in Greece, Spain, Portugal and Italy totaled $363 million and $561 million, respectively. | |||||||||||||||||
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. Global economic conditions, governmental actions and customer-specific factors may 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. | |||||||||||||||||
Fair Value Measurements | |||||||||||||||||
The fair value hierarchy under the accounting standard for fair value measurements consists of the following three levels: | |||||||||||||||||
• | Level 1 — Quoted prices in active markets that the company has the ability to access for identical assets or liabilities; | ||||||||||||||||
• | Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market; and | ||||||||||||||||
• | Level 3 — Valuations using significant inputs that are unobservable in the market and include the use of judgment by the company’s management about the assumptions market participants would use in pricing the asset or liability. | ||||||||||||||||
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 consolidated balance sheets. | |||||||||||||||||
Basis of fair value measurement | |||||||||||||||||
(in millions) | Balance at | Quoted prices in | Significant other | Significant | |||||||||||||
December 31, | active markets for | observable inputs | unobservable inputs | ||||||||||||||
2014 | identical assets | (Level 2) | (Level 3) | ||||||||||||||
(Level 1) | |||||||||||||||||
Assets | |||||||||||||||||
Foreign currency hedges | $ 51 | $ — | $ 51 | $ — | |||||||||||||
Interest rate hedges | 90 | — | 90 | — | |||||||||||||
Available-for-sale securities | |||||||||||||||||
Equity securities | 105 | 105 | — | — | |||||||||||||
Foreign government debt securities | 18 | — | 18 | — | |||||||||||||
Total assets | $264 | $105 | $159 | $ — | |||||||||||||
Liabilities | |||||||||||||||||
Foreign currency hedges | $ 23 | $ — | $ 23 | $ — | |||||||||||||
Interest rate hedges | 2 | — | 2 | — | |||||||||||||
Contingent payments related to acquisitions | 569 | — | — | 569 | |||||||||||||
Total liabilities | $594 | $ — | $ 25 | $569 | |||||||||||||
Basis of fair value measurement | |||||||||||||||||
(in millions) | Balance at | Quoted prices in | Significant other | Significant | |||||||||||||
December 31, | active markets for | observable inputs | unobservable inputs | ||||||||||||||
2013 | identical assets | (Level 2) | (Level 3) | ||||||||||||||
(Level 1) | |||||||||||||||||
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 December 31, 2014, cash and equivalents of $2.9 billion included money market funds of approximately $989 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, regulatory, and commercial milestone payments, in addition to sales-based payments, and are valued using discounted cash flow techniques. The fair value of development, regulatory, 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 December 31, 2014, management’s expected weighted-average probability of payment for development, regulatory, and commercial milestone payments expected to occur was approximately 26%. 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 December 31, 2014, the company held available-for-sale equity securities that had an amortized cost basis and fair value of $79 million and $105 million, respectively. The company had net unrealized gains of $27 million, comprised of unrealized losses of $9 million, which are temporary in nature, and unrealized gains of $36 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, with $9 million in cumulative unrealized losses. As of December 31, 2014 and 2013, the cumulative unrealized gains or losses for the company’s available-for-sale debt securities were less than $1 million. | |||||||||||||||||
In July 2012, Baxter acquired approximately 3 million shares of Onconova preferred stock for $50 million, which the company classified as available-for-sale debt securities as a result of certain mandatory redemption rights held by Baxter. In 2013, Baxter reclassified the securities to available-for-sale equity securities as a result of the conversion of the preferred stock to common stock upon the completion of Onconova’s initial public offering. In 2014, the company recorded a $45 million other-than-temporary impairment charge to write-down the investment in Onconova to its fair value of $9 million based on the duration and severity of the loss. The loss was reported in other expense (income), net. The company recognized losses totaling $8 million in 2012 related to unrealized and realized losses associated with the company’s Greek government and European Financial Stability Facility bonds, which Baxter sold for $14 million in the second quarter of 2012. | |||||||||||||||||
In February 2012, as a result of the company’s acquisition of Synovis, the company acquired marketable securities, which included municipal securities, corporate bonds, and U.S. government agency issues, which had been classified as available-for-sale, with primarily all of these securities maturing within one year. The company received proceeds of $45 million from the sale and maturity of all of these securities in 2012. | |||||||||||||||||
Refer to Note 13 for fair value disclosures related to the company’s pension plans. | |||||||||||||||||
The following table is a reconciliation of the fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions and preferred stock. | |||||||||||||||||
(in millions) | Contingent | Preferred | |||||||||||||||
payments | stock | ||||||||||||||||
Fair value as of December 31, 2012 | $ 86 | $ 51 | |||||||||||||||
Additions | 269 | — | |||||||||||||||
Payments | (2 | ) | — | ||||||||||||||
Net gains recognized in earnings | (17 | ) | — | ||||||||||||||
CTA | 4 | — | |||||||||||||||
Conversion to a publicly traded equity security | — | (51 | ) | ||||||||||||||
Fair value as of December 31, 2013 | 340 | — | |||||||||||||||
Additions | 142 | — | |||||||||||||||
Payments | (15 | ) | — | ||||||||||||||
Net losses recognized in earnings | 122 | — | |||||||||||||||
CTA | (20 | ) | — | ||||||||||||||
Fair value as of December 31, 2014 | $569 | $ — | |||||||||||||||
The company’s additions in 2014 related 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 related to an increase in the estimated fair value of contingent payment liabilities associated with the 2013 acquisition of the investigational hemophilia compound OBIZUR and related assets from Inspiration and Ipsen. The loss was reported in other expense (income), 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. The company’s additions in 2013 principally related to contingent payment liabilities of $269 million associated with the Inspiration / Ipsen acquisition in the first quarter of 2013. | |||||||||||||||||
As discussed further in Note 7, the company recorded asset impairment charges related to its COLLEAGUE and SYNDEO infusion pumps and business optimization initiatives in 2014, 2013, and 2012. As these assets had no alternative use and no salvage value, the fair values, measured using significant unobservable inputs (Level 3), were assessed to be zero. | |||||||||||||||||
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 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 consolidated balance sheets and the approximate fair values. | |||||||||||||||||
Book values | Approximate | ||||||||||||||||
fair values | |||||||||||||||||
as of December 31 (in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Assets | |||||||||||||||||
Investments | $ | 54 | $ | 53 | $ | 52 | $ | 53 | |||||||||
Liabilities | |||||||||||||||||
Short-term debt | 913 | 181 | 913 | 181 | |||||||||||||
Current maturities of long-term debt and lease obligations | 786 | 859 | 791 | 862 | |||||||||||||
Long-term debt and lease obligations | 7,606 | 8,126 | 8,192 | 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 December 31, 2014 and 2013. | |||||||||||||||||
Basis of fair value measurement | |||||||||||||||||
(in millions) | Balance as of | Quoted prices in | Significant other | Significant | |||||||||||||
December 31, | active markets for | observable inputs | unobservable inputs | ||||||||||||||
2014 | identical assets | (Level 2) | (Level 3) | ||||||||||||||
(Level 1) | |||||||||||||||||
Assets | |||||||||||||||||
Investments | $ 52 | $— | $ 8 | $44 | |||||||||||||
Total assets | $ 52 | $— | $ 8 | $44 | |||||||||||||
Liabilities | |||||||||||||||||
Short-term debt | $ 913 | $— | $ 913 | $— | |||||||||||||
Current maturities of long-term debt and lease obligations | 791 | — | 791 | — | |||||||||||||
Long-term debt and lease obligations | 8,192 | — | 8,192 | — | |||||||||||||
Long-term litigation liabilities | 52 | — | — | 52 | |||||||||||||
Total liabilities | $9,948 | $— | $9,896 | $52 | |||||||||||||
Basis of fair value measurement | |||||||||||||||||
(in millions) | Balance as of | Quoted prices in | Significant other | Significant | |||||||||||||
December 31, | active markets for | observable inputs | unobservable inputs | ||||||||||||||
2013 | identical assets | (Level 2) | (Level 3) | ||||||||||||||
(Level 1) | |||||||||||||||||
Assets | |||||||||||||||||
Investments | $ 53 | $— | $ 17 | $36 | |||||||||||||
Total assets | $ 53 | $— | $ 17 | $36 | |||||||||||||
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 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 company. | |||||||||||||||||
Investments in 2014 and 2013 include 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 2014, the company recorded $84 million of income in other expense (income), net 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. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies | NOTE 11 |
COMMITMENTS AND CONTINGENCIES | |
Collaboration Agreement Contingent Payments | |
Refer to Note 5 for information regarding the company’s unfunded contingent payments associated with collaborative arrangements. | |
Limited Partnership Commitments | |
In connection with the company’s initiative to invest in early-stage products and therapies, the company has unfunded commitments of $38 million as a limited partner in multiple investment companies as of December 31, 2014. | |
Indemnifications | |
During the normal course of business, Baxter makes indemnities, commitments and guarantees pursuant to which the company may be required to make payments related to specific transactions. Indemnifications include: (i) intellectual property indemnities to customers in connection with the use, sales or license of products and services; (ii) indemnities to customers in connection with losses incurred while performing services on their premises; (iii) indemnities to vendors and service providers pertaining to claims based on negligence or willful misconduct; and (iv) indemnities involving the representations and warranties in certain contracts. In addition, under Baxter’s Amended and Restated Certificate of Incorporation, and consistent with Delaware General Corporation Law, the company has agreed to indemnify its directors and officers for certain losses and expenses upon the occurrence of certain prescribed events. The majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum potential for future payments that the company could be obligated to make. To help address some of these risks, the company maintains various insurance coverages. Based on historical experience and evaluation of the agreements, the company does not believe that any significant payments related to its indemnities will occur, and therefore the company has not recorded any associated liabilities. | |
Legal Contingencies | |
Refer to Note 16 for a discussion of the company’s legal contingencies. |
Shareholders_Equity
Shareholders' Equity | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Shareholders' Equity | NOTE 12 | ||||||||||||||||
SHAREHOLDERS’ EQUITY | |||||||||||||||||
Stock-Based Compensation | |||||||||||||||||
The company’s stock-based compensation generally includes stock options, restricted stock units (RSUs), performance share units (PSUs) and purchases under the company’s employee stock purchase plan. Shares issued relating to the company’s stock-based plans are generally issued out of treasury stock. | |||||||||||||||||
In 2011, shareholders approved the Baxter International Inc. 2011 Incentive Plan which provided for 40 million additional shares of common stock available for issuance with respect to awards for participants. As of December 31, 2014, approximately 29 million authorized shares are available for future awards under the company’s stock-based compensation plans. | |||||||||||||||||
Stock Compensation Expense | |||||||||||||||||
Stock compensation expense recognized in the consolidated statements of income was $159 million, $150 million and $130 million in 2014, 2013 and 2012, respectively. The related tax benefit recognized was $51 million in 2014, $45 million in 2013 and $40 million in 2012. | |||||||||||||||||
Stock compensation expense is recorded at the corporate level and is not allocated to a segment. 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. Costs capitalized in the consolidated balance sheets at December 31, 2014 and 2013 were not significant. | |||||||||||||||||
Stock compensation expense is based on awards expected to vest, and therefore has been reduced by estimated forfeitures. | |||||||||||||||||
Stock Options | |||||||||||||||||
Stock options are granted to employees and non-employee directors with exercise prices at least equal to 100% of the market value on the date of grant. Stock options granted to employees generally vest in one-third increments over a three-year period. Stock options granted to non-employee directors generally cliff-vest 100% one year from the grant date. Stock options typically have a contractual term of 10 years. The grant-date fair value, adjusted for estimated forfeitures, is recognized as expense on a straight-line basis over the substantive vesting period. | |||||||||||||||||
The fair value of stock options is determined using the Black-Scholes model. The weighted-average assumptions used in estimating the fair value of stock options granted during each year, along with the weighted-average grant-date fair values, were as follows. | |||||||||||||||||
years ended December 31 | 2014 | 2013 | 2012 | ||||||||||||||
Expected volatility | 24% | 25% | 25% | ||||||||||||||
Expected life (in years) | 5.5 | 5.5 | 5.5 | ||||||||||||||
Risk-free interest rate | 1.70% | 0.90% | 1.00% | ||||||||||||||
Dividend yield | 2.84% | 2.60% | 2.30% | ||||||||||||||
Fair value per stock option | $12 | $12 | $10 | ||||||||||||||
The following table summarizes stock option activity for the year ended December 31, 2014 and stock option information at December 31, 2014. | |||||||||||||||||
(options and aggregate intrinsic values in thousands) | Options | Weighted- | Weighted-average | Aggregate | |||||||||||||
average | remaining | intrinsic | |||||||||||||||
exercise | contractual | value | |||||||||||||||
price | term (in years) | ||||||||||||||||
Outstanding at January 1, 2014 | 29,129 | $ | 57 | ||||||||||||||
Granted | 6,894 | 69.26 | |||||||||||||||
Exercised | (5,591 | ) | 52.54 | ||||||||||||||
Forfeited | (1,042 | ) | 67.16 | ||||||||||||||
Expired | (117 | ) | 49.21 | ||||||||||||||
Outstanding at December 31, 2014 | 29,273 | $ | 60.41 | 6.2 | $ | 377,120 | |||||||||||
Vested or expected to vest as of December 31, 2014 | 28,756 | $ | 60.25 | 6.2 | $ | 375,093 | |||||||||||
Exercisable at December 31, 2014 | 17,419 | $ | 55.36 | 4.6 | $ | 312,381 | |||||||||||
The aggregate intrinsic value in the table above represents the difference between the exercise price and the company’s closing stock price on the last trading day of the year. The total intrinsic value of options exercised was $114 million, $176 million and $129 million in 2014, 2013 and 2012, respectively. | |||||||||||||||||
As of December 31, 2014, $63 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over a weighted-average period of approximately 1.6 years. | |||||||||||||||||
RSUs | |||||||||||||||||
RSUs are granted to employees and non-employee directors. RSUs granted to employees generally vest in one-third increments over a three-year period. RSUs granted to non-employee directors generally cliff-vest one year from the grant date. The grant-date fair value, adjusted for estimated forfeitures, is recognized as expense on a straight-line basis over the substantive vesting period. The fair value of RSUs is determined based on the number of shares granted and the quoted price of the company’s common stock on the date of grant. | |||||||||||||||||
The following table summarizes nonvested RSU activity for the year ended December 31, 2014. | |||||||||||||||||
(share units in thousands) | Share units | Weighted- | |||||||||||||||
average | |||||||||||||||||
grant-date | |||||||||||||||||
fair value | |||||||||||||||||
Nonvested RSUs at January 1, 2014 | 2,218 | $62.06 | |||||||||||||||
Granted | 1,521 | 71.22 | |||||||||||||||
Vested | (854 | ) | 60.23 | ||||||||||||||
Forfeited | (237 | ) | 62.5 | ||||||||||||||
Nonvested RSUs at December 31, 2014 | 2,648 | $67.89 | |||||||||||||||
As of December 31, 2014, $92 million of unrecognized compensation cost related to RSUs is expected to be recognized as expense over a weighted-average period of approximately 1.7 years. The weighted-average grant-date fair value of RSUs in 2014, 2013 and 2012 was $71.22, $70.09 and $57.03, respectively. The fair value of RSUs vested in 2014, 2013 and 2012 was $62 million, $47 million and $21 million, respectively. | |||||||||||||||||
PSUs | |||||||||||||||||
The company’s annual equity awards stock compensation program for senior management includes the issuance of PSUs based on return on invested capital (ROIC) as well as market conditions. The vesting condition for ROIC PSUs is set at the beginning of the year for each tranche of the award during the three-year service period. Compensation cost for the ROIC 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 ROIC PSUs is adjusted at each reporting date to reflect the estimated probability of achieving the vesting condition. | |||||||||||||||||
The fair value for PSUs based on market conditions is determined using a Monte Carlo model. 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. | |||||||||||||||||
years ended December 31 | 2014 | 2013 | 2012 | ||||||||||||||
Baxter volatility | 20% | 21% | 24% | ||||||||||||||
Peer group volatility | 13%-58% | 13%-38% | 14%-50% | ||||||||||||||
Correlation of returns | 0.23-0.66 | 0.37-0.62 | 0.26-0.54 | ||||||||||||||
Risk-free interest rate | 0.70% | 0.30% | 0.40% | ||||||||||||||
Fair value per PSU | $57 | $67 | $72 | ||||||||||||||
Unrecognized compensation cost related to all granted unvested PSUs of $12 million at December 31, 2014 is expected to be recognized as expense over a weighted-average period of 1.6 years. | |||||||||||||||||
The following table summarizes nonvested PSU activity for the year ended December 31, 2014. | |||||||||||||||||
(share units in thousands) | Share units | Weighted-average | |||||||||||||||
grant-date | |||||||||||||||||
fair value | |||||||||||||||||
Nonvested PSUs at January 1, 2014 | 645 | $70.18 | |||||||||||||||
Granted | 285 | 62.08 | |||||||||||||||
Vested | (360 | ) | 71.51 | ||||||||||||||
Forfeited | (81 | ) | 68.16 | ||||||||||||||
Nonvested PSUs at December 31, 2014 | 489 | $64.80 | |||||||||||||||
Employee Stock Purchase Plan | |||||||||||||||||
Nearly all employees are eligible to participate in the company’s employee stock purchase plan. The employee purchase price is 85% of the closing market price on the purchase date. | |||||||||||||||||
In 2011, shareholders approved the Baxter International Inc. Employee Stock Purchase Plan which reflected the merger of the previous plans for U.S. and international employees. This employee stock purchase plan provided for 10 million shares of common stock available for issuance to eligible participants, of which approximately seven million shares were available for future awards as of December 31, 2014. | |||||||||||||||||
During 2014, 2013 and 2012, the company issued approximately 0.8 million, 0.8 million and 0.9 million shares, respectively, under the prior and current employee stock purchase plans. The number of shares under subscription at December 31, 2014 totaled approximately 0.6 million. | |||||||||||||||||
Realized Excess Income Tax Benefits and the Impact on the Statements of Cash Flows | |||||||||||||||||
Realized excess tax benefits associated with stock compensation are presented in the consolidated statements of cash flows as an outflow within the operating section and an inflow within the financing section. Realized excess tax benefits from stock-based compensation were $24 million, $34 million and $24 million in 2014, 2013 and 2012, respectively. | |||||||||||||||||
Cash Dividends | |||||||||||||||||
Total cash dividends declared per common share for 2014, 2013, and 2012 were $2.05, $1.92 and $1.57, respectively. In November 2014, the board of directors declared a quarterly dividend of $0.52 per share ($2.08 per share on an annualized basis), which was paid on January 2, 2015 to shareholders of record as of December 5, 2014. | |||||||||||||||||
In May 2013, the board of directors declared a quarterly dividend of $0.49 per share ($1.96 per share on an annualized basis), which represented an increase of 9% over the previous quarterly rate. In July 2012, the board of directors declared a quarterly dividend of $0.45 per share ($1.80 per share on an annualized basis), which represented an increase of 34% over the previous quarterly rate. | |||||||||||||||||
Stock Repurchase Programs | |||||||||||||||||
As authorized by the board of directors, the company repurchases its stock depending on the company’s cash flows, net debt level and market conditions. The company repurchased eight million shares for $0.6 billion in 2014, 13 million shares for $0.9 billion in 2013 and 25 million shares for $1.5 billion in 2012. In July 2012, the board of directors authorized the repurchase of up to $2.0 billion of the company’s common stock and $0.5 billion remained available as of December 31, 2014. |
RETIREMENT_AND_OTHER_BENEFIT_P
RETIREMENT AND OTHER BENEFIT PROGRAMS | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
RETIREMENT AND OTHER BENEFIT PROGRAMS | NOTE 13 | ||||||||||||||||||||||||
RETIREMENT AND OTHER BENEFIT PROGRAMS | |||||||||||||||||||||||||
The company sponsors a number of qualified and nonqualified pension plans for eligible employees. The company also sponsors certain unfunded contributory healthcare and life insurance benefits for substantially all domestic retired employees. Newly hired employees in the United States and Puerto Rico are not eligible to participate in the pension plans but receive a higher level of company contributions in the defined contribution plans. | |||||||||||||||||||||||||
In July 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 plan amendment resulted in a reduction to the postemployment benefit obligation of $124 million, which was partially offset by a $44 million actuarial loss for the change in discount rate. The corresponding $80 million recognized in AOCI will be amortized as a reduction to net periodic benefit cost over approximately 11 years. | |||||||||||||||||||||||||
In August 2012, Baxter announced an offer to terminated-vested participants in the U.S. pension plan (approximately 16,000 participants) to pay a lump-sum payment which would fully settle the company’s pension plan obligation to these participants. The company offered the one-time voluntary lump-sum payment in an effort to reduce its long-term pension obligations and ongoing annual pension expense. The final acceptance rate by participants was approximately 50 percent, which resulted in a final payout of $377 million from plan assets in December 2012. The company recorded a non-cash settlement charge of $164 million in the fourth quarter of 2012 to immediately expense the unrealized actuarial losses related to the obligations that were settled, which were previously deferred in AOCI. The settlement charge was recognized in marketing and administrative expenses since the terminated-vested participants subject to the settlement were no longer contributing to the activities of the company. | |||||||||||||||||||||||||
Reconciliation of Pension and Other Postemployment Benefits (OPEB) Plan Obligations, Assets and Funded Status | |||||||||||||||||||||||||
The benefit plan information in the table below pertains to all of the company’s pension and OPEB plans, both in the United States and in other countries. | |||||||||||||||||||||||||
Pension benefits | OPEB | ||||||||||||||||||||||||
as of and for the years ended December 31 (in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Benefit obligations | |||||||||||||||||||||||||
Beginning of period | $ | 5,425 | $ | 5,364 | $ | 564 | $ | 650 | |||||||||||||||||
Service cost | 130 | 137 | 5 | 10 | |||||||||||||||||||||
Interest cost | 242 | 207 | 25 | 26 | |||||||||||||||||||||
Participant contributions | 10 | 9 | 12 | 11 | |||||||||||||||||||||
Actuarial loss/(gain) | 965 | (350 | ) | 106 | (99 | ) | |||||||||||||||||||
Benefit payments | (228 | ) | (203 | ) | (37 | ) | (34 | ) | |||||||||||||||||
Settlements | (6 | ) | (4 | ) | — | — | |||||||||||||||||||
Acquisitions and divestitures | (8 | ) | 220 | — | — | ||||||||||||||||||||
Plan amendments | (5 | ) | — | (124 | ) | — | |||||||||||||||||||
Foreign exchange and other | (194 | ) | 45 | — | — | ||||||||||||||||||||
End of period | 6,331 | 5,425 | 551 | 564 | |||||||||||||||||||||
Fair value of plan assets | |||||||||||||||||||||||||
Beginning of period | 4,000 | 3,642 | — | — | |||||||||||||||||||||
Actual return on plan assets | 427 | 464 | — | — | |||||||||||||||||||||
Employer contributions | 74 | 67 | 25 | 23 | |||||||||||||||||||||
Participant contributions | 10 | 9 | 12 | 11 | |||||||||||||||||||||
Benefit payments | (228 | ) | (203 | ) | (37 | ) | (34 | ) | |||||||||||||||||
Settlements | (6 | ) | (4 | ) | — | — | |||||||||||||||||||
Acquisitions and divestitures | — | 8 | — | — | |||||||||||||||||||||
Foreign exchange and other | (80 | ) | 17 | — | — | ||||||||||||||||||||
End of period | 4,197 | 4,000 | — | — | |||||||||||||||||||||
Funded status at December 31 | $ | (2,134 | ) | $ | (1,425 | ) | $ | (551 | ) | $ | (564 | ) | |||||||||||||
Amounts recognized in the consolidated balance sheets | |||||||||||||||||||||||||
Noncurrent asset | $ | 53 | $ | 50 | $ | — | $ | — | |||||||||||||||||
Current liability | (29 | ) | (29 | ) | (23 | ) | (24 | ) | |||||||||||||||||
Noncurrent liability | (2,158 | ) | (1,446 | ) | (528 | ) | (540 | ) | |||||||||||||||||
Net liability recognized at December 31 | $ | (2,134 | ) | $ | (1,425 | ) | $ | (551 | ) | $ | (564 | ) | |||||||||||||
Accumulated Benefit Obligation Information | |||||||||||||||||||||||||
The pension obligation information in the table above represents the projected benefit obligation (PBO). The PBO incorporates assumptions relating to future compensation levels. The accumulated benefit obligation (ABO) is the same as the PBO except that it includes no assumptions relating to future compensation levels. The ABO for all of the company’s pension plans was $5.8 billion and $5.0 billion at the 2014 and 2013 measurement dates, respectively. | |||||||||||||||||||||||||
The information in the funded status table above represents the totals for all of the company’s pension plans. The following is information relating to the individual plans in the funded status table above that have an ABO in excess of plan assets. | |||||||||||||||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||||||||||||||
ABO | $ | 5,550 | $ | 4,780 | |||||||||||||||||||||
Fair value of plan assets | 3,878 | 3,710 | |||||||||||||||||||||||
The following is information relating to the individual plans in the funded status table above that have a PBO in excess of plan assets (many of which also have an ABO in excess of assets, and are therefore also included in the table directly above). | |||||||||||||||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||||||||||||||
PBO | $ | 6,117 | $ | 5,260 | |||||||||||||||||||||
Fair value of plan assets | 3,954 | 3,785 | |||||||||||||||||||||||
Expected Net Pension and OPEB Plan Payments for the Next 10 Years | |||||||||||||||||||||||||
(in millions) | Pension | OPEB | |||||||||||||||||||||||
benefits | |||||||||||||||||||||||||
2015 | $ | 229 | $ | 24 | |||||||||||||||||||||
2016 | 242 | 29 | |||||||||||||||||||||||
2017 | 259 | 30 | |||||||||||||||||||||||
2018 | 268 | 31 | |||||||||||||||||||||||
2019 | 286 | 31 | |||||||||||||||||||||||
2020 through 2024 | 1,643 | 156 | |||||||||||||||||||||||
Total expected net benefit payments for next 10 years | $ | 2,927 | $ | 301 | |||||||||||||||||||||
The expected net benefit payments above reflect the company’s share of the total net benefits expected to be paid from the plans’ assets (for funded plans) or from the company’s assets (for unfunded plans). The federal subsidies relating to the Medicare Prescription Drug, Improvement and Modernization Act are not expected to be significant. | |||||||||||||||||||||||||
Amounts Recognized in AOCI | |||||||||||||||||||||||||
The pension and OPEB plans’ gains or losses, prior service costs or credits, and transition assets or obligations not yet recognized in net periodic benefit cost are recognized on a net-of-tax basis in AOCI and will be amortized from AOCI to net periodic benefit cost in the future. | |||||||||||||||||||||||||
The following is a summary of the pre-tax losses included in AOCI at December 31, 2014 and December 31, 2013. | |||||||||||||||||||||||||
(in millions) | Pension | OPEB | |||||||||||||||||||||||
benefits | |||||||||||||||||||||||||
Actuarial loss | $ | 2,069 | $ | 159 | |||||||||||||||||||||
Prior service credit and transition obligation | (5 | ) | (120 | ) | |||||||||||||||||||||
Total pre-tax loss recognized in AOCI at December 31, 2014 | $ | 2,064 | $ | 39 | |||||||||||||||||||||
Actuarial loss | $ | 1,455 | $ | 55 | |||||||||||||||||||||
Prior service credit and transition obligation | — | (1 | ) | ||||||||||||||||||||||
Total pre-tax loss recognized in AOCI at December 31, 2013 | $ | 1,455 | $ | 54 | |||||||||||||||||||||
Refer to Note 14 for the net-of-tax balances included in AOCI as of each of the year-end dates. The following is a summary of the net-of-tax amounts recorded in OCI relating to pension and OPEB plans. | |||||||||||||||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||||||||||
(Charge) gain arising during the year, net of tax (benefit) expense of ($240) in 2014, $221 in 2013 and ($143) in 2012 | $ | (494 | ) | $ | 426 | $ | (353 | ) | |||||||||||||||||
Settlement charge, net of tax expense of $65 | — | — | 103 | ||||||||||||||||||||||
Amortization of loss to earnings, net of tax expense of $47 in 2014, $88 in 2013 and $77 in 2012 | 94 | 166 | 139 | ||||||||||||||||||||||
Pension and other employee benefits (charge) gain | $ | (400 | ) | $ | 592 | $ | (111 | ) | |||||||||||||||||
In 2012, OCI activity for pension and OPEB plans was related to actuarial losses, including the settlement of certain of the company’s pension obligations. In 2013, OCI activity for pension and OPEB plans was primarily related to actuarial gains/losses. In 2014, OCI activity for pension and OPEB plans was related to actuarial losses as well as the OPEB plan amendment referenced above. | |||||||||||||||||||||||||
Amounts Expected to be Amortized From AOCI to Net Periodic Benefit Cost in 2015 | |||||||||||||||||||||||||
With respect to the AOCI balance at December 31, 2014, the following is a summary of the pre-tax amounts expected to be amortized to net periodic benefit cost in 2015. | |||||||||||||||||||||||||
(in millions) | Pension | OPEB | |||||||||||||||||||||||
benefits | |||||||||||||||||||||||||
Actuarial loss | $ | 210 | $ | 9 | |||||||||||||||||||||
Prior service credit and transition obligation | (2 | ) | (12 | ) | |||||||||||||||||||||
Total pre-tax amount expected to be amortized from AOCI to net pension and OPEB cost in 2015 | $ | 208 | $ | (3 | ) | ||||||||||||||||||||
Net Periodic Benefit Cost | |||||||||||||||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Pension benefits | |||||||||||||||||||||||||
Service cost | $ | 130 | $ | 137 | $ | 110 | |||||||||||||||||||
Interest cost | 242 | 207 | 235 | ||||||||||||||||||||||
Expected return on plan assets | (269 | ) | (254 | ) | (288 | ) | |||||||||||||||||||
Amortization of net losses and other deferred amounts | 144 | 245 | 209 | ||||||||||||||||||||||
Settlement losses | 1 | 1 | 168 | ||||||||||||||||||||||
Net periodic pension benefit cost | $ | 248 | $ | 336 | $ | 434 | |||||||||||||||||||
OPEB | |||||||||||||||||||||||||
Service cost | $ | 5 | $ | 10 | $ | 7 | |||||||||||||||||||
Interest cost | 25 | 26 | 29 | ||||||||||||||||||||||
Amortization of net loss and prior service credit | (3 | ) | 9 | 7 | |||||||||||||||||||||
Net periodic OPEB cost | $ | 27 | $ | 45 | $ | 43 | |||||||||||||||||||
Weighted-Average Assumptions Used in Determining Benefit Obligations at the Measurement Date | |||||||||||||||||||||||||
Pension benefits | OPEB | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
Discount rate | |||||||||||||||||||||||||
U.S. and Puerto Rico plans | 4.00% | 4.85% | 3.95% | 4.90% | |||||||||||||||||||||
International plans | 2.26% | 3.41% | n/a | n/a | |||||||||||||||||||||
Rate of compensation increase | |||||||||||||||||||||||||
U.S. and Puerto Rico plans | 3.80% | 3.80% | n/a | n/a | |||||||||||||||||||||
International plans | 3.28% | 3.29% | n/a | n/a | |||||||||||||||||||||
Annual rate of increase in the per-capita cost | n/a | n/a | 6.00% | 6.25% | |||||||||||||||||||||
Rate decreased to | n/a | n/a | 5.00% | 5.00% | |||||||||||||||||||||
by the year ended | n/a | n/a | 2019 | 2019 | |||||||||||||||||||||
The assumptions above, which were used in calculating the December 31, 2014 measurement date benefit obligations, will be used in the calculation of net periodic benefit cost in 2015. | |||||||||||||||||||||||||
Weighted-Average Assumptions Used in Determining Net Periodic Benefit Cost | |||||||||||||||||||||||||
Pension benefits | OPEB | ||||||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Discount rate | |||||||||||||||||||||||||
U.S. and Puerto Rico plans | 4.85% | 3.95% | 4.80% | 4.90% | 4.00% | 4.75% | |||||||||||||||||||
International plans | 3.41% | 3.19% | 4.48% | n/a | n/a | n/a | |||||||||||||||||||
Expected return on plan assets | |||||||||||||||||||||||||
U.S. and Puerto Rico plans | 7.50% | 7.50% | 7.75% | n/a | n/a | n/a | |||||||||||||||||||
International plans | 6.02% | 6.33% | 6.85% | n/a | n/a | n/a | |||||||||||||||||||
Rate of compensation increase | |||||||||||||||||||||||||
U.S. and Puerto Rico plans | 3.80% | 4.50% | 4.50% | n/a | n/a | n/a | |||||||||||||||||||
International plans | 3.29% | 3.51% | 3.54% | n/a | n/a | n/a | |||||||||||||||||||
Annual rate of increase in the per-capita cost | n/a | n/a | n/a | 6.25% | 6.50% | 7.00% | |||||||||||||||||||
Rate decreased to | n/a | n/a | n/a | 5.00% | 5.00% | 5.00% | |||||||||||||||||||
by the year ended | n/a | n/a | n/a | 2019 | 2019 | 2016 | |||||||||||||||||||
The company establishes the expected return on plan assets assumption primarily based on a review of historical compound average asset returns, both company-specific and relating to the broad market (based on the company’s asset allocation), as well as an analysis of current market and economic information and future expectations. The company plans to use a 7.25% assumption for its U.S. and Puerto Rico plans for 2015. | |||||||||||||||||||||||||
Effect of a One-Percent Change in Assumed Healthcare Cost Trend Rate on the OPEB Plan | |||||||||||||||||||||||||
One percent | One percent | ||||||||||||||||||||||||
increase | decrease | ||||||||||||||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Effect on total of service and interest cost components of OPEB cost | $ | 4 | $ | 6 | $ | (3 | ) | $ | (5 | ) | |||||||||||||||
Effect on OPEB obligation | $ | 67 | $ | 74 | $ | (55 | ) | $ | (61 | ) | |||||||||||||||
Pension Plan Assets | |||||||||||||||||||||||||
An investment committee of members of senior management is responsible for supervising, monitoring and evaluating the invested assets of the company’s funded pension plans. The investment committee, which meets at least quarterly, abides by documented policies and procedures relating to investment goals, targeted asset | |||||||||||||||||||||||||
allocations, risk management practices, allowable and prohibited investment holdings, diversification, use of derivatives, the relationship between plan assets and benefit obligations, and other relevant factors and considerations. | |||||||||||||||||||||||||
The investment committee’s documented policies and procedures include the following: | |||||||||||||||||||||||||
• | Ability to pay all benefits when due; | ||||||||||||||||||||||||
• | Targeted long-term performance expectations relative to applicable market indices, such as Standard & Poor’s, Russell, MSCI EAFE, and other indices; | ||||||||||||||||||||||||
• | Targeted asset allocation percentage ranges (summarized below), and periodic reviews of these allocations; | ||||||||||||||||||||||||
• | Diversification of assets among third-party investment managers, and by geography, industry, stage of business cycle and other measures; | ||||||||||||||||||||||||
• | Specified investment holding and transaction prohibitions (for example, private placements or other restricted securities, securities that are not traded in a sufficiently active market, short sales, certain derivatives, commodities and margin transactions); | ||||||||||||||||||||||||
• | Specified portfolio percentage limits on holdings in a single corporate or other entity (generally 5%, except for holdings in U.S. government or agency securities); | ||||||||||||||||||||||||
• | Specified average credit quality for the fixed-income securities portfolio (at least A- by Standard & Poor’s or A3 by Moody’s); | ||||||||||||||||||||||||
• | Specified portfolio percentage limits on foreign holdings; and | ||||||||||||||||||||||||
• | Periodic monitoring of investment manager performance and adherence to the investment committee’s policies. | ||||||||||||||||||||||||
Plan assets are invested using a total return investment approach whereby a mix of equity securities, debt securities and other investments are used to preserve asset values, diversify risk and exceed the planned benchmark investment return. Investment strategies and asset allocations are based on consideration of plan liabilities, the plans’ funded status and other factors, such as the plans’ demographics and liability durations. Investment performance is reviewed by the investment committee on a quarterly basis and asset allocations are reviewed at least annually. | |||||||||||||||||||||||||
Plan assets are managed in a balanced portfolio comprised of two major components: equity securities and fixed income securities. The target allocations for plan assets are 60 percent in equity securities and 40 percent in fixed income securities and other holdings. The documented policy includes an allocation range based on each individual investment type within the major components that allows for a variance from the target allocations of approximately five percentage points. Equity securities primarily include common stock of U.S. and international companies, common/collective trust funds, mutual funds, and partnership investments. Fixed income securities and other holdings primarily include cash, money market funds with an original maturity of three months or less, U.S. and foreign government and governmental agency issues, corporate bonds, municipal securities, hedge funds, derivative contracts and asset-backed securities. | |||||||||||||||||||||||||
While the investment committee provides oversight over plan assets for U.S. and international plans, the summary above is specific to the plans in the United States. The plan assets for international plans are managed and allocated by the entities in each country, with input and oversight provided by the investment committee. The plan assets for the U.S. and international plans are included in the table below. | |||||||||||||||||||||||||
The following tables summarize the bases used to measure the pension plan assets and liabilities that are carried at fair value on a recurring basis. | |||||||||||||||||||||||||
Basis of fair value measurement | |||||||||||||||||||||||||
(in millions) | Balance at | Quoted prices in | Significant other | Significant | |||||||||||||||||||||
December 31, 2014 | active markets for | observable inputs | unobservable | ||||||||||||||||||||||
identical assets | (Level 2) | inputs | |||||||||||||||||||||||
(Level 1) | (Level 3) | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Fixed income securities | |||||||||||||||||||||||||
Cash and cash equivalents | $ 129 | $ 21 | $ 108 | $ — | |||||||||||||||||||||
U.S. government and government agency issues | 434 | — | 434 | — | |||||||||||||||||||||
Corporate bonds | 704 | — | 704 | — | |||||||||||||||||||||
Equity securities | |||||||||||||||||||||||||
Common stock: | |||||||||||||||||||||||||
Large cap | 1,024 | 1,024 | — | — | |||||||||||||||||||||
Mid cap | 459 | 459 | — | — | |||||||||||||||||||||
Small cap | 101 | 101 | — | — | |||||||||||||||||||||
Total common stock | 1,584 | 1,584 | — | — | |||||||||||||||||||||
Mutual funds | 404 | 180 | 224 | — | |||||||||||||||||||||
Common/collective trust funds | 607 | — | 601 | 6 | |||||||||||||||||||||
Partnership investments | 214 | — | — | 214 | |||||||||||||||||||||
Other holdings | 121 | 11 | 108 | 2 | |||||||||||||||||||||
Collateral held on loaned securities | 266 | — | 266 | — | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Collateral to be paid on loaned securities | -266 | -82 | -184 | — | |||||||||||||||||||||
Fair value of pension plan assets | $4,197 | $1,714 | $2,261 | $222 | |||||||||||||||||||||
Basis of fair value measurement | |||||||||||||||||||||||||
(in millions) | Balance at | 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 | |||||||||||||||||||||||||
Fixed income securities | |||||||||||||||||||||||||
Cash and cash equivalents | $ 267 | $ 24 | $ 243 | $ — | |||||||||||||||||||||
U.S. government and government agency issues | 287 | — | 287 | — | |||||||||||||||||||||
Corporate bonds | 637 | — | 637 | — | |||||||||||||||||||||
Equity securities | |||||||||||||||||||||||||
Common stock: | |||||||||||||||||||||||||
Large cap | 974 | 974 | — | — | |||||||||||||||||||||
Mid cap | 442 | 442 | — | — | |||||||||||||||||||||
Small cap | 93 | 93 | — | — | |||||||||||||||||||||
Total common stock | 1,509 | 1,509 | — | — | |||||||||||||||||||||
Mutual funds | 381 | 180 | 201 | — | |||||||||||||||||||||
Common/collective trust funds | 617 | — | 612 | 5 | |||||||||||||||||||||
Partnership investments | 199 | — | — | 199 | |||||||||||||||||||||
Other holdings | 103 | 10 | 91 | 2 | |||||||||||||||||||||
Collateral held on loaned securities | 248 | — | 248 | — | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Collateral to be paid on loaned securities | -248 | -88 | -160 | — | |||||||||||||||||||||
Fair value of pension plan assets | $4,000 | $1,635 | $2,159 | $206 | |||||||||||||||||||||
The following is a reconciliation of changes in fair value measurements that used significant unobservable inputs (Level 3). | |||||||||||||||||||||||||
(in millions) | Total | Common/collective | Partnership | Other | |||||||||||||||||||||
trust funds | investments | holdings | |||||||||||||||||||||||
Balance at December 31, 2012 | $187 | $ 5 | $180 | $ 2 | |||||||||||||||||||||
Actual return on plan assets still held at year end | 8 | — | 8 | — | |||||||||||||||||||||
Actual return on plan assets sold during the year | — | — | — | — | |||||||||||||||||||||
Purchases, sales and settlements | 11 | — | 11 | — | |||||||||||||||||||||
Balance at December 31, 2013 | 206 | 5 | 199 | 2 | |||||||||||||||||||||
Actual return on plan assets still held at year end | 14 | 1 | 13 | — | |||||||||||||||||||||
Actual return on plan assets sold during the year | 4 | — | 4 | — | |||||||||||||||||||||
Purchases, sales and settlements | (2 | ) | — | (2 | ) | — | |||||||||||||||||||
Balance at December 31, 2014 | $222 | $ 6 | $214 | $ 2 | |||||||||||||||||||||
The assets and liabilities of the company’s pension plans are valued using the following valuation methods: | |||||||||||||||||||||||||
Investment category | Valuation methodology | ||||||||||||||||||||||||
Cash and cash equivalents | These largely consist of a short-term investment fund, U.S. Dollars and foreign currency. The fair value of the short-term investment fund is based on the net asset value | ||||||||||||||||||||||||
U.S. government and government agency issues | Values are based on reputable pricing vendors, who typically use pricing matrices or models that use observable inputs | ||||||||||||||||||||||||
Corporate bonds | Values are based on reputable pricing vendors, who typically use pricing matrices or models that use observable inputs | ||||||||||||||||||||||||
Common stock | Values are based on the closing prices on the valuation date in an active market on national and international stock exchanges | ||||||||||||||||||||||||
Mutual funds | Values are based on the net asset value of the units held in the respective fund which are obtained from national and international exchanges or based on the net asset value of the underlying assets of the fund provided by the fund manager | ||||||||||||||||||||||||
Common/collective trust funds | Values are based on the net asset value of the units held at year end | ||||||||||||||||||||||||
Partnership investments | Values are based on the estimated fair value of the participation by the company in the investment as determined by the general partner or investment manager of the respective partnership | ||||||||||||||||||||||||
Other holdings | The value of these assets vary by investment type, but primarily are determined by reputable pricing vendors, who use pricing matrices or models that use observable inputs | ||||||||||||||||||||||||
Collateral held on loaned securities | Values are based on the net asset value per unit of the fund in which the collateral is invested | ||||||||||||||||||||||||
Collateral to be paid on loaned securities | Values are based on the fair value of the underlying securities loaned on the valuation date | ||||||||||||||||||||||||
Expected Pension and OPEB Plan Funding | |||||||||||||||||||||||||
The company’s funding policy for its pension plans is to contribute amounts sufficient to meet legal funding requirements, plus any additional amounts that the company may determine to be appropriate considering the funded status of the plans, tax deductibility, the cash flows generated by the company, and other factors. Volatility in the global financial markets could have an unfavorable impact on future funding requirements. The company has no obligation to fund its principal plans in the United States in 2015. The company continually reassesses the amount and timing of any discretionary contributions. The company expects to make cash contributions to its pension plans of at least $36 million in 2015, primarily related to the company’s international plans. The company expects to have net cash outflows relating to its OPEB plan of approximately $24 million in 2015. | |||||||||||||||||||||||||
The table below details the funded status percentage of the company’s pension plans as of December 31, 2014, including certain plans that are unfunded in accordance with the guidelines of the company’s funding policy outlined above. | |||||||||||||||||||||||||
United States and Puerto Rico | International | ||||||||||||||||||||||||
as of December 31, 2014 (in millions) | Qualified | Nonqualified | Funded | Unfunded | Total | ||||||||||||||||||||
plans | plan | plans | plans | ||||||||||||||||||||||
Fair value of plan assets | $3,414 | n/a | $ 783 | n/a | $4,197 | ||||||||||||||||||||
PBO | 4,449 | $224 | 1,064 | $594 | 6,331 | ||||||||||||||||||||
Funded status percentage | 77% | n/a | 74% | n/a | 66% | ||||||||||||||||||||
U.S. Defined Contribution Plan | |||||||||||||||||||||||||
Most U.S. employees are eligible to participate in a qualified defined contribution plan. Company contributions were $52 million in 2014, $45 million in 2013 and $39 million in 2012. |
ACCUMULATED_OTHER_COMPREHENSIV
ACCUMULATED OTHER COMPREHENSIVE INCOME | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME | NOTE 14 | ||||||||||||||||||||
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, 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 years ended December 31, 2014 and 2013. | |||||||||||||||||||||
(in millions) | CTA | Pension and | Hedging | Other | Total | ||||||||||||||||
other employee | activities | ||||||||||||||||||||
benefits | |||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||
Balance as of December 31, 2013 | $ | (991 | ) | $(1,027 | ) | $ 10 | $ | 32 | $ | (1,976 | ) | ||||||||||
Other comprehensive income before reclassifications | (1,332 | ) | (494 | ) | 32 | (6 | ) | (1,800 | ) | ||||||||||||
Amounts reclassified from AOCI (a) | — | 94 | (8 | ) | 40 | 126 | |||||||||||||||
Net other comprehensive (loss) income | (1,332 | ) | (400 | ) | 24 | 34 | (1,674 | ) | |||||||||||||
Balance as of December 31, 2014 | $ | (2,323 | ) | $(1,427 | ) | $ 34 | $ | 66 | $ | (3,650 | ) | ||||||||||
(in millions) | CTA | Pension and | Hedging | Other | Total | ||||||||||||||||
other employee | activities | ||||||||||||||||||||
benefits | |||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||
Balance as of December 31, 2012 | $ | (1,227 | ) | $(1,619 | ) | $ (5 | ) | $ | 41 | $ | (2,810 | ) | |||||||||
Other comprehensive income before reclassifications | 236 | 426 | 41 | (13 | ) | 690 | |||||||||||||||
Amounts reclassified from AOCI (a) | — | 166 | (26 | ) | 4 | 144 | |||||||||||||||
Net other comprehensive income (loss) | 236 | 592 | 15 | (9 | ) | 834 | |||||||||||||||
Balance as of December 31, 2013 | $ | (991 | ) | $(1,027 | ) | $ 10 | $ | 32 | $ | (1,976 | ) | ||||||||||
(a) | See table below for details about the reclassifications for the years ended December 31, 2014 and 2013. | ||||||||||||||||||||
The following is a summary of the amounts reclassified from AOCI to net income during the years ended December 31, 2014 and 2013. | |||||||||||||||||||||
Amounts reclassified from | |||||||||||||||||||||
AOCI (a) | |||||||||||||||||||||
(in millions) | 2014 | 2013 | Location of impact in income statement | ||||||||||||||||||
Amortization of pension and other employee benefits items | |||||||||||||||||||||
Actuarial losses and other | $(141 | )(b) | $(254 | )(b) | |||||||||||||||||
(141 | ) | (254 | ) | Total before tax | |||||||||||||||||
47 | 88 | Tax benefit | |||||||||||||||||||
$ (94 | ) | $(166 | ) | Net of tax | |||||||||||||||||
Gains (losses) on hedging activities | |||||||||||||||||||||
Interest rate contracts | $ (1 | ) | $ 10 | Net interest expense | |||||||||||||||||
Foreign exchange contracts | 1 | (1 | ) | Net sales | |||||||||||||||||
Foreign exchange contracts | 13 | 32 | Cost of sales | ||||||||||||||||||
13 | 41 | Total before tax | |||||||||||||||||||
(5 | ) | (15 | ) | Tax expense | |||||||||||||||||
$ 8 | $ 26 | Net of tax | |||||||||||||||||||
Other | |||||||||||||||||||||
Other-than-temporary impairment of available-for-sale equity securities | $ (45 | ) | $ (6 | ) | Other expense (income), net | ||||||||||||||||
Gain on available-for-sale equity securities | 1 | — | Other expense (income), net | ||||||||||||||||||
(44 | ) | (6 | ) | Total before tax | |||||||||||||||||
4 | 2 | Tax benefit | |||||||||||||||||||
$ (40 | ) | $ (4 | ) | Net of tax | |||||||||||||||||
Total reclassification for the period | $(126 | ) | $(144 | ) | 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 13. | ||||||||||||||||||||
Refer to Note 9 for additional information regarding hedging activity and Note 13 for additional information regarding the amortization of pension and other employee benefits items. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
INCOME TAXES | NOTE 15 | ||||||||||||
INCOME TAXES | |||||||||||||
Income from Continuing Operations Before Income Tax Expense by Category | |||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
United States | $ 74 | $ | 446 | $ | 385 | ||||||||
International | 2,365 | 2,100 | 2,453 | ||||||||||
Income from continuing operations before income taxes | $2,439 | $ | 2,546 | $ | 2,838 | ||||||||
Income Tax Expense Related to Continuing Operations | |||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
Current | |||||||||||||
United States | |||||||||||||
Federal | $ 102 | $ 296 | $ 122 | ||||||||||
State and local | 22 | 28 | 55 | ||||||||||
International | 447 | 434 | 395 | ||||||||||
Current income tax expense | 571 | 758 | 572 | ||||||||||
Deferred | |||||||||||||
United States | |||||||||||||
Federal | (15 | ) | (147 | ) | 112 | ||||||||
State and local | (6 | ) | (5 | ) | (81 | ) | |||||||
International | (57 | ) | (72 | ) | (48 | ) | |||||||
Deferred income tax expense | (78 | ) | (224 | ) | (17 | ) | |||||||
Income tax expense | $ 493 | $ 534 | $ 555 | ||||||||||
Deferred Tax Assets and Liabilities | |||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Deferred tax assets | |||||||||||||
Accrued expenses | $ | 642 | $ | 426 | |||||||||
Retirement benefits | 898 | 669 | |||||||||||
Tax credits and net operating losses | 369 | 426 | |||||||||||
Valuation allowances | (137 | ) | (137 | ) | |||||||||
Total deferred tax assets | 1,772 | 1,384 | |||||||||||
Deferred tax liabilities | |||||||||||||
Subsidiaries’ unremitted earnings | 208 | 265 | |||||||||||
Asset basis differences | 1,011 | 849 | |||||||||||
Total deferred tax liabilities | 1,219 | 1,114 | |||||||||||
Net deferred tax asset | $ | 553 | $ | 270 | |||||||||
At December 31, 2014, the company had U.S. operating loss carryforwards totaling $100 million. The U.S. operating loss carryforwards expire between 2015 and 2032. At December 31, 2014, the company had foreign operating loss carryforwards totaling $1.2 billion, and foreign tax credit carryforwards totaling $66 million. Of these foreign amounts, $4 million expires in 2015, $21 million expires in 2016, $49 million expires in 2017, $34 million expires in 2018, $40 million expires in 2019, $2 million expires in 2020, $27 million expires after 2020 and $1.1 billion has no expiration date. Realization of these operating loss and tax credit carryforwards depends on generating sufficient taxable income in future periods. A valuation allowance of $137 million was recorded at both December 31, 2014 and 2013 to reduce the deferred tax assets associated with net operating loss and tax credit carryforwards, because the company does not believe it is more likely than not that these assets will be fully realized prior to expiration. The company will continue to evaluate the need for additional valuation allowances and, as circumstances change, the valuation allowance may change. | |||||||||||||
Income Tax Expense Related to Continuing Operations Reconciliation | |||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
Income tax expense at U.S. statutory rate | $ | 854 | $ | 891 | $ | 993 | |||||||
Tax incentives | (223 | ) | (245 | ) | (274 | ) | |||||||
State and local taxes | 11 | 22 | (11 | ) | |||||||||
Foreign tax benefit | (161 | ) | (121 | ) | (170 | ) | |||||||
Contingent tax matters | (37 | ) | 26 | 30 | |||||||||
Branded Prescription Drug Fee | 24 | 9 | 7 | ||||||||||
Other factors | 25 | (48 | ) | (20 | ) | ||||||||
Income tax expense | $ | 493 | $ | 534 | $ | 555 | |||||||
The company recognized deferred U.S. income tax expense of $45 million during 2014 relating to 2014 earnings outside the United States that are not deemed indefinitely reinvested. Management intends to continue to reinvest past earnings in several jurisdictions outside of the United States indefinitely, and therefore has not recognized U.S. income tax expense on these earnings. U.S. federal and state income taxes, net of applicable credits, on these foreign unremitted earnings from continuing operations of $13.9 billion as of December 31, 2014 would be approximately $4.2 billion. As of December 31, 2013 the foreign unremitted earnings from continuing operations and U.S. federal and state income tax amounts were $12.2 billion and $3.8 billion, respectively. | |||||||||||||
Effective Income Tax Rate for Continuing Operations | |||||||||||||
The effective income tax rate for continuing operations was 20.2% in 2014, 21.0% in 2013, and 19.6% in 2012. As detailed in the income tax expense reconciliation table above, the company’s effective 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. | |||||||||||||
Factors impacting the company’s effective tax rate in 2014 included 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. Partially offsetting this increase in the effective tax rate was an increase in income earned in foreign jurisdictions with rates of tax lower than the U.S. rate. Additionally, the company favorably settled certain contingent tax matters. | |||||||||||||
Factors impacting the company’s effective tax rate in 2013 included the favorable settlement of the company’s bilateral Advance Pricing Agreement proceedings between the U.S. government and the government of Switzerland relating to intellectual property, product, and service transfer pricing arrangements, which was offset by other contingent tax matters principally related to transfer pricing. Additionally, the effective tax rate was unfavorably impacted by increases in valuation allowances relating to the tax benefit from losses that the company does not believe that it is more likely than not to realize and interest expense related to the company’s unrecognized tax benefits. Partially offsetting these unfavorable items were $16 million of U.S. R&D credits. Additionally, the company’s effective tax rate was impacted by a change in the earnings mix from lower tax to higher tax rate jurisdictions compared to the prior year. | |||||||||||||
Factors impacting the company’s effective tax rate in 2012 were gains totaling $91 million relating to the reduction of certain contingent payment liabilities related to prior acquisitions, for which there were no tax charges. Also impacting the effective tax rate was a cost of sales reduction of $37 million for an adjustment to the COLLEAGUE infusion pump reserves when the company substantially completed the recall in the United States in 2012, for which there was no tax charge. These items were offset by a change in the earnings mix from lower tax to higher tax rate jurisdictions compared to the prior year. | |||||||||||||
Unrecognized Tax Benefits | |||||||||||||
The company classifies interest and penalties associated with income taxes in the income tax expense line in the consolidated statements of income. Net interest and penalties recorded during 2014, 2013 and 2012 were $12 million, $1 million and $12 million, respectively. The liability recorded at December 31, 2014 and 2013 related to interest and penalties was $63 million and $124 million, respectively. The following is a reconciliation of the company’s unrecognized tax benefits, including those related to discontinued operations for the years ended December 31, 2014, 2013 and 2012. | |||||||||||||
as of and for the years ended (in millions) | 2014 | 2013 | 2012 | ||||||||||
Balance at beginning of the year | $ | 287 | $ | 437 | $ | 443 | |||||||
Increase associated with tax positions taken during the current year | 41 | 31 | 25 | ||||||||||
Increase (decrease) associated with tax positions taken during a prior year | (27 | ) | 38 | (9 | ) | ||||||||
Settlements | (82 | ) | (216 | ) | (21 | ) | |||||||
Decrease associated with lapses in statutes of limitations | (13 | ) | (3 | ) | (1 | ) | |||||||
Balance at end of the year | $ | 206 | $ | 287 | $ | 437 | |||||||
Of the gross unrecognized tax benefits, $215 million and $393 million were recognized as liabilities in the consolidated balance sheets as of December 31, 2014 and 2013, respectively. | |||||||||||||
None of the positions included in the liability for uncertain tax positions related to tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. | |||||||||||||
Tax Incentives | |||||||||||||
The company has received tax incentives in Puerto Rico, Switzerland, and certain other taxing jurisdictions outside the United States. The financial impact of the reductions as compared to the statutory tax rates is indicated in the income tax expense reconciliation table above. The tax reductions as compared to the local statutory rate favorably impacted earnings from continuing operations per diluted share by $0.42 in 2014, $0.44 in 2013 and $0.50 in 2012. The Puerto Rico grant provides that the company’s manufacturing operations are and will be partially exempt from local taxes until the year 2018. The Switzerland grant provides that the company’s manufacturing operations will be partially exempt from local taxes until approximately the year 2024, at which time the tax rate will be approximately 8%. | |||||||||||||
Examinations of Tax Returns | |||||||||||||
As of December 31, 2014, Baxter had ongoing audits in the United States, Germany, Austria, Italy, Turkey, and other jurisdictions. Baxter expects to reduce the amount of its liability for uncertain tax positions within the next 12 months by $104 million due principally to the resolution of tax disputes in Turkey, Singapore, Austria, and the United States. While the final outcome of these matters is inherently uncertain, the company believes it has made adequate tax provisions for all years subject to examination. |
LEGAL_PROCEEDINGS
LEGAL PROCEEDINGS | 12 Months Ended |
Dec. 31, 2014 | |
LEGAL PROCEEDINGS | NOTE 16 |
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 December 31, 2014, the company’s total recorded reserves with respect to legal matters were $72 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 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 be 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 matters. 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. The company and plaintiffs in a consolidated derivative suit filed in the U.S.D.C. for the Northern District of Illinois have entered into a settlement agreement, which settlement has been preliminarily approved by the court. Two other derivative actions were previously filed in state courts, one in Lake County, Illinois and one in the Delaware Chancery Court. 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, which motion is pending. | |
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 amount 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 | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
SEGMENT INFORMATION | NOTE 17 | ||||||||||||||||
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. Additionally, the BioScience business is investing in new disease areas, including oncology, as well as emerging technology platforms, including gene therapy and biosimilars. | |||||||||||||||||
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, the Medical Products business provides products and services to treat end-stage renal disease, or irreversible kidney failure, along with other renal therapies, which business was enhanced through the 2013 acquisition of Gambro. The Medical Products business now offers a comprehensive portfolio to meet the needs of patients across the treatment continuum, including technologies and therapies for peritoneal dialysis (PD), in-center hemodialysis (HD), home HD (HHD), continuous renal replacement therapy (CRRT) and additional dialysis services. The financial information for the year ended December 31, 2014 includes the results of Gambro. The financial information for the year ended December 31, 2013 includes the results of Gambro since 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 years ended December 31, 2014, 2013 and 2012. Refer to Note 2 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. The accounting policies of the segments are substantially the same as those described in the summary of significant accounting policies in Note 1. | |||||||||||||||||
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, 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, nonstrategic investments and related income and expense, certain employee benefit plan costs as well as certain nonrecurring gains, losses, and 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. | |||||||||||||||||
Segment Information | |||||||||||||||||
as of and for the years ended December 31 (in millions) | BioScience | Medical | Other | Total | |||||||||||||
Products | |||||||||||||||||
2014 | |||||||||||||||||
Net sales | $ | 6,699 | $ | 9,972 | $ | — | $ | 16,671 | |||||||||
Depreciation and amortization | 285 | 633 | 84 | 1,002 | |||||||||||||
Pre-tax income (loss) from continuing operations | 2,040 | 1,316 | (917 | ) | 2,439 | ||||||||||||
Assets | 9,936 | 11,440 | 4,541 | 25,917 | |||||||||||||
Capital expenditures | 1,020 | 749 | 129 | 1,898 | |||||||||||||
2013 | |||||||||||||||||
Net sales | $ | 6,272 | $ | 8,695 | $ | — | $ | 14,967 | |||||||||
Depreciation and amortization | 255 | 472 | 88 | 815 | |||||||||||||
Pre-tax income (loss) from continuing operations | 2,331 | 1,398 | (1,183 | ) | 2,546 | ||||||||||||
Assets | 8,967 | 12,269 | 3,988 | 25,224 | |||||||||||||
Capital expenditures | 868 | 530 | 127 | 1,525 | |||||||||||||
2012 | |||||||||||||||||
Net sales | $ | 5,983 | $ | 7,953 | $ | — | $ | 13,936 | |||||||||
Depreciation and amortization | 235 | 385 | 84 | 704 | |||||||||||||
Pre-tax income (loss) from continuing operations | 2,257 | 1,592 | (1,011 | ) | 2,838 | ||||||||||||
Assets | 7,380 | 7,568 | 5,442 | 20,390 | |||||||||||||
Capital expenditures | 570 | 495 | 96 | 1,161 | |||||||||||||
Pre-Tax Income from Continuing Operations Reconciliation | |||||||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||
Total pre-tax income from continuing operations from segments | $ | 3,356 | $ | 3,729 | $ | 3,849 | |||||||||||
Unallocated amounts | |||||||||||||||||
Net interest expense | (145 | ) | (128 | ) | (87 | ) | |||||||||||
Certain foreign exchange fluctuations and hedging activities | 40 | 83 | 53 | ||||||||||||||
Stock compensation | (159 | ) | (150 | ) | (130 | ) | |||||||||||
Business optimization charges | (19 | ) | (180 | ) | (150 | ) | |||||||||||
Pension settlement charges | — | — | (168 | ) | |||||||||||||
Certain tax and legal reserves | — | (104 | ) | — | |||||||||||||
Other Corporate items | (634 | ) | (704 | ) | (529 | ) | |||||||||||
Income from continuing operations before income taxes | $ | 2,439 | $ | 2,546 | $ | 2,838 | |||||||||||
Assets Reconciliation | |||||||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||||||
Total segment assets | $ | 21,376 | $ | 21,236 | |||||||||||||
Cash and equivalents | 2,925 | 2,733 | |||||||||||||||
Deferred income taxes | 774 | 545 | |||||||||||||||
PP&E, net | 494 | 437 | |||||||||||||||
Other Corporate assets | 348 | 273 | |||||||||||||||
Consolidated total assets | $ | 25,917 | $ | 25,224 | |||||||||||||
Geographic Information | |||||||||||||||||
Net sales are based on product shipment destination and assets are based on physical location. | |||||||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||
Net sales | |||||||||||||||||
United States | $ | 7,015 | $ | 6,444 | $ | 6,043 | |||||||||||
Europe | 5,136 | 4,371 | 4,008 | ||||||||||||||
Asia-Pacific | 2,619 | 2,324 | 2,183 | ||||||||||||||
Latin America and Canada | 1,901 | 1,828 | 1,702 | ||||||||||||||
Consolidated net sales | $ | 16,671 | $ | 14,967 | $ | 13,936 | |||||||||||
as of December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||
PP&E, net | |||||||||||||||||
United States | $ | 4,071 | $ | 3,091 | $ | 2,333 | |||||||||||
Austria | 778 | 914 | 802 | ||||||||||||||
Other countries | 3,849 | 3,827 | 2,963 | ||||||||||||||
Consolidated PP&E, net | $ | 8,698 | $ | 7,832 | $ | 6,098 | |||||||||||
Significant Product Sales | |||||||||||||||||
Effective January 1, 2013, Baxter transitioned to a commercial franchise structure for reporting net sales within each segment. Prior period net sales have been reclassified to reflect the new commercial franchise structure. The following is a summary of net sales as a percentage of consolidated net sales for the company’s commercial franchises. | |||||||||||||||||
years ended December 31 | 2014 | 2013 | 2012 | ||||||||||||||
Hemophilia1 | 22 | % | 23 | % | 23% | ||||||||||||
Fluid Systems2 | 19 | % | 21 | % | 21% | ||||||||||||
Renal3 | 25 | % | 21 | % | 18% | ||||||||||||
BioTherapeutics4 | 13 | % | 14 | % | 15% | ||||||||||||
Specialty Pharmaceuticals5 | 9 | % | 10 | % | 11% | ||||||||||||
1 | Includes sales of recombinant and plasma-derived hemophilia products (primarily factor VIII and factor IX). | ||||||||||||||||
2 | Principally includes IV solutions, infusion pumps, administration sets, and premixed and oncology drug platforms. | ||||||||||||||||
3 | Consists of therapies to treat end-stage renal disease, including PD, HD, and HHD and therapies to treat acute kidney injuries, including CRRT. | ||||||||||||||||
4 | Includes sales of the company’s plasma-based therapies to treat alpha-1 antitrypsin deficiency, burns and shock, and other chronic and acute blood-related conditions. | ||||||||||||||||
5 | Principally includes nutrition and anesthesia products. |
QUARTERLY_FINANCIAL_RESULTS_AN
QUARTERLY FINANCIAL RESULTS AND MARKET FOR THE COMPANY'S STOCK (UNAUDITED) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
QUARTERLY FINANCIAL RESULTS AND MARKET FOR THE COMPANY'S STOCK (UNAUDITED) | NOTE 18 | ||||||||||||||||||||
QUARTERLY FINANCIAL RESULTS AND MARKET FOR THE COMPANY’S STOCK (UNAUDITED) | |||||||||||||||||||||
years ended December 31 (in millions, except per share data) | First | Second | Third | Fourth | Full year | ||||||||||||||||
quarter | quarter | quarter | quarter | ||||||||||||||||||
2014 | |||||||||||||||||||||
Net sales | $ | 3,848 | $ | 4,154 | $ | 4,197 | $ | 4,472 | $ | 16,671 | |||||||||||
Gross margin | 1,891 | 1,969 | 2,073 | 2,224 | 8,157 | ||||||||||||||||
Income from continuing operations1 | 507 | 468 | 447 | 524 | 1,946 | ||||||||||||||||
Income from continuing operations per common share1 | |||||||||||||||||||||
Basic | 0.94 | 0.86 | 0.83 | 0.97 | 3.59 | ||||||||||||||||
Diluted | 0.93 | 0.85 | 0.82 | 0.96 | 3.56 | ||||||||||||||||
Income from discontinued operations, net of tax | 49 | 52 | 21 | 429 | 551 | ||||||||||||||||
Income from discontinued operations per common share | |||||||||||||||||||||
Basic | 0.09 | 0.1 | 0.03 | 0.79 | 1.02 | ||||||||||||||||
Diluted | 0.09 | 0.1 | 0.04 | 0.78 | 1 | ||||||||||||||||
Net income1 | 556 | 520 | 468 | 953 | 2,497 | ||||||||||||||||
Net income per common share1 | |||||||||||||||||||||
Basic | 1.02 | 0.96 | 0.86 | 1.76 | 4.61 | ||||||||||||||||
Diluted | 1.01 | 0.95 | 0.86 | 1.74 | 4.56 | ||||||||||||||||
Cash dividends declared per common share | 0.49 | 0.52 | 0.52 | 0.52 | 2.05 | ||||||||||||||||
Market price per common share | |||||||||||||||||||||
High | 73.58 | 75.45 | 77 | 74.7 | 77 | ||||||||||||||||
Low | 66.49 | 71.98 | 71.28 | 67.24 | 66.49 | ||||||||||||||||
2013 | |||||||||||||||||||||
Net sales | $ | 3,364 | $ | 3,571 | $ | 3,710 | $ | 4,322 | $ | 14,967 | |||||||||||
Gross margin | 1,696 | 1,874 | 1,906 | 1,996 | 7,472 | ||||||||||||||||
Income from continuing operations2 | 523 | 552 | 528 | 409 | 2,012 | ||||||||||||||||
Income from continuing operations per common share2 | |||||||||||||||||||||
Basic | 0.96 | 1.02 | 0.97 | 0.75 | 3.7 | ||||||||||||||||
Diluted | 0.95 | 1.01 | 0.96 | 0.74 | 3.66 | ||||||||||||||||
Income (loss) from discontinued operations, net of tax | 29 | 38 | 16 | (83 | ) | 0 | |||||||||||||||
Income from discontinued operations per common share | |||||||||||||||||||||
Basic | 0.05 | 0.07 | 0.03 | (0.15 | ) | 0 | |||||||||||||||
Diluted | 0.05 | 0.06 | 0.03 | (0.15 | ) | 0 | |||||||||||||||
Net income2 | 552 | 590 | 544 | 326 | 2,012 | ||||||||||||||||
Net income per common share2 | |||||||||||||||||||||
Basic | 1.01 | 1.09 | 1 | 0.6 | 3.7 | ||||||||||||||||
Diluted | 1 | 1.07 | 0.99 | 0.59 | 3.66 | ||||||||||||||||
Cash dividends declared per common share | 0.45 | 0.49 | 0.49 | 0.49 | 1.92 | ||||||||||||||||
Market price per common share | |||||||||||||||||||||
High | 72.64 | 73.04 | 74.43 | 69.55 | 74.43 | ||||||||||||||||
Low | 66.42 | 68.1 | 65.69 | 63.89 | 63.89 | ||||||||||||||||
1 | The first quarter of 2014 included charges of $69 million related business optimization, Gambro integration costs, tax and legal reserves, and milestone payments associated with the company’s collaboration arrangements. The second quarter of 2014 included charges of $177 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, and | ||||||||||||||||||||
milestone payments associated with the company’s collaboration arrangements. The third quarter of 2014 included charges of $283 million related to business optimization, Gambro integration costs, separation-related costs, the Branded Prescription Drug Fee, and upfront and milestone payments associated with the company’s collaboration arrangements. The fourth quarter of 2014 included $275 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, an other-than-temporary impairment loss, and milestone payments associated with the company’s collaboration arrangements. | |||||||||||||||||||||
2 | The first quarter of 2013 included charges of $45 million related Gambro acquisition costs and currency-related items. The second quarter of 2013 included charges of $76 million related to business optimization and Gambro acquisition costs. The third quarter of 2013 included charges of $152 million related to Gambro acquisition and integration costs, reserve items and adjustments, and an upfront payment associated with one of the company’s collaboration arrangements. The fourth quarter of 2013 included $371 million related to business optimization, Gambro acquisition and integration costs, product-related items, and upfront and milestone payments associated with the company’s collaboration arrangements. | ||||||||||||||||||||
Baxter common stock is listed on the New York, Chicago and SIX Swiss stock exchanges. The New York Stock Exchange is the principal market on which the company’s common stock is traded. At January 31, 2015, there were 34,340 holders of record of the company’s common stock. |
Schedule_IIValuation_and_Quali
Schedule II-Valuation and Qualifying Accounts | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Schedule II-Valuation and Qualifying Accounts | SCHEDULE II | ||||||||||||||||||||
Additions | Charged | ||||||||||||||||||||
(credited) | |||||||||||||||||||||
to other | |||||||||||||||||||||
Valuation and Qualifying Accounts | Balance at | Charged to | accounts (1) | Deductions | Balance at | ||||||||||||||||
(in millions) | beginning | costs and | from | end of | |||||||||||||||||
of period | expenses | reserves | period | ||||||||||||||||||
Year ended December 31, 2014: | |||||||||||||||||||||
Allowance for doubtful accounts | $ | 169 | 1 | (16 | ) | (15 | ) | $ | 139 | ||||||||||||
Deferred tax asset valuation allowance | $ | 137 | 10 | (7 | ) | (3 | ) | $ | 137 | ||||||||||||
Year ended December 31, 2013: | |||||||||||||||||||||
Allowance for doubtful accounts | $ | 127 | 26 | 27 | (11 | ) | $ | 169 | |||||||||||||
Deferred tax asset valuation allowance | $ | 104 | 13 | 25 | (5 | ) | $ | 137 | |||||||||||||
Year ended December 31, 2012: | |||||||||||||||||||||
Allowance for doubtful accounts | $ | 128 | 12 | (2 | ) | (11 | ) | $ | 127 | ||||||||||||
Deferred tax asset valuation allowance | $ | 116 | 10 | (4 | ) | (18 | ) | $ | 104 | ||||||||||||
-1 | Valuation accounts of acquired or divested companies and foreign currency translation adjustments. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Nature of Operations | Nature of Operations | ||||||||||||
Baxter International Inc. (Baxter or the company), through its subsidiaries, develops, manufactures and markets products that save and sustain the lives of people with hemophilia, immune disorders, cancer, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. As a global, diversified healthcare company, Baxter applies a unique combination of expertise in medical devices, pharmaceuticals and biotechnology to create products that advance patient care worldwide. The company operates in two segments, BioScience and Medical Products, which are described in Note 17. | |||||||||||||
In March 2014, Baxter announced plans to create two separate, independent global healthcare companies – one focused on lifesaving medical products and the other on developing and marketing innovative biopharmaceuticals. The transition is intended to take the form of a tax-free distribution to Baxter shareholders of more than 80% of the 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 in the United States, and the effectiveness of the Form 10 registration statement filed with the United States Securities and Exchange Commission. Upon separation, the historical results of the biopharmaceuticals business will be presented as discontinued operations. | |||||||||||||
Use of Estimates | Use of Estimates | ||||||||||||
The preparation of the financial statements in conformity with generally accepted accounting principles (GAAP) requires the company to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. | |||||||||||||
Basis of Presentation | Basis of Presentation | ||||||||||||
The consolidated financial statements include the accounts of Baxter and its majority-owned subsidiaries, any other subsidiaries that Baxter controls, and variable interest entities (VIEs) in which Baxter is the primary beneficiary, after elimination of intercompany transactions. During 2012, the company exercised its option to purchase the remaining equity of Sigma International General Medical Apparatus, LLC (SIGMA), which Baxter previously consolidated as the primary beneficiary of a VIE. The company has not subsequently entered into any new arrangements in which it determined that it was the primary beneficiary of a VIE, and there were no VIEs consolidated by the company as of December 31, 2013 and 2014. Refer to Note 3 for additional information about the SIGMA option exercise. | |||||||||||||
On September 6, 2013, Baxter acquired Indap Holding AB, the holding company for Gambro AB (Gambro), a privately held dialysis product company based in Lund, Sweden, for cash consideration of $3.7 billion. Beginning September 6, 2013, Baxter’s financial statements include the assets, liabilities, and operating results of Gambro. Refer to Note 5 for additional information about the Gambro acquisition. | |||||||||||||
In the third quarter of 2014, the company committed to a plan to divest its Vaccines franchise. Refer to Note 2 for a summary of the operating results of the Vaccines franchise reflected as discontinued operations. | |||||||||||||
Revision of 2013 Tax Balances | |||||||||||||
The company identified and corrected prior period errors in the presentation of its current and deferred income tax assets and liabilities as of December 31, 2013 in the consolidated balance sheet with no impact to total equity. The company assessed the impact of these errors and concluded that these errors were not material to previously issued financial statements. The company has revised its previously reported consolidated balance sheet as of December 31, 2013 as reflected below. | |||||||||||||
as of December 31, 2013 (in millions) | As Reported | Adjustments | As Revised | ||||||||||
Short-term deferred income taxes | $ 393 | $ 111 | $ 504 | ||||||||||
Prepaid expense and other | 468 | 80 | 548 | ||||||||||
Other assets | 1,534 | (836 | ) | 698 | |||||||||
Accounts payable and accrued liabilities | 4,866 | (658 | ) | 4,208 | |||||||||
Other long-term liabilities | 3,351 | 13 | 3,364 | ||||||||||
Revenue Recognition | Revenue Recognition | ||||||||||||
The company recognizes revenues from product sales and services when earned. Specifically, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred (or services have been rendered), the price is fixed or determinable, and collectibility is reasonably assured. For product sales, revenue is not recognized until title and risk of loss have transferred to the customer. The shipping terms for the majority of the company’s revenue arrangements are FOB destination. The recognition of revenue is delayed if there are significant post-delivery obligations, such as training, installation or other services. Provisions for discounts, rebates to customers, chargebacks to wholesalers and returns are provided for at the time the related sales are recorded, and are reflected as a reduction to gross sales to arrive at net sales. | |||||||||||||
The company sometimes enters into arrangements in which it commits to delivering multiple products or services to its customers. In these cases, total arrangement consideration is allocated to the deliverables based on their relative selling prices. Then the allocated consideration is recognized as revenue in accordance with the principles described above. Selling prices are determined by applying a selling price hierarchy. Selling prices are determined using vendor specific objective evidence (VSOE), if it exists. Otherwise, selling prices are determined using third party evidence (TPE). If neither VSOE nor TPE is available, the company uses its best estimate of selling prices. | |||||||||||||
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts | ||||||||||||
In the normal course of business, the company provides credit to its customers, performs credit evaluations of these customers and maintains reserves for potential credit losses. In determining the amount of the allowance for doubtful accounts, the company considers, among other items, historical credit losses, the past-due status of receivables, payment histories and other customer-specific information. Receivables are written off when the company determines they are uncollectible. The allowance for doubtful accounts was $139 million at December 31, 2014 and $169 million at December 31, 2013. | |||||||||||||
Product Warranties | Product Warranties | ||||||||||||
The company provides for the estimated costs relating to product warranties at the time the related revenue is recognized. The cost is determined based on actual company experience for the same or similar products, as well as other relevant information. Product warranty liabilities are adjusted based on changes in estimates. | |||||||||||||
Cash and Equivalents | Cash and Equivalents | ||||||||||||
Cash and equivalents include cash, certificates of deposit and money market funds with an original maturity of three months or less. | |||||||||||||
Inventories | Inventories | ||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Raw materials | $ | 910 | $ | 920 | |||||||||
Work in process | 1,126 | 1,136 | |||||||||||
Finished goods | 1,523 | 1,443 | |||||||||||
Inventories | $ | 3,559 | $ | 3,499 | |||||||||
Inventories are stated at the lower of cost (first-in, first-out method) or market value. Market value for raw materials is based on replacement costs, and market value for work in process and finished goods is based on net realizable value. The company reviews inventories on hand at least quarterly and records provisions for estimated excess, slow-moving and obsolete inventory, as well as inventory with a carrying value in excess of net realizable value. | |||||||||||||
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net | ||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Land | $ | 225 | $ | 220 | |||||||||
Buildings and leasehold improvements | 2,673 | 2,670 | |||||||||||
Machinery and equipment | 7,687 | 7,360 | |||||||||||
Equipment with customers | 1,353 | 1,361 | |||||||||||
Construction in progress | 2,870 | 2,184 | |||||||||||
Total property, plant and equipment, at cost | 14,808 | 13,795 | |||||||||||
Accumulated depreciation | (6,110 | ) | (5,963 | ) | |||||||||
Property, plant and equipment (PP&E), net | $ | 8,698 | $ | 7,832 | |||||||||
Depreciation expense is calculated using the straight-line method over the estimated useful lives of the related assets, which range from 20 to 50 years for buildings and improvements and from three to 15 years for machinery and equipment. Leasehold improvements are amortized over the life of the related facility lease (including any renewal periods, if appropriate) or the asset, whichever is shorter. Baxter capitalizes certain computer software and software development costs incurred in connection with developing or obtaining software for internal use as part of machinery and equipment. Capitalized software costs are amortized on a straight-line basis over the estimated useful lives of the software, and are included in depreciation expense. Straight-line and accelerated methods of depreciation are used for income tax purposes. Depreciation expense was $809 million in 2014, $674 million in 2013 and $590 million in 2012. | |||||||||||||
Acquisitions | Acquisitions | ||||||||||||
Results of operations of acquired companies are included in the company’s results of operations as of the respective acquisition dates. The purchase price of each acquisition is allocated to the net assets acquired based on estimates of their fair values at the date of the acquisition. Any purchase price in excess of these net assets is recorded as goodwill. The allocation of purchase price in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. | |||||||||||||
Contingent consideration is recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent payments are recognized in earnings. Contingent payments related to acquisitions consist of development, regulatory, and commercial milestone payments, in addition to sales-based payments, and are valued using discounted cash flow techniques. The fair value of development, regulatory, and commercial milestone payments reflects management’s expectations of probability of payment, and increases or decreases as the probability of payment or expectation of timing of payments changes. The fair value of sales-based payments is based upon probability-weighted future revenue estimates and increases or decreases as revenue estimates or expectation of timing of payments changes. | |||||||||||||
Research and Development | Research and Development | ||||||||||||
Research and development (R&D) costs, including R&D acquired in transactions that are not business combinations, are expensed as incurred. Pre-regulatory approval contingent milestone obligations to counterparties in collaborative arrangements are expensed when the milestone is achieved. Payments made to counterparties on or after regulatory approval are capitalized and amortized over the remaining useful life of the related product. Amounts capitalized for such payments are included in other intangible assets, net of accumulated amortization. | |||||||||||||
Acquired in-process R&D (IPR&D) is the value assigned to technology or products under development acquired in a business combination which have not received regulatory approval and have no alternative future use. Acquired IPR&D is capitalized as an indefinite-lived intangible asset. Development costs incurred after the acquisition are expensed as incurred. Upon receipt of regulatory approval of the related technology or product, the indefinite-lived intangible asset is accounted for as a finite-lived intangible asset and generally amortized on a straight-line basis over the estimated economic life of the related technology or product, subject to annual impairment reviews as discussed below. If the R&D project is abandoned, the indefinite-lived asset is charged to expense. | |||||||||||||
Collaborative Arrangements | Collaborative Arrangements | ||||||||||||
The company enters into collaborative arrangements in the normal course of business. These collaborative arrangements take a number of forms and structures, and are designed to enhance and expedite long-term sales and profitability growth. These arrangements generally provide that Baxter obtain commercialization rights to a product under development. The agreements often require Baxter to make upfront payments and include additional contingent milestone payments relating to the achievement of specified development, regulatory and commercial milestones, as well as make royalty payments. Baxter may also be responsible for other on-going costs associated with the arrangements, including R&D cost reimbursements to the counterparty. | |||||||||||||
Royalty payments are expensed as cost of sales when they become due and payable. Any purchases of inventory from the partner during the development stage are expensed as R&D, while such purchases during the commercialization phase are capitalized as inventory and recognized as cost of sales when the related finished products are sold. | |||||||||||||
Business Optimization Charges | Business Optimization Charges | ||||||||||||
The company records liabilities for costs associated with exit or disposal activities in the period in which the liability is incurred. Employee termination costs are primarily recorded when actions are probable and estimable. Costs for one-time termination benefits in which the employee is required to render service until termination in order to receive the benefits are recognized ratably over the future service period. Refer to the discussion below regarding the accounting for asset impairment charges. | |||||||||||||
Impairment Reviews | Goodwill | ||||||||||||
Goodwill is not amortized, but is subject to an impairment review annually and whenever indicators of impairment exist. Goodwill would be impaired if the carrying amount of a reporting unit exceeded the fair value of that reporting unit, calculated as the present value of estimated cash flows discounted using a risk-free market rate adjusted for a market participant’s view of similar companies and perceived risks in the cash flows. The implied fair value of goodwill is then determined by subtracting the fair value of all identifiable net assets other than goodwill from the fair value of the reporting unit, with an impairment charge recorded for the excess, if any, of carrying amount of goodwill over the implied fair value. | |||||||||||||
Intangible Assets Not Subject to Amortization | |||||||||||||
Indefinite-lived intangible assets, such as IPR&D acquired in business combinations and certain trademarks with indefinite lives, are subject to an impairment review annually and whenever indicators of impairment exist. Indefinite-lived intangible assets are impaired if the carrying amount of the asset exceeded the fair value of the asset. | |||||||||||||
Other Long-Lived Assets | |||||||||||||
The company reviews the carrying amounts of long-lived assets, other than goodwill and intangible assets not subject to amortization, for potential impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating recoverability, the company groups assets and liabilities at the lowest level such that the identifiable cash flows relating to the group are largely independent of the cash flows of other assets and liabilities. The company then compares the carrying amounts of the assets or asset groups with the related estimated undiscounted future cash flows. In the event impairment exists, an impairment charge is recorded as the amount by which the carrying amount of the asset or asset group exceeds the fair value. | |||||||||||||
Shipping and Handling Costs | Shipping and Handling Costs | ||||||||||||
Shipping costs, which are costs incurred to physically move product from Baxter’s premises to the customer’s premises, are classified as marketing and administrative expenses. Handling costs, which are costs incurred to store, move and prepare products for shipment, are classified as cost of sales. Approximately $340 million in 2014, $293 million in 2013 and $265 million in 2012 of shipping costs were classified in marketing and administrative expenses. | |||||||||||||
Income Taxes | Income Taxes | ||||||||||||
Deferred taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting based on enacted tax laws and rates. The company maintains valuation allowances unless it is more likely than not that the deferred tax asset will be realized. With respect to uncertain tax positions, the company determines whether the position is more likely than not to be sustained upon examination, based on the technical merits of the position. Any tax position that meets the more likely than not recognition threshold is measured and recognized in the consolidated financial statements at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The liability relating to uncertain tax positions is classified as current in the consolidated balance sheets to the extent the company anticipates making a payment within one year. Interest and penalties associated with income taxes are classified in the income tax expense line in the consolidated statements of income. | |||||||||||||
Foreign Currency Translation | Foreign Currency Translation | ||||||||||||
Currency translation adjustments (CTA) related to foreign operations are included in other comprehensive income (OCI). For foreign operations in highly inflationary economies, translation gains and losses are included in other expense (income), net, and were not material in 2014, 2013 and 2012. | |||||||||||||
Derivatives and Hedging Activities | Derivatives and Hedging Activities | ||||||||||||
All derivative instruments are recognized as either assets or liabilities at fair value in the 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. | |||||||||||||
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 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 related to forecasted third-party sales denominated in foreign currencies, forecasted intercompany sales denominated in foreign currencies and anticipated issuances of debt, respectively. | |||||||||||||
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. | |||||||||||||
For derivative instruments that are not designated as hedges, the change in fair value is recorded directly to other expense (income), net. | |||||||||||||
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 income or loss recognition of the underlying hedged items. 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. | |||||||||||||
Derivatives, including those that are not designated as a hedge, are principally classified in the operating section of the consolidated statements of cash flows in the same category as the related consolidated balance sheet account. | |||||||||||||
Refer to Note 9 for further information regarding the company’s derivative and hedging activities. | |||||||||||||
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. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Revised Previously Reported Consolidated Balance Sheet | The company has revised its previously reported consolidated balance sheet as of December 31, 2013 as reflected below. | ||||||||||||
as of December 31, 2013 (in millions) | As Reported | Adjustments | As Revised | ||||||||||
Short-term deferred income taxes | $ 393 | $ 111 | $ 504 | ||||||||||
Prepaid expense and other | 468 | 80 | 548 | ||||||||||
Other assets | 1,534 | (836 | ) | 698 | |||||||||
Accounts payable and accrued liabilities | 4,866 | (658 | ) | 4,208 | |||||||||
Other long-term liabilities | 3,351 | 13 | 3,364 | ||||||||||
Inventories | |||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Raw materials | $ | 910 | $ | 920 | |||||||||
Work in process | 1,126 | 1,136 | |||||||||||
Finished goods | 1,523 | 1,443 | |||||||||||
Inventories | $ | 3,559 | $ | 3,499 | |||||||||
Property, Plant and Equipment, Net | |||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Land | $ | 225 | $ | 220 | |||||||||
Buildings and leasehold improvements | 2,673 | 2,670 | |||||||||||
Machinery and equipment | 7,687 | 7,360 | |||||||||||
Equipment with customers | 1,353 | 1,361 | |||||||||||
Construction in progress | 2,870 | 2,184 | |||||||||||
Total property, plant and equipment, at cost | 14,808 | 13,795 | |||||||||||
Accumulated depreciation | (6,110 | ) | (5,963 | ) | |||||||||
Property, plant and equipment (PP&E), net | $ | 8,698 | $ | 7,832 | |||||||||
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Summary of Operating Results Reflected as Discontinued Operations | Following is a summary of the operating results of the Vaccines franchise, which have been reflected as discontinued operations for the years ended December 31, 2014, 2013 and 2012. | ||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
Net sales | $ | 301 | $ | 292 | $ | 254 | |||||||
Income before income taxes | 616 | 3 | 51 | ||||||||||
Income tax expense | 65 | 3 | 8 | ||||||||||
Net income | $ | 551 | $ | 0 | $ | 43 | |||||||
Supplemental_Financial_Informa1
Supplemental Financial Information (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Other Long-Term Assets | Other Long-Term Assets | ||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Deferred income taxes | $ | 273 | $ | 41 | |||||||||
Other long-term receivables | 127 | 216 | |||||||||||
Other | 515 | 441 | |||||||||||
Other long-term assets | $ | 915 | $ | 698 | |||||||||
Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities | ||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Accounts payable, principally trade | $ | 1,264 | $ | 1,103 | |||||||||
Income taxes payable | 336 | 382 | |||||||||||
Deferred income taxes | 9 | 21 | |||||||||||
Common stock dividends payable | 282 | 266 | |||||||||||
Employee compensation and withholdings | 716 | 667 | |||||||||||
Property, payroll and certain other taxes | 261 | 237 | |||||||||||
Infusion pump reserves | 22 | 64 | |||||||||||
Business optimization reserves | 118 | 199 | |||||||||||
Accrued rebates | 374 | 346 | |||||||||||
Other | 961 | 923 | |||||||||||
Accounts payable and accrued liabilities | $ | 4,343 | $ | 4,208 | |||||||||
Other Long-Term Liabilities | Other Long-Term Liabilities | ||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Pension and other employee benefits | $ | 2,748 | $ | 2,049 | |||||||||
Litigation reserves | 53 | 72 | |||||||||||
Infusion pump reserves | — | 19 | |||||||||||
Business optimization reserves | 51 | 89 | |||||||||||
Contingent payment liabilities | 569 | 340 | |||||||||||
Other | 692 | 795 | |||||||||||
Other long-term liabilities | $ | 4,113 | $ | 3,364 | |||||||||
Net Interest Expense | Net Interest Expense | ||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
Interest costs | $ | 237 | $ | 225 | $ | 165 | |||||||
Interest costs capitalized | (70 | ) | (70 | ) | (52 | ) | |||||||
Interest expense | 167 | 155 | 113 | ||||||||||
Interest income | (22 | ) | (27 | ) | (26 | ) | |||||||
Net interest expense | $ | 145 | $ | 128 | $ | 87 | |||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Reconciliation of Basic Shares to Diluted Shares | The following is a reconciliation of basic shares to diluted shares. | ||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
Basic shares | 542 | 543 | 551 | ||||||||||
Effect of dilutive securities | 5 | 6 | 5 | ||||||||||
Diluted shares | 547 | 549 | 556 | ||||||||||
Acquisitions_and_Collaboration1
Acquisitions and Collaborations (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 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 assets acquired and liabilities assumed as of the acquisition date for the company’s other significant acquisitions in 2014, 2013 and 2012. | ||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
(in millions) | Chatham | AesRx | Inspiration/Ipsen | Synovis | |||||||||||||
Consideration transferred | |||||||||||||||||
Cash, net of cash acquired | $ 70 | $15 | $ 51 | $304 | |||||||||||||
Contingent payments | 77 | 65 | 269 | — | |||||||||||||
Fair value of consideration transferred | $147 | $80 | $320 | $304 | |||||||||||||
Assets acquired and liabilities assumed | |||||||||||||||||
Other intangible assets | $ 74 | $78 | $288 | $115 | |||||||||||||
Other assets, net | — | — | 25 | 25 | |||||||||||||
Total identifiable net assets | $ 74 | $78 | $313 | $140 | |||||||||||||
Goodwill | 73 | 2 | 7 | 164 | |||||||||||||
Total assets acquired and liabilities assumed | $147 | $80 | $320 | $304 | |||||||||||||
Subsidiary Information in Consolidated Statement of Income from Acquisition | The following table presents information for Gambro that has been included in Baxter’s consolidated statements of income from the acquisition date through December 31, 2013. | ||||||||||||||||
(in millions) | Gambro’s operations | ||||||||||||||||
included in Baxter’s results | |||||||||||||||||
Net sales | $513 | ||||||||||||||||
Net loss | $ (45 | ) | |||||||||||||||
Supplemental Pro Forma Information | The following table presents supplemental pro forma information for the years ended December 31, 2013 and 2012 as if the acquisition of Gambro had occurred on January 1, 2012. | ||||||||||||||||
Unaudited Pro Forma Consolidated Results | |||||||||||||||||
Years ended December 31, | |||||||||||||||||
(in millions, except per share information) | 2013 | 2012 | |||||||||||||||
Net sales | $15,996 | $15,513 | |||||||||||||||
Income from continuing operations | 2,138 | 1,978 | |||||||||||||||
Basic EPS from continuing operations | $ 3.94 | $ 3.59 | |||||||||||||||
Diluted EPS from continuing operations | $ 3.89 | $ 3.56 | |||||||||||||||
Gambro AB | |||||||||||||||||
Summary of Fair Value of Consideration Transferred and Amounts Recognized for Assets Acquired and Liabilities Assumed | The following table summarizes the 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) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Goodwill | The following is a summary of the activity in goodwill by segment. | ||||||||||||||||
(in millions) | BioScience | Medical | Total | ||||||||||||||
Products | |||||||||||||||||
December 31, 2012 | $ 975 | $ | 1,527 | $ | 2,502 | ||||||||||||
Additions | 7 | 1,622 | 1,629 | ||||||||||||||
Currency translation and other adjustments | 9 | 65 | 74 | ||||||||||||||
December 31, 2013 | 991 | 3,214 | 4,205 | ||||||||||||||
Additions | 75 | 4 | 79 | ||||||||||||||
Currency translation and other adjustments | (39 | ) | (371 | ) | (410 | ) | |||||||||||
December 31, 2014 | $1,027 | $ | 2,847 | $ | 3,874 | ||||||||||||
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 | |||||||||||||||
December 31, 2014 | |||||||||||||||||
Gross other intangible assets | $2,278 | $ 443 | $272 | $2,993 | |||||||||||||
Accumulated amortization | (769 | ) | (145 | ) | — | (914 | ) | ||||||||||
Other intangible assets, net | $1,509 | $ 298 | $272 | $2,079 | |||||||||||||
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) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Infusion Pump Charges | The following table summarizes cash activity in the company’s COLLEAGUE and SYNDEO infusion pump reserves through December 31, 2014. | ||||||||||||
(in millions) | |||||||||||||
Charges and adjustments in 2005 through 2011 | $ | 716 | |||||||||||
Utilization in 2005 through 2011 | (440 | ) | |||||||||||
Reserves at December 31, 2011 | 276 | ||||||||||||
Reserve adjustments | 26 | ||||||||||||
Utilization | (175 | ) | |||||||||||
Reserves at December 31, 2012 | 127 | ||||||||||||
Reserve adjustments | (17 | ) | |||||||||||
Utilization | (27 | ) | |||||||||||
Reserves at December 31, 2013 | 83 | ||||||||||||
Reserve adjustments | (25 | ) | |||||||||||
Utilization | (36 | ) | |||||||||||
Reserves at December 31, 2014 | $ | 22 | |||||||||||
Total Charges | The company’s total charges in 2014, 2013, and 2012 are presented below. | ||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
Cash expenses | $87 | $ | 182 | $ | 98 | ||||||||
Non-cash expenses | 4 | 132 | 52 | ||||||||||
Reserve adjustments | (64 | ) | (20 | ) | — | ||||||||
Total business optimization expenses | 27 | 294 | 150 | ||||||||||
Discontinued operations | (8 | ) | (101 | ) | — | ||||||||
Business optimization expenses in continuing operations | $19 | $ | 193 | $ | 150 | ||||||||
Business Optimization Charge | The following table summarizes cash activity in the reserves related to the company’s business optimization initiatives. | ||||||||||||
(in millions) | |||||||||||||
Charges and adjustments in 2009 through 2011 | $ | 409 | |||||||||||
Utilization in 2009 through 2011 | (183 | ) | |||||||||||
CTA | (1 | ) | |||||||||||
Reserve at December 31, 2011 | 225 | ||||||||||||
2012 charges | 98 | ||||||||||||
Utilization in 2012 | (99 | ) | |||||||||||
CTA | (4 | ) | |||||||||||
Reserve at December 31, 2012 | 220 | ||||||||||||
2013 charges | 182 | ||||||||||||
Reserve adjustments | (20 | ) | |||||||||||
Utilization in 2013 | (98 | ) | |||||||||||
CTA | 4 | ||||||||||||
Reserve at December 31, 2013 | 288 | ||||||||||||
2014 charges | 87 | ||||||||||||
Reserve adjustments | (62 | ) | |||||||||||
Utilization in 2014 | (125 | ) | |||||||||||
CTA | (19 | ) | |||||||||||
Reserve at December 31, 2014 | $ | 169 | |||||||||||
Debt_Credit_Facilities_and_Lea1
Debt, Credit Facilities and Lease Commitments (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Schedule of Debt Outstanding | At December 31, 2014 and 2013, the company had the following debt outstanding. | ||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||
Commercial paper | $ 875 | $ | — | ||||||||
Other short-term debt | 38 | 181 | |||||||||
Short-term debt | $ 913 | $ | 181 | ||||||||
as of December 31 (in millions) | Effective interest | 20142 | 20132 | ||||||||
rate in 20141 | |||||||||||
4.0% notes due 2014 | 4.10% | — | 351 | ||||||||
Floating rate notes due 2014 | 0.60% | — | 500 | ||||||||
Variable-rate loan due 2015 | 0.80% | 171 | 194 | ||||||||
4.625% notes due 2015 | 4.70% | 604 | 625 | ||||||||
5.9% notes due 2016 | 6.00% | 614 | 622 | ||||||||
0.95% notes due 2016 | 1.10% | 500 | 500 | ||||||||
1.85% notes due 2017 | 2.00% | 500 | 500 | ||||||||
Variable-rate loan due 2017 | 1.00% | 120 | 136 | ||||||||
5.375% notes due 2018 | 5.50% | 500 | 499 | ||||||||
1.85% notes due 2018 | 2.00% | 750 | 750 | ||||||||
4.5% notes due 2019 | 4.60% | 535 | 534 | ||||||||
4.25% notes due 2020 | 4.40% | 299 | 299 | ||||||||
2.40% notes due 2022 | 2.50% | 723 | 684 | ||||||||
3.2% notes due 2023 | 3.30% | 1,275 | 1,246 | ||||||||
6.625% debentures due 2028 | 6.70% | 132 | 133 | ||||||||
6.25% notes due 2037 | 6.30% | 499 | 499 | ||||||||
3.65% notes due 2042 | 3.70% | 298 | 298 | ||||||||
4.5% notes due 2043 | 4.50% | 500 | 500 | ||||||||
Other | — | 372 | 115 | ||||||||
Total debt and capital lease obligations | 8,392 | 8,985 | |||||||||
Current portion | (786 | ) | (859 | ) | |||||||
Long-term portion | $7,606 | $ | 8,126 | ||||||||
1 | Excludes the effect of any related interest rate swaps. | ||||||||||
2 | Book values include any discounts, premiums and adjustments related to hedging instruments. | ||||||||||
Future Minimum Lease Payments and Debt Maturities | Future Minimum Lease Payments and Debt Maturities | ||||||||||
as of and for the years ended December 31 (in millions) | Operating | Debt maturities | |||||||||
leases | and capital | ||||||||||
leases | |||||||||||
2015 | $ 222 | $ 786 | |||||||||
2016 | 187 | 1,142 | |||||||||
2017 | 163 | 644 | |||||||||
2018 | 130 | 1,275 | |||||||||
2019 | 113 | 525 | |||||||||
Thereafter | 232 | 4,097 | |||||||||
Total obligations and commitments | 1,047 | 8,469 | |||||||||
Interest on capital leases, discounts and premiums, and adjustments relating to hedging instruments | — | (77 | ) | ||||||||
Total debt and lease obligations | $1,047 | $8,392 | |||||||||
Derivative_Instruments_and_Hed1
Derivative Instruments and Hedging Activity (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Summary of Gains and Losses on Derivative Instruments | The following tables summarize the gains and losses on the company’s derivative instruments for the years ended December 31, 2014 and 2013. | ||||||||||||||||||||
Gain (loss) | Location of gain (loss) in | Gain (loss) | |||||||||||||||||||
recognized in OCI | income statement | reclassified from | |||||||||||||||||||
AOCI into income | |||||||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Cash flow hedges | |||||||||||||||||||||
Interest rate contracts | $ (1 | ) | $26 | Net interest expense | $ (1 | ) | $10 | ||||||||||||||
Foreign exchange contracts | 1 | 1 | Net sales | 1 | (1 | ) | |||||||||||||||
Foreign exchange contracts | 51 | 36 | Cost of sales | 13 | 32 | ||||||||||||||||
Total | $51 | $63 | $13 | $41 | |||||||||||||||||
Location of gain (loss) in | Gain (loss) | ||||||||||||||||||||
income statement | recognized in income | ||||||||||||||||||||
(in millions) | 2014 | 2013 | |||||||||||||||||||
Fair value hedges | |||||||||||||||||||||
Interest rate contracts | Net interest expense | $68 | $(46 | ) | |||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Other expense (income), net | $49 | $ 11 | ||||||||||||||||||
Net of Tax Activity in Accumulated Other Comprehensive Income Related to Cash Flow Hedges | The following table summarizes net-of-tax activity in AOCI, a component of shareholders’ equity, related to the company’s cash flow hedges. | ||||||||||||||||||||
as of and for the years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||||||
Accumulated other comprehensive income (loss) balance at beginning of year | $ | 10 | $ | (5 | ) | $ | 2 | ||||||||||||||
Gain (loss) in fair value of derivatives during the year | 32 | 41 | (7 | ) | |||||||||||||||||
Amount reclassified to earnings during the year | (8 | ) | (26 | ) | — | ||||||||||||||||
Accumulated other comprehensive income (loss) balance at end of year | $ | 34 | $ | 10 | $ | (5 | ) | ||||||||||||||
Classification and Fair Value Amounts of Derivative Instruments | The following table summarizes the classification and fair value amounts of derivative instruments reported in the consolidated balance sheet as of December 31, 2014. | ||||||||||||||||||||
Derivatives in asset positions | Derivatives in liability positions | ||||||||||||||||||||
(in millions) | Balance sheet location | Fair | Balance sheet location | Fair | |||||||||||||||||
value | value | ||||||||||||||||||||
Derivative instruments designated as hedges | |||||||||||||||||||||
Interest rate contracts | Prepaid expenses and other | $ | 1 | Accounts payable | $ 2 | ||||||||||||||||
and accrued liabilities | |||||||||||||||||||||
Interest rate contracts | Other long-term assets | 89 | Other long-term liabilities | — | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | 51 | Accounts payable and accrued liabilities | — | |||||||||||||||||
Total derivative instruments designated as hedges | $ | 141 | $ 2 | ||||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | $ | — | Accounts payable and accrued liabilities | $23 | ||||||||||||||||
Total derivative instruments | $ | 141 | $25 | ||||||||||||||||||
The following table summarizes the classification and fair value amounts of derivative instruments reported in the consolidated balance sheet as of December 31, 2013. | |||||||||||||||||||||
Derivatives in asset positions | Derivatives in liability positions | ||||||||||||||||||||
(in millions) | Balance sheet location | Fair | Balance sheet location | Fair | |||||||||||||||||
value | 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 and accrued liabilities | 7 | |||||||||||||||||
Total derivative instruments designated as hedges | $ | 72 | $21 | ||||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other | $ | — | Accounts payable and accrued liabilities | $ 1 | ||||||||||||||||
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: | ||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||
(in millions) | Asset | Liability | Asset | Liability | |||||||||||||||||
Gross amounts recognized in the consolidated balance sheet | $141 | $ 25 | $ 72 | $ 22 | |||||||||||||||||
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet | (22 | ) | (22 | ) | (17 | ) | (17 | ) | |||||||||||||
Total | $119 | $ 3 | $ 55 | $ 5 | |||||||||||||||||
Financial_Instruments_and_Rela1
Financial Instruments and Related Fair Value Measurements (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Summary of Activity Relating to Securitization Arrangement | The following is a summary of the activity relating to the securitization arrangement. | ||||||||||||||||
as of and for the years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||
Sold receivables at beginning of year | $ | 114 | $ | 157 | $ | 160 | |||||||||||
Proceeds from sales of receivables | 464 | 506 | 630 | ||||||||||||||
Cash collections (remitted to the owners of the receivables) | (459 | ) | (519 | ) | (624 | ) | |||||||||||
Effect of currency exchange rate changes | (15 | ) | (30 | ) | (9 | ) | |||||||||||
Sold receivables at end of year | $ | 104 | $ | 114 | $ | 157 | |||||||||||
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 consolidated balance sheets. | ||||||||||||||||
Basis of fair value measurement | |||||||||||||||||
(in millions) | Balance at | Quoted prices in | Significant other | Significant | |||||||||||||
December 31, | active markets for | observable inputs | unobservable inputs | ||||||||||||||
2014 | identical assets | (Level 2) | (Level 3) | ||||||||||||||
(Level 1) | |||||||||||||||||
Assets | |||||||||||||||||
Foreign currency hedges | $ 51 | $ — | $ 51 | $ — | |||||||||||||
Interest rate hedges | 90 | — | 90 | — | |||||||||||||
Available-for-sale securities | |||||||||||||||||
Equity securities | 105 | 105 | — | — | |||||||||||||
Foreign government debt securities | 18 | — | 18 | — | |||||||||||||
Total assets | $264 | $105 | $159 | $ — | |||||||||||||
Liabilities | |||||||||||||||||
Foreign currency hedges | $ 23 | $ — | $ 23 | $ — | |||||||||||||
Interest rate hedges | 2 | — | 2 | — | |||||||||||||
Contingent payments related to acquisitions | 569 | — | — | 569 | |||||||||||||
Total liabilities | $594 | $ — | $ 25 | $569 | |||||||||||||
Basis of fair value measurement | |||||||||||||||||
(in millions) | Balance at | Quoted prices in | Significant other | Significant | |||||||||||||
December 31, | active markets for | observable inputs | unobservable inputs | ||||||||||||||
2013 | identical assets | (Level 2) | (Level 3) | ||||||||||||||
(Level 1) | |||||||||||||||||
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 consist of contingent payments related to acquisitions and preferred stock. | ||||||||||||||||
(in millions) | Contingent | Preferred | |||||||||||||||
payments | stock | ||||||||||||||||
Fair value as of December 31, 2012 | $ 86 | $ 51 | |||||||||||||||
Additions | 269 | — | |||||||||||||||
Payments | (2 | ) | — | ||||||||||||||
Net gains recognized in earnings | (17 | ) | — | ||||||||||||||
CTA | 4 | — | |||||||||||||||
Conversion to a publicly traded equity security | — | (51 | ) | ||||||||||||||
Fair value as of December 31, 2013 | 340 | — | |||||||||||||||
Additions | 142 | — | |||||||||||||||
Payments | (15 | ) | — | ||||||||||||||
Net losses recognized in earnings | 122 | — | |||||||||||||||
CTA | (20 | ) | — | ||||||||||||||
Fair value as of December 31, 2014 | $569 | $ — | |||||||||||||||
Book Values and Fair Values of Financial Instruments | the following table provides the values recognized on the consolidated balance sheets and the approximate fair values. | ||||||||||||||||
Book values | Approximate | ||||||||||||||||
fair values | |||||||||||||||||
as of December 31 (in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Assets | |||||||||||||||||
Investments | $ | 54 | $ | 53 | $ | 52 | $ | 53 | |||||||||
Liabilities | |||||||||||||||||
Short-term debt | 913 | 181 | 913 | 181 | |||||||||||||
Current maturities of long-term debt and lease obligations | 786 | 859 | 791 | 862 | |||||||||||||
Long-term debt and lease obligations | 7,606 | 8,126 | 8,192 | 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 December 31, 2014 and 2013. | ||||||||||||||||
Basis of fair value measurement | |||||||||||||||||
(in millions) | Balance as of | Quoted prices in | Significant other | Significant | |||||||||||||
December 31, | active markets for | observable inputs | unobservable inputs | ||||||||||||||
2014 | identical assets | (Level 2) | (Level 3) | ||||||||||||||
(Level 1) | |||||||||||||||||
Assets | |||||||||||||||||
Investments | $ 52 | $— | $ 8 | $44 | |||||||||||||
Total assets | $ 52 | $— | $ 8 | $44 | |||||||||||||
Liabilities | |||||||||||||||||
Short-term debt | $ 913 | $— | $ 913 | $— | |||||||||||||
Current maturities of long-term debt and lease obligations | 791 | — | 791 | — | |||||||||||||
Long-term debt and lease obligations | 8,192 | — | 8,192 | — | |||||||||||||
Long-term litigation liabilities | 52 | — | — | 52 | |||||||||||||
Total liabilities | $9,948 | $— | $9,896 | $52 | |||||||||||||
Basis of fair value measurement | |||||||||||||||||
(in millions) | Balance as of | Quoted prices in | Significant other | Significant | |||||||||||||
December 31, | active markets for | observable inputs | unobservable inputs | ||||||||||||||
2013 | identical assets | (Level 2) | (Level 3) | ||||||||||||||
(Level 1) | |||||||||||||||||
Assets | |||||||||||||||||
Investments | $ 53 | $— | $ 17 | $36 | |||||||||||||
Total assets | $ 53 | $— | $ 17 | $36 | |||||||||||||
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) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Stock Options Fair Value Assumptions | the fair value of stock options granted during each year, along with the weighted-average grant-date fair values, were as follows. | ||||||||||||||||
years ended December 31 | 2014 | 2013 | 2012 | ||||||||||||||
Expected volatility | 24% | 25% | 25% | ||||||||||||||
Expected life (in years) | 5.5 | 5.5 | 5.5 | ||||||||||||||
Risk-free interest rate | 1.70% | 0.90% | 1.00% | ||||||||||||||
Dividend yield | 2.84% | 2.60% | 2.30% | ||||||||||||||
Fair value per stock option | $12 | $12 | $10 | ||||||||||||||
Summary of Stock Option Activity | The following table summarizes stock option activity for the year ended December 31, 2014 and stock option information at December 31, 2014. | ||||||||||||||||
(options and aggregate intrinsic values in thousands) | Options | Weighted- | Weighted-average | Aggregate | |||||||||||||
average | remaining | intrinsic | |||||||||||||||
exercise | contractual | value | |||||||||||||||
price | term (in years) | ||||||||||||||||
Outstanding at January 1, 2014 | 29,129 | $ | 57 | ||||||||||||||
Granted | 6,894 | 69.26 | |||||||||||||||
Exercised | (5,591 | ) | 52.54 | ||||||||||||||
Forfeited | (1,042 | ) | 67.16 | ||||||||||||||
Expired | (117 | ) | 49.21 | ||||||||||||||
Outstanding at December 31, 2014 | 29,273 | $ | 60.41 | 6.2 | $ | 377,120 | |||||||||||
Vested or expected to vest as of December 31, 2014 | 28,756 | $ | 60.25 | 6.2 | $ | 375,093 | |||||||||||
Exercisable at December 31, 2014 | 17,419 | $ | 55.36 | 4.6 | $ | 312,381 | |||||||||||
Summary of Nonvested Restricted Stock Units Activity | The following table summarizes nonvested RSU activity for the year ended December 31, 2014. | ||||||||||||||||
(share units in thousands) | Share units | Weighted- | |||||||||||||||
average | |||||||||||||||||
grant-date | |||||||||||||||||
fair value | |||||||||||||||||
Nonvested RSUs at January 1, 2014 | 2,218 | $62.06 | |||||||||||||||
Granted | 1,521 | 71.22 | |||||||||||||||
Vested | (854 | ) | 60.23 | ||||||||||||||
Forfeited | (237 | ) | 62.5 | ||||||||||||||
Nonvested RSUs at December 31, 2014 | 2,648 | $67.89 | |||||||||||||||
Performance Stock Units Fair Value | The fair value for PSUs based on market conditions is determined using a Monte Carlo model. 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. | ||||||||||||||||
years ended December 31 | 2014 | 2013 | 2012 | ||||||||||||||
Baxter volatility | 20% | 21% | 24% | ||||||||||||||
Peer group volatility | 13%-58% | 13%-38% | 14%-50% | ||||||||||||||
Correlation of returns | 0.23-0.66 | 0.37-0.62 | 0.26-0.54 | ||||||||||||||
Risk-free interest rate | 0.70% | 0.30% | 0.40% | ||||||||||||||
Fair value per PSU | $57 | $67 | $72 | ||||||||||||||
Summary of Nonvested Performance Stock Unit Activity | The following table summarizes nonvested PSU activity for the year ended December 31, 2014. | ||||||||||||||||
(share units in thousands) | Share units | Weighted-average | |||||||||||||||
grant-date | |||||||||||||||||
fair value | |||||||||||||||||
Nonvested PSUs at January 1, 2014 | 645 | $70.18 | |||||||||||||||
Granted | 285 | 62.08 | |||||||||||||||
Vested | (360 | ) | 71.51 | ||||||||||||||
Forfeited | (81 | ) | 68.16 | ||||||||||||||
Nonvested PSUs at December 31, 2014 | 489 | $64.80 | |||||||||||||||
RETIREMENT_AND_OTHER_BENEFIT_P1
RETIREMENT AND OTHER BENEFIT PROGRAMS (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Reconciliation of Pension and Other Postemployment Benefits (OPEB) Plan Obligations, Assets and Funded Status | The benefit plan information in the table below pertains to all of the company’s pension and OPEB plans, both in the United States and in other countries. | ||||||||||||||||||||||||
Pension benefits | OPEB | ||||||||||||||||||||||||
as of and for the years ended December 31 (in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Benefit obligations | |||||||||||||||||||||||||
Beginning of period | $ | 5,425 | $ | 5,364 | $ | 564 | $ | 650 | |||||||||||||||||
Service cost | 130 | 137 | 5 | 10 | |||||||||||||||||||||
Interest cost | 242 | 207 | 25 | 26 | |||||||||||||||||||||
Participant contributions | 10 | 9 | 12 | 11 | |||||||||||||||||||||
Actuarial loss/(gain) | 965 | (350 | ) | 106 | (99 | ) | |||||||||||||||||||
Benefit payments | (228 | ) | (203 | ) | (37 | ) | (34 | ) | |||||||||||||||||
Settlements | (6 | ) | (4 | ) | — | — | |||||||||||||||||||
Acquisitions and divestitures | (8 | ) | 220 | — | — | ||||||||||||||||||||
Plan amendments | (5 | ) | — | (124 | ) | — | |||||||||||||||||||
Foreign exchange and other | (194 | ) | 45 | — | — | ||||||||||||||||||||
End of period | 6,331 | 5,425 | 551 | 564 | |||||||||||||||||||||
Fair value of plan assets | |||||||||||||||||||||||||
Beginning of period | 4,000 | 3,642 | — | — | |||||||||||||||||||||
Actual return on plan assets | 427 | 464 | — | — | |||||||||||||||||||||
Employer contributions | 74 | 67 | 25 | 23 | |||||||||||||||||||||
Participant contributions | 10 | 9 | 12 | 11 | |||||||||||||||||||||
Benefit payments | (228 | ) | (203 | ) | (37 | ) | (34 | ) | |||||||||||||||||
Settlements | (6 | ) | (4 | ) | — | — | |||||||||||||||||||
Acquisitions and divestitures | — | 8 | — | — | |||||||||||||||||||||
Foreign exchange and other | (80 | ) | 17 | — | — | ||||||||||||||||||||
End of period | 4,197 | 4,000 | — | — | |||||||||||||||||||||
Funded status at December 31 | $ | (2,134 | ) | $ | (1,425 | ) | $ | (551 | ) | $ | (564 | ) | |||||||||||||
Amounts recognized in the consolidated balance sheets | |||||||||||||||||||||||||
Noncurrent asset | $ | 53 | $ | 50 | $ | — | $ | — | |||||||||||||||||
Current liability | (29 | ) | (29 | ) | (23 | ) | (24 | ) | |||||||||||||||||
Noncurrent liability | (2,158 | ) | (1,446 | ) | (528 | ) | (540 | ) | |||||||||||||||||
Net liability recognized at December 31 | $ | (2,134 | ) | $ | (1,425 | ) | $ | (551 | ) | $ | (564 | ) | |||||||||||||
Information Relating to Individual Plans in Funded Status that have ABO in Excess of Plan Assets | The following is information relating to the individual plans in the funded status table above that have an ABO in excess of plan assets. | ||||||||||||||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||||||||||||||
ABO | $ | 5,550 | $ | 4,780 | |||||||||||||||||||||
Fair value of plan assets | 3,878 | 3,710 | |||||||||||||||||||||||
Information Relating to Individual Plans in Funded Status that have PBO in Excess of Plan Assets | The following is information relating to the individual plans in the funded status table above that have a PBO in excess of plan assets (many of which also have an ABO in excess of assets, and are therefore also included in the table directly above). | ||||||||||||||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||||||||||||||
PBO | $ | 6,117 | $ | 5,260 | |||||||||||||||||||||
Fair value of plan assets | 3,954 | 3,785 | |||||||||||||||||||||||
Expected Net Pension and OPEB Plan Payments for Next 10 Years | Expected Net Pension and OPEB Plan Payments for the Next 10 Years | ||||||||||||||||||||||||
(in millions) | Pension | OPEB | |||||||||||||||||||||||
benefits | |||||||||||||||||||||||||
2015 | $ | 229 | $ | 24 | |||||||||||||||||||||
2016 | 242 | 29 | |||||||||||||||||||||||
2017 | 259 | 30 | |||||||||||||||||||||||
2018 | 268 | 31 | |||||||||||||||||||||||
2019 | 286 | 31 | |||||||||||||||||||||||
2020 through 2024 | 1,643 | 156 | |||||||||||||||||||||||
Total expected net benefit payments for next 10 years | $ | 2,927 | $ | 301 | |||||||||||||||||||||
Summary of Pre-Tax losses Included in AOCI | The following is a summary of the pre-tax losses included in AOCI at December 31, 2014 and December 31, 2013. | ||||||||||||||||||||||||
(in millions) | Pension | OPEB | |||||||||||||||||||||||
benefits | |||||||||||||||||||||||||
Actuarial loss | $ | 2,069 | $ | 159 | |||||||||||||||||||||
Prior service credit and transition obligation | (5 | ) | (120 | ) | |||||||||||||||||||||
Total pre-tax loss recognized in AOCI at December 31, 2014 | $ | 2,064 | $ | 39 | |||||||||||||||||||||
Actuarial loss | $ | 1,455 | $ | 55 | |||||||||||||||||||||
Prior service credit and transition obligation | — | (1 | ) | ||||||||||||||||||||||
Total pre-tax loss recognized in AOCI at December 31, 2013 | $ | 1,455 | $ | 54 | |||||||||||||||||||||
Summary of Net-of-Tax Amounts Recorded in OCI Relating to Pension and OPEB Plans | The following is a summary of the net-of-tax amounts recorded in OCI relating to pension and OPEB plans. | ||||||||||||||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||||||||||
(Charge) gain arising during the year, net of tax (benefit) expense of ($240) in 2014, $221 in 2013 and ($143) in 2012 | $ | (494 | ) | $ | 426 | $ | (353 | ) | |||||||||||||||||
Settlement charge, net of tax expense of $65 | — | — | 103 | ||||||||||||||||||||||
Amortization of loss to earnings, net of tax expense of $47 in 2014, $88 in 2013 and $77 in 2012 | 94 | 166 | 139 | ||||||||||||||||||||||
Pension and other employee benefits (charge) gain | $ | (400 | ) | $ | 592 | $ | (111 | ) | |||||||||||||||||
Summary of Pre-tax Amounts Expected to be Amortized to Net Periodic Benefit Cost in 2015 | the following is a summary of the pre-tax amounts expected to be amortized to net periodic benefit cost in 2015. | ||||||||||||||||||||||||
(in millions) | Pension | OPEB | |||||||||||||||||||||||
benefits | |||||||||||||||||||||||||
Actuarial loss | $ | 210 | $ | 9 | |||||||||||||||||||||
Prior service credit and transition obligation | (2 | ) | (12 | ) | |||||||||||||||||||||
Total pre-tax amount expected to be amortized from AOCI to net pension and OPEB cost in 2015 | $ | 208 | $ | (3 | ) | ||||||||||||||||||||
Net Periodic Benefit Cost | Net Periodic Benefit Cost | ||||||||||||||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Pension benefits | |||||||||||||||||||||||||
Service cost | $ | 130 | $ | 137 | $ | 110 | |||||||||||||||||||
Interest cost | 242 | 207 | 235 | ||||||||||||||||||||||
Expected return on plan assets | (269 | ) | (254 | ) | (288 | ) | |||||||||||||||||||
Amortization of net losses and other deferred amounts | 144 | 245 | 209 | ||||||||||||||||||||||
Settlement losses | 1 | 1 | 168 | ||||||||||||||||||||||
Net periodic pension benefit cost | $ | 248 | $ | 336 | $ | 434 | |||||||||||||||||||
OPEB | |||||||||||||||||||||||||
Service cost | $ | 5 | $ | 10 | $ | 7 | |||||||||||||||||||
Interest cost | 25 | 26 | 29 | ||||||||||||||||||||||
Amortization of net loss and prior service credit | (3 | ) | 9 | 7 | |||||||||||||||||||||
Net periodic OPEB cost | $ | 27 | $ | 45 | $ | 43 | |||||||||||||||||||
Weighted-Average Assumptions Used in Determining Benefit Obligations at Measurement Date | Weighted-Average Assumptions Used in Determining Benefit Obligations at the Measurement Date | ||||||||||||||||||||||||
Pension benefits | OPEB | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
Discount rate | |||||||||||||||||||||||||
U.S. and Puerto Rico plans | 4.00% | 4.85% | 3.95% | 4.90% | |||||||||||||||||||||
International plans | 2.26% | 3.41% | n/a | n/a | |||||||||||||||||||||
Rate of compensation increase | |||||||||||||||||||||||||
U.S. and Puerto Rico plans | 3.80% | 3.80% | n/a | n/a | |||||||||||||||||||||
International plans | 3.28% | 3.29% | n/a | n/a | |||||||||||||||||||||
Annual rate of increase in the per-capita cost | n/a | n/a | 6.00% | 6.25% | |||||||||||||||||||||
Rate decreased to | n/a | n/a | 5.00% | 5.00% | |||||||||||||||||||||
by the year ended | n/a | n/a | 2019 | 2019 | |||||||||||||||||||||
Weighted-Average Assumptions Used in Determining Net Periodic Benefit Cost | |||||||||||||||||||||||||
Pension benefits | OPEB | ||||||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Discount rate | |||||||||||||||||||||||||
U.S. and Puerto Rico plans | 4.85% | 3.95% | 4.80% | 4.90% | 4.00% | 4.75% | |||||||||||||||||||
International plans | 3.41% | 3.19% | 4.48% | n/a | n/a | n/a | |||||||||||||||||||
Expected return on plan assets | |||||||||||||||||||||||||
U.S. and Puerto Rico plans | 7.50% | 7.50% | 7.75% | n/a | n/a | n/a | |||||||||||||||||||
International plans | 6.02% | 6.33% | 6.85% | n/a | n/a | n/a | |||||||||||||||||||
Rate of compensation increase | |||||||||||||||||||||||||
U.S. and Puerto Rico plans | 3.80% | 4.50% | 4.50% | n/a | n/a | n/a | |||||||||||||||||||
International plans | 3.29% | 3.51% | 3.54% | n/a | n/a | n/a | |||||||||||||||||||
Annual rate of increase in the per-capita cost | n/a | n/a | n/a | 6.25% | 6.50% | 7.00% | |||||||||||||||||||
Rate decreased to | n/a | n/a | n/a | 5.00% | 5.00% | 5.00% | |||||||||||||||||||
by the year ended | n/a | n/a | n/a | 2019 | 2019 | 2016 | |||||||||||||||||||
Effect of One-Percent Change in Assumed Healthcare Cost Trend Rate on OPEB Plan | Effect of a One-Percent Change in Assumed Healthcare Cost Trend Rate on the OPEB Plan | ||||||||||||||||||||||||
One percent | One percent | ||||||||||||||||||||||||
increase | decrease | ||||||||||||||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Effect on total of service and interest cost components of OPEB cost | $ | 4 | $ | 6 | $ | (3 | ) | $ | (5 | ) | |||||||||||||||
Effect on OPEB obligation | $ | 67 | $ | 74 | $ | (55 | ) | $ | (61 | ) | |||||||||||||||
Fair Value of Pension Plan Assets and Liabilities | The following tables summarize the bases used to measure the pension plan assets and liabilities that are carried at fair value on a recurring basis. | ||||||||||||||||||||||||
Basis of fair value measurement | |||||||||||||||||||||||||
(in millions) | Balance at | Quoted prices in | Significant other | Significant | |||||||||||||||||||||
December 31, 2014 | active markets for | observable inputs | unobservable | ||||||||||||||||||||||
identical assets | (Level 2) | inputs | |||||||||||||||||||||||
(Level 1) | (Level 3) | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Fixed income securities | |||||||||||||||||||||||||
Cash and cash equivalents | $ 129 | $ 21 | $ 108 | $ — | |||||||||||||||||||||
U.S. government and government agency issues | 434 | — | 434 | — | |||||||||||||||||||||
Corporate bonds | 704 | — | 704 | — | |||||||||||||||||||||
Equity securities | |||||||||||||||||||||||||
Common stock: | |||||||||||||||||||||||||
Large cap | 1,024 | 1,024 | — | — | |||||||||||||||||||||
Mid cap | 459 | 459 | — | — | |||||||||||||||||||||
Small cap | 101 | 101 | — | — | |||||||||||||||||||||
Total common stock | 1,584 | 1,584 | — | — | |||||||||||||||||||||
Mutual funds | 404 | 180 | 224 | — | |||||||||||||||||||||
Common/collective trust funds | 607 | — | 601 | 6 | |||||||||||||||||||||
Partnership investments | 214 | — | — | 214 | |||||||||||||||||||||
Other holdings | 121 | 11 | 108 | 2 | |||||||||||||||||||||
Collateral held on loaned securities | 266 | — | 266 | — | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Collateral to be paid on loaned securities | -266 | -82 | -184 | — | |||||||||||||||||||||
Fair value of pension plan assets | $4,197 | $1,714 | $2,261 | $222 | |||||||||||||||||||||
Basis of fair value measurement | |||||||||||||||||||||||||
(in millions) | Balance at | 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 | |||||||||||||||||||||||||
Fixed income securities | |||||||||||||||||||||||||
Cash and cash equivalents | $ 267 | $ 24 | $ 243 | $ — | |||||||||||||||||||||
U.S. government and government agency issues | 287 | — | 287 | — | |||||||||||||||||||||
Corporate bonds | 637 | — | 637 | — | |||||||||||||||||||||
Equity securities | |||||||||||||||||||||||||
Common stock: | |||||||||||||||||||||||||
Large cap | 974 | 974 | — | — | |||||||||||||||||||||
Mid cap | 442 | 442 | — | — | |||||||||||||||||||||
Small cap | 93 | 93 | — | — | |||||||||||||||||||||
Total common stock | 1,509 | 1,509 | — | — | |||||||||||||||||||||
Mutual funds | 381 | 180 | 201 | — | |||||||||||||||||||||
Common/collective trust funds | 617 | — | 612 | 5 | |||||||||||||||||||||
Partnership investments | 199 | — | — | 199 | |||||||||||||||||||||
Other holdings | 103 | 10 | 91 | 2 | |||||||||||||||||||||
Collateral held on loaned securities | 248 | — | 248 | — | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Collateral to be paid on loaned securities | -248 | -88 | -160 | — | |||||||||||||||||||||
Fair value of pension plan assets | $4,000 | $1,635 | $2,159 | $206 | |||||||||||||||||||||
Changes in Fair Value Measurements that Used Significant Unobservable Inputs | The following is a reconciliation of changes in fair value measurements that used significant unobservable inputs (Level 3). | ||||||||||||||||||||||||
(in millions) | Total | Common/collective | Partnership | Other | |||||||||||||||||||||
trust funds | investments | holdings | |||||||||||||||||||||||
Balance at December 31, 2012 | $187 | $ 5 | $180 | $ 2 | |||||||||||||||||||||
Actual return on plan assets still held at year end | 8 | — | 8 | — | |||||||||||||||||||||
Actual return on plan assets sold during the year | — | — | — | — | |||||||||||||||||||||
Purchases, sales and settlements | 11 | — | 11 | — | |||||||||||||||||||||
Balance at December 31, 2013 | 206 | 5 | 199 | 2 | |||||||||||||||||||||
Actual return on plan assets still held at year end | 14 | 1 | 13 | — | |||||||||||||||||||||
Actual return on plan assets sold during the year | 4 | — | 4 | — | |||||||||||||||||||||
Purchases, sales and settlements | (2 | ) | — | (2 | ) | — | |||||||||||||||||||
Balance at December 31, 2014 | $222 | $ 6 | $214 | $ 2 | |||||||||||||||||||||
Funded Status Percentage of Pension Plans | The table below details the funded status percentage of the company’s pension plans as of December 31, 2014, including certain plans that are unfunded in accordance with the guidelines of the company’s funding policy outlined above. | ||||||||||||||||||||||||
United States and Puerto Rico | International | ||||||||||||||||||||||||
as of December 31, 2014 (in millions) | Qualified | Nonqualified | Funded | Unfunded | Total | ||||||||||||||||||||
plans | plan | plans | plans | ||||||||||||||||||||||
Fair value of plan assets | $3,414 | n/a | $ 783 | n/a | $4,197 | ||||||||||||||||||||
PBO | 4,449 | $224 | 1,064 | $594 | 6,331 | ||||||||||||||||||||
Funded status percentage | 77% | n/a | 74% | n/a | 66% | ||||||||||||||||||||
ACCUMULATED_OTHER_COMPREHENSIV1
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 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 years ended December 31, 2014 and 2013. | ||||||||||||||||||||
(in millions) | CTA | Pension and | Hedging | Other | Total | ||||||||||||||||
other employee | activities | ||||||||||||||||||||
benefits | |||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||
Balance as of December 31, 2013 | $ | (991 | ) | $(1,027 | ) | $ 10 | $ | 32 | $ | (1,976 | ) | ||||||||||
Other comprehensive income before reclassifications | (1,332 | ) | (494 | ) | 32 | (6 | ) | (1,800 | ) | ||||||||||||
Amounts reclassified from AOCI (a) | — | 94 | (8 | ) | 40 | 126 | |||||||||||||||
Net other comprehensive (loss) income | (1,332 | ) | (400 | ) | 24 | 34 | (1,674 | ) | |||||||||||||
Balance as of December 31, 2014 | $ | (2,323 | ) | $(1,427 | ) | $ 34 | $ | 66 | $ | (3,650 | ) | ||||||||||
(in millions) | CTA | Pension and | Hedging | Other | Total | ||||||||||||||||
other employee | activities | ||||||||||||||||||||
benefits | |||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||
Balance as of December 31, 2012 | $ | (1,227 | ) | $(1,619 | ) | $ (5 | ) | $ | 41 | $ | (2,810 | ) | |||||||||
Other comprehensive income before reclassifications | 236 | 426 | 41 | (13 | ) | 690 | |||||||||||||||
Amounts reclassified from AOCI (a) | — | 166 | (26 | ) | 4 | 144 | |||||||||||||||
Net other comprehensive income (loss) | 236 | 592 | 15 | (9 | ) | 834 | |||||||||||||||
Balance as of December 31, 2013 | $ | (991 | ) | $(1,027 | ) | $ 10 | $ | 32 | $ | (1,976 | ) | ||||||||||
(a) | See table below for details about the reclassifications for the years ended December 31, 2014 and 2013. | ||||||||||||||||||||
Summary of Reclassification from AOCI to Net Income | The following is a summary of the amounts reclassified from AOCI to net income during the years ended December 31, 2014 and 2013. | ||||||||||||||||||||
Amounts reclassified from | |||||||||||||||||||||
AOCI (a) | |||||||||||||||||||||
(in millions) | 2014 | 2013 | Location of impact in income statement | ||||||||||||||||||
Amortization of pension and other employee benefits items | |||||||||||||||||||||
Actuarial losses and other | $(141 | )(b) | $(254 | )(b) | |||||||||||||||||
(141 | ) | (254 | ) | Total before tax | |||||||||||||||||
47 | 88 | Tax benefit | |||||||||||||||||||
$ (94 | ) | $(166 | ) | Net of tax | |||||||||||||||||
Gains (losses) on hedging activities | |||||||||||||||||||||
Interest rate contracts | $ (1 | ) | $ 10 | Net interest expense | |||||||||||||||||
Foreign exchange contracts | 1 | (1 | ) | Net sales | |||||||||||||||||
Foreign exchange contracts | 13 | 32 | Cost of sales | ||||||||||||||||||
13 | 41 | Total before tax | |||||||||||||||||||
(5 | ) | (15 | ) | Tax expense | |||||||||||||||||
$ 8 | $ 26 | Net of tax | |||||||||||||||||||
Other | |||||||||||||||||||||
Other-than-temporary impairment of available-for-sale equity securities | $ (45 | ) | $ (6 | ) | Other expense (income), net | ||||||||||||||||
Gain on available-for-sale equity securities | 1 | — | Other expense (income), net | ||||||||||||||||||
(44 | ) | (6 | ) | Total before tax | |||||||||||||||||
4 | 2 | Tax benefit | |||||||||||||||||||
$ (40 | ) | $ (4 | ) | Net of tax | |||||||||||||||||
Total reclassification for the period | $(126 | ) | $(144 | ) | 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 13. |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Income Before Income Tax Expense by Category | Income from Continuing Operations Before Income Tax Expense by Category | ||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
United States | $ 74 | $ | 446 | $ | 385 | ||||||||
International | 2,365 | 2,100 | 2,453 | ||||||||||
Income from continuing operations before income taxes | $2,439 | $ | 2,546 | $ | 2,838 | ||||||||
Income Tax Expense | Income Tax Expense Related to Continuing Operations | ||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
Current | |||||||||||||
United States | |||||||||||||
Federal | $ 102 | $ 296 | $ 122 | ||||||||||
State and local | 22 | 28 | 55 | ||||||||||
International | 447 | 434 | 395 | ||||||||||
Current income tax expense | 571 | 758 | 572 | ||||||||||
Deferred | |||||||||||||
United States | |||||||||||||
Federal | (15 | ) | (147 | ) | 112 | ||||||||
State and local | (6 | ) | (5 | ) | (81 | ) | |||||||
International | (57 | ) | (72 | ) | (48 | ) | |||||||
Deferred income tax expense | (78 | ) | (224 | ) | (17 | ) | |||||||
Income tax expense | $ 493 | $ 534 | $ 555 | ||||||||||
Deferred Tax Assets and Liabilities | Deferred Tax Assets and Liabilities | ||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||
Deferred tax assets | |||||||||||||
Accrued expenses | $ | 642 | $ | 426 | |||||||||
Retirement benefits | 898 | 669 | |||||||||||
Tax credits and net operating losses | 369 | 426 | |||||||||||
Valuation allowances | (137 | ) | (137 | ) | |||||||||
Total deferred tax assets | 1,772 | 1,384 | |||||||||||
Deferred tax liabilities | |||||||||||||
Subsidiaries’ unremitted earnings | 208 | 265 | |||||||||||
Asset basis differences | 1,011 | 849 | |||||||||||
Total deferred tax liabilities | 1,219 | 1,114 | |||||||||||
Net deferred tax asset | $ | 553 | $ | 270 | |||||||||
Income Tax Expense Reconciliation | Income Tax Expense Related to Continuing Operations Reconciliation | ||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||
Income tax expense at U.S. statutory rate | $ | 854 | $ | 891 | $ | 993 | |||||||
Tax incentives | (223 | ) | (245 | ) | (274 | ) | |||||||
State and local taxes | 11 | 22 | (11 | ) | |||||||||
Foreign tax benefit | (161 | ) | (121 | ) | (170 | ) | |||||||
Contingent tax matters | (37 | ) | 26 | 30 | |||||||||
Branded Prescription Drug Fee | 24 | 9 | 7 | ||||||||||
Other factors | 25 | (48 | ) | (20 | ) | ||||||||
Income tax expense | $ | 493 | $ | 534 | $ | 555 | |||||||
Reconciliation of Unrecognized Tax Benefits | The following is a reconciliation of the company’s unrecognized tax benefits, including those related to discontinued operations for the years ended December 31, 2014, 2013 and 2012. | ||||||||||||
as of and for the years ended (in millions) | 2014 | 2013 | 2012 | ||||||||||
Balance at beginning of the year | $ | 287 | $ | 437 | $ | 443 | |||||||
Increase associated with tax positions taken during the current year | 41 | 31 | 25 | ||||||||||
Increase (decrease) associated with tax positions taken during a prior year | (27 | ) | 38 | (9 | ) | ||||||||
Settlements | (82 | ) | (216 | ) | (21 | ) | |||||||
Decrease associated with lapses in statutes of limitations | (13 | ) | (3 | ) | (1 | ) | |||||||
Balance at end of the year | $ | 206 | $ | 287 | $ | 437 | |||||||
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Segment Information | Segment Information | ||||||||||||||||
as of and for the years ended December 31 (in millions) | BioScience | Medical | Other | Total | |||||||||||||
Products | |||||||||||||||||
2014 | |||||||||||||||||
Net sales | $ | 6,699 | $ | 9,972 | $ | — | $ | 16,671 | |||||||||
Depreciation and amortization | 285 | 633 | 84 | 1,002 | |||||||||||||
Pre-tax income (loss) from continuing operations | 2,040 | 1,316 | (917 | ) | 2,439 | ||||||||||||
Assets | 9,936 | 11,440 | 4,541 | 25,917 | |||||||||||||
Capital expenditures | 1,020 | 749 | 129 | 1,898 | |||||||||||||
2013 | |||||||||||||||||
Net sales | $ | 6,272 | $ | 8,695 | $ | — | $ | 14,967 | |||||||||
Depreciation and amortization | 255 | 472 | 88 | 815 | |||||||||||||
Pre-tax income (loss) from continuing operations | 2,331 | 1,398 | (1,183 | ) | 2,546 | ||||||||||||
Assets | 8,967 | 12,269 | 3,988 | 25,224 | |||||||||||||
Capital expenditures | 868 | 530 | 127 | 1,525 | |||||||||||||
2012 | |||||||||||||||||
Net sales | $ | 5,983 | $ | 7,953 | $ | — | $ | 13,936 | |||||||||
Depreciation and amortization | 235 | 385 | 84 | 704 | |||||||||||||
Pre-tax income (loss) from continuing operations | 2,257 | 1,592 | (1,011 | ) | 2,838 | ||||||||||||
Assets | 7,380 | 7,568 | 5,442 | 20,390 | |||||||||||||
Capital expenditures | 570 | 495 | 96 | 1,161 | |||||||||||||
Pre-Tax Income from Continuing Operations Reconciliation | Pre-Tax Income from Continuing Operations Reconciliation | ||||||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||
Total pre-tax income from continuing operations from segments | $ | 3,356 | $ | 3,729 | $ | 3,849 | |||||||||||
Unallocated amounts | |||||||||||||||||
Net interest expense | (145 | ) | (128 | ) | (87 | ) | |||||||||||
Certain foreign exchange fluctuations and hedging activities | 40 | 83 | 53 | ||||||||||||||
Stock compensation | (159 | ) | (150 | ) | (130 | ) | |||||||||||
Business optimization charges | (19 | ) | (180 | ) | (150 | ) | |||||||||||
Pension settlement charges | — | — | (168 | ) | |||||||||||||
Certain tax and legal reserves | — | (104 | ) | — | |||||||||||||
Other Corporate items | (634 | ) | (704 | ) | (529 | ) | |||||||||||
Income from continuing operations before income taxes | $ | 2,439 | $ | 2,546 | $ | 2,838 | |||||||||||
Assets Reconciliation | Assets Reconciliation | ||||||||||||||||
as of December 31 (in millions) | 2014 | 2013 | |||||||||||||||
Total segment assets | $ | 21,376 | $ | 21,236 | |||||||||||||
Cash and equivalents | 2,925 | 2,733 | |||||||||||||||
Deferred income taxes | 774 | 545 | |||||||||||||||
PP&E, net | 494 | 437 | |||||||||||||||
Other Corporate assets | 348 | 273 | |||||||||||||||
Consolidated total assets | $ | 25,917 | $ | 25,224 | |||||||||||||
Geographic Information | Net sales are based on product shipment destination and assets are based on physical location. | ||||||||||||||||
years ended December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||
Net sales | |||||||||||||||||
United States | $ | 7,015 | $ | 6,444 | $ | 6,043 | |||||||||||
Europe | 5,136 | 4,371 | 4,008 | ||||||||||||||
Asia-Pacific | 2,619 | 2,324 | 2,183 | ||||||||||||||
Latin America and Canada | 1,901 | 1,828 | 1,702 | ||||||||||||||
Consolidated net sales | $ | 16,671 | $ | 14,967 | $ | 13,936 | |||||||||||
as of December 31 (in millions) | 2014 | 2013 | 2012 | ||||||||||||||
PP&E, net | |||||||||||||||||
United States | $ | 4,071 | $ | 3,091 | $ | 2,333 | |||||||||||
Austria | 778 | 914 | 802 | ||||||||||||||
Other countries | 3,849 | 3,827 | 2,963 | ||||||||||||||
Consolidated PP&E, net | $ | 8,698 | $ | 7,832 | $ | 6,098 | |||||||||||
Significant Product Sales | Significant Product Sales | ||||||||||||||||
Effective January 1, 2013, Baxter transitioned to a commercial franchise structure for reporting net sales within each segment. Prior period net sales have been reclassified to reflect the new commercial franchise structure. The following is a summary of net sales as a percentage of consolidated net sales for the company’s commercial franchises. | |||||||||||||||||
years ended December 31 | 2014 | 2013 | 2012 | ||||||||||||||
Hemophilia1 | 22 | % | 23 | % | 23% | ||||||||||||
Fluid Systems2 | 19 | % | 21 | % | 21% | ||||||||||||
Renal3 | 25 | % | 21 | % | 18% | ||||||||||||
BioTherapeutics4 | 13 | % | 14 | % | 15% | ||||||||||||
Specialty Pharmaceuticals5 | 9 | % | 10 | % | 11% | ||||||||||||
1 | Includes sales of recombinant and plasma-derived hemophilia products (primarily factor VIII and factor IX). | ||||||||||||||||
2 | Principally includes IV solutions, infusion pumps, administration sets, and premixed and oncology drug platforms. | ||||||||||||||||
3 | Consists of therapies to treat end-stage renal disease, including PD, HD, and HHD and therapies to treat acute kidney injuries, including CRRT. | ||||||||||||||||
4 | Includes sales of the company’s plasma-based therapies to treat alpha-1 antitrypsin deficiency, burns and shock, and other chronic and acute blood-related conditions. | ||||||||||||||||
5 | Principally includes nutrition and anesthesia products. |
QUARTERLY_FINANCIAL_RESULTS_AN1
QUARTERLY FINANCIAL RESULTS AND MARKET FOR THE COMPANY'S STOCK (UNAUDITED) (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Quarterly Financial Results and Market for Company's Stock | |||||||||||||||||||||
years ended December 31 (in millions, except per share data) | First | Second | Third | Fourth | Full year | ||||||||||||||||
quarter | quarter | quarter | quarter | ||||||||||||||||||
2014 | |||||||||||||||||||||
Net sales | $ | 3,848 | $ | 4,154 | $ | 4,197 | $ | 4,472 | $ | 16,671 | |||||||||||
Gross margin | 1,891 | 1,969 | 2,073 | 2,224 | 8,157 | ||||||||||||||||
Income from continuing operations1 | 507 | 468 | 447 | 524 | 1,946 | ||||||||||||||||
Income from continuing operations per common share1 | |||||||||||||||||||||
Basic | 0.94 | 0.86 | 0.83 | 0.97 | 3.59 | ||||||||||||||||
Diluted | 0.93 | 0.85 | 0.82 | 0.96 | 3.56 | ||||||||||||||||
Income from discontinued operations, net of tax | 49 | 52 | 21 | 429 | 551 | ||||||||||||||||
Income from discontinued operations per common share | |||||||||||||||||||||
Basic | 0.09 | 0.1 | 0.03 | 0.79 | 1.02 | ||||||||||||||||
Diluted | 0.09 | 0.1 | 0.04 | 0.78 | 1 | ||||||||||||||||
Net income1 | 556 | 520 | 468 | 953 | 2,497 | ||||||||||||||||
Net income per common share1 | |||||||||||||||||||||
Basic | 1.02 | 0.96 | 0.86 | 1.76 | 4.61 | ||||||||||||||||
Diluted | 1.01 | 0.95 | 0.86 | 1.74 | 4.56 | ||||||||||||||||
Cash dividends declared per common share | 0.49 | 0.52 | 0.52 | 0.52 | 2.05 | ||||||||||||||||
Market price per common share | |||||||||||||||||||||
High | 73.58 | 75.45 | 77 | 74.7 | 77 | ||||||||||||||||
Low | 66.49 | 71.98 | 71.28 | 67.24 | 66.49 | ||||||||||||||||
2013 | |||||||||||||||||||||
Net sales | $ | 3,364 | $ | 3,571 | $ | 3,710 | $ | 4,322 | $ | 14,967 | |||||||||||
Gross margin | 1,696 | 1,874 | 1,906 | 1,996 | 7,472 | ||||||||||||||||
Income from continuing operations2 | 523 | 552 | 528 | 409 | 2,012 | ||||||||||||||||
Income from continuing operations per common share2 | |||||||||||||||||||||
Basic | 0.96 | 1.02 | 0.97 | 0.75 | 3.7 | ||||||||||||||||
Diluted | 0.95 | 1.01 | 0.96 | 0.74 | 3.66 | ||||||||||||||||
Income (loss) from discontinued operations, net of tax | 29 | 38 | 16 | (83 | ) | 0 | |||||||||||||||
Income from discontinued operations per common share | |||||||||||||||||||||
Basic | 0.05 | 0.07 | 0.03 | (0.15 | ) | 0 | |||||||||||||||
Diluted | 0.05 | 0.06 | 0.03 | (0.15 | ) | 0 | |||||||||||||||
Net income2 | 552 | 590 | 544 | 326 | 2,012 | ||||||||||||||||
Net income per common share2 | |||||||||||||||||||||
Basic | 1.01 | 1.09 | 1 | 0.6 | 3.7 | ||||||||||||||||
Diluted | 1 | 1.07 | 0.99 | 0.59 | 3.66 | ||||||||||||||||
Cash dividends declared per common share | 0.45 | 0.49 | 0.49 | 0.49 | 1.92 | ||||||||||||||||
Market price per common share | |||||||||||||||||||||
High | 72.64 | 73.04 | 74.43 | 69.55 | 74.43 | ||||||||||||||||
Low | 66.42 | 68.1 | 65.69 | 63.89 | 63.89 | ||||||||||||||||
1 | The first quarter of 2014 included charges of $69 million related business optimization, Gambro integration costs, tax and legal reserves, and milestone payments associated with the company’s collaboration arrangements. The second quarter of 2014 included charges of $177 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, and | ||||||||||||||||||||
milestone payments associated with the company’s collaboration arrangements. The third quarter of 2014 included charges of $283 million related to business optimization, Gambro integration costs, separation-related costs, the Branded Prescription Drug Fee, and upfront and milestone payments associated with the company’s collaboration arrangements. The fourth quarter of 2014 included $275 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, an other-than-temporary impairment loss, and milestone payments associated with the company’s collaboration arrangements. | |||||||||||||||||||||
2 | The first quarter of 2013 included charges of $45 million related Gambro acquisition costs and currency-related items. The second quarter of 2013 included charges of $76 million related to business optimization and Gambro acquisition costs. The third quarter of 2013 included charges of $152 million related to Gambro acquisition and integration costs, reserve items and adjustments, and an upfront payment associated with one of the company’s collaboration arrangements. The fourth quarter of 2013 included $371 million related to business optimization, Gambro acquisition and integration costs, product-related items, and upfront and milestone payments associated with the company’s collaboration arrangements. |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 12 Months Ended | 0 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 06, 2013 | |
Segment | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of segments | 2 | |||
Allowance for doubtful accounts | $139,000,000 | $169,000,000 | ||
Depreciation and amortization expense | 809,000,000 | 674,000,000 | 590,000,000 | |
Shipping costs included in marketing and administrative expenses | 340,000,000 | 293,000,000 | 265,000,000 | |
Tax position likely of being realized upon ultimate settlement | Greater than 50% | |||
Building and Building Improvements | Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Estimated useful life | 20 years | |||
Building and Building Improvements | Maximum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Estimated useful life | 50 years | |||
Machinery and Equipment | Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Estimated useful life | 3 years | |||
Machinery and Equipment | Maximum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Estimated useful life | 15 years | |||
Gambro AB | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Total cash payment for the acquisition | $3,700,000,000 |
Revised_Previously_Reported_Co
Revised Previously Reported Consolidated Balance Sheet (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Short-term deferred income taxes | $501 | $504 |
Prepaid expense and other | 563 | 548 |
Other assets | 915 | 698 |
Accounts payable and accrued liabilities | 4,343 | 4,208 |
Other long-term liabilities | 4,113 | 3,364 |
Scenario, Previously Reported | ||
Short-term deferred income taxes | 393 | |
Prepaid expense and other | 468 | |
Other assets | 1,534 | |
Accounts payable and accrued liabilities | 4,866 | |
Other long-term liabilities | 3,351 | |
Restatement Adjustment | ||
Short-term deferred income taxes | 111 | |
Prepaid expense and other | 80 | |
Other assets | -836 | |
Accounts payable and accrued liabilities | -658 | |
Other long-term liabilities | $13 |
Inventories_Detail
Inventories (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Inventory | ||
Raw materials | $910 | $920 |
Work in process | 1,126 | 1,136 |
Finished goods | 1,523 | 1,443 |
Inventories | $3,559 | $3,499 |
Property_Plant_and_Equipment_N
Property, Plant and Equipment ,Net (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | |||
Property, Plant and Equipment, Net | |||
Land | $225 | $220 | |
Buildings and leasehold improvements | 2,673 | 2,670 | |
Machinery and equipment | 7,687 | 7,360 | |
Equipment with customers | 1,353 | 1,361 | |
Construction in progress | 2,870 | 2,184 | |
Total property, plant and equipment, at cost | 14,808 | 13,795 | |
Accumulated depreciation | -6,110 | -5,963 | |
Property, plant and equipment (PP&E), net | $8,698 | $7,832 | $6,098 |
Discontinued_Operations_Additi
Discontinued Operations - Additional Information (Detail) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Cash proceed from divestiture of commercial vaccines business | $639 |
Vaccines | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
After-tax gain from divestiture of commercial vaccines business | $417 |
Summary_of_Operating_Results_R
Summary of Operating Results Reflected as Discontinued Operations (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||
Net income | $429 | $21 | $52 | $49 | ($83) | $16 | $38 | $29 | $551 | $0 | $43 |
Vaccines Franchise | |||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||
Net sales | 301 | 292 | 254 | ||||||||
Income before income taxes | 616 | 3 | 51 | ||||||||
Income tax expense | 65 | 3 | 8 | ||||||||
Net income | $551 | $0 | $43 |
Other_LongTerm_Assets_Detail
Other Long-Term Assets (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Other Assets, Noncurrent | ||
Deferred income taxes | $273 | $41 |
Other long-term receivables | 127 | 216 |
Other | 515 | 441 |
Other long-term assets | $915 | $698 |
Accounts_Payable_and_Accrued_L
Accounts Payable and Accrued Liabilities (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Accounts Payable and Accrued Liabilities, Current | ||
Accounts payable, principally trade | $1,264 | $1,103 |
Income taxes payable | 336 | 382 |
Deferred income taxes | 9 | 21 |
Common stock dividends payable | 282 | 266 |
Employee compensation and withholdings | 716 | 667 |
Property, payroll and certain other taxes | 261 | 237 |
Infusion pump reserves | 22 | 64 |
Business optimization reserves | 118 | 199 |
Accrued rebates | 374 | 346 |
Other | 961 | 923 |
Accounts payable and accrued liabilities | $4,343 | $4,208 |
Other_LongTerm_Liabilities_Det
Other Long-Term Liabilities (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Other Liabilities Noncurrent | ||
Pension and other employee benefits | $2,748 | $2,049 |
Litigation reserves | 53 | 72 |
Infusion pump reserves | 19 | |
Business optimization reserves | 51 | 89 |
Contingent payment liabilities | 569 | 340 |
Other | 692 | 795 |
Other long-term liabilities | $4,113 | $3,364 |
Net_Interest_Expense_Detail
Net Interest Expense (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Interest Income Expense Net | |||
Interest costs | $237 | $225 | $165 |
Interest costs capitalized | -70 | -70 | -52 |
Interest expense | 167 | 155 | 113 |
Interest income | -22 | -27 | -26 |
Net interest expense | $145 | $128 | $87 |
Supplemental_Financial_Informa2
Supplemental Financial Information - Additional Information (Detail) (Sigma International, USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2012 | Apr. 30, 2012 | Apr. 30, 2009 |
Sigma International | |||
Supplemental Financial Information [Line Items] | |||
Cash paid for exercise of purchase option | $90 | ||
Equity in acquiree | 40.00% | ||
SIGMA pre-tax income included in results of operations after option exercise | 100.00% |
Reconciliation_of_Basic_Shares
Reconciliation of Basic Shares to Diluted Shares (Detail) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Reconciliation of Basic Shares to Diluted Shares | |||
Basic shares | 542 | 543 | 551 |
Effect of dilutive securities | 5 | 6 | 5 |
Diluted shares | 547 | 549 | 556 |
Earnings_Per_Share_Additional_
Earnings Per Share - Additional Information (Detail) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Reconciliation of Basic Shares to Diluted Shares | |||
Anti-dilutive securities excluded from computation of EPS | 9 | 5 | 16 |
Acquisitions_and_Collaboration2
Acquisitions and Collaborations - Additional Information (Detail) (USD $) | 12 Months Ended | 0 Months Ended | 4 Months Ended | 1 Months Ended | ||||||||
Share data in Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 06, 2013 | Dec. 31, 2013 | Mar. 31, 2013 | Feb. 29, 2012 | Apr. 30, 2014 | 31-May-12 | Jun. 30, 2014 | Nov. 30, 2013 | Jul. 31, 2012 |
Acquisitions And Collaborations [Line Items] | ||||||||||||
Intangible assets, weighted average useful life | 15 years | |||||||||||
Research and development charges | $1,421,000,000 | $1,165,000,000 | $1,081,000,000 | |||||||||
Business acquisition contingent consideration | 569,000,000 | 340,000,000 | 340,000,000 | |||||||||
Goodwill | 3,874,000,000 | 4,205,000,000 | 2,502,000,000 | 4,205,000,000 | ||||||||
Business acquisition, cost of acquired entity, purchase price | 409,000,000 | 3,851,000,000 | 515,000,000 | |||||||||
Unfunded milestone payments | 2,600,000,000 | |||||||||||
Payments to collaborative partners classified in research and development expenses | 270,000,000 | 129,000,000 | 138,000,000 | |||||||||
Up Front Payment | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Payments to collaborative partners classified in research and development expenses | 100,000,000 | 88,000,000 | 108,000,000 | |||||||||
Milestone Payments | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Payments to collaborative partners classified in research and development expenses | 118,000,000 | 17,000,000 | 6,000,000 | |||||||||
Indap Holding AB | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Percentage of voting interest acquired | 100.00% | |||||||||||
Gambro AB | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Total cash payment for the acquisition | 3,700,000,000 | |||||||||||
Business combination recognized liabilities assumed debt | 221,000,000 | |||||||||||
Measurement period adjustments, property, plant and equipment | 14,000,000 | |||||||||||
Measurement period adjustments, working capital adjustments | 4,000,000 | |||||||||||
Measurement period adjustments, goodwill | -10,000,000 | |||||||||||
Change in consideration transferred | -4,000,000 | |||||||||||
Other intangible assets | 1,290,000,000 | |||||||||||
Intangible assets, weighted average useful life | 15 years | |||||||||||
Business combination acquisition-related cost | 101,000,000 | |||||||||||
Net loss | -45,000,000 | |||||||||||
Elimination of acquisition costs | 244,000,000 | |||||||||||
Goodwill | 1,610,000,000 | |||||||||||
Business acquisition, cost of acquired entity, purchase price | 3,700,000,000 | |||||||||||
Gambro AB | In-process research and development (IPR&D) | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Cash flow projections discount rate | 12.00% | |||||||||||
Research and development charges | 85,000,000 | |||||||||||
Gambro AB | Developed Technology Rights | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Other intangible assets | 916,000,000 | |||||||||||
Gambro AB | Trademarks | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Other intangible assets | 206,000,000 | |||||||||||
Gambro AB | IPR&D | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Other intangible assets | 168,000,000 | |||||||||||
Gambro AB | Fair Value Adjustment to Inventory | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Net loss | 62,000,000 | |||||||||||
Elimination of acquisition costs | 62,000,000 | |||||||||||
Addition of acquisition costs | 62,000,000 | |||||||||||
Inspiration / Ipsen OBIZUR business | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Other intangible assets | 288,000,000 | 288,000,000 | ||||||||||
Business acquisition contingent consideration | 386,000,000 | 269,000,000 | ||||||||||
Goodwill | 7,000,000 | 7,000,000 | 7,000,000 | |||||||||
Business acquisition, cost of acquired entity, purchase price | 51,000,000 | 51,000,000 | ||||||||||
Inspiration / Ipsen OBIZUR business | In-process research and development (IPR&D) | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Other intangible assets | 288,000,000 | |||||||||||
Inspiration / Ipsen OBIZUR business | Regulatory and Sales Milestones | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Business acquisition contingent consideration | 135,000,000 | |||||||||||
Synovis Life Technologies Inc. | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Other intangible assets | 115,000,000 | |||||||||||
Intangible assets, weighted average useful life | 12 years | |||||||||||
Goodwill | 164,000,000 | 164,000,000 | ||||||||||
Business acquisition, cost of acquired entity, purchase price | 304,000,000 | |||||||||||
Synovis Life Technologies Inc. | Developed Technology | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Other intangible assets | 115,000,000 | |||||||||||
Chatham Therapeutics | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Other intangible assets | 74,000,000 | |||||||||||
Research and development charges | 30,000,000 | |||||||||||
Initial payment under the agreement | 70,000,000 | |||||||||||
Business acquisition contingent consideration | 77,000,000 | 77,000,000 | ||||||||||
Goodwill | 73,000,000 | |||||||||||
Business acquisition, cost of acquired entity, purchase price | 70,000,000 | |||||||||||
Chatham Therapeutics | In-process research and development (IPR&D) | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Other intangible assets | 74,000,000 | |||||||||||
Cash flow projections discount rate | 12.00% | |||||||||||
Goodwill | 73,000,000 | |||||||||||
IPR&D completion term | 10 years | |||||||||||
Chatham Therapeutics | Maximum | Development, regulatory and commercial milestones | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Business collaboration contingent consideration potential cash payment | 560,000,000 | |||||||||||
Chatham Therapeutics | Maximum | Sales Milestone | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Business collaboration contingent consideration potential cash payment | 780,000,000 | |||||||||||
Chatham Therapeutics | Minimum | In-process research and development (IPR&D) | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Research and development charges | 130,000,000 | |||||||||||
AesRx LLC | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Other intangible assets | 78,000,000 | |||||||||||
Initial payment under the agreement | 15,000,000 | |||||||||||
Business acquisition contingent consideration | 65,000,000 | 65,000,000 | ||||||||||
Goodwill | 2,000,000 | |||||||||||
Business acquisition, cost of acquired entity, purchase price | 15,000,000 | |||||||||||
AesRx LLC | In-process research and development (IPR&D) | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Other intangible assets | 78,000,000 | |||||||||||
Cash flow projections discount rate | 15.50% | |||||||||||
Goodwill | 2,000,000 | |||||||||||
IPR&D completion term | 5 years | |||||||||||
AesRx LLC | Maximum | Development, regulatory and commercial milestones | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Business collaboration contingent consideration potential cash payment | 278,000,000 | |||||||||||
AesRx LLC | Maximum | Sales Milestone | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Business collaboration contingent consideration potential cash payment | 550,000,000 | |||||||||||
AesRx LLC | Minimum | In-process research and development (IPR&D) | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Research and development charges | 40,000,000 | |||||||||||
Merrimack Pharmaceuticals Inc. | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Research and development charges | 100,000,000 | |||||||||||
Merrimack Pharmaceuticals Inc. | Maximum | Development, regulatory and commercial milestones | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Business collaboration contingent consideration potential cash payment | 870,000,000 | |||||||||||
CTI BioPharma Corp. | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Research and development charges | 33,000,000 | |||||||||||
Shares of Common stock acquired | 16 | |||||||||||
CTI BioPharma Corp. | Common Stock | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Payments to acquire stock | 27,000,000 | |||||||||||
CTI BioPharma Corp. | Maximum | Development, regulatory and commercial milestones | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Business collaboration contingent consideration potential cash payment | 302,000,000 | 302,000,000 | ||||||||||
Coherus Biosciences, Inc | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Research and development expense | 30,000,000 | 30,000,000 | ||||||||||
Coherus Biosciences, Inc | Maximum | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Business collaboration contingent consideration potential cash payment | 169,000,000 | 169,000,000 | ||||||||||
JW Holdings | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Research and development charges | 25,000,000 | |||||||||||
JW Holdings | Maximum | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Business collaboration contingent consideration potential cash payment | 11,000,000 | 11,000,000 | ||||||||||
Onconova Therapeutics, Inc. | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Research and development charges | 50,000,000 | |||||||||||
Shares of preferred stock acquired | 3 | |||||||||||
Onconova Therapeutics, Inc. | Preferred Stock | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Payments to acquire stock | 50,000,000 | |||||||||||
Onconova Therapeutics, Inc. | Maximum | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Business collaboration contingent consideration potential cash payment | 783,000,000 | |||||||||||
Momenta Pharmaceuticals | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Research and development charges | 33,000,000 | |||||||||||
Momenta Pharmaceuticals | Maximum | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Business collaboration contingent consideration potential cash payment | $202,000,000 |
Summary_of_Fair_Value_of_Consi
Summary of Fair Value of Consideration Transferred and Amounts Recognized for Assets Acquired and Liabilities Assumed (Detail) (USD $) | 12 Months Ended | 0 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 06, 2013 |
Consideration transferred | ||||
Cash | $409 | $3,851 | $515 | |
Assets acquired and liabilities assumed | ||||
Goodwill | 3,874 | 4,205 | 2,502 | |
Gambro AB | ||||
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 | -341 | |||
Total identifiable net assets | 2,090 | |||
Goodwill | 1,610 | |||
Total assets acquired and liabilities assumed | $3,700 |
Summary_of_Fair_Value_of_Consi1
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 |
Subsidiary_Information_in_Cons
Subsidiary Information in Consolidated Statement of Income from Acquisition (Detail) (Gambro AB, USD $) | 4 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2013 |
Gambro AB | |
Business Acquisition, Impact on Operating Results [Line Items] | |
Net sales | $513 |
Net loss | ($45) |
Supplemental_Pro_Forma_Informa
Supplemental Pro Forma Information (Detail) (Gambro AB, USD $) | 12 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Gambro AB | ||
Business Acquisition, Pro Forma Information [Line Items] | ||
Net sales | $15,996 | $15,513 |
Income from continuing operations | $2,138 | $1,978 |
Basic EPS from continuing operations | $3.94 | $3.59 |
Diluted EPS from continuing operations | $3.89 | $3.56 |
Summary_of_Fair_Value_of_Consi2
Summary of Fair Value of Consideration Transferred and Recognized Amounts of Assets Acquired and Liabilities Assumed (Detail) (USD $) | 12 Months Ended | 1 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2013 | Feb. 29, 2012 |
Consideration transferred | |||||
Cash, net of cash acquired | $409 | $3,851 | $515 | ||
Assets acquired and liabilities assumed | |||||
Goodwill | 3,874 | 4,205 | 2,502 | ||
Chatham Therapeutics | |||||
Consideration transferred | |||||
Cash, net of cash acquired | 70 | ||||
Contingent payments | 77 | ||||
Fair value of consideration transferred | 147 | ||||
Assets acquired and liabilities assumed | |||||
Other intangible assets | 74 | ||||
Total identifiable net assets | 74 | ||||
Goodwill | 73 | ||||
Total assets acquired and liabilities assumed | 147 | ||||
AesRx LLC | |||||
Consideration transferred | |||||
Cash, net of cash acquired | 15 | ||||
Contingent payments | 65 | ||||
Fair value of consideration transferred | 80 | ||||
Assets acquired and liabilities assumed | |||||
Other intangible assets | 78 | ||||
Total identifiable net assets | 78 | ||||
Goodwill | 2 | ||||
Total assets acquired and liabilities assumed | 80 | ||||
Inspiration / Ipsen OBIZUR business | |||||
Consideration transferred | |||||
Cash, net of cash acquired | 51 | 51 | |||
Contingent payments | 269 | ||||
Fair value of consideration transferred | 320 | ||||
Assets acquired and liabilities assumed | |||||
Other intangible assets | 288 | ||||
Other assets (liabilities), net | 25 | ||||
Total identifiable net assets | 313 | ||||
Goodwill | 7 | 7 | |||
Total assets acquired and liabilities assumed | 320 | ||||
Synovis Life Technologies Inc. | |||||
Consideration transferred | |||||
Cash, net of cash acquired | 304 | ||||
Fair value of consideration transferred | 304 | ||||
Assets acquired and liabilities assumed | |||||
Other intangible assets | 115 | ||||
Other assets (liabilities), net | 25 | ||||
Total identifiable net assets | 140 | ||||
Goodwill | 164 | 164 | |||
Total assets acquired and liabilities assumed | $304 |
Goodwill_Detail
Goodwill (Detail) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Goodwill [Line Items] | ||
Goodwill, beginning balance | $4,205 | $2,502 |
Additions | 79 | 1,629 |
Currency translation and other adjustments | -410 | 74 |
Goodwill, ending balance | 3,874 | 4,205 |
BioScience | ||
Goodwill [Line Items] | ||
Goodwill, beginning balance | 991 | 975 |
Additions | 75 | 7 |
Currency translation and other adjustments | -39 | 9 |
Goodwill, ending balance | 1,027 | 991 |
Medical Products | ||
Goodwill [Line Items] | ||
Goodwill, beginning balance | 3,214 | 1,527 |
Additions | 4 | 1,622 |
Currency translation and other adjustments | -371 | 65 |
Goodwill, ending balance | $2,847 | $3,214 |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets, Net - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Goodwill And Other Intangible Asset [Line Items] | |||
Accumulated goodwill impairment losses | $0 | ||
Amortization expense | 185,000,000 | 129,000,000 | 101,000,000 |
Anticipated annual amortization expense of other intangible assets for 2015 | 193,000,000 | ||
Anticipated annual amortization expense of other intangible assets for 2016 | 189,000,000 | ||
Anticipated annual amortization expense of other intangible assets for 2017 | 173,000,000 | ||
Anticipated annual amortization expense of other intangible assets for 2018 | 168,000,000 | ||
Anticipated annual amortization expense of other intangible assets for 2019 | $155,000,000 | ||
Intangible assets, weighted average useful life | 15 years |
Other_Intangible_Assets_Net_De
Other Intangible Assets, Net (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets | $2,993 | $3,103 |
Accumulated amortization | -914 | -809 |
Other intangible assets, net | 2,079 | 2,294 |
Developed technology, including patents | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets | 2,278 | 2,144 |
Accumulated amortization | -769 | -665 |
Other intangible assets, net | 1,509 | 1,479 |
Other Intangible Assets | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets | 443 | 494 |
Accumulated amortization | -145 | -144 |
Other intangible assets, net | 298 | 350 |
Indefinite Lived Intangible Assets | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets | 272 | 465 |
Accumulated amortization | 0 | 0 |
Other intangible assets, net | $272 | $465 |
Infusion_Pump_and_Business_Opt2
Infusion Pump and Business Optimization Charges - Additional Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended | 36 Months Ended | 84 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2011 |
Infusion Pump Charges | |||||||
Infusion pump and other product-related charges | $93 | $93 | $17 | $925 | |||
Cash reserves utilized | 4 | 36 | 27 | 175 | 440 | ||
Infusion pump charges related to cash | 716 | ||||||
Infusion pump charges related asset impairments | 209 | ||||||
Adjustment to infusion pump reserves | 25 | 37 | |||||
Reclass of infusion pump reserve from non-cash to cash | 63 | ||||||
Increase in cash reserves | -25 | -17 | 26 | ||||
Reclass of infusion pump reserve from cash to non-cash | 17 | ||||||
Business Optimization Initiatives | |||||||
Costs associated with optimizing the cost structure | 19 | 193 | 150 | 528 | |||
Restructuring cost recorded in discontinued operations | 8 | 101 | |||||
Discontinued Operations | |||||||
Business Optimization Initiatives | |||||||
Costs associated with optimizing the cost structure | 13 | ||||||
Cost of Sales | |||||||
Business Optimization Initiatives | |||||||
Costs associated with optimizing the cost structure | -8 | 52 | 62 | ||||
Marketing and Administrative Expenses | |||||||
Business Optimization Initiatives | |||||||
Costs associated with optimizing the cost structure | 2 | 95 | 60 | ||||
Research and Development Expense | |||||||
Business Optimization Initiatives | |||||||
Costs associated with optimizing the cost structure | 25 | 46 | 28 | ||||
Cash | |||||||
Business Optimization Initiatives | |||||||
Costs associated with optimizing the cost structure | 87 | 182 | 98 | 409 | |||
Non Cash | |||||||
Business Optimization Initiatives | |||||||
Costs associated with optimizing the cost structure | $119 |
Infusion_Pump_Charges_Detail
Infusion Pump Charges (Detail) (USD $) | 3 Months Ended | 12 Months Ended | 84 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Infusion pump reserves | |||||
Charges and adjustments in 2005 through 2011 | $716 | ||||
Reserve adjustments | -25 | -17 | 26 | ||
Utilization | -4 | -36 | -27 | -175 | -440 |
Reserves, ending balance | $22 | $22 | $83 | $127 | $276 |
Business_Optimization_Initiati
Business Optimization Initiatives (Detail) (USD $) | 12 Months Ended | 36 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Restructuring Cost and Reserve [Line Items] | ||||
Cash expenses | $87 | $182 | $98 | |
Non-cash expenses | 4 | 132 | 52 | |
Reserve adjustments | -64 | -20 | ||
Total business optimization expenses | 27 | 294 | 150 | |
Discontinued operations | -8 | -101 | ||
Business optimization expenses in continuing operations | $19 | $193 | $150 | $528 |
Business_Optimization_Charges_
Business Optimization Charges (Detail) (USD $) | 12 Months Ended | 36 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2011 |
Business Optimization Initiatives | |||||
Charge | $19 | $193 | $150 | $528 | |
Reserve adjustments | 64 | 20 | |||
Cash | |||||
Business Optimization Initiatives | |||||
Charge | 87 | 182 | 98 | 409 | |
Reserve adjustments | -62 | -20 | |||
Utilization | -125 | -98 | -99 | -183 | |
CTA | -19 | 4 | -4 | -1 | |
Reserve, ending balance | $169 | $288 | $220 | $225 | $225 |
Debt_Outstanding_Detail
Debt Outstanding (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Debt Instrument [Line Items] | ||
Commercial paper | $875,000,000 | $0 |
Other short-term debt | 38,000,000 | 181,000,000 |
Short-term debt | $913,000,000 | $181,000,000 |
Schedule_of_Debt_Outstanding_D
Schedule of Debt Outstanding (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | $8,392 | [1] | $8,985 | [1] |
Current portion | -786 | [1] | -859 | [1] |
Long-term portion | 7,606 | [1] | 8,126 | [1] |
4.0% notes due 2014 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 351 | [1] | ||
Effective Interest Rate | 4.10% | [2] | ||
Floating rate notes due 2014 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 500 | [1] | ||
Effective Interest Rate | 0.60% | [2] | ||
Variable Rate Loan due 2015 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 171 | [1] | 194 | [1] |
Effective Interest Rate | 0.80% | [2] | ||
4.625% notes due 2015 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 604 | [1] | 625 | [1] |
Effective Interest Rate | 4.70% | [2] | ||
5.9% notes due 2016 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 614 | [1] | 622 | [1] |
Effective Interest Rate | 6.00% | [2] | ||
0.95% notes due 2016 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 500 | [1] | 500 | [1] |
Effective Interest Rate | 1.10% | [2] | ||
1.85% Notes Due 2017 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 500 | [1] | 500 | [1] |
Effective Interest Rate | 2.00% | [2] | ||
Variable-rate loan due 2017 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 120 | [1] | 136 | [1] |
Effective Interest Rate | 1.00% | [2] | ||
5.375% notes due 2018 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 500 | [1] | 499 | [1] |
Effective Interest Rate | 5.50% | [2] | ||
1.85% notes due 2018 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 750 | [1] | 750 | [1] |
Effective Interest Rate | 2.00% | [2] | ||
4.5% notes due 2019 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 535 | [1] | 534 | [1] |
Effective Interest Rate | 4.60% | [2] | ||
4.25% notes due 2020 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 299 | [1] | 299 | [1] |
Effective Interest Rate | 4.40% | [2] | ||
2.40% notes due 2022 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 723 | [1] | 684 | [1] |
Effective Interest Rate | 2.50% | [2] | ||
3.2% notes due 2023 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 1,275 | [1] | 1,246 | [1] |
Effective Interest Rate | 3.30% | [2] | ||
6.625% Debentures due 2028 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 132 | [1] | 133 | [1] |
Effective Interest Rate | 6.70% | [2] | ||
6.25% notes due 2037 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 499 | [1] | 499 | [1] |
Effective Interest Rate | 6.30% | [2] | ||
3.65% Notes due 2042 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 298 | [1] | 298 | [1] |
Effective Interest Rate | 3.70% | [2] | ||
4.5% notes due 2043 | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | 500 | [1] | 500 | [1] |
Effective Interest Rate | 4.50% | [2] | ||
Other | ||||
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | $372 | [1] | $115 | [1] |
[1] | Book values include any discounts, premiums and adjustments related to hedging instruments. | |||
[2] | Excludes the effect of any related interest rate swaps. |
Debt_Credit_Facilities_and_Lea2
Debt, Credit Facilities and Lease Commitments - Additional Information (Detail) (USD $) | 12 Months Ended | 1 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 30, 2013 | |
Debt Instrument [Line Items] | ||||
Commercial paper outstanding | $875,000,000 | $0 | ||
Line of Credit Facility Amount Outstanding | 124,000,000 | |||
Operating lease rent expense | 250,000,000 | 214,000,000 | 202,000,000 | |
Floating rate notes due 2014 | ||||
Debt Instrument [Line Items] | ||||
Senior notes | 500,000,000 | |||
Higher rate of debt maturity periods | Dec-14 | |||
Senior Notes maturing June 2016 | ||||
Debt Instrument [Line Items] | ||||
Senior notes | 500,000,000 | |||
Higher rate of debt maturity periods | Jun-16 | |||
Senior notes, coupon rates | 0.95% | |||
Senior Notes maturing in June 2018 | ||||
Debt Instrument [Line Items] | ||||
Senior notes | 750,000,000 | |||
Higher rate of debt maturity periods | Jun-18 | |||
Senior notes, coupon rates | 1.85% | |||
Senior Notes maturing June 2023 | ||||
Debt Instrument [Line Items] | ||||
Senior notes | 1,250,000,000 | |||
Higher rate of debt maturity periods | Jun-23 | |||
Senior notes, coupon rates | 3.20% | |||
Senior Notes maturing June 2043 | ||||
Debt Instrument [Line Items] | ||||
Senior notes | 500,000,000 | |||
Higher rate of debt maturity periods | Jun-43 | |||
Senior notes, coupon rates | 4.50% | |||
Commercial Paper | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, weighted average interest rate | 0.46% | |||
Domestic Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Credit facility maximum capacity | 1,500,000,000 | |||
Credit facility expiration date | 2015-12 | |||
Line of Credit Facility Amount Outstanding | 0 | |||
Additional Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Credit facility maximum capacity | 1,800,000,000 | |||
Credit facility expiration date | 2015-12 | |||
Line of Credit Facility Amount Outstanding | 0 | |||
Foreign Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Credit facility maximum capacity | 375,000,000 | |||
Credit facility expiration date | 2015-12 | |||
Other Line Of Credit | ||||
Debt Instrument [Line Items] | ||||
Credit facility maximum capacity | 329,000,000 | 587,000,000 | ||
Line of Credit Facility Amount Outstanding | 38,000,000 | 181,000,000 | ||
Gambro AB | ||||
Debt Instrument [Line Items] | ||||
Net proceeds of debt to be used for acquisition | $3,000,000,000 |
Future_Minimum_Lease_Payments_
Future Minimum Lease Payments and Debt Maturities (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Leases Future Minimum Payments [Line Items] | ||||
2015 | $222 | |||
2016 | 187 | |||
2017 | 163 | |||
2018 | 130 | |||
2019 | 113 | |||
Thereafter | 232 | |||
Total obligations and commitments | 1,047 | |||
Total debt and lease obligations | 1,047 | |||
2015 | 786 | |||
2016 | 1,142 | |||
2017 | 644 | |||
2018 | 1,275 | |||
2019 | 525 | |||
Thereafter | 4,097 | |||
Total obligations and commitments | 8,469 | |||
Interest on capital leases, discounts and premiums, and adjustments relating to hedging instruments | -77 | |||
Total debt and lease obligations | $8,392 | [1] | $8,985 | [1] |
[1] | Book values include any discounts, premiums and adjustments related to hedging instruments. |
Derivative_Instruments_and_Hed2
Derivative Instruments and Hedging Activity - Additional Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Jun. 30, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Maximum length of time hedge in cash flow hedge | 12 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 | |||
Gain (loss) on hedged item in fair value hedge | -68 | 46 | ||
Deferred, net after-tax gains on derivative instruments | 28 | |||
Gambro AB | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Contract maturity period | 2013-06 | |||
Derivative gain (losses) | -23 | |||
Not Designated as Hedging Instrument | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative notional amount | 434 | 381 | ||
Foreign exchange contract | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative notional amount | 917 | 2,100 | ||
Interest rate contract | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative notional amount | 1,000 | 550 | 0 | |
Interest rate contract | Fair value hedges | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative notional amount | 2,900 | 1,200 | ||
Total notional amount of undesignated derivative instruments | Gambro AB | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative notional amount | 1,500 | 3,700 | ||
Dedesignated As Hedging Instrument | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative notional amount | $0 |
Summary_of_Gains_and_Losses_on
Summary of Gains and Losses on Derivative Instruments (Detail) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | $13 | [1] | $41 | [1] |
Other (income) expense, net | Not Designated as Hedging Instrument | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in income, undesignated derivative instruments | 49 | 11 | ||
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 | [1] |
Cash Flow Hedges | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in OCI | 51 | 63 | ||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | 13 | 41 | ||
Cash Flow Hedges | Interest rate contract | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in OCI | -1 | 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 | 10 | ||
Cash Flow Hedges | Foreign Exchange Contracts One | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in OCI | 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 | 51 | 36 | ||
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 | 13 | 32 | ||
Fair value hedges | Interest Expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in income, fair value hedges | $68 | ($46) | ||
[1] | Amounts in parentheses indicate reductions to net income. |
Net_of_Tax_Activity_in_Accumul
Net of Tax Activity in Accumulated Other Comprehensive Income Related to Cash Flow Hedges (Detail) (USD $) | 12 Months Ended | ||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Hedging activities, Beginning Balance | $10 | ($5) | $2 | ||
Gain (loss) in fair value of derivatives during the year | 32 | 41 | -7 | ||
Amount reclassified to earnings during the year | -8 | [1],[2] | -26 | [1],[2] | |
Hedging activities, Ending Balance | $34 | $10 | ($5) | ||
[1] | Amounts in parentheses indicate reductions to net income. | ||||
[2] | See table below for details about the reclassifications for the years ended December 31, 2014 and 2013. |
Classification_and_Fair_Value_
Classification and Fair Value Amounts of Derivative Instruments (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | $141 | $72 |
Derivative liability, fair value | 25 | 22 |
Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 141 | 72 |
Derivative liability, fair value | 2 | 21 |
Designated as Hedging Instrument | Interest rate contract | Other Long -Term Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | 14 | |
Designated as Hedging Instrument | Interest rate contract | Accounts Payable And Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | 2 | |
Designated as Hedging Instrument | Interest rate contract | Other Long -Term Assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 89 | 35 |
Designated as Hedging Instrument | Interest rate contract | Prepaid expenses and other | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 1 | |
Designated as Hedging Instrument | Foreign exchange contract | Accounts Payable And Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | 7 | |
Designated as Hedging Instrument | Foreign exchange contract | Prepaid expenses and other | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 51 | 37 |
Not Designated as Hedging Instrument | Foreign exchange contract | Accounts Payable And Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | $23 | $1 |
Derivative_Positions_Presented
Derivative Positions Presented On Net Basis (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts recognized in the consolidated balance sheet, asset | $141 | $72 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, asset | -22 | -17 |
Total | 119 | 55 |
Gross amounts recognized in the consolidated balance sheet, liability | 25 | 22 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, liability | -22 | -17 |
Total | $3 | $5 |
Summary_of_Activity_Relating_t
Summary of Activity Relating to Securitization Arrangement (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accounts Receivable Securitization [Line Items] | |||
Sold receivables at beginning of year | $114 | $157 | $160 |
Proceeds from sales of receivables | 464 | 506 | 630 |
Cash collections (remitted to the owners of the receivables) | -459 | -519 | -624 |
Effect of currency exchange rate changes | -15 | -30 | -9 |
Sold receivables at end of year | $104 | $114 | $157 |
Financial_Instruments_and_Rela2
Financial Instruments and Related Fair Value Measurements - Additional Information (Detail) (USD $) | 12 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Share data in Millions, unless otherwise specified | Dec. 31, 2014 | Jul. 31, 2012 | Jun. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2011 | Mar. 31, 2013 | Apr. 30, 2014 | Jun. 30, 2014 |
Financial Instruments and Fair Value [Line Items] | |||||||||
Cash and equivalents | $2,925,000,000 | $3,270,000,000 | $2,733,000,000 | $2,905,000,000 | |||||
Weighted average probability | 26.00% | ||||||||
Available for sale equity securities amortized cost basis | 79,000,000 | 111,000,000 | |||||||
Available for sale equity securities fair value | 105,000,000 | 102,000,000 | |||||||
Business acquisition contingent consideration | 569,000,000 | 340,000,000 | |||||||
Assets salvage value | 0 | ||||||||
Equity income recognized from equity method investments | 84,000,000 | ||||||||
Onconova Therapeutics, Inc. | |||||||||
Financial Instruments and Fair Value [Line Items] | |||||||||
Available for sale equity securities fair value | 9,000,000 | ||||||||
Preferred stock, shares acquired | 3 | ||||||||
Other-than-temporary impairment charge to write-down the investment to its fair value | 45,000,000 | ||||||||
Inspiration / Ipsen OBIZUR business | |||||||||
Financial Instruments and Fair Value [Line Items] | |||||||||
Business acquisition contingent consideration | 386,000,000 | 269,000,000 | |||||||
Chatham Therapeutics | |||||||||
Financial Instruments and Fair Value [Line Items] | |||||||||
Business acquisition contingent consideration | 77,000,000 | 77,000,000 | |||||||
AesRx LLC | |||||||||
Financial Instruments and Fair Value [Line Items] | |||||||||
Business acquisition contingent consideration | 65,000,000 | 65,000,000 | |||||||
Greek Government Bonds and European Financial Stability Facility Bonds | |||||||||
Financial Instruments and Fair Value [Line Items] | |||||||||
Losses recognized related to realized an unrealized losses associated with the company's Greek government and European Financial Stability Facility bonds | -8,000,000 | ||||||||
Proceed from sale of securities | 14,000,000 | ||||||||
Equity securities | |||||||||
Financial Instruments and Fair Value [Line Items] | |||||||||
Proceed from sale of securities | 45,000,000 | ||||||||
Securities maturity period | 1 year | ||||||||
Debt Securities | Maximum | |||||||||
Financial Instruments and Fair Value [Line Items] | |||||||||
Available for sale securities cumulative unrealized gains(losses) | 1,000,000 | 1,000,000 | |||||||
Preferred Stock | Onconova Therapeutics, Inc. | |||||||||
Financial Instruments and Fair Value [Line Items] | |||||||||
Payments to acquire stock | 50,000,000 | ||||||||
Equity Securities | |||||||||
Financial Instruments and Fair Value [Line Items] | |||||||||
Available for sale equity securities net unrealized gain (loss) | 27,000,000 | ||||||||
Available for sale equity securities cumulative unrealized losses | 9,000,000 | ||||||||
Available for sale equity securities cumulative unrealized gain | 36,000,000 | -9,000,000 | |||||||
Fair Value, Inputs, Level 2 | |||||||||
Financial Instruments and Fair Value [Line Items] | |||||||||
Money market funds, at carrying value | 989,000,000 | ||||||||
Fair Value, Inputs, Level 3 | |||||||||
Financial Instruments and Fair Value [Line Items] | |||||||||
Fair value | 0 | ||||||||
Countries With Liquidity Issues | |||||||||
Financial Instruments and Fair Value [Line Items] | |||||||||
Total accounts receivable from certain countries with liquidity issues | $363,000,000 | $561,000,000 |
Financial_Assets_and_Liabiliti
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency hedges, assets at fair value | $141 | $72 |
Equity securities | 105 | 102 |
Foreign currency hedges, liabilities at fair value | 25 | 22 |
Contingent payments related to acquisitions | 569 | 340 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 0 | |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency hedges, assets at fair value | 51 | 37 |
Interest rate hedges, assets at fair value | 90 | 35 |
Equity securities | 105 | 102 |
Foreign government debt securities | 18 | 18 |
Total assets | 264 | 192 |
Foreign currency hedges, liabilities at fair value | 23 | 8 |
Interest rate hedges, liabilities at fair value | 2 | 14 |
Contingent payments related to acquisitions | 569 | 340 |
Total liabilities | 594 | 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 | 105 | 102 |
Total assets | 105 | 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 | 51 | 37 |
Interest rate hedges, assets at fair value | 90 | 35 |
Foreign government debt securities | 18 | 18 |
Total assets | 159 | 90 |
Foreign currency hedges, liabilities at fair value | 23 | 8 |
Interest rate hedges, liabilities at fair value | 2 | 14 |
Total liabilities | 25 | 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 | 569 | 340 |
Total liabilities | $569 | $340 |
Reconciliation_of_Fair_Value_M
Reconciliation of Fair Value Measurements that Use Significant Unobservable Inputs (Detail) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Contingent payments, Fair value as of beginning of period | $340 | $86 |
Contingent payments, additions | 142 | 269 |
Contingent payments, payments | -15 | -2 |
Contingent payments, unrealized gains recognized in earnings | 122 | -17 |
Contingent payments,CTA | -20 | 4 |
Contingent payments, conversion to a publicly traded equity security | 0 | |
Contingent payments, Fair value as of end of period | 569 | 340 |
Preferred stock, Fair value as of beginning of period | 51 | |
Preferred stock, additions | 0 | 0 |
Preferred stock, payments | 0 | 0 |
Preferred stock, unrealized gains recognized in earnings | 0 | 0 |
Preferred stock,CTA | 0 | 0 |
Preferred stock, conversion to a publicly traded equity security | ($51) |
Book_Values_and_Fair_Values_of
Book Values and Fair Values of Financial Instruments (Detail) (USD $) | Dec. 31, 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 | $7,606 | [1] | $8,126 | [1] |
Long-term litigation liabilities | 53 | 72 | ||
Book Values | ||||
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ||||
Investments | 54 | 53 | ||
Short-term debt | 913 | 181 | ||
Current maturities of long-term debt and lease obligations | 786 | 859 | ||
Long-term debt and lease obligations | 7,606 | 8,126 | ||
Long-term litigation liabilities | 53 | 72 | ||
Approximate fair values | ||||
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ||||
Investments | 52 | 53 | ||
Short-term debt | 913 | 181 | ||
Current maturities of long-term debt and lease obligations | 791 | 862 | ||
Long-term debt and lease obligations | 8,192 | 8,298 | ||
Long-term litigation liabilities | $52 | $70 | ||
[1] | Book values include any discounts, premiums and adjustments related to hedging instruments. |
Summarization_of_Bases_Used_to
Summarization of Bases Used to Measure Fair Value of Financial Instruments (Detail) (USD $) | Dec. 31, 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 | $7,606 | [1] | $8,126 | [1] |
Long-term litigation liabilities | 53 | 72 | ||
Approximate fair values | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Investments | 52 | 53 | ||
Total assets | 52 | 53 | ||
Short-term debt | 913 | 181 | ||
Current maturities of long-term debt and lease obligations | 791 | 862 | ||
Long-term debt and lease obligations | 8,192 | 8,298 | ||
Long-term litigation liabilities | 52 | 70 | ||
Total liabilities | 9,948 | 9,411 | ||
Fair Value, Inputs, Level 2 | Approximate fair values | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Investments | 8 | 17 | ||
Total assets | 8 | 17 | ||
Short-term debt | 913 | 181 | ||
Current maturities of long-term debt and lease obligations | 791 | 862 | ||
Long-term debt and lease obligations | 8,192 | 8,298 | ||
Total liabilities | 9,896 | 9,341 | ||
Fair Value, Inputs, Level 3 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Total assets | 0 | |||
Fair Value, Inputs, Level 3 | Approximate fair values | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Investments | 44 | 36 | ||
Total assets | 44 | 36 | ||
Long-term litigation liabilities | 52 | 70 | ||
Total liabilities | $52 | $70 | ||
[1] | Book values include any discounts, premiums and adjustments related to hedging instruments. |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Contingencies And Commitments [Line Items] | |
Unfunded commitment payments | $38 |
Shareholders_Equity_Additional
Shareholders' Equity - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||
Share data in Millions, except Per Share data, unless otherwise specified | Nov. 30, 2014 | 31-May-13 | Jul. 31, 2012 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Stockholders Equity Note [Line Items] | |||||||||||||||
Authorized shares available for future awards under the stock-based compensation plans | 40 | ||||||||||||||
Shares available for future awards under the stock-based compensation plans | 29 | 29 | |||||||||||||
Stock compensation expense | $159,000,000 | $150,000,000 | $130,000,000 | ||||||||||||
Tax benefit related to stock based compensation | 51,000,000 | 45,000,000 | 40,000,000 | ||||||||||||
Stock based compensation in marketing and administrative expenses | 70.00% | 70.00% | 70.00% | ||||||||||||
Exercise prices of stock options granted to employees and non employee directors | At least equal to 100% of the market value | ||||||||||||||
Stock options granted contractual term | 10 years | ||||||||||||||
Employee purchase price | 85% of the closing market price on the purchase date. | ||||||||||||||
Share issued, ESPP | 0.8 | 0.8 | 0.9 | ||||||||||||
Shares under Subscription, ESPP | 0.6 | 0.6 | |||||||||||||
Realized excess tax benefits from stock issued under employee benefit plans | 24,000,000 | 34,000,000 | 24,000,000 | ||||||||||||
Cash dividends declared per common share | $0.52 | $0.49 | $0.45 | $0.52 | $0.52 | $0.52 | $0.49 | $0.49 | $0.49 | $0.49 | $0.45 | $2.05 | $1.92 | $1.57 | |
Cash dividends declared per common share annualized basis | $2.08 | $1.96 | $1.80 | ||||||||||||
Percentage of increase in dividend over the previously quarterly rate | 9.00% | 34.00% | |||||||||||||
Share repurchases | 8 | 13 | 25 | ||||||||||||
Value of share repurchases | 600,000,000 | 900,000,000 | 1,500,000,000 | ||||||||||||
Stock repurchase program, authorized amount | 2,000,000,000 | ||||||||||||||
Remaining value available under stock repurchase programs | 500,000,000 | 500,000,000 | |||||||||||||
Stock Options And Restricted Stock Units To Employees | |||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||
Stock options and RSUs vesting period | One-third increments over a three-year period | ||||||||||||||
Stock Options And Restricted Stock Units To Non Employee Directors | |||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||
Stock options and RSUs vesting period | 100% one year from the grant date | ||||||||||||||
Employee Stock Option | |||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||
Total intrinsic value of stock options exercised | 114,000,000 | 176,000,000 | 129,000,000 | ||||||||||||
Unrecognized compensation cost related to all unvested | 63,000,000 | 63,000,000 | |||||||||||||
Weighted-average period for all unvested | 1 year 7 months 6 days | ||||||||||||||
Restricted Stock Units | |||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||
Unrecognized compensation cost related to all unvested | 92,000,000 | 92,000,000 | |||||||||||||
Weighted-average period for all unvested | 1 year 8 months 12 days | ||||||||||||||
Weighted average fair value | $71.22 | $70.09 | $57.03 | ||||||||||||
Fair value of RSUs and restricted stock vested | 62,000,000 | 47,000,000 | 21,000,000 | ||||||||||||
Performance Shares | |||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||
Unrecognized compensation cost related to all unvested | $12,000,000 | $12,000,000 | |||||||||||||
Weighted-average period for all unvested | 1 year 7 months 6 days | ||||||||||||||
Weighted average fair value | $62.08 | ||||||||||||||
Performance Shares | Based on return on invested capital | |||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||
Target service period | 3 years | ||||||||||||||
Employee Stock Purchase Plan | |||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||
Authorized shares available for future awards under the stock-based compensation plans | 10 | ||||||||||||||
Shares available for future awards under the stock-based compensation plans | 7 | 7 |
Stock_Options_Fair_Value_Assum
Stock Options Fair Value Assumptions (Detail) (Employee Stock Option, USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 24.00% | 25.00% | 25.00% |
Expected life (in years) | 5 years 6 months | 5 years 6 months | 5 years 6 months |
Risk-free interest rate | 1.70% | 0.90% | 1.00% |
Dividend yield | 2.84% | 2.60% | 2.30% |
Fair value per stock option | $12 | $12 | $10 |
Summary_of_Stock_Option_Activi
Summary of Stock Option Activity (Detail) (USD $) | 12 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 |
Number of options | |
Number of options, Outstanding at beginning of year | 29,129 |
Number of options, Granted | 6,894 |
Number of options, Exercised | -5,591 |
Number of options, Forfeited | -1,042 |
Number of options, Expired | -117 |
Number of options, Outstanding at end of year | 29,273 |
Number of options, Vested or expected to vest at end of year | 28,756 |
Number of options , Exercisable at end of year | 17,419 |
Stock options grant weighted-average exercise price | |
Weighted-average exercise price, Outstanding at beginning of year | $57 |
Weighted-average exercise price, Granted | $69.26 |
Weighted-average exercise price, Exercised | $52.54 |
Weighted-average exercise price, Forfeited | $67.16 |
Weighted-average exercise price, Expired | $49.21 |
Weighted Average Exercise Price Outstanding at end of year | $60.41 |
Weighted Average Exercise Price Vested or expected to vest at end of year | $60.25 |
Weighted Average Exercise Price Exercisable at end of year | $55.36 |
Stock options grant Weighted-average remaining contractual life | |
Weighted average remaining contractual life, Outstanding at end of year | 6 years 2 months 12 days |
Weighted average remaining contractual life, Vested or expected to vest at end of year | 6 years 2 months 12 days |
Weighted average remaining contractual life, Exercisable at end of year | 4 years 7 months 6 days |
Stock options grant aggregate intrinsic value | |
Aggregate intrinsic value, outstanding, ending balance | $377,120 |
Aggregate intrinsic value,Vested or expected to vest at end of year | 375,093 |
Aggregate intrinsic value, Exercisable at end of year | $312,381 |
Summary_of_Nonvested_Restricte
Summary of Nonvested Restricted Stock Units Activity (Detail) (Restricted Stock Units, USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Restricted Stock Units | |||
RSUs shares | |||
Nonvested Units at beginning of year | 2,218 | ||
Granted | 1,521 | ||
Vested | -854 | ||
Forfeited | -237 | ||
Nonvested Units at end of year | 2,648 | 2,218 | |
RSUs weighted-average grant date fair value | |||
Weighted-average grant date fair value Nonvested Units at beginning of year | $62.06 | ||
Weighted-average grant date fair value Granted | $71.22 | $70.09 | $57.03 |
Weighted-average grant date fair value Vested | $60.23 | ||
Weighted-average grant date fair value Forfeited | $62.50 | ||
Weighted-average grant date fair value Nonvested Units at end of year | $67.89 | $62.06 |
Performance_Stock_Units_Fair_V
Performance Stock Units Fair Value Assumptions (Detail) (Performance Shares, USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Baxter volatility | 20.00% | 21.00% | 24.00% |
Peer group volatility | |||
Peer group volatility minimum | 13.00% | 13.00% | 14.00% |
Peer group volatility maximum | 58.00% | 38.00% | 50.00% |
Correlation of returns | |||
Correlation of returns minimum | 0.23 | 0.37 | 0.26 |
Correlation of returns maximum | 0.66 | 0.62 | 0.54 |
Risk-free interest rate | 0.70% | 0.30% | 0.40% |
Fair value per PSU | $57 | $67 | $72 |
Summary_of_Nonvested_Performan
Summary of Nonvested Performance Stock Unit Activity (Detail) (Performance Shares, USD $) | 12 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 |
Performance Shares | |
PSUs shares | |
Nonvested Units at beginning of year | 645 |
Granted | 285 |
Vested | -360 |
Forfeited | -81 |
Nonvested Units at end of year | 489 |
PSUs weighted-average grant date fair value | |
Weighted-average grant date fair value Nonvested Units at beginning of year | $70.18 |
Weighted-average grant date fair value Granted | $62.08 |
Weighted-average grant date fair value Vested | $71.51 |
Weighted-average grant date fair value Forfeited | $68.16 |
Weighted-average grant date fair value Nonvested Units at end of year | $64.80 |
Recovered_Sheet1
Retirement and Other Benefit Programs - Additional Information (Detail) (USD $) | 12 Months Ended | 1 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jul. 31, 2014 | Dec. 31, 2012 | |
Y | Person | ||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Expected return on plan assets assumption rate for 2015 | 7.25% | ||||
General investment portfolio limits on holdings, description | 5.00% | ||||
Allowed variance from target allocation of plan assets | 5.00% | ||||
Minimum expected cash contribution to pension plans in 2015 | $36,000,000 | ||||
Defined contribution plan, contributions by employer | 52,000,000 | 45,000,000 | 39,000,000 | ||
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 | -124,000,000 | ||||
Actuarial loss for the change in discount | 44,000,000 | ||||
Reduction to postemployment benefit obligation due to plan amendment, amount recognized in AOCI | 80,000,000 | ||||
Reduction to postemployment benefit obligation due to plan amendment, amortization period | 11 years | ||||
Equity Securities | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Target allocation for plan assets | 60 percent | ||||
Fixed Income Securities | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Target allocation for plan assets | 40 percent | ||||
Us Pension Plan Settlement | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Number of eligible terminated-vested participants | 16,000 | 16,000 | |||
Defined Benefit Plan, Settlements acceptance rate | 50.00% | 50.00% | |||
Settlement charge final payout | 377,000,000 | 377,000,000 | |||
Settlement charge | 164,000,000 | ||||
Accumulated Benefit Obligation | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Accumulated benefit obligation of company's pension plan | 5,800,000,000 | 5,000,000,000 | |||
Pension And Other Postretirement Benefits | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Expected cash outflow relating to OPEB in 2015 | $24,000,000 |
Reconciliation_of_Pension_and_
Reconciliation of Pension and Other Postemployment Benefits (OPEB) Plan Obligations, Assets and Funded Status (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Benefit obligations | |||
End of period | $6,331 | ||
Fair value of plan assets | |||
End of period | 4,197 | 4,000 | |
Pension Plans, Defined Benefit | |||
Benefit obligations | |||
Beginning of period | 5,425 | 5,364 | |
Service cost | 130 | 137 | 110 |
Interest cost | 242 | 207 | 235 |
Participant contributions | 10 | 9 | |
Actuarial loss/(gain) | 965 | -350 | |
Benefit payments | -228 | -203 | |
Settlements | -6 | -4 | |
Acquisitions and divestitures | -8 | 220 | |
Plan amendments | -5 | ||
Foreign exchange and other | -194 | 45 | |
End of period | 6,331 | 5,425 | 5,364 |
Fair value of plan assets | |||
Beginning of period | 4,000 | 3,642 | |
Actual return on plan assets | 427 | 464 | |
Employer contributions | 74 | 67 | |
Participant contributions | 10 | 9 | |
Benefit payments | -228 | -203 | |
Settlements | -6 | -4 | |
Acquisitions and divestitures | 8 | ||
Foreign exchange and other | -80 | 17 | |
End of period | 4,197 | 4,000 | 3,642 |
Funded status at December 31 | -2,134 | -1,425 | |
Amounts recognized in the consolidated balance sheets | |||
Noncurrent asset | 53 | 50 | |
Current liability | -29 | -29 | |
Noncurrent liability | -2,158 | -1,446 | |
Net liability recognized at December 31 | -2,134 | -1,425 | |
Other Postretirement Benefit Plans, Defined Benefit | |||
Benefit obligations | |||
Beginning of period | 564 | 650 | |
Service cost | 5 | 10 | 7 |
Interest cost | 25 | 26 | 29 |
Participant contributions | 12 | 11 | |
Actuarial loss/(gain) | 106 | -99 | |
Benefit payments | -37 | -34 | |
Plan amendments | -124 | ||
End of period | 551 | 564 | 650 |
Fair value of plan assets | |||
Employer contributions | 25 | 23 | |
Participant contributions | 12 | 11 | |
Benefit payments | -37 | -34 | |
Funded status at December 31 | -551 | -564 | |
Amounts recognized in the consolidated balance sheets | |||
Current liability | -23 | -24 | |
Noncurrent liability | -528 | -540 | |
Net liability recognized at December 31 | ($551) | ($564) |
Information_Relating_to_Indivi
Information Relating to Individual Plans in Funded Status Table above that have ABO in Excess of Plan Assets (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Information relating to the individual plans in the funded status table above that have an ABO in excess of plan assets | ||
ABO | $5,550 | $4,780 |
Fair value of plan assets | $3,878 | $3,710 |
Information_Relating_to_Indivi1
Information Relating to Individual Plans in Funded Status Table that have PBO in Excess of Plan Assets (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Information relating to the individual plans in the funded status table above that have a PBO in excess of plan assets | ||
PBO | $6,117 | $5,260 |
Fair value of plan assets | $3,954 | $3,785 |
Expected_Net_Pension_and_OPEB_
Expected Net Pension and OPEB Plan Payments for Next 10 Years (Detail) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Pension Plans, Defined Benefit | |
Expected Net Pension and OPEB Plan Payments for the Next 10 Years | |
2015 | $229 |
2016 | 242 |
2017 | 259 |
2018 | 268 |
2019 | 286 |
2020 through 2024 | 1,643 |
Total expected net benefit payments for next 10 years | 2,927 |
Other Postretirement Benefit Plans, Defined Benefit | |
Expected Net Pension and OPEB Plan Payments for the Next 10 Years | |
2015 | 24 |
2016 | 29 |
2017 | 30 |
2018 | 31 |
2019 | 31 |
2020 through 2024 | 156 |
Total expected net benefit payments for next 10 years | $301 |
Summary_of_PreTax_losses_Inclu
Summary of Pre-Tax losses Included in AOCI (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Pension Plans, Defined Benefit | ||
Summary of the pre-tax losses included in AOCI | ||
Actuarial loss | $2,069 | $1,455 |
Prior service credit and transition obligation | -5 | |
Total pre-tax loss recognized in AOCI | 2,064 | 1,455 |
Other Postretirement Benefit Plans, Defined Benefit | ||
Summary of the pre-tax losses included in AOCI | ||
Actuarial loss | 159 | 55 |
Prior service credit and transition obligation | -120 | -1 |
Total pre-tax loss recognized in AOCI | $39 | $54 |
Summary_of_NetofTax_Amounts_Re
Summary of Net-of-Tax Amounts Recorded in OCI Relating to Pension and OPEB Plans (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Summary of the net-of-tax amounts recorded in OCI relating to pension and OPEB plans | |||
(Charge) gain arising during the year, net of tax (benefit) expense of ($240) in 2014, $221 in 2013 and ($143) in 2012 | ($494) | $426 | ($353) |
Settlement charge, net of tax expense of $65 | 103 | ||
Amortization of loss to earnings, net of tax expense of $47 in 2014, $88 in 2013 and $77 in 2012 | 94 | 166 | 139 |
Pension and other employee benefits (charge) gain | ($400) | $592 | ($111) |
Summary_of_NetofTax_Amounts_Re1
Summary of Net-of-Tax Amounts Recorded in OCI Relating to Pension and OPEB Plans (Parenthetical) (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Defined Benefit Plan Disclosure [Line Items] | |||
Gain (charge) arising during the year, tax amount | ($240) | $221 | ($143) |
Settlement charge, tax expense | 65 | ||
Amortization of loss to earnings, tax expense | $47 | $88 | $77 |
Amounts_Expected_to_be_Amortiz
Amounts Expected to be Amortized from AOCI to Net Periodic Benefit Cost in 2014 (Detail) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
Pension Plans, Defined Benefit | |
Defined Benefit Plan Disclosure [Line Items] | |
Actuarial loss | $210 |
Prior service credit and transition obligation | -2 |
Total pre-tax amount expected to be amortized from AOCI to net pension and OPEB cost in 2015 | 208 |
Other Postretirement Benefit Plans, Defined Benefit | |
Defined Benefit Plan Disclosure [Line Items] | |
Actuarial loss | 9 |
Prior service credit and transition obligation | -12 |
Total pre-tax amount expected to be amortized from AOCI to net pension and OPEB cost in 2015 | ($3) |
Net_Periodic_Benefit_Cost_Deta
Net Periodic Benefit Cost (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Pension Plans, Defined Benefit | |||
Net periodic benefit cost | |||
Service cost | $130 | $137 | $110 |
Interest cost | 242 | 207 | 235 |
Expected return on plan assets | -269 | -254 | -288 |
Amortization of net loss and prior service credit/other deferred amounts | 144 | 245 | 209 |
Settlement losses | 1 | 1 | 168 |
Net periodic benefit cost | 248 | 336 | 434 |
Other Postretirement Benefit Plans, Defined Benefit | |||
Net periodic benefit cost | |||
Service cost | 5 | 10 | 7 |
Interest cost | 25 | 26 | 29 |
Amortization of net loss and prior service credit/other deferred amounts | -3 | 9 | 7 |
Net periodic benefit cost | $27 | $45 | $43 |
WeightedAverage_Assumptions_Us
Weighted-Average Assumptions Used in Determining (Detail) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Pension Benefits | |||
Defined Benefit Plan Disclosure [Line Items] | |||
by the year ended | |||
by the year ended | |||
Pension Benefits | United States And Puerto Rico Nonqualified Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 4.00% | 4.85% | |
Rate of compensation increase | 3.80% | 3.80% | |
Discount rate | 4.85% | 3.95% | 4.80% |
Expected return on plan assets | 7.50% | 7.50% | 7.75% |
Rate of compensation increase | 3.80% | 4.50% | 4.50% |
Pension Benefits | International Unfunded Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 2.26% | 3.41% | |
Rate of compensation increase | 3.28% | 3.29% | |
Discount rate | 3.41% | 3.19% | 4.48% |
Expected return on plan assets | 6.02% | 6.33% | 6.85% |
Rate of compensation increase | 3.29% | 3.51% | 3.54% |
Other Postretirement Benefit Plans, Defined Benefit | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Annual rate of increase in the per-capita cost | 6.00% | 6.25% | |
Rate decreased to | 5.00% | 5.00% | |
by the year ended | 2019 | 2019 | |
Annual rate of increase in the per-capita cost | 6.25% | 6.50% | 7.00% |
Rate decreased to | 5.00% | 5.00% | 5.00% |
by the year ended | 2019 | 2019 | 2016 |
Other Postretirement Benefit Plans, Defined Benefit | United States And Puerto Rico Nonqualified Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 3.95% | 4.90% | |
Discount rate | 4.90% | 4.00% | 4.75% |
Effect_of_OnePercent_Change_in
Effect of One-Percent Change in Assumed Healthcare Cost Trend Rate on the OPEB Plan (Detail) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Effect of a one-percentage change in assumed healthcare cost trend rate on the OPEB plan | ||
Effect on total of service and interest cost components of OPEB cost,one percent increase | $4 | $6 |
Effect on OPEB obligation,one percent increase | 67 | 74 |
Effect on total of service and interest cost components of OPEB cost, one percent decrease | -3 | -5 |
Effect on OPEB obligation, one percent decrease | ($55) | ($61) |
Fair_Value_of_Pension_Plan_Ass
Fair Value of Pension Plan Assets and Liabilities (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | $4,197 | $4,000 | |
Cash and Cash Equivalents | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 129 | 267 | |
U.S Government and Government Agency Issues | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 434 | 287 | |
Corporate Debt Securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 704 | 637 | |
Common Stock Large Cap | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 1,024 | 974 | |
Common Stock Mid Cap | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 459 | 442 | |
Common Stock Small Cap | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 101 | 93 | |
Common Stock | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 1,584 | 1,509 | |
Mutual Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 404 | 381 | |
Common Collective Trust Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 607 | 617 | |
Partnership Investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 214 | 199 | |
Other Holdings | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 121 | 103 | |
Collateral Held on Loaned Securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 266 | 248 | |
Securities Pledged as Collateral | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Collateral to be paid on loaned securities | -266 | -248 | |
Fair Value, Inputs, Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 1,714 | 1,635 | |
Fair Value, Inputs, Level 1 | Cash and Cash Equivalents | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 21 | 24 | |
Fair Value, Inputs, Level 1 | Common Stock Large Cap | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 1,024 | 974 | |
Fair Value, Inputs, Level 1 | Common Stock Mid Cap | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 459 | 442 | |
Fair Value, Inputs, Level 1 | Common Stock Small Cap | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 101 | 93 | |
Fair Value, Inputs, Level 1 | Common Stock | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 1,584 | 1,509 | |
Fair Value, Inputs, Level 1 | Mutual Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 180 | 180 | |
Fair Value, Inputs, Level 1 | Other Holdings | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 11 | 10 | |
Fair Value, Inputs, Level 1 | Securities Pledged as Collateral | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Collateral to be paid on loaned securities | -82 | -88 | |
Fair Value, Inputs, Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 2,261 | 2,159 | |
Fair Value, Inputs, Level 2 | Cash and Cash Equivalents | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 108 | 243 | |
Fair Value, Inputs, Level 2 | U.S Government and Government Agency Issues | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 434 | 287 | |
Fair Value, Inputs, Level 2 | Corporate Debt Securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 704 | 637 | |
Fair Value, Inputs, Level 2 | Mutual Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 224 | 201 | |
Fair Value, Inputs, Level 2 | Common Collective Trust Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 601 | 612 | |
Fair Value, Inputs, Level 2 | Other Holdings | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 108 | 91 | |
Fair Value, Inputs, Level 2 | Collateral Held on Loaned Securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 266 | 248 | |
Fair Value, Inputs, Level 2 | Securities Pledged as Collateral | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Collateral to be paid on loaned securities | -184 | -160 | |
Fair Value, Inputs, Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 222 | 206 | 187 |
Fair Value, Inputs, Level 3 | Common Collective Trust Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 6 | 5 | |
Fair Value, Inputs, Level 3 | Partnership Investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 214 | 199 | 180 |
Fair Value, Inputs, Level 3 | Other Holdings | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | $2 | $2 | $2 |
Changes_in_Fair_Value_Measurem
Changes in Fair Value Measurements that Used Significant Unobservable Inputs (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Defined Benefit Plan Disclosure [Line Items] | |||
End of period | $4,197 | $4,000 | |
Fair Value, Inputs, Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Beginning of period | 206 | 187 | |
Actual return on plan assets still held at year end | 14 | 8 | |
Actual return on plan assets sold during the year | 4 | ||
Purchases, sales and settlements | -2 | 11 | |
End of period | 222 | 206 | |
Collective Trust Funds | Fair Value, Inputs, Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Beginning of period | 5 | 5 | |
Actual return on plan assets still held at year end | 1 | ||
End of period | 6 | 5 | |
Partnership Investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
End of period | 214 | 199 | |
Partnership Investments | Fair Value, Inputs, Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Beginning of period | 199 | 180 | |
Actual return on plan assets still held at year end | 13 | 8 | |
Actual return on plan assets sold during the year | 4 | ||
Purchases, sales and settlements | -2 | 11 | |
End of period | 214 | 199 | |
Other Holdings | |||
Defined Benefit Plan Disclosure [Line Items] | |||
End of period | 121 | 103 | |
Other Holdings | Fair Value, Inputs, Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Beginning of period | 2 | ||
End of period | $2 | $2 | $2 |
Funded_Status_Percentage_of_Co
Funded Status Percentage of Company's Pension Plans (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Funded status percentage of the company's pension plans | ||
Fair value of plan assets | $4,197 | $4,000 |
PBO | 6,331 | |
Funded status percentage | 66.00% | |
United States Pension Plans of US Entity, Defined Benefit | Qualified Pension Plan | ||
Funded status percentage of the company's pension plans | ||
Fair value of plan assets | 3,414 | |
PBO | 4,449 | |
Funded status percentage | 77.00% | |
United States Pension Plans of US Entity, Defined Benefit | Non Qualified Pension Plan | ||
Funded status percentage of the company's pension plans | ||
PBO | 224 | |
Foreign Pension Plans, Defined Benefit | Qualified Pension Plan | ||
Funded status percentage of the company's pension plans | ||
Fair value of plan assets | 783 | |
PBO | 1,064 | |
Funded status percentage | 74.00% | |
Foreign Pension Plans, Defined Benefit | Non Qualified Pension Plan | ||
Funded status percentage of the company's pension plans | ||
PBO | $594 |
Summary_of_Changes_in_AOCI_by_
Summary of Changes in AOCI by Component (Detail) (USD $) | 12 Months Ended | ||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||
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 | -1,332 | 236 | |||
Currency translation adjustment, amounts reclassified from AOCI | 0 | [1] | 0 | [1] | |
Currency translation adjustment, net other comprehensive (loss) income | -1,332 | 236 | -98 | ||
Currency translation adjustment, Ending Balance | -2,323 | -991 | -1,227 | ||
Pension and other employee benefit, Beginning Balance | -1,027 | -1,619 | |||
Pension and other employee benefit, Other comprehensive income (loss) before reclassifications | -494 | 426 | |||
Pension and other employee benefit, Amounts reclassified from AOCI | 94 | [1],[2] | 166 | [1],[2] | |
Pension and other employee benefit, Net other comprehensive (loss) income | -400 | 592 | -111 | ||
Pension and other employee benefit, Ending Balance | -1,427 | -1,027 | -1,619 | ||
Hedging activities, Beginning Balance | 10 | -5 | 2 | ||
Hedging activities, Other comprehensive income (loss) before reclassifications | 32 | 41 | -7 | ||
Hedging activities, Amounts reclassified from AOCI | -8 | [1],[2] | -26 | [1],[2] | |
Hedging activities, Net other comprehensive income (loss) | 24 | 15 | -7 | ||
Hedging activities, Ending Balance | 34 | 10 | -5 | ||
Other, Beginning Balance | 32 | 41 | |||
Other, Other comprehensive income (loss) before reclassifications | -6 | -13 | |||
Other, Amounts reclassified from AOCI | 40 | [1],[2] | 4 | [1],[2] | |
Other, Net other comprehensive (loss) income | 34 | -9 | -3 | ||
Other, Ending Balance | 66 | 32 | 41 | ||
Total, Beginning Balance | -1,976 | -2,810 | |||
Total, Other comprehensive income (loss) before reclassifications | -1,800 | 690 | |||
Total, Amounts reclassified from AOCI | 126 | [1],[2] | 144 | [1],[2] | |
Total other comprehensive (loss) income, net of tax | -1,674 | 834 | -219 | ||
Total, Ending Balance | ($3,650) | ($1,976) | ($2,810) | ||
[1] | See table below for details about the reclassifications for the years ended December 31, 2014 and 2013. | ||||
[2] | Amounts in parentheses indicate reductions to net income. |
Summary_of_Amounts_Reclassific
Summary of Amounts Reclassification from AOCI to Net Income (Detail) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
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 | ($141) | [1] | ($254) | [1] |
Amortization of pension and other employee benefits items Actuarial losses and other reclassified from AOCI to net income, tax benefit | 47 | [1] | 88 | [1] |
Amortization of pension and other employee benefits items Actuarial losses and other reclassified from AOCI to net income, net of tax | -94 | [1],[2] | -166 | [1],[2] |
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | 13 | [1] | 41 | [1] |
Gains (losses) on hedging activities reclassified from AOCI to net income, tax expense | -5 | [1] | -15 | [1] |
Gains (loss) on hedging activities reclassified from AOCI to net income, net of tax | 8 | [1],[2] | 26 | [1],[2] |
Gains (loss) on available for sale securities reclassified from AOCI to net income, before tax | -44 | [1] | -6 | [1] |
Gains (loss) on available for sale securities reclassified from AOCI to net income, tax benefit | 4 | [1] | 2 | [1] |
Other Available-for-sale securities reclassified from AOCI to net income, net of tax | -40 | [1],[2] | -4 | [1],[2] |
Total reclassification for the period | -126 | [1],[2] | -144 | [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 Other-than-temporary impairment of reclassified from AOCI to net income, before tax | -45 | [1] | -6 | [1] |
Gains (loss) on available for sale securities sale reclassified from AOCI to net income, before tax | 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] | 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 | 13 | [1] | 32 | [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 | ($141) | [1],[3] | ($254) | [1],[3] |
[1] | Amounts in parentheses indicate reductions to net income. | |||
[2] | See table below for details about the reclassifications for the years ended December 31, 2014 and 2013. | |||
[3] | These AOCI components are included in the computation of net periodic benefit cost disclosed in Note 13. |
Income_From_Continuing_Operati
Income From Continuing Operations Before Income Tax Expense by Category (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Before Income Taxes [Line Items] | |||
United States | $74 | $446 | $385 |
International | 2,365 | 2,100 | 2,453 |
Income from continuing operations before income taxes | $2,439 | $2,546 | $2,838 |
Income_Tax_Expense_Related_To_
Income Tax Expense Related To Continuing Operations (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Current | |||
Federal | $102 | $296 | $122 |
State and local | 22 | 28 | 55 |
International | 447 | 434 | 395 |
Current income tax expense | 571 | 758 | 572 |
Deferred | |||
Federal | -15 | -147 | 112 |
State and local | -6 | -5 | -81 |
International | -57 | -72 | -48 |
Deferred income tax expense | -78 | -224 | -17 |
Income tax expense | $493 | $534 | $555 |
Deferred_Tax_Assets_and_Liabil
Deferred Tax Assets and Liabilities (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Deferred tax assets | ||
Accrued expenses | $642 | $426 |
Retirement benefits | 898 | 669 |
Tax credits and net operating losses | 369 | 426 |
Valuation allowances | -137 | -137 |
Total deferred tax assets | 1,772 | 1,384 |
Deferred tax liabilities | ||
Subsidiaries' unremitted earnings | 208 | 265 |
Asset basis differences | 1,011 | 849 |
Total deferred tax liabilities | 1,219 | 1,114 |
Net deferred tax asset | $553 | $270 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Taxes [Line Items] | |||
Valuation allowance | $137,000,000 | $137,000,000 | |
Foreign earnings for prior years not indefinitely reinvested | 45,000,000 | ||
Effective income tax rate | 20.20% | 21.00% | 19.60% |
Research and development tax credit | 16,000,000 | ||
Gains (loss) related to the reduction (increase) of contingent payment liabilities | 122,000,000 | -17,000,000 | -108,000,000 |
Income expense(benefit) | 493,000,000 | 534,000,000 | 555,000,000 |
Infusion pump reserve adjustment | 25,000,000 | 37,000,000 | |
Unrecognized interest and penalties expense | 12,000,000 | 1,000,000 | 12,000,000 |
Net interest and penalties | 63,000,000 | 124,000,000 | |
Gross unrecognized tax benefit liability | 215,000,000 | 393,000,000 | |
Impact on earnings per diluted share | $0.42 | $0.44 | $0.50 |
Expected reduction in uncertain tax positions | 104,000,000 | ||
Income tax examination expected months for settlement proceedings | Within the next 12 months | ||
Prior Acquisition | |||
Income Taxes [Line Items] | |||
Gains (loss) related to the reduction (increase) of contingent payment liabilities | 91,000,000 | ||
Income expense(benefit) | 0 | ||
Colleague | |||
Income Taxes [Line Items] | |||
Income expense(benefit) | 0 | ||
Infusion pump reserve adjustment | 37,000,000 | ||
Investments in Foreign Subsidiaries and Foreign Corporate Joint Ventures that are Essentially Permanent in Duration | |||
Income Taxes [Line Items] | |||
Foreign unremitted earnings | 13,900,000,000 | 12,200,000,000 | |
Estimated federal and state income tax amounts net of applicable credits on foreign unremitted earnings | 4,200,000,000 | 3,800,000,000 | |
Domestic Tax Authority | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards | 100,000,000 | ||
Domestic Tax Authority | Minimum | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards, expiration dates | 2015 | ||
Domestic Tax Authority | Maximum | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards, expiration dates | 2032 | ||
Foreign Tax Authority | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards | 1,200,000,000 | ||
Foreign tax credit carryforwards | 66,000,000 | ||
SWITZERLAND | Forecast | |||
Income Taxes [Line Items] | |||
Manufacturing Operation will be partially exempt from local tax rate | 8.00% | ||
Operating Loss Carryforward Expiring Year One | Foreign Tax Authority | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards | 4,000,000 | ||
Operating loss carryforwards, expiration dates | 2015 | ||
Operating Loss Carryforward Expiring Year Two | Foreign Tax Authority | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards | 21,000,000 | ||
Operating loss carryforwards, expiration dates | 2016 | ||
Operating Loss Carryforward Expiring Year Three | Foreign Tax Authority | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards | 49,000,000 | ||
Operating loss carryforwards, expiration dates | 2017 | ||
Operating Loss Carryforward Expiring Year Four | Foreign Tax Authority | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards | 34,000,000 | ||
Operating loss carryforwards, expiration dates | 2018 | ||
Operating Loss Carryforward Expiring Year Five | Foreign Tax Authority | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards | 40,000,000 | ||
Operating loss carryforwards, expiration dates | 2019 | ||
Operating Loss Carryforward Expiring Year Six | Foreign Tax Authority | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards | 2,000,000 | ||
Operating loss carryforwards, expiration dates | 2020 | ||
Operating Loss Carryforward Expiring After 2018 | Foreign Tax Authority | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards | 27,000,000 | ||
Operating loss carryforwards, expiration dates | After 2020 | ||
Operating Loss Carryforward No Expiration | Foreign Tax Authority | |||
Income Taxes [Line Items] | |||
Operating loss carryforwards | $1,100,000,000 | ||
Operating loss carryforwards, expiration dates | No expiration date |
Income_Tax_Expense_Reconciliat
Income Tax Expense Reconciliation (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Expense Reconciliation | |||
Income tax expense at U.S. statutory rate | $854 | $891 | $993 |
Tax incentives | -223 | -245 | -274 |
State and local taxes | 11 | 22 | -11 |
Foreign tax benefit | -161 | -121 | -170 |
Contingent tax matters | -37 | 26 | 30 |
Branded Prescription Drug Fee | 24 | 9 | 7 |
Other factors | 25 | -48 | -20 |
Income tax expense | $493 | $534 | $555 |
Reconciliation_of_Companys_Unr
Reconciliation of Company's Unrecognized Tax Benefits (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Reconciliation Of Unrecognized Tax Benefits Excluding Amounts Pertaining To Examined Tax Returns | |||
Balance at beginning of the year | $287 | $437 | $443 |
Increase associated with tax positions taken during the current year | 41 | 31 | 25 |
Increase (decrease) associated with tax positions taken during a prior year | -27 | 38 | -9 |
Settlements | -82 | -216 | -21 |
Decrease associated with lapses in statutes of limitations | -13 | -3 | -1 |
Balance at end of the year | $206 | $287 | $437 |
Legal_Proceedings_Additional_I
Legal Proceedings - Additional Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2014 |
Loss Contingencies [Line Items] | ||
Settlement amount | $64 | $72 |
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) | 12 Months Ended |
Dec. 31, 2014 | |
Segment | |
Segment Information [Line Items] | |
Number of segments | 2 |
Segment_Information_Detail
Segment Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Segment Information [Line Items] | |||||||||||
Net sales | $4,472 | $4,197 | $4,154 | $3,848 | $4,322 | $3,710 | $3,571 | $3,364 | $16,671 | $14,967 | $13,936 |
Depreciation and amortization | 1,002 | 815 | 704 | ||||||||
Pre-tax income (loss) from continuing operations | 2,439 | 2,546 | 2,838 | ||||||||
Assets | 25,917 | 25,224 | 25,917 | 25,224 | 20,390 | ||||||
Capital expenditures | 1,898 | 1,525 | 1,161 | ||||||||
BioScience | |||||||||||
Segment Information [Line Items] | |||||||||||
Net sales | 6,699 | 6,272 | 5,983 | ||||||||
Depreciation and amortization | 285 | 255 | 235 | ||||||||
Pre-tax income (loss) from continuing operations | 2,040 | 2,331 | 2,257 | ||||||||
Assets | 9,936 | 8,967 | 9,936 | 8,967 | 7,380 | ||||||
Capital expenditures | 1,020 | 868 | 570 | ||||||||
Medical Products | |||||||||||
Segment Information [Line Items] | |||||||||||
Net sales | 9,972 | 8,695 | 7,953 | ||||||||
Depreciation and amortization | 633 | 472 | 385 | ||||||||
Pre-tax income (loss) from continuing operations | 1,316 | 1,398 | 1,592 | ||||||||
Assets | 11,440 | 12,269 | 11,440 | 12,269 | 7,568 | ||||||
Capital expenditures | 749 | 530 | 495 | ||||||||
Other | |||||||||||
Segment Information [Line Items] | |||||||||||
Depreciation and amortization | 84 | 88 | 84 | ||||||||
Pre-tax income (loss) from continuing operations | -917 | -1,183 | -1,011 | ||||||||
Assets | 4,541 | 3,988 | 4,541 | 3,988 | 5,442 | ||||||
Capital expenditures | $129 | $127 | $96 |
Pre_Tax_Income_Reconciliation_
Pre- Tax Income Reconciliation (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Consolidated income before income taxes | $2,439 | $2,546 | $2,838 |
Operating Segments | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Consolidated income before income taxes | 3,356 | 3,729 | 3,849 |
Unallocated Amount To Segment Net Interest Expense | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Consolidated income before income taxes | -145 | -128 | -87 |
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] | |||
Consolidated income before income taxes | 40 | 83 | 53 |
Unallocated Amount To Segment Stock Compensation | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Consolidated income before income taxes | -159 | -150 | -130 |
Unallocated Amount To Segment Business Optimization Charges | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Consolidated income before income taxes | -19 | -180 | -150 |
Unallocated Amount To Pension Settlement Charges | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Consolidated income before income taxes | -168 | ||
Unallocated Amount to Segment Certain Tax and Legal Reserves | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Consolidated income before income taxes | -104 | ||
Unallocated Amount to Segment Other Corporate Items | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Consolidated income before income taxes | ($634) | ($704) | ($529) |
Assets_Reconciliation_Detail
Assets Reconciliation (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Consolidated total assets | $25,917 | $25,224 | $20,390 |
Operating Segments | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Consolidated total assets | 21,376 | 21,236 | |
Unallocated Amount To Segment Cash And Cash Equivalents | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Consolidated total assets | 2,925 | 2,733 | |
Unallocated Amount To Segment Deferred Income Taxes | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Consolidated total assets | 774 | 545 | |
Unallocated Amount to Segment Property, Plant and Equipment | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Consolidated total assets | 494 | 437 | |
Unallocated Amount To Segment Other Corporate Assets | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Consolidated total assets | $348 | $273 |
Geographic_Information_Detail
Geographic Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Geographic Information | |||||||||||
Consolidated net sales | $4,472 | $4,197 | $4,154 | $3,848 | $4,322 | $3,710 | $3,571 | $3,364 | $16,671 | $14,967 | $13,936 |
Consolidated PP&E, net | 8,698 | 7,832 | 8,698 | 7,832 | 6,098 | ||||||
US | |||||||||||
Geographic Information | |||||||||||
Consolidated net sales | 7,015 | 6,444 | 6,043 | ||||||||
Consolidated PP&E, net | 4,071 | 3,091 | 4,071 | 3,091 | 2,333 | ||||||
Europe | |||||||||||
Geographic Information | |||||||||||
Consolidated net sales | 5,136 | 4,371 | 4,008 | ||||||||
Asia Pacific | |||||||||||
Geographic Information | |||||||||||
Consolidated net sales | 2,619 | 2,324 | 2,183 | ||||||||
Latin America And Canada | |||||||||||
Geographic Information | |||||||||||
Consolidated net sales | 1,901 | 1,828 | 1,702 | ||||||||
Austria | |||||||||||
Geographic Information | |||||||||||
Consolidated PP&E, net | 778 | 914 | 778 | 914 | 802 | ||||||
Other Countries | |||||||||||
Geographic Information | |||||||||||
Consolidated PP&E, net | $3,849 | $3,827 | $3,849 | $3,827 | $2,963 |
Significant_Product_Sales_Deta
Significant Product Sales (Detail) | 12 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||
Hemophilia | ||||||
Revenue from External Customer [Line Items] | ||||||
Net sales as percentage of consolidated net sales for principal product categories | 22.00% | [1] | 23.00% | [1] | 23.00% | [1] |
Fluid Systems | ||||||
Revenue from External Customer [Line Items] | ||||||
Net sales as percentage of consolidated net sales for principal product categories | 19.00% | [2] | 21.00% | [2] | 21.00% | [2] |
Renal | ||||||
Revenue from External Customer [Line Items] | ||||||
Net sales as percentage of consolidated net sales for principal product categories | 25.00% | [3] | 21.00% | [3] | 18.00% | [3] |
Bio Therapeutics | ||||||
Revenue from External Customer [Line Items] | ||||||
Net sales as percentage of consolidated net sales for principal product categories | 13.00% | [4] | 14.00% | [4] | 15.00% | [4] |
Specialty Pharmaceuticals | ||||||
Revenue from External Customer [Line Items] | ||||||
Net sales as percentage of consolidated net sales for principal product categories | 9.00% | [5] | 10.00% | [5] | 11.00% | [5] |
[1] | Includes sales of recombinant and plasma-derived hemophilia products (primarily factor VIII and factor IX). | |||||
[2] | Principally includes IV solutions, infusion pumps, administration sets, and premixed and oncology drug platforms. | |||||
[3] | Consists of therapies to treat end-stage renal disease, including PD, HD, and HHD and therapies to treat acute kidney injuries, including CRRT. | |||||
[4] | Includes sales of the company's plasma-based therapies to treat alpha-1 antitrypsin deficiency, burns and shock, and other chronic and acute blood-related conditions. | |||||
[5] | Principally includes nutrition and anesthesia products. |
Recovered_Sheet2
Quarterly Financial Results and Market for Company's Stock (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||||||||||||
In Millions, except Per Share data, unless otherwise specified | Nov. 30, 2014 | 31-May-13 | Jul. 31, 2012 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||||||||
Quarterly Financial Information [Line Items] | ||||||||||||||||||||||||
Net sales | $4,472 | $4,197 | $4,154 | $3,848 | $4,322 | $3,710 | $3,571 | $3,364 | $16,671 | $14,967 | $13,936 | |||||||||||||
Gross margin | 2,224 | 2,073 | 1,969 | 1,891 | 1,996 | 1,906 | 1,874 | 1,696 | 8,157 | 7,472 | 7,134 | |||||||||||||
Income from continuing operations | 524 | [1] | 447 | [1] | 468 | [1] | 507 | [1] | 409 | [2] | 528 | [2] | 552 | [2] | 523 | [2] | 1,946 | [1] | 2,012 | [2] | 2,283 | |||
Income from continuing operations per common share | ||||||||||||||||||||||||
Basic | $0.97 | $0.83 | $0.86 | $0.94 | $0.75 | $0.97 | $1.02 | $0.96 | $3.59 | $3.70 | $4.14 | |||||||||||||
Diluted | $0.96 | $0.82 | $0.85 | $0.93 | $0.74 | $0.96 | $1.01 | $0.95 | $3.56 | $3.66 | $4.11 | |||||||||||||
Income (loss) from discontinued operations, net of tax | 429 | 21 | 52 | 49 | -83 | 16 | 38 | 29 | 551 | 0 | 43 | |||||||||||||
Income from discontinued operations per common share | ||||||||||||||||||||||||
Basic | $0.79 | $0.03 | $0.10 | $0.09 | ($0.15) | $0.03 | $0.07 | $0.05 | $1.02 | $0 | $0.08 | |||||||||||||
Diluted | $0.78 | $0.04 | $0.10 | $0.09 | ($0.15) | $0.03 | $0.06 | $0.05 | $1 | $0 | $0.07 | |||||||||||||
Net income | $953 | [1] | $468 | [1] | $520 | [1] | $556 | [1] | $326 | [2] | $544 | [2] | $590 | [2] | $552 | [2] | $2,497 | [1] | $2,012 | [2] | $2,326 | |||
Net income per common share | ||||||||||||||||||||||||
Basic | $1.76 | $0.86 | $0.96 | $1.02 | $0.60 | $1 | $1.09 | $1.01 | $4.61 | $3.70 | $4.22 | |||||||||||||
Diluted | $1.74 | $0.86 | $0.95 | $1.01 | $0.59 | $0.99 | $1.07 | $1 | $4.56 | $3.66 | $4.18 | |||||||||||||
Cash dividends declared per common share | $0.52 | $0.49 | $0.45 | $0.52 | $0.52 | $0.52 | $0.49 | $0.49 | $0.49 | $0.49 | $0.45 | $2.05 | $1.92 | $1.57 | ||||||||||
Market price per common share | ||||||||||||||||||||||||
High | $74,700,000 | $77,000,000 | $75,450,000 | $73,580,000 | $69,550,000 | $74,430,000 | $73,040,000 | $72,640,000 | $77,000,000 | $74,430,000 | ||||||||||||||
Low | $67,240,000 | $71,280,000 | $71,980,000 | $66,490,000 | $63,890,000 | $65,690,000 | $68,100,000 | $66,420,000 | $66,490,000 | $63,890,000 | ||||||||||||||
[1] | The first quarter of 2014 included charges of $69 million related business optimization, Gambro integration costs, tax and legal reserves, and milestone payments associated with the company's collaboration arrangements. The second quarter of 2014 included charges of $177 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, and milestone payments associated with the company's collaboration arrangements. The third quarter of 2014 included charges of $283 million related to business optimization, Gambro integration costs, separation-related costs, the Branded Prescription Drug Fee, and upfront and milestone payments associated with the company's collaboration arrangements. The fourth quarter of 2014 included $275 million related to business optimization, Gambro integration costs, product-related items, separation-related costs, reserve items and adjustments, an other-than-temporary impairment loss, and milestone payments associated with the company's collaboration arrangements. | |||||||||||||||||||||||
[2] | The first quarter of 2013 included charges of $45 million related Gambro acquisition costs and currency-related items. The second quarter of 2013 included charges of $76 million related to business optimization and Gambro acquisition costs. The third quarter of 2013 included charges of $152 million related to Gambro acquisition and integration costs, reserve items and adjustments, and an upfront payment associated with one of the company's collaboration arrangements. The fourth quarter of 2013 included $371 million related to business optimization, Gambro acquisition and integration costs, product-related items, and upfront and milestone payments associated with the company's collaboration arrangements. |
Recovered_Sheet3
Quarterly Financial Results and Market for Company's Stock (Parenthetical) (Detail) (USD $) | 3 Months Ended | 6 Months Ended | ||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Mar. 31, 2013 | Jun. 30, 2013 |
Quarterly Financial Information [Line Items] | ||||||||
Business acquisition costs and currency-related items charges | $45 | |||||||
Business optimization and acquisition related costs | 76 | |||||||
Business acquisition, collaboration arrangements payments and other charges | 152 | |||||||
Business optimization, acquisition, collaboration arrangements and other Charges | $275 | $283 | $177 | $69 | $371 |
Quarterly_Financial_Results_an2
Quarterly Financial Results and Market for Company's Stock - Additional Information (Detail) (Subsequent Event) | Jan. 31, 2015 |
Person | |
Subsequent Event | |
Quarterly Financial Results and Market For The Company's Stock | |
Number of holders of common stock | 34,340 |
Valuation_And_Qualifying_Accou
Valuation And Qualifying Accounts (Detail) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Allowance for Doubtful Accounts | ||||||
Valuation and Qualifying Accounts Disclosure [Line Items] | ||||||
Balance at beginning of period | $169 | $127 | $128 | |||
Additions Charged to costs and expenses | 1 | 26 | 12 | |||
Charged (credited) to other account | -16 | [1] | 27 | [1] | -2 | [1] |
Deductions from reserves | -15 | -11 | -11 | |||
Balance at end of period | 139 | 169 | 127 | |||
Deferred tax asset valuation allowance | ||||||
Valuation and Qualifying Accounts Disclosure [Line Items] | ||||||
Balance at beginning of period | 137 | 104 | 116 | |||
Additions Charged to costs and expenses | 10 | 13 | 10 | |||
Charged (credited) to other account | -7 | [1] | 25 | [1] | -4 | [1] |
Deductions from reserves | -3 | -5 | -18 | |||
Balance at end of period | $137 | $137 | $104 | |||
[1] | Valuation accounts of acquired or divested companies and foreign currency translation adjustments. |