Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 29, 2016 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | BAX | |
Entity Registrant Name | BAXTER INTERNATIONAL INC | |
Entity Central Index Key | 10,456 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 552,262,740 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net sales | $ 2,375 | $ 2,403 |
Cost of sales | 1,410 | 1,384 |
Gross margin | 965 | 1,019 |
Marketing and administrative expenses | 641 | 784 |
Research and development expenses | 136 | 143 |
Operating income | 188 | 92 |
Net interest expense | 28 | 30 |
Other income, net | (3,169) | (86) |
Income from continuing operations before income taxes | 3,329 | 148 |
Income tax (benefit)/expense | (58) | 14 |
Income from continuing operations | 3,387 | 134 |
(Loss) income from discontinued operations, net of tax | (7) | 296 |
Net income | $ 3,380 | $ 430 |
Income from continuing operations per common share | ||
Basic | $ 6.17 | $ 0.25 |
Diluted | 6.13 | 0.24 |
Income from discontinued operations per common share | ||
Basic | (0.01) | 0.54 |
Diluted | (0.01) | 0.54 |
Net income per common share | ||
Basic | 6.16 | 0.79 |
Diluted | $ 6.12 | $ 0.78 |
Weighted-average number of common shares outstanding | ||
Basic | 549 | 543 |
Diluted | 552 | 548 |
Cash dividends declared per common share | $ 0.115 | $ 0.520 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net income | $ 3,380 | $ 430 |
Other comprehensive income (loss), net of tax: | ||
Currency translation adjustments, net of tax expense (benefit) of $14 and ($109) for the three months ended March 31, 2016 and 2015, respectively | 92 | (1,138) |
Pension and other employee benefits, net of tax expense of $11 and $31 for the three months ended March 31, 2016 and 2015, respectively | 21 | 68 |
Hedging activities, net of tax benefit of ($3) and ($7) for the three months ended March 31, 2016 and 2015, respectively | (6) | (10) |
Available-for-sale securities, net of tax expense of zero and $9 for the three months ended March 31, 2016 and 2015, respectively | (3,366) | 21 |
Total other comprehensive income (loss), net of tax | (3,259) | (1,059) |
Comprehensive income (loss) | $ 121 | $ (629) |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Tax expense (benefit) on currency translation adjustments | $ 14 | $ (109) |
Tax expense on pension and other employee benefits | 11 | 31 |
Tax benefit on hedging activities | (3) | (7) |
Tax expense on available-for-sale securities | $ 0 | $ 9 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and equivalents | $ 2,211 | $ 2,213 |
Accounts and other current receivables, net | 1,830 | 1,731 |
Inventories | 1,682 | 1,604 |
Prepaid expenses and other | 951 | 855 |
Investment in Baxalta common stock | 1,232 | 5,148 |
Current assets held for disposition | 111 | 245 |
Total current assets | 8,017 | 11,796 |
Property, plant and equipment, net | 4,403 | 4,386 |
Other assets | ||
Goodwill | 2,727 | 2,687 |
Other intangible assets, net | 1,359 | 1,349 |
Other | 844 | 744 |
Total other assets | 4,930 | 4,780 |
Total assets | 17,350 | 20,962 |
Current liabilities | ||
Short-term debt | 817 | 1,775 |
Current maturities of long-term debt and lease obligations | 472 | 810 |
Accounts payable and accrued liabilities | 2,387 | 2,666 |
Current income taxes payable | 137 | 453 |
Current liabilities held for disposition | 10 | 46 |
Total current liabilities | 3,823 | 5,750 |
Long-term debt and lease obligations | 2,068 | 3,922 |
Other long-term liabilities | 2,439 | 2,425 |
Equity | ||
Common stock, $1 par value, authorized 2,000,000,000 shares, issued 683,494,944 shares in 2016 and 2015 | 683 | 683 |
Common stock in treasury, at cost, 132,271,988 shares in 2016 and 135,839,938 shares in 2015 | (7,434) | (7,646) |
Additional contributed capital | 5,882 | 5,902 |
Retained earnings | 12,923 | 9,683 |
Accumulated other comprehensive (loss) income | (3,035) | 224 |
Total Baxter shareholders' equity | 9,019 | 8,846 |
Noncontrolling interests | 1 | 19 |
Total equity | 9,020 | 8,865 |
Total liabilities and equity | $ 17,350 | $ 20,962 |
Condensed Consolidated Balance6
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
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 | 132,271,988 | 135,839,938 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operations | ||
Net income | $ 3,380 | $ 430 |
Adjustments to reconcile income from continuing operations to net cash from operating activities: | ||
(Loss) income from discontinued operations, net of tax | 7 | (296) |
Depreciation and amortization | 189 | 187 |
Deferred income taxes | (71) | 48 |
Stock compensation | 23 | 29 |
Net periodic pension benefit and OPEB costs | 30 | 60 |
Net realized gains on the Retained Share transactions | (3,239) | |
Other | 97 | (87) |
Changes in balance sheet items | ||
Accounts and other current receivables, net | 16 | 50 |
Inventories | (26) | (122) |
Accounts payable and accrued liabilities | (438) | (306) |
Business optimization and infusion pump payments | (34) | (19) |
Other | (108) | (2) |
Cash flows from operations - continuing operations | (174) | (28) |
Cash flows from operations - discontinued operations | (159) | 124 |
Cash flows from operations | (333) | 96 |
Cash flows from investing activities | ||
Capital expenditures | (184) | (214) |
Acquisitions and investments, net of cash acquired | (33) | (7) |
Divestitures and other investing activities | 3 | 4 |
Cash flows from investing activities - continuing operations | (214) | (217) |
Cash flows from investing activities - discontinued operations | 13 | (553) |
Cash flows from investing activities | (201) | (770) |
Cash flows from financing activities | ||
Issuances of debt | 61 | 900 |
Payments of obligations | (20) | (618) |
Increase in debt with original maturities of three months or less, net | 450 | 361 |
Cash dividends on common stock | (63) | (282) |
Proceeds and realized excess tax benefits from stock issued under employee benefit plans | 99 | 48 |
Other | (17) | (25) |
Cash flows from financing activities | 510 | 384 |
Effect of foreign exchange rate changes on cash and equivalents | 22 | (105) |
Decrease in cash and equivalents | (2) | (395) |
Cash and equivalents at beginning of period | 2,213 | 2,925 |
Cash and equivalents at end of period | 2,211 | 2,530 |
Supplemental Schedule of Non-Cash Investing and Financing Activities | ||
Net proceeds on Retained Share transactions | 3,239 | |
Payment of obligations in exchange for Retained Shares | 3,646 | |
Other Supplemental Information | ||
Income taxes paid | $ 429 | $ 91 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2016 | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION The unaudited interim condensed consolidated financial statements of Baxter International Inc. and its subsidiaries (the company or Baxter) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (GAAP) in the United States have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the company’s Annual Report on Form 10-K for the year ended December 31, 2015 (2015 Annual Report). In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair statement of the interim periods. All such adjustments, unless otherwise noted herein, are of a normal, recurring nature. The results of operations for the interim period are not necessarily indicative of the results of operations to be expected for the full year. Certain reclassifications have been made to conform the prior period condensed consolidated statements to the current period presentation. Separation of Baxalta Incorporated On July 1, 2015, Baxter completed the distribution of approximately 80.5% of the outstanding common stock of Baxalta Incorporated (Baxalta) to Baxter shareholders (the Distribution). The Distribution was made to Baxter’s shareholders of record as of the close of business on June 17, 2015 (Record Date), who received one share of Baxalta common stock for each Baxter common share held as of the Record Date. As a result of the Distribution, Baxalta became an independent public company trading under the symbol “BXLT” on the New York Stock Exchange. As a result of the separation, the condensed consolidated statements of income, condensed consolidated balance sheets, condensed consolidated statements of cash flow and related financial information reflect Baxalta’s operations, assets and liabilities, and cash flows as discontinued operations for all periods presented. Refer to Note 2 for additional information regarding the separation of Baxalta. New accounting standards Recently issued accounting standards not yet adopted In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends ASC Topic 718, Compensation – Stock Compensation. The updated guidance requires all tax effects related to share-based payment to be recorded in income tax expense in the consolidated statement of income. Current guidance requires that tax effects of deductions in excess of share-based compensation costs (windfall tax benefits) be recorded in additional paid-in capital, and tax deficiencies recorded in additional paid-in capital to the extent of previously recognized windfall tax benefits, with the remainder recorded in income tax expense. The new guidance also requires all tax-related cash flows resulting from share-based payments to be reported as operating activities in the consolidated statement of cash flows, rather than the current requirement to present windfall tax benefits as an inflow from financing activities and an outflow from operating activities. The guidance is effective for the company beginning January 1, 2017. The company is currently evaluating the impact of this standard on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, lessees are required to recognize lease assets and liabilities on the balance sheet for leases classified as operating leases under current GAAP. This ASU is effective for the company beginning January 1, 2019. The company is currently evaluating the impact of this standard on its consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the existing accounting standards for revenue recognition. ASU No. 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, 2018. The 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 standard on its consolidated financial statements. Recently adopted accounting pronouncements As of January 1, 2016, the company adopted ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which amended ASC 835-30, Interest - Imputation of Interest. This guidance requires that debt issuance costs related to a recognized debt liability be presented as a direct deduction from the carrying amount of the related debt liability. As a result of the adoption, the company reclassified debt issuance costs of $13 million from other assets to long-term debt in the Company’s consolidated balance sheet as of December 31, 2015. The adoption of this guidance did not impact the company’s consolidated statements of earnings, comprehensive income, shareholders’ equity, or cash flows. As of January 1, 2016, the company adopted ASU No. 2015-05, Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. This guidance requires software licenses within cloud computing arrangements to be classified as intangible assets. The adoption of ASU No. 2015-05 did not have a material impact on Baxter’s financial position or results of operations. |
SEPARATION OF BAXALTA INCORPORA
SEPARATION OF BAXALTA INCORPORATED | 3 Months Ended |
Mar. 31, 2016 | |
SEPARATION OF BAXALTA INCORPORATED | 2. SEPARATION OF BAXALTA INCORPORATED After giving effect to the Distribution, the company retained 19.5% of the outstanding common stock, or 131,902,719 shares of Baxalta (Retained Shares). Effective January 27, 2016, Baxter completed a debt-for-equity exchange through the transfer of 37,573,040 Retained Shares in exchange for the extinguishment of the $1.45 billion aggregate principal amount of indebtedness outstanding under the U.S. dollar denominated revolving credit facility. Additionally, on March 16, 2016, the company completed a debt-for-equity exchange, in which Baxter exchanged 63,823,582 Retained Shares for the extinguishment of $2.2 billion in aggregate principal amount of Baxter indebtedness. See Note 8 for additional details regarding these debt-for-equity transactions. Baxter accounts for its investment in these Retained Shares as available-for-sale equity securities with a fair value of approximately $1.2 billion and $5.1 billion as of March 31, 2016 and December 31, 2015, respectively. For a portion of Baxalta’s operations, the legal transfer of Baxalta’s assets and liabilities did not occur with the separation of Baxalta on July 1, 2015 due to the time required to transfer marketing authorizations and other regulatory requirements in certain countries. Under the terms of the International Commercial Operations Agreement (ICOA), Baxalta is subject to the risks and entitled to the benefits generated by these operations and assets until legal transfer; therefore, the net economic benefit and any cash collected by these entities are transferred to Baxalta. Following is a summary of the operating results of Baxalta, which have been reflected as discontinued operations for the three months ended March 31, 2016 and 2015. The assets and liabilities have been classified as held for disposition as of March 31, 2016 and December 31, 2015. Three months ended (in millions) 2016 2015 Major classes of line items constituting income from discontinued operations before income taxes Net sales $ 64 $ 1,362 Cost of sales (59 ) (580 ) Marketing and administrative expenses (20 ) (231 ) Research and development expenses — (157 ) Other income and expense items that are not major — (2 ) (Loss) income from discontinued operations before income taxes (15 ) 392 Gain on disposal of discontinued operations 17 — Income tax expense 9 96 (Loss) income from discontinued operations, net of tax $ (7 ) $ 296 March 31, December 31, (in millions) 2016 2015 Carrying amounts of major classes of assets included as part of discontinued operations Accounts and other current receivables, net $ 99 $ 228 Inventories 9 8 Property, plant, and equipment, net 1 2 Other 2 7 Total assets of the disposal group $ 111 $ 245 Carrying amounts of major classes of liabilities included as part of discontinued operations Accounts payable and accrued liabilities $ 2 $ 46 Other long-term liabilities 8 — Total liabilities of the disposal group $ 10 $ 46 As of March 31, 2016 and December 31, 2015, Baxter has recorded a liability of $92 million and $190 million, respectively, for its obligation to transfer these net assets to Baxalta. On February 1, 2016, the legal transfer of approximately $90 million of net assets as of December 31, 2015 was distributed to Baxalta resulting in a gain of $17 million, which is recorded within income from discontinued operations, net of tax. It is expected that the majority of the remaining operations will be transferred to Baxalta during 2016. Baxter and Baxalta entered into several agreements in connection with the July 1, 2015 separation, including a transition services agreement (TSA), separation and distribution agreement, manufacturing and supply agreements (MSA), tax matters agreement, an employee matters agreement, a long-term services agreement, and a shareholder’s and registration rights agreement. Pursuant to the TSA, Baxter and Baxalta and their respective subsidiaries are providing to each other, on an interim, transitional basis, various services. Services being provided by Baxter include, among others, finance, information technology, human resources, quality supply chain, and certain other administrative services. The services generally commenced on the Distribution date and are expected to terminate within 24 months (or 36 months in the case of certain information technology services) of the Distribution date. Billings by Baxter under the TSA are recorded as a reduction of the costs to provide the respective service in the applicable expense category, primarily in marketing and administrative expenses, in the condensed consolidated statements of income. In the first quarter of 2016, the company recognized approximately $27 million as a reduction to marketing and administrative expenses related to the TSA. Pursuant to the MSA, Baxalta or Baxter, as the case may be, manufactures, labels, and packages products for the other party. The terms of the agreements range in initial duration from five to ten years. In the first quarter of 2016, Baxter recognized approximately $11 million in sales to Baxalta. In addition, Baxter recognized $45 million in cost of sales related to purchases from Baxalta pursuant to the MSA. The cash flows associated with these agreements are included in cash flows from operations — continuing operations. Cash outflows of $159 million were reported in cash flows from operations – discontinued operations for the period ending March 31, 2016. These relate to non-assignable tenders whereby Baxter remains the seller of Baxalta products, transactions related to importation services Baxter provides in certain countries, in addition to trade payables settled post local separation on Baxalta’s behalf. |
SUPPLEMENTAL FINANCIAL INFORMAT
SUPPLEMENTAL FINANCIAL INFORMATION | 3 Months Ended |
Mar. 31, 2016 | |
SUPPLEMENTAL FINANCIAL INFORMATION | 3. SUPPLEMENTAL FINANCIAL INFORMATION Net interest expense Three months ended March 31, (in millions) 2016 2015 Interest expense, net of capitalized interest $ 33 $ 35 Interest income (5 ) (5 ) Net interest expense $ 28 $ 30 Other income, net Three months ended March 31, (in millions) 2016 2015 Foreign exchange $ (9 ) $ (89 ) Net loss on debt extinguishment 101 — Net realized gains on Retained Shares transactions (3,239 ) — All other (22 ) 3 Other income, net $ (3,169 ) $ (86 ) Inventories March 31, December 31, (in millions) 2016 2015 Raw materials $ 369 $ 374 Work in process 159 142 Finished goods 1,154 1,088 Inventories $ 1,682 $ 1,604 Property, plant and equipment, net March 31, December 31, (in millions) 2016 2015 Property, plant and equipment, at cost $ 9,134 $ 8,990 Accumulated depreciation (4,731 ) (4,604 ) Property, plant and equipment, net $ 4,403 $ 4,386 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2016 | |
EARNINGS PER SHARE | 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. Three months ended March 31, (in millions) 2016 2015 Basic shares 549 543 Effect of dilutive securities 3 5 Diluted shares 552 548 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 20 million and 9 million equity awards for the three months ended March 31, 2016 and 2015, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS. Refer to Note 9 for additional information regarding items impacting basic shares. Stock repurchases In July 2012, the Board of Directors authorized the repurchase of up to $2.0 billion of the company’s common stock. During the first quarter of 2016, the company did not repurchase any shares and has $0.5 billion remaining available under the authorization as of March 31, 2016. |
ACQUISITIONS AND OTHER ARRANGEM
ACQUISITIONS AND OTHER ARRANGEMENTS | 3 Months Ended |
Mar. 31, 2016 | |
ACQUISITIONS AND OTHER ARRANGEMENTS | 5. ACQUISITIONS AND OTHER ARRANGEMENTS In the first quarter of 2016, Baxter paid approximately $23 million to acquire the rights to Vancomycin injection in 0.9% Sodium Chloride (Normal Saline) in 500mg, 750mg, and 1 gram presentations from Celerity Pharmaceuticals, LLC (Celerity). Baxter capitalized the purchase price as an intangible asset and is amortizing the asset over the estimated economic life of 12 years. Refer to Note 5 within the 2015 Annual Report for additional information regarding the company’s agreement with Celerity. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | 3 Months Ended |
Mar. 31, 2016 | |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | 6. GOODWILL AND OTHER INTANGIBLE ASSETS, NET Goodwill The following is a reconciliation of goodwill by business segment. (in millions) Renal Hospital Products Total Balance as of December 31, 2015 $ 408 $2,279 $ 2,687 Currency translation adjustments 7 33 40 Balance as of March 31, 2016 $ 415 $2,312 $ 2,727 As of March 31, 2016, 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, including patents Other amortized intangible assets Indefinite-lived intangible assets Total March 31, 2016 Gross other intangible assets $1,781 $ 410 $87 $2,278 Accumulated amortization (766 ) (153 ) — (919 ) Other intangible assets, net $1,015 $ 257 $87 $1,359 December 31, 2015 Gross other intangible assets $1,742 $ 393 $86 $2,221 Accumulated amortization (729 ) (143 ) — (872 ) Other intangible assets, net $1,013 $ 250 $86 $1,349 Intangible asset amortization expense was $40 million in the first quarters of 2016 and 2015, respectively. The increase in other intangible assets, net during the first three months of 2016 was primarily driven by the acquisition of the rights to Vancomycin detailed in Note 5 and currency translation adjustments (CTA), partially offset by amortization expense. |
INFUSION PUMP AND BUSINESS OPTI
INFUSION PUMP AND BUSINESS OPTIMIZATION CHARGES | 3 Months Ended |
Mar. 31, 2016 | |
INFUSION PUMP AND BUSINESS OPTIMIZATION CHARGES | 7. INFUSION PUMP AND BUSINESS OPTIMIZATION CHARGES Infusion pump charges In the first quarter of 2016, the company refined its estimates for remediation activities related to the SIGMA SPECTRUM infusion pump recall and decreased the reserve by $12 million. In addition, the company recorded utilization of the SIGMA SPECTRUM reserve of $14 million. The balance as of March 31, 2016 was $14 million for the SIGMA SPECTRUM infusion pump recall. Refer to the 2015 Annual Report for further information about the Company’s infusion pump recall activities. Business optimization charges The Company records charges from its business optimization initiatives primarily related to optimizing the company’s overall cost structure on a global basis, as the company streamlines its international operations, rationalizes its manufacturing facilities, enhances its general and administrative infrastructure and realigns certain R&D activities. The restructuring charges primarily include employee termination costs, costs associated with the company’s business optimization programs including consulting and other fees, in addition to Gambro integration costs. During the first quarters of 2016 and 2015, the company recorded the following charges related to business optimization programs. Three months ended March 31, (in millions) 2016 2015 Restructuring charges, net $ 4 $ (1 ) Costs to implement business optimization programs 11 18 Total business optimization charges $15 $17 During the first quarters of 2016 and 2015, the company recorded the following restructuring charges. Three months ended March 31, 2016 (in millions) COGS SGA R&D Total Employee termination costs $13 $ 1 $ 1 $15 Reserve adjustments (1) (8 ) (2 ) (11 ) Total restructuring charges $12 $(7 ) $(1 ) $ 4 Three months ended March 31, 2015 (in millions) COGS SGA Total Employee termination costs $ 1 $11 $12 Asset related costs 3 1 4 Asset impairment 2 — 2 Reserve adjustments (13 ) (6 ) (19 ) Total restructuring charges $ (7 ) $ 6 $ (1 ) The following table summarizes cash activity in the reserves related to the company’s business optimization initiatives. (in millions) Reserves as of December 31, 2015 $ 116 Charges 15 Reserve adjustments (11 ) Utilization (22 ) CTA 13 Reserves as of March 31, 2016 $ 111 The reserves are expected to be substantially utilized by the end of 2016. |
DEBT, FINANCIAL INSTRUMENTS AND
DEBT, FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2016 | |
DEBT, FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 8. DEBT, FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS Debt-for-equity exchanges On January 27, 2016, Baxter exchanged Retained Shares for the extinguishment of $1.45 billion aggregate principal amount outstanding under its $1.8 billion U.S. dollar-denominated revolving credit facility. This exchange extinguished the indebtedness under the facility, which was terminated in connection with such debt-for-equity exchange. There were no material prepayment penalties or breakage costs associated with the termination of the facility. Baxter recognized a net realized gain of $1.25 billion related to the Retained Shares exchanged, which was included in other income, net for the period ended March 31, 2016. On March 16, 2016, the company exchanged Retained Shares for the extinguishment of approximately $2.2 billion in principal amount of its 0.950% Notes due May 2016, 5.900% Notes due August 2016, 1.850% Notes due January 2017, 5.375% Notes due May 2018, 1.850% Notes due June 2018, 4.500% Notes due August 2019, and 4.250% Notes due February 2020 purchased by certain third party purchasers in the previously announced debt tender offers. As a result, the company recognized a net loss on extinguishment of debt totaling $101 million and a net realized gain of $2.0 billion on the Retained Shares exchanged, which are included in other income, net for the period ended March 31, 2016. Commercial paper During the first quarter of 2016, the company issued and redeemed commercial paper, of which $750 million was outstanding as of March 31, 2016 with a weighted-average interest rate of 0.75%. There was a balance of $300 million outstanding at December 31, 2015 with a weighted-average interest rate of 0.6%. This commercial paper is classified as short-term debt. Securitization arrangement The following is a summary of the activity relating to the company’s securitization arrangement in Japan. Three months ended (in millions) 2016 2015 Sold receivables at beginning of period $ 81 $ 104 Proceeds from sales of receivables 104 113 Cash collections (remitted to the owners of the receivables) (107 ) (120 ) Effect of currency exchange rate changes 7 (1 ) Sold receivables at end of period $ 85 $ 96 The impacts on the condensed consolidated statements of income relating to the sale of receivables were immaterial for each period. Refer to the 2015 Annual Report for further information regarding the company’s securitization agreements. 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 March 31, 2016, the company’s net accounts receivable from the public sector in Greece, Spain, Portugal and Italy totaled $206 million. Global economic conditions and liquidity issues in certain countries have resulted, and may continue to result, in delays in the collection of receivables and credit losses. Governmental actions and customer-specific factors may also require the company to re-evaluate the collectability of its receivables and the company could potentially incur additional credit losses. These conditions may also impact the stability of the Euro. Derivatives and hedging activities The company operates on a global basis and is exposed to the risk that its earnings, cash flows and equity could be adversely impacted by fluctuations in foreign exchange and interest rates. The company’s hedging policy attempts to manage these risks to an acceptable level based on the company’s judgment of the appropriate trade-off between risk, opportunity and costs. The company is primarily exposed to foreign exchange risk with respect to recognized assets and liabilities, forecasted transactions and net assets denominated in the Euro, British Pound, Chinese Yuan, Korean Won, Australian Dollar, Canadian Dollar, Japanese Yen, Columbian Peso, Brazilian Real, Swedish Krona, and Mexican Peso. The company manages its foreign currency exposures on a consolidated basis, which allows the company to net exposures and take advantage of any natural offsets. In addition, the company uses derivative and nonderivative instruments to further reduce the net exposure to foreign exchange. Gains and losses on the hedging instruments offset losses and gains on the hedged transactions and reduce the earnings and equity volatility resulting from foreign exchange. Financial market and currency volatility may limit the company’s ability to cost-effectively hedge these exposures. The company is also exposed to the risk that its earnings and cash flows could be adversely impacted by fluctuations in interest rates. The company’s policy is to manage interest costs using a mix of fixed- and floating-rate debt that the company believes is appropriate. To manage this mix in a cost-efficient manner, the company periodically enters into interest rate swaps in which the company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional amount. The company does not hold any instruments for trading purposes and none of the company’s outstanding derivative instruments contain credit-risk-related contingent features. All derivative instruments are recognized as either assets or liabilities at fair value in the condensed consolidated balance sheets and are classified as short-term or long-term based on the scheduled maturity of the instrument. Based upon the exposure being hedged, the company designates its hedging instruments as cash flow or fair value hedges. Cash Flow Hedges The company may use options, including collars and purchased options, forwards and cross-currency swaps to hedge the foreign exchange risk to earnings relating to forecasted transactions and recognized assets and liabilities. For each derivative instrument that is designated and effective as a cash flow hedge, the gain or loss on the derivative is accumulated in accumulated other comprehensive income (AOCI) and then recognized in earnings consistent with the underlying hedged item. Option premiums or net premiums paid are initially recorded as assets and reclassified to other comprehensive income (OCI) over the life of the option, and then recognized in earnings consistent with the underlying hedged item. Cash flow hedges are classified in net sales, cost of sales, and net interest expense, and primarily relate to forecasted third-party sales denominated in foreign currencies, forecasted intercompany sales denominated in foreign currencies, and anticipated issuances of debt, respectively. The notional amounts of foreign exchange contracts were $415 million and $378 million as of March 31, 2016 and December 31, 2015, respectively. There were no outstanding interest rate contracts designated as cash flow hedges as of March 31, 2016 and December 31, 2015. The maximum term over which the company has cash flow hedge contracts in place related to forecasted transactions as of March 31, 2016 is 15 months. Fair Value Hedges The company uses interest rate swaps to convert a portion of its fixed-rate debt into variable-rate debt. These instruments hedge the company’s earnings from changes in the fair value of debt due to fluctuations in the designated benchmark interest rate. For each derivative instrument that is designated and effective as a fair value hedge, the gain or loss on the derivative is recognized immediately to earnings, and offsets the loss or gain on the underlying hedged item. Fair value hedges are classified in net interest expense, as they hedge the interest rate risk associated with certain of the company’s fixed-rate debt. The total notional amount of interest rate contracts designated as fair value hedges was $535 million and $1.3 billion as of March 31, 2016 and December 31, 2015, respectively. The decrease is due to swaps terminated in conjunction with the aforementioned debt-for-equity exchanges. Dedesignations If it is determined that a derivative or nonderivative hedging instrument is no longer highly effective as a hedge, the company discontinues hedge accounting prospectively. If the company removes the cash flow hedge designation because the hedged forecasted transactions are no longer probable of occurring, any gains or losses are immediately reclassified from AOCI to earnings. Gains or losses relating to terminations of effective cash flow hedges in which the forecasted transactions are still probable of occurring are deferred and recognized consistent with the loss or income recognition of the underlying hedged items. There were no hedge dedesignations in the first quarters of 2016 or 2015 resulting from changes in the company’s assessment of the probability that the hedged forecasted transactions would occur. 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. In March 2016, the company terminated a total notional value of $765 million of interest rate contracts in connection with the March debt tender offers, resulting in a $34 million reduction to the debt extinguishment loss. There were no fair value hedges terminated during the first quarter of 2015. Undesignated Derivative Instruments The company uses forward contracts to hedge earnings from the effects of foreign exchange relating to certain of the company’s intercompany and third-party receivables and payables denominated in a foreign currency. These derivative instruments are generally not formally designated as hedges, and the change in fair value, which substantially offsets the change in book value of the hedged items, is recorded directly to other expense (income), net. The terms of these instruments generally do not exceed one month. The total notional amount of undesignated derivative instruments was $630 million as of March 31, 2016 and $580 million as of December 31, 2015. Gains and Losses on Derivative Instruments The following tables summarize the income statement locations and gains and losses on the company’s derivative instruments for the three months ended March 31, 2016 and 2015. Gain (loss) recognized in OCI Location of gain (loss) in income statement Gain (loss) reclassified from AOCI (in millions) 2016 2015 2016 2015 Cash flow hedges Interest rate contracts $— $— Other income, net $ 4 $— Foreign exchange contracts — (1 ) Net sales — — Foreign exchange contracts (4 ) 64 Cost of sales 1 25 Total $(4 ) $63 $ 5 $25 Gain (loss) recognized in income (in millions) Location of gain (loss) in income statement 2016 2015 Fair value hedges Interest rate contracts Net interest expense $22 $ 47 Undesignated derivative instruments Foreign exchange contracts Other income, net $ 6 $ (8 ) For the company’s fair value hedges, equal and offsetting losses of $22 million and $47 million were recognized in net interest expense in the first quarters of 2016 and 2015, respectively, as adjustments to the underlying hedged item, fixed-rate debt. Ineffectiveness related to the company’s cash flow and fair value hedges for the first quarter of 2016 was not material. As of March 31, 2016, $2 million of deferred, net after-tax losses on derivative instruments included in AOCI are expected to be recognized in earnings during the next 12 months, coinciding with when the hedged items are expected to impact earnings. Fair Values of Derivative Instruments The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of March 31, 2016. Derivatives in asset positions Derivatives in liability positions (in millions) Balance sheet location Fair value Balance sheet location Fair value Derivative instruments designated as hedges Interest rate contracts Other long-term assets $ 33 Other long-term liabilities $— Foreign exchange contracts Prepaid expenses and other 9 Accounts payable and 1 Foreign exchange contracts Other long-term assets — Other long-term liabilities — Total derivative instruments designated as hedges $ 42 $ 1 Undesignated derivative instruments Foreign exchange contracts Prepaid expenses and other $ — Accounts payable and $ 2 Total derivative instruments $ 42 $ 3 The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2015. Derivatives in asset positions Derivatives in liability positions (in millions) Balance sheet location Fair value Balance sheet location Fair value Derivative instruments designated as hedges Interest rate contracts Prepaid expenses and other $ — Accounts payable and $ — Interest rate contracts Other long-term assets 46 Other long-term liabilities — Foreign exchange contracts Prepaid expenses and other 9 Accounts payable and 1 Total derivative instruments designated as hedges $ 55 $ 1 Undesignated derivative instruments Foreign exchange contracts Prepaid expenses and other $ 1 Accounts payable and $ 1 Total derivative instruments $ 56 $ 2 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. March 31, 2016 December 31, 2015 (in millions) Asset Liability Asset Liability Gross amounts recognized in the consolidated balance sheet $42 $ 3 $56 $ 2 Gross amount subject to offset in master netting arrangements not offset in the (3 ) (3 ) (2 ) (2 ) Total $39 $— $54 $— Fair value measurements The following tables summarize the bases used to measure financial assets and liabilities that are carried at fair value on a recurring basis in the condensed consolidated balance sheets. Basis of fair value measurement (in millions) Balance as of March 31, 2016 Quoted prices in (Level 1) Significant other (Level 2) Significant inputs (Level 3) Assets Foreign currency hedges $ 9 $— $ 9 $— Interest rate hedges 33 — 33 — Available-for-sale securities 1,242 10 1,232 — Total assets $1,284 $10 $1,274 $— Liabilities Foreign currency hedges $ 3 $— $ 3 $— Contingent payments related to acquisitions 20 — — 20 Total liabilities $ 23 $— $ 3 $20 Basis of fair value measurement (in millions) Balance as of December 31, 2015 Quoted prices in (Level 1) Significant other (Level 2) Significant inputs (Level 3) Assets Foreign currency hedges $ 10 $— $ 10 $— Interest rate hedges 46 — 46 — Available-for-sale securities 5,162 14 5,148 — Total assets $5,218 $14 $5,204 $— Liabilities Foreign currency hedges $ 2 $— $ 2 $— Contingent payments related to acquisitions 20 — — 20 Total liabilities $ 22 $— $ 2 $20 As of March 31, 2016, cash and equivalents of $2.2 billion included money market funds of approximately $483 million, and as of December 31, 2015, cash and equivalents of $2.2 billion included money market funds of approximately $500 million. Money market funds 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 investment in the Retained Shares of $1.2 billion as of March 31, 2016 and $5.1 billion as of December 31, 2015, is categorized as a Level 2 security as these securities were not registered as of those dates. The value of this investment is based on Baxalta’s common stock price as of March 31, 2016 and December 31, 2015, which represents an identical equity instrument registered under the Securities Act of 1933, as amended. 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. Contingent payments related to acquisitions consist of commercial milestone payments and sales-based payments, and are valued using discounted cash flow techniques. The fair value of 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. 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. Changes in the fair value of contingent payments related to Baxter’s acquisitions, which use significant unobservable inputs (Level 3) in the fair value measurement, were immaterial during the first quarter of 2016. The company made minor sales-based payments in the first quarter of 2016. The following table provides information relating to the company’s investments in available-for-sale equity securities. (in millions) Amortized cost Unrealized gains Unrealized losses Fair value March 31, 2016 $179 $1,065 $ 2 $1,242 December 31, 2015 $732 $4,430 $— $5,162 In the first quarter of 2016 the company recorded $3.2 billion of net realized gains within other income, net related to exchanges of available-for-sale equity securities, which represented gains from the Retained Share transactions. The company did not have any sales of available-for-sale or equity method investments in the first quarter of 2015. Book Values and Fair Values of Financial Instruments In addition to the financial instruments that the company is required to recognize at fair value in the condensed consolidated balance sheets, the company has certain financial instruments that are recognized at historical cost or some basis other than fair value. For these financial instruments, the following table provides the values recognized in the condensed consolidated balance sheets and the approximate fair values as of March 31, 2016 and December 31, 2015. Book values Approximate fair values (in millions) 2016 2015 2016 2015 Assets Investments $ 22 $ 21 $ 22 $ 21 Liabilities Short-term debt $ 817 $1,775 $ 817 $1,775 Current maturities of long-term debt and lease obligations 472 810 475 818 Long-term debt and lease obligations 2,068 3,922 2,232 4,077 The following tables summarize the bases used to measure the approximate fair value of the financial instruments as of March 31, 2016 and December 31, 2015. Basis of fair value measurement (in millions) Balance as of March 31, Quoted prices in (Level 1) Significant other (Level 2) Significant (Level 3) Assets Investments $ 22 $— $ 2 $20 Total assets $ 22 $— $ 2 $20 Liabilities Short-term debt $ 817 $— $ 817 $— Current maturities of long-term debt and lease obligations 475 — 475 — Long-term debt and lease obligations 2,232 — 2,232 — Total liabilities $3,524 $— $3,524 $— Basis of fair value measurement (in millions) Balance as of December 31, Quoted prices in (Level 1) Significant other (Level 2) Significant (Level 3) Assets Investments $ 21 $— $ 2 $19 Total assets $ 21 $— $ 2 $19 Liabilities Short-term debt $1,775 $— $1,775 $— Current maturities of long-term debt and lease obligations 818 — 818 — Long-term debt and lease obligations 4,077 — 4,077 — Total liabilities $6,670 $— $6,670 $— Investments in 2016 and 2015 included certain cost method investments and held-to-maturity debt securities. The fair value of held-to-maturity debt securities is calculated using a discounted cash flow model that incorporates observable inputs, including interest rate yields, which represents a Level 2 basis of fair value measurement. In determining the fair value of cost method investments, the company takes into consideration recent transactions, as well as the financial information of the investee, which represents a Level 3 basis of fair value measurement. The estimated fair values of current and long-term debt were computed by multiplying price by the notional amount of the respective debt instrument. Price is calculated using the stated terms of the respective debt instrument and yield curves commensurate with the company’s credit risk. The carrying values of the other financial instruments approximate their fair values due to the short-term maturities of most of these assets and liabilities. |
STOCK COMPENSATION
STOCK COMPENSATION | 3 Months Ended |
Mar. 31, 2016 | |
STOCK COMPENSATION | 9. STOCK COMPENSATION Stock compensation expense totaled $23 million and $29 million in the first quarter of 2016 and 2015, respectively. Over 70% of stock compensation expense is classified in marketing and administrative expenses with the remainder classified in cost of sales and R&D expenses. The company awarded stock compensation grants consisting of 6.4 million stock options, 1.0 million RSUs and 0.3 million PSUs during the first quarter of 2016. Stock Options The weighted-average Black-Scholes assumptions used in estimating the fair value of stock options granted during the period, along with the weighted-average grant-date fair values, were as follows. Three months ended 2016 2015 Expected volatility 20 % 20 % Expected life (in years) 5.5 5.5 Risk-free interest rate 1.4 % 1.7 % Dividend yield 1.2 % 3.0 % Fair value per stock option $7 $9 The total intrinsic value of stock options exercised was $55 million and $14 million during the first quarters of 2016 and 2015, respectively. As of March 31, 2016, the unrecognized compensation cost related to all unvested stock options of $87 million is expected to be recognized as expense over a weighted-average period of 2.1 years. Restricted Stock Units As of March 31, 2016, the unrecognized compensation cost related to all unvested RSUs of $94 million is expected to be recognized as expense over a weighted-average period of 2.0 years. Performance Share Units As of March 31, 2016, the unrecognized compensation cost related to all granted unvested PSUs of $20 million is expected to be recognized as expense over a weighted-average period of 2.1 years. |
RETIREMENT AND OTHER BENEFIT PR
RETIREMENT AND OTHER BENEFIT PROGRAMS | 3 Months Ended |
Mar. 31, 2016 | |
RETIREMENT AND OTHER BENEFIT PROGRAMS | 10. RETIREMENT AND OTHER BENEFIT PROGRAMS The following is a summary of net periodic benefit cost relating to the company’s pension and other postemployment benefit (OPEB) plans. Three months ended March 31, (in millions) 2016 2015 Pension benefits Service cost $ 23 $ 23 Interest cost 46 49 Expected return on plan assets (75 ) (61 ) Amortization of net losses and other deferred amounts 37 43 Net periodic pension benefit cost $ 31 $ 54 OPEB Service cost $ 1 $ 1 Interest cost 2 6 Amortization of net loss and prior service credit (4 ) (1 ) Net periodic OPEB cost $ (1 ) $ 6 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 3 Months Ended |
Mar. 31, 2016 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | 11. 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 table is a net-of-tax summary of the changes in AOCI by component for the three months ended March 31, 2016 and 2015. (in millions) CTA Pension and Hedging Available- Total Gains (losses) Balance as of December 31, 2015 $ (3,191 ) $ (1,064 ) $ 7 $ 4,472 $ 224 Other comprehensive income before reclassifications 92 (1 ) (3 ) 22 110 Amounts reclassified from AOCI (a) — 22 (3 ) (3,388 ) (3,369 ) Net other comprehensive (loss) income 92 21 (6 ) (3,366 ) (3,259 ) Balance as of March 31, 2016 $ (3,099 ) $ (1,043 ) $ 1 $ 1,106 $ (3,035 ) (in millions) CTA Pension and Hedging Available- Total Gains (losses) Balance as of December 31, 2014 $ (2,323 ) $ (1,427 ) $ 34 $ 66 $ (3,650 ) Other comprehensive income before reclassifications (1,138 ) 33 6 14 (1,085 ) Amounts reclassified from AOCI (a) — 35 (16 ) 7 26 Net other comprehensive (loss) income (1,138 ) 68 (10 ) 21 (1,059 ) Balance as of March 31, 2015 $ (3,461 ) $ (1,359 ) $ 24 $ 87 $ (4,709 ) (a) See table below for details about these reclassifications. The following is a summary of the amounts reclassified from AOCI to net income during the three months ended March 31, 2016 and 2015. Amounts reclassified from AOCI (a) (in millions) Three months ended March 31, 2016 Three months ended March 31, 2015 Location of impact in income statement Amortization of pension and other employee benefits items Actuarial losses and other (b) $ (33 ) $ (50 ) (33 ) (50 ) Total before tax 11 15 Tax benefit $ (22 ) $ (35 ) Net of tax Gains on hedging activities Interest rate contracts $ 4 $ — Net interest expense Foreign exchange contracts 1 25 Cost of sales 5 25 Total before tax (2 ) (9 ) Tax expense $ 3 $ 16 Net of tax Available-for-sale-securities Gains on sale of equity securities $3,388 $ — Other income, net Other-than-temporary impairment of equity securities — (9 ) Other income, net 3,388 (9 ) Total before tax — 2 Tax benefit 3,388 $ (7 ) Net of tax Total reclassification for the period $3,369 $ (26 ) 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 10. Refer to Note 8 for additional information regarding hedging activity and Note 10 for additional information regarding the amortization of pension and other employee benefits items. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2016 | |
INCOME TAXES | 12. INCOME TAXES Effective tax rate The company’s effective income tax rate for continuing operations was (1.7)% and 9.5% in the first quarters of 2016 and 2015, respectively. The company’s effective income tax rate differs from the U.S. federal statutory rate each year due to certain operations that are subject to tax incentives, state and local taxes, and foreign taxes that are different than the U.S. federal statutory rate. In addition, the effective tax rate can be impacted each period by discrete factors and events. The effective income tax rate for continuing operations during the three months ended March 31, 2016 decreased due to the impact of discrete items including tax-free net realized gains associated with the debt-for-equity exchanges and the benefits associated with closing an IRS and German income tax audit. These items reduced the effective tax rate by 22.0 percentage points. The effective income tax rate for continuing operations in the first quarter of 2015 included significant deductions related to the separation of Baxalta, including debt tender premium costs that were deductible at rates significantly higher than the rate of tax without such charges. During the first quarter of 2016, Baxter paid approximately $303 million to partially settle a US Federal income tax audit for the period 2008-2013. Additionally, the company settled a German income tax audit for the period 2008-2011. As a result, the company reduced its gross unrecognized tax benefits by $85 million. Pursuant to the tax matters agreement with Baxalta, Baxalta paid the company approximately $34 million pursuant to its tax indemnity obligations in respect of its portion of the settled gross unrecognized tax benefits. See Note 2 for additional details regarding the separation of Baxalta. |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 3 Months Ended |
Mar. 31, 2016 | |
LEGAL PROCEEDINGS | 13. 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 recorded. If a loss is not probable or a probable loss cannot be reasonably estimated, no liability is recorded. As of March 31, 2016, the company’s total recorded reserves with respect to legal matters were $34 million and the total related receivables were $10 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 On July 31, 2015, Davita Healthcare Partners, Inc. filed suit against Baxter Healthcare Corporation in the District Court of the State of Colorado regarding an ongoing commercial dispute relating to the provision of peritoneal dialysis products. The company denies the claims and intends to vigorously defend against the suit. Trial in this case is currently scheduled for August 2016. Other 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 | 3 Months Ended |
Mar. 31, 2016 | |
SEGMENT INFORMATION | 14. SEGMENT INFORMATION Baxter’s two segments 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 Renal The Hospital Products The company uses income from continuing operations before net interest expense, income tax expense, depreciation and amortization expense (Segment EBITDA), on a segment basis to make resource allocation decisions and assess the ongoing performance of the company’s business segments. Intersegment sales are eliminated in consolidation. Certain items are maintained at Corporate and are not allocated to a segment. They primarily include most of the company’s debt and cash and equivalents and related net interest expense, 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, integration and separation-related costs, and asset impairment). Financial information for the company’s segments is as follows. Three months ended March 31, (in millions) 2016 2015 Net sales Renal $ 898 $ 913 Hospital Products 1,477 1,490 Total net sales $ 2,375 $ 2,403 EBITDA Renal $ 122 $ 85 Hospital Products 509 487 Total segment EBITDA $ 631 $ 572 March 31, December 31, (in millions) 2016 2015 Total assets Renal $ 4,719 $ 4,609 Hospital Products 6,787 6,632 Other 5,844 9,721 Total assets $ 17,350 $ 20,962 The following is a reconciliation of segment EBITDA to income from continuing operations before income taxes per the condensed consolidated statements of income. Three months ended March 31, (in millions) 2016 2015 Total segment EBITDA $ 631 $ 572 Reconciling items Depreciation and amortization (189 ) (187 ) Stock compensation (23 ) (29 ) Net interest expense (28 ) (30 ) Business optimization items (5 ) — Certain foreign currency fluctuations and hedging activities 22 108 Net realized gains on Retained Shares transactions 3,239 — Net loss on debt extinguishment (101 ) — Other Corporate items (217 ) (286 ) Income from continuing operations before income taxes $ 3,329 $ 148 |
SEPARATION OF BAXALTA INCORPO22
SEPARATION OF BAXALTA INCORPORATED (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Discontinued Operations | Following is a summary of the operating results of Baxalta, which have been reflected as discontinued operations for the three months ended March 31, 2016 and 2015. The assets and liabilities have been classified as held for disposition as of March 31, 2016 and December 31, 2015. Three months ended (in millions) 2016 2015 Major classes of line items constituting income from discontinued operations before income taxes Net sales $ 64 $ 1,362 Cost of sales (59 ) (580 ) Marketing and administrative expenses (20 ) (231 ) Research and development expenses — (157 ) Other income and expense items that are not major — (2 ) (Loss) income from discontinued operations before income taxes (15 ) 392 Gain on disposal of discontinued operations 17 — Income tax expense 9 96 (Loss) income from discontinued operations, net of tax $ (7 ) $ 296 March 31, December 31, (in millions) 2016 2015 Carrying amounts of major classes of assets included as part of discontinued operations Accounts and other current receivables, net $ 99 $ 228 Inventories 9 8 Property, plant, and equipment, net 1 2 Other 2 7 Total assets of the disposal group $ 111 $ 245 Carrying amounts of major classes of liabilities included as part of discontinued operations Accounts payable and accrued liabilities $ 2 $ 46 Other long-term liabilities 8 — Total liabilities of the disposal group $ 10 $ 46 |
SUPPLEMENTAL FINANCIAL INFORM23
SUPPLEMENTAL FINANCIAL INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Net Interest Expense | Net interest expense Three months ended March 31, (in millions) 2016 2015 Interest expense, net of capitalized interest $ 33 $ 35 Interest income (5 ) (5 ) Net interest expense $ 28 $ 30 |
Other Income, Net | Other income, net Three months ended March 31, (in millions) 2016 2015 Foreign exchange $ (9 ) $ (89 ) Net loss on debt extinguishment 101 — Net realized gains on Retained Shares transactions (3,239 ) — All other (22 ) 3 Other income, net $ (3,169 ) $ (86 ) |
Inventories | Inventories March 31, December 31, (in millions) 2016 2015 Raw materials $ 369 $ 374 Work in process 159 142 Finished goods 1,154 1,088 Inventories $ 1,682 $ 1,604 |
Property, Plant and Equipment, Net | Property, plant and equipment, net March 31, December 31, (in millions) 2016 2015 Property, plant and equipment, at cost $ 9,134 $ 8,990 Accumulated depreciation (4,731 ) (4,604 ) Property, plant and equipment, net $ 4,403 $ 4,386 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Reconciliation of Basic Shares to Diluted Shares | The following is a reconciliation of basic shares to diluted shares. Three months ended March 31, (in millions) 2016 2015 Basic shares 549 543 Effect of dilutive securities 3 5 Diluted shares 552 548 |
GOODWILL AND OTHER INTANGIBLE25
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill | The following is a reconciliation of goodwill by business segment. (in millions) Renal Hospital Products Total Balance as of December 31, 2015 $ 408 $2,279 $ 2,687 Currency translation adjustments 7 33 40 Balance as of March 31, 2016 $ 415 $2,312 $ 2,727 |
Other Intangible Assets, Net | The following is a summary of the company’s other intangible assets. (in millions) Developed technology, including patents Other amortized intangible assets Indefinite-lived intangible assets Total March 31, 2016 Gross other intangible assets $1,781 $ 410 $87 $2,278 Accumulated amortization (766 ) (153 ) — (919 ) Other intangible assets, net $1,015 $ 257 $87 $1,359 December 31, 2015 Gross other intangible assets $1,742 $ 393 $86 $2,221 Accumulated amortization (729 ) (143 ) — (872 ) Other intangible assets, net $1,013 $ 250 $86 $1,349 |
INFUSION PUMP AND BUSINESS OP26
INFUSION PUMP AND BUSINESS OPTIMIZATION CHARGES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Business Optimization Charges | During the first quarters of 2016 and 2015, the company recorded the following charges related to business optimization programs. Three months ended March 31, (in millions) 2016 2015 Restructuring charges, net $ 4 $ (1 ) Costs to implement business optimization programs 11 18 Total business optimization charges $15 $17 |
Summary of Restructuring Charges | During the first quarters of 2016 and 2015, the company recorded the following restructuring charges. Three months ended March 31, 2016 (in millions) COGS SGA R&D Total Employee termination costs $13 $ 1 $ 1 $15 Reserve adjustments (1) (8 ) (2 ) (11 ) Total restructuring charges $12 $(7 ) $(1 ) $ 4 Three months ended March 31, 2015 (in millions) COGS SGA Total Employee termination costs $ 1 $11 $12 Asset related costs 3 1 4 Asset impairment 2 — 2 Reserve adjustments (13 ) (6 ) (19 ) Total restructuring charges $ (7 ) $ 6 $ (1 ) |
Summary of Cash Activity in Reserves related to Business Optimization Initiatives | The following table summarizes cash activity in the reserves related to the company’s business optimization initiatives. (in millions) Reserves as of December 31, 2015 $ 116 Charges 15 Reserve adjustments (11 ) Utilization (22 ) CTA 13 Reserves as of March 31, 2016 $ 111 |
DEBT, FINANCIAL INSTRUMENTS A27
DEBT, FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Activity Relating to Securitization Arrangement | The following is a summary of the activity relating to the company’s securitization arrangement in Japan. Three months ended (in millions) 2016 2015 Sold receivables at beginning of period $ 81 $ 104 Proceeds from sales of receivables 104 113 Cash collections (remitted to the owners of the receivables) (107 ) (120 ) Effect of currency exchange rate changes 7 (1 ) Sold receivables at end of period $ 85 $ 96 |
Summary of Gains and Losses on Derivative Instruments | The following tables summarize the income statement locations and gains and losses on the company’s derivative instruments for the three months ended March 31, 2016 and 2015. Gain (loss) recognized in OCI Location of gain (loss) in income statement Gain (loss) reclassified from AOCI (in millions) 2016 2015 2016 2015 Cash flow hedges Interest rate contracts $— $— Other income, net $ 4 $— Foreign exchange contracts — (1 ) Net sales — — Foreign exchange contracts (4 ) 64 Cost of sales 1 25 Total $(4 ) $63 $ 5 $25 Gain (loss) recognized in income (in millions) Location of gain (loss) in income statement 2016 2015 Fair value hedges Interest rate contracts Net interest expense $22 $ 47 Undesignated derivative instruments Foreign exchange contracts Other income, net $ 6 $ (8 ) |
Classification and Fair Value Amounts of Derivative Instruments | The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of March 31, 2016. Derivatives in asset positions Derivatives in liability positions (in millions) Balance sheet location Fair value Balance sheet location Fair value Derivative instruments designated as hedges Interest rate contracts Other long-term assets $ 33 Other long-term liabilities $— Foreign exchange contracts Prepaid expenses and other 9 Accounts payable and 1 Foreign exchange contracts Other long-term assets — Other long-term liabilities — Total derivative instruments designated as hedges $ 42 $ 1 Undesignated derivative instruments Foreign exchange contracts Prepaid expenses and other $ — Accounts payable and $ 2 Total derivative instruments $ 42 $ 3 The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2015. Derivatives in asset positions Derivatives in liability positions (in millions) Balance sheet location Fair value Balance sheet location Fair value Derivative instruments designated as hedges Interest rate contracts Prepaid expenses and other $ — Accounts payable and $ — Interest rate contracts Other long-term assets 46 Other long-term liabilities — Foreign exchange contracts Prepaid expenses and other 9 Accounts payable and 1 Total derivative instruments designated as hedges $ 55 $ 1 Undesignated derivative instruments Foreign exchange contracts Prepaid expenses and other $ 1 Accounts payable and $ 1 Total derivative instruments $ 56 $ 2 |
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. March 31, 2016 December 31, 2015 (in millions) Asset Liability Asset Liability Gross amounts recognized in the consolidated balance sheet $42 $ 3 $56 $ 2 Gross amount subject to offset in master netting arrangements not offset in the (3 ) (3 ) (2 ) (2 ) Total $39 $— $54 $— |
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following tables summarize the bases used to measure financial assets and liabilities that are carried at fair value on a recurring basis in the condensed consolidated balance sheets. Basis of fair value measurement (in millions) Balance as of March 31, 2016 Quoted prices in (Level 1) Significant other (Level 2) Significant inputs (Level 3) Assets Foreign currency hedges $ 9 $— $ 9 $— Interest rate hedges 33 — 33 — Available-for-sale securities 1,242 10 1,232 — Total assets $1,284 $10 $1,274 $— Liabilities Foreign currency hedges $ 3 $— $ 3 $— Contingent payments related to acquisitions 20 — — 20 Total liabilities $ 23 $— $ 3 $20 Basis of fair value measurement (in millions) Balance as of December 31, 2015 Quoted prices in (Level 1) Significant other (Level 2) Significant inputs (Level 3) Assets Foreign currency hedges $ 10 $— $ 10 $— Interest rate hedges 46 — 46 — Available-for-sale securities 5,162 14 5,148 — Total assets $5,218 $14 $5,204 $— Liabilities Foreign currency hedges $ 2 $— $ 2 $— Contingent payments related to acquisitions 20 — — 20 Total liabilities $ 22 $— $ 2 $20 |
Investments in Available-For-Sale Equity Securities | The following table provides information relating to the company’s investments in available-for-sale equity securities. (in millions) Amortized cost Unrealized gains Unrealized losses Fair value March 31, 2016 $179 $1,065 $ 2 $1,242 December 31, 2015 $732 $4,430 $— $5,162 |
Book Values and Fair Values of Financial Instruments | The following table provides the values recognized in the condensed consolidated balance sheets and the approximate fair values as of March 31, 2016 and December 31, 2015. Book values Approximate fair values (in millions) 2016 2015 2016 2015 Assets Investments $ 22 $ 21 $ 22 $ 21 Liabilities Short-term debt $ 817 $1,775 $ 817 $1,775 Current maturities of long-term debt and lease obligations 472 810 475 818 Long-term debt and lease obligations 2,068 3,922 2,232 4,077 |
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 March 31, 2016 and December 31, 2015. Basis of fair value measurement (in millions) Balance as of March 31, Quoted prices in (Level 1) Significant other (Level 2) Significant (Level 3) Assets Investments $ 22 $— $ 2 $20 Total assets $ 22 $— $ 2 $20 Liabilities Short-term debt $ 817 $— $ 817 $— Current maturities of long-term debt and lease obligations 475 — 475 — Long-term debt and lease obligations 2,232 — 2,232 — Total liabilities $3,524 $— $3,524 $— Basis of fair value measurement (in millions) Balance as of December 31, Quoted prices in (Level 1) Significant other (Level 2) Significant (Level 3) Assets Investments $ 21 $— $ 2 $19 Total assets $ 21 $— $ 2 $19 Liabilities Short-term debt $1,775 $— $1,775 $— Current maturities of long-term debt and lease obligations 818 — 818 — Long-term debt and lease obligations 4,077 — 4,077 — Total liabilities $6,670 $— $6,670 $— |
STOCK COMPENSATION (Tables)
STOCK COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stock Options Fair Value Assumptions | The weighted-average Black-Scholes assumptions used in estimating the fair value of stock options granted during the period, along with the weighted-average grant-date fair values, were as follows. Three months ended 2016 2015 Expected volatility 20 % 20 % Expected life (in years) 5.5 5.5 Risk-free interest rate 1.4 % 1.7 % Dividend yield 1.2 % 3.0 % Fair value per stock option $7 $9 |
RETIREMENT AND OTHER BENEFIT 29
RETIREMENT AND OTHER BENEFIT PROGRAMS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Net Periodic Benefit Cost Relating to Pension and Other Postemployement Benefit | The following is a summary of net periodic benefit cost relating to the company’s pension and other postemployment benefit (OPEB) plans. Three months ended March 31, (in millions) 2016 2015 Pension benefits Service cost $ 23 $ 23 Interest cost 46 49 Expected return on plan assets (75 ) (61 ) Amortization of net losses and other deferred amounts 37 43 Net periodic pension benefit cost $ 31 $ 54 OPEB Service cost $ 1 $ 1 Interest cost 2 6 Amortization of net loss and prior service credit (4 ) (1 ) Net periodic OPEB cost $ (1 ) $ 6 |
ACCUMULATED OTHER COMPREHENSI30
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Changes in AOCI by Component | The following table is a net-of-tax summary of the changes in AOCI by component for the three months ended March 31, 2016 and 2015. (in millions) CTA Pension and Hedging Available- Total Gains (losses) Balance as of December 31, 2015 $ (3,191 ) $ (1,064 ) $ 7 $ 4,472 $ 224 Other comprehensive income before reclassifications 92 (1 ) (3 ) 22 110 Amounts reclassified from AOCI (a) — 22 (3 ) (3,388 ) (3,369 ) Net other comprehensive (loss) income 92 21 (6 ) (3,366 ) (3,259 ) Balance as of March 31, 2016 $ (3,099 ) $ (1,043 ) $ 1 $ 1,106 $ (3,035 ) (in millions) CTA Pension and Hedging Available- Total Gains (losses) Balance as of December 31, 2014 $ (2,323 ) $ (1,427 ) $ 34 $ 66 $ (3,650 ) Other comprehensive income before reclassifications (1,138 ) 33 6 14 (1,085 ) Amounts reclassified from AOCI (a) — 35 (16 ) 7 26 Net other comprehensive (loss) income (1,138 ) 68 (10 ) 21 (1,059 ) Balance as of March 31, 2015 $ (3,461 ) $ (1,359 ) $ 24 $ 87 $ (4,709 ) (a) See table below for details about these reclassifications. |
Summary of Reclassification from AOCI to Net Income | The following is a summary of the amounts reclassified from AOCI to net income during the three months ended March 31, 2016 and 2015. Amounts reclassified from AOCI (a) (in millions) Three months ended March 31, 2016 Three months ended March 31, 2015 Location of impact in income statement Amortization of pension and other employee benefits items Actuarial losses and other (b) $ (33 ) $ (50 ) (33 ) (50 ) Total before tax 11 15 Tax benefit $ (22 ) $ (35 ) Net of tax Gains on hedging activities Interest rate contracts $ 4 $ — Net interest expense Foreign exchange contracts 1 25 Cost of sales 5 25 Total before tax (2 ) (9 ) Tax expense $ 3 $ 16 Net of tax Available-for-sale-securities Gains on sale of equity securities $3,388 $ — Other income, net Other-than-temporary impairment of equity securities — (9 ) Other income, net 3,388 (9 ) Total before tax — 2 Tax benefit 3,388 $ (7 ) Net of tax Total reclassification for the period $3,369 $ (26 ) 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 10. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Information | Financial information for the company’s segments is as follows. Three months ended March 31, (in millions) 2016 2015 Net sales Renal $ 898 $ 913 Hospital Products 1,477 1,490 Total net sales $ 2,375 $ 2,403 EBITDA Renal $ 122 $ 85 Hospital Products 509 487 Total segment EBITDA $ 631 $ 572 March 31, December 31, (in millions) 2016 2015 Total assets Renal $ 4,719 $ 4,609 Hospital Products 6,787 6,632 Other 5,844 9,721 Total assets $ 17,350 $ 20,962 |
EBITDA to Income from Continuing Operations Reconciliation | The following is a reconciliation of segment EBITDA to income from continuing operations before income taxes per the condensed consolidated statements of income. Three months ended March 31, (in millions) 2016 2015 Total segment EBITDA $ 631 $ 572 Reconciling items Depreciation and amortization (189 ) (187 ) Stock compensation (23 ) (29 ) Net interest expense (28 ) (30 ) Business optimization items (5 ) — Certain foreign currency fluctuations and hedging activities 22 108 Net realized gains on Retained Shares transactions 3,239 — Net loss on debt extinguishment (101 ) — Other Corporate items (217 ) (286 ) Income from continuing operations before income taxes $ 3,329 $ 148 |
Basis of Presentation- Addition
Basis of Presentation- Additional Information (Detail) - USD ($) $ in Millions | Jul. 01, 2015 | Mar. 31, 2016 | Dec. 31, 2015 |
Basis Of Presentation [Line Items] | |||
Other assets | $ 844 | $ 744 | |
ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs | Restatement Adjustment | |||
Basis Of Presentation [Line Items] | |||
Other assets | (13) | ||
Long-term debt, excluding capital lease obligations | $ 13 | ||
Spinoff | |||
Basis Of Presentation [Line Items] | |||
Percentage of outstanding common stock distributed | 80.50% | ||
Record date for distribution | Jun. 17, 2015 |
Separation of Baxalta Incorpo33
Separation of Baxalta Incorporated - Additional Information (Detail) - USD ($) $ in Millions | Mar. 16, 2016 | Jan. 27, 2016 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Available-for-sale equity securities, fair value | $ 1,242 | $ 5,162 | |||
Accounts payable and accrued liabilities | 2,387 | 2,666 | |||
Cash flows from operations - discontinued operations | $ (159) | $ 124 | |||
Spinoff | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Percentage of common stock retained | 19.50% | ||||
Common stock, shares outstanding | 131,902,719 | ||||
Disposition of Baxalta shares of common stock | 63,823,582 | 37,573,040 | |||
Extinguishment of debt | $ 2,200 | $ 1,450 | |||
Available-for-sale equity securities, fair value | $ 1,200 | 5,100 | |||
Transition Services Agreement | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Reduction in marketing and administrative expense | 27 | ||||
Transition Services Agreement | Manufacturing and supply agreement (MSA) | Spinoff | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Net sales | 11 | ||||
Cost of sales | $ 45 | ||||
Transition Services Agreement | Minimum | Manufacturing and supply agreement (MSA) | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
The termination of service period | 5 years | ||||
Transition Services Agreement | Maximum | Manufacturing and supply agreement (MSA) | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
The termination of service period | 10 years | ||||
Baxalta Inc | Discontinued Operations, Held-for-disposition | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Accounts payable and accrued liabilities | $ 92 | 190 | |||
Net assets | $ 90 | ||||
Gain on disposal of discontinued operations | 17 | 0 | |||
Net sales | 64 | 1,362 | |||
Cost of sales | $ 59 | $ 580 |
Summary of Operating Results Wh
Summary of Operating Results Which Have Been Reflected As Discontinued Operations (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
(Loss) income from discontinued operations, net of tax | $ (7) | $ 296 |
Baxalta Inc | Discontinued Operations, Held-for-disposition | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net sales | 64 | 1,362 |
Cost of sales | (59) | (580) |
Marketing and administrative expenses | (20) | (231) |
Research and development expenses | (157) | |
Other income and expense items that are not major | (2) | |
(Loss) income from discontinued operations before income taxes | (15) | 392 |
Gain on disposal of discontinued operations | 17 | 0 |
Income tax expense | $ 9 | $ 96 |
Summary of Assets and Liabiliti
Summary of Assets and Liabilities Classified As Held For Disposition (Detail) - Baxalta Inc - Discontinued Operations, Held-for-disposition - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Accounts and other current receivables, net | $ 99 | $ 228 |
Inventories | 9 | 8 |
Property, plant, and equipment, net | 1 | 2 |
Other | 2 | 7 |
Total assets of the disposal group | 111 | 245 |
Accounts payable and accrued liabilities | 2 | 46 |
Other long-term liabilities | 8 | 0 |
Total liabilities of the disposal group | $ 10 | $ 46 |
Net Interest Expense (Detail)
Net Interest Expense (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Interest Income Expense Net | ||
Interest expense, net of capitalized interest | $ 33 | $ 35 |
Interest income | (5) | (5) |
Net interest expense | $ 28 | $ 30 |
Other Income, Net (Detail)
Other Income, Net (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Other Income, net | ||
Foreign exchange | $ (9) | $ (89) |
Net loss on debt extinguishment | 101 | |
Net realized gains on Retained Shares transactions | (3,239) | |
All other | (22) | 3 |
Other income, net | $ (3,169) | $ (86) |
Inventories (Detail)
Inventories (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Inventory | ||
Raw materials | $ 369 | $ 374 |
Work in process | 159 | 142 |
Finished goods | 1,154 | 1,088 |
Inventories | $ 1,682 | $ 1,604 |
Property, Plant and Equipment ,
Property, Plant and Equipment ,Net (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment, Net | ||
Property, plant and equipment, at cost | $ 9,134 | $ 8,990 |
Accumulated depreciation | (4,731) | (4,604) |
Property, plant and equipment, net | $ 4,403 | $ 4,386 |
Reconciliation of Basic Shares
Reconciliation of Basic Shares to Diluted Shares (Detail) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Reconciliation of Basic Shares to Diluted Shares | ||
Basic shares | 549 | 543 |
Effect of dilutive securities | 3 | 5 |
Diluted shares | 552 | 548 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - USD ($) shares in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Jul. 31, 2012 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluded from computation of EPS | 20 | 9 | |
Stock repurchase program, authorized amount | $ 2,000,000,000 | ||
Purchases of common stock | 0 | ||
Remaining value available under stock repurchase programs | $ 500,000,000 |
Acquisitions and Other Arrang42
Acquisitions and Other Arrangements - Additional Information (Detail) $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Acquisitions and Other Arrangements [Line Items] | |
Payment to acquire the rights to Vancomycin injection | $ 23 |
Estimated economic life | 12 years |
Goodwill (Detail)
Goodwill (Detail) $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Goodwill [Line Items] | |
Goodwill, beginning balance | $ 2,687 |
Currency translation adjustments | 40 |
Goodwill, ending balance | 2,727 |
Renal | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 408 |
Currency translation adjustments | 7 |
Goodwill, ending balance | 415 |
Hospital Products | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 2,279 |
Currency translation adjustments | 33 |
Goodwill, ending balance | $ 2,312 |
Goodwill and Other Intangible44
Goodwill and Other Intangible Assets, Net - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Goodwill And Other Intangible Asset [Line Items] | ||
Accumulated goodwill impairment losses | $ 0 | |
Amortization expense | $ 40 | $ 40 |
Other Intangible Assets, Net (D
Other Intangible Assets, Net (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets | $ 2,278 | $ 2,221 |
Accumulated amortization | (919) | (872) |
Other intangible assets, net | 1,359 | 1,349 |
Developed technology, including patents | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets | 1,781 | 1,742 |
Accumulated amortization | (766) | (729) |
Other intangible assets, net | 1,015 | 1,013 |
Other Intangible Assets | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets | 410 | 393 |
Accumulated amortization | (153) | (143) |
Other intangible assets, net | 257 | 250 |
Indefinite Lived Intangible Assets | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets | 87 | 86 |
Other intangible assets, net | $ 87 | $ 86 |
Infusion Pump and Business Op46
Infusion Pump and Business Optimization Charges - Additional Information (Detail) - SIGMA Spectrum Infusion Pump $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Infusion Pump Charges | |
Decrease of infusion pump reserves | $ 12 |
Utilization of reserves | 14 |
Infusion pump reserve balance | $ 14 |
Business Optimization Charges (
Business Optimization Charges (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | $ 4 | $ (1) |
Costs to implement business optimization programs | 11 | 18 |
Total business optimization charges | $ 15 | $ 17 |
Summary of Restructuring Charge
Summary of Restructuring Charges (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | $ 4 | $ (1) |
Employee Termination Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | 15 | 12 |
Reserve Adjustments | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | (11) | (19) |
Asset Related Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | 4 | |
Asset Impairment | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | 2 | |
Cost of Sales | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | 12 | (7) |
Cost of Sales | Employee Termination Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | 13 | 1 |
Cost of Sales | Reserve Adjustments | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | (1) | (13) |
Cost of Sales | Asset Related Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | 3 | |
Cost of Sales | Asset Impairment | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | 2 | |
Marketing and Administrative Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | (7) | 6 |
Marketing and Administrative Expenses | Employee Termination Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | 1 | 11 |
Marketing and Administrative Expenses | Reserve Adjustments | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | (8) | (6) |
Marketing and Administrative Expenses | Asset Related Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | $ 1 | |
Research and Development Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | (1) | |
Research and Development Expenses | Employee Termination Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | 1 | |
Research and Development Expenses | Reserve Adjustments | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges, net | $ (2) |
Summary of Cash Activity in Res
Summary of Cash Activity in Reserves related to Business Optimization Initiatives (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Restructuring Cost and Reserve [Line Items] | ||
Charges | $ 4 | $ (1) |
Severance and Other Employee Related Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Reserves, Beginning balance | 116 | |
Charges | 15 | |
Reserve adjustments | (11) | |
Utilization | (22) | |
CTA | 13 | |
Reserves, ending balance | $ 111 |
Debt, Financial Instruments a50
Debt, Financial Instruments and Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions | Mar. 16, 2016 | Jan. 27, 2016 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 |
Debt and Financial Instruments [Line Items] | ||||||
Net realized gains on the Retained Share transactions | $ 3,239 | |||||
Recognized loss on extinguishment of debt | (101) | |||||
Commercial paper outstanding | $ 750 | $ 300 | ||||
Maximum length of time hedge in cash flow hedge | 15 months | |||||
Terminated interest rate contract | $ 765 | |||||
Gain on termination of interest rate contract | 34 | |||||
Gain (loss) on hedged item in fair value hedge | (22) | $ (47) | ||||
Deferred, net after-tax losses on derivative instruments | (2) | |||||
Cash and equivalents | 2,211 | 2,530 | 2,213 | $ 2,925 | ||
Available-for-sale securities | 1,242 | 5,162 | ||||
Dedesignated As Hedging Instrument | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Derivative notional amount | 0 | $ 0 | ||||
Not Designated as Hedging Instrument | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Derivative notional amount | 630 | 580 | ||||
Interest rate contract | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Derivative notional amount | 0 | 0 | ||||
Interest rate contract | Fair value hedges | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Derivative notional amount | 535 | 1,300 | ||||
Foreign exchange contract | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Derivative notional amount | 415 | 378 | ||||
Countries With Liquidity Issues | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Total accounts receivable from certain countries with liquidity issues | 206 | |||||
Fair Value, Inputs, Level 2 | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Money market funds, at carrying value | 483 | 500 | ||||
Available-for-sale securities | 1,200 | $ 5,100 | ||||
Debt Tender Offer | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Net realized gains on the Retained Share transactions | $ 2,000 | |||||
Tender offer date | Mar. 16, 2016 | |||||
Principal amount of notes exchanged for Retained Share | $ 2,200 | |||||
Recognized loss on extinguishment of debt | $ (101) | |||||
Debt Tender Offer | 0.950% notes due 2016 | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Senior notes, coupon rates | 0.95% | |||||
Higher rate of debt maturity periods | May 2,016 | |||||
Debt Tender Offer | 5.9% notes due 2016 | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Senior notes, coupon rates | 5.90% | |||||
Higher rate of debt maturity periods | August 2,016 | |||||
Debt Tender Offer | 1.85% Notes due 2017 | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Senior notes, coupon rates | 1.85% | |||||
Higher rate of debt maturity periods | January 2,017 | |||||
Debt Tender Offer | 5.375% notes due 2018 | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Senior notes, coupon rates | 5.375% | |||||
Higher rate of debt maturity periods | May 2,018 | |||||
Debt Tender Offer | 1.85% notes due 2018 | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Senior notes, coupon rates | 1.85% | |||||
Higher rate of debt maturity periods | June 2,018 | |||||
Debt Tender Offer | 4.500% notes due 2019 | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Senior notes, coupon rates | 4.50% | |||||
Higher rate of debt maturity periods | August 2,019 | |||||
Debt Tender Offer | 4.25% notes due 2020 | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Senior notes, coupon rates | 4.25% | |||||
Higher rate of debt maturity periods | February 2,020 | |||||
Commercial Paper | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Debt instrument, weighted average interest rate | 0.75% | 0.60% | ||||
Domestic Line of Credit | ||||||
Debt and Financial Instruments [Line Items] | ||||||
Drawing | $ 1,450 | |||||
Line of Credit Facility Amount Outstanding | $ 1,800 | |||||
Net realized gains on the Retained Share transactions | $ 1,250 |
Summary of Activity Relating to
Summary of Activity Relating to Securitization Arrangement (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Accounts Receivable Securitization [Line Items] | ||
Sold receivables at beginning of period | $ 81 | $ 104 |
Proceeds from sales of receivables | 104 | 113 |
Cash collections (remitted to the owners of the receivables) | (107) | (120) |
Effect of currency exchange rate changes | 7 | (1) |
Sold receivables at end of period | $ 85 | $ 96 |
Summary of Gains and Losses on
Summary of Gains and Losses on Derivative Instruments (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | [1] | $ 5 | $ 25 |
Other income, net | Not Designated as Hedging Instrument | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in income, undesignated derivative instruments | 6 | (8) | |
Interest rate contract | Net Interest Expense | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | [1] | 4 | |
Fair value hedges | Net Interest Expense | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in income, fair value hedges | 22 | 47 | |
Cash Flow Hedges | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in OCI | (4) | 63 | |
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | 5 | 25 | |
Cash Flow Hedges | Interest rate contract | Other income, net | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (losses) on hedging activities reclassified from AOCI to net income, before tax | 4 | ||
Cash Flow Hedges | Foreign Exchange Contracts One | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in OCI | (1) | ||
Cash Flow Hedges | Foreign Exchange Contracts Two | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in OCI | (4) | 64 | |
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 | $ 1 | $ 25 | |
[1] | Amounts in parentheses indicate reductions to net income. |
Classification and Fair Value A
Classification and Fair Value Amounts of Derivative Instruments (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | $ 42 | $ 56 |
Derivative liability, fair value | 3 | 2 |
Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 42 | 55 |
Derivative liability, fair value | 1 | 1 |
Designated as Hedging Instrument | Interest rate contract | Other Long-Term Assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 33 | 46 |
Designated as Hedging Instrument | Foreign exchange contract | Accounts Payable And Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | 1 | 1 |
Designated as Hedging Instrument | Foreign exchange contract | Prepaid expenses and other | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 9 | 9 |
Not Designated as Hedging Instrument | Foreign exchange contract | Accounts Payable And Accrued Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | $ 2 | 1 |
Not Designated as Hedging Instrument | Foreign exchange contract | Prepaid expenses and other | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | $ 1 |
Derivative Positions Presented
Derivative Positions Presented On Net Basis (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Derivatives, Fair Value [Line Items] | ||
Gross amounts recognized in the consolidated balance sheet, asset | $ 42 | $ 56 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, asset | (3) | (2) |
Total | 39 | 54 |
Gross amounts recognized in the consolidated balance sheet, liability | 3 | 2 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, liability | (3) | (2) |
Total | $ 0 | $ 0 |
Financial Assets and Liabilitie
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency hedges, assets at fair value | $ 42 | $ 56 |
Foreign currency hedges, liabilities at fair value | 3 | 2 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency hedges, assets at fair value | 9 | 10 |
Interest rate hedges, assets at fair value | 33 | 46 |
Available-for-sale securities | 1,242 | 5,162 |
Total assets | 1,284 | 5,218 |
Foreign currency hedges, liabilities at fair value | 3 | 2 |
Contingent payments related to acquisitions | 20 | 20 |
Total liabilities | 23 | 22 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 10 | 14 |
Total assets | 10 | 14 |
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 | 9 | 10 |
Interest rate hedges, assets at fair value | 33 | 46 |
Available-for-sale securities | 1,232 | 5,148 |
Total assets | 1,274 | 5,204 |
Foreign currency hedges, liabilities at fair value | 3 | 2 |
Total liabilities | 3 | 2 |
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 | 20 | 20 |
Total liabilities | $ 20 | $ 20 |
Available-for-Sale Equity Secur
Available-for-Sale Equity Securities (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | $ 179 | $ 732 |
Unrealized gains | 1,065 | 4,430 |
Unrealized losses | 2 | |
Fair value | $ 1,242 | $ 5,162 |
Book Values and Fair Values of
Book Values and Fair Values of Financial Instruments (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ||
Long-term debt and lease obligations | $ 2,068 | $ 3,922 |
Book Values | ||
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ||
Investments | 22 | 21 |
Short-term debt | 817 | 1,775 |
Current maturities of long-term debt and lease obligations | 472 | 810 |
Long-term debt and lease obligations | 2,068 | 3,922 |
Approximate fair values | ||
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ||
Investments | 22 | 21 |
Short-term debt | 817 | 1,775 |
Current maturities of long-term debt and lease obligations | 475 | 818 |
Long-term debt and lease obligations | $ 2,232 | $ 4,077 |
Summarization of Bases Used to
Summarization of Bases Used to Measure Fair Value of Financial Instruments (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Current maturities of long-term debt and lease obligations | $ 472 | $ 810 |
Long-term debt and lease obligations | 2,068 | 3,922 |
Approximate fair values | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments | 22 | 21 |
Total assets | 22 | 21 |
Short-term debt | 817 | 1,775 |
Current maturities of long-term debt and lease obligations | 475 | 818 |
Long-term debt and lease obligations | 2,232 | 4,077 |
Total liabilities | 3,524 | 6,670 |
Fair Value, Inputs, Level 2 | Approximate fair values | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments | 2 | 2 |
Total assets | 2 | 2 |
Short-term debt | 817 | 1,775 |
Current maturities of long-term debt and lease obligations | 475 | 818 |
Long-term debt and lease obligations | 2,232 | 4,077 |
Total liabilities | 3,524 | 6,670 |
Fair Value, Inputs, Level 3 | Approximate fair values | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments | 20 | 19 |
Total assets | $ 20 | $ 19 |
Stock Compensation - Additional
Stock Compensation - Additional Information (Detail) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock compensation expense | $ 23 | $ 29 |
Stock Options granted | 6.4 | |
Marketing and Administrative Expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock compensation expense allocation percentage | 70.00% | 70.00% |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Awards Granted | 1 | |
Unrecognized compensation cost related to all unvested | $ 94 | |
Weighted-average period for all unvested | 2 years | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Awards Granted | 0.3 | |
Unrecognized compensation cost related to all unvested | $ 20 | |
Weighted-average period for all unvested | 2 years 1 month 6 days | |
Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total intrinsic value of stock options exercised | $ 55 | $ 14 |
Unrecognized compensation cost related to all unvested | $ 87 | |
Weighted-average period for all unvested | 2 years 1 month 6 days |
Stock Options Fair Value Assump
Stock Options Fair Value Assumptions (Detail) - Employee Stock Option - $ / shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 20.00% | 20.00% |
Expected life (in years) | 5 years 6 months | 5 years 6 months |
Risk-free interest rate | 1.40% | 1.70% |
Dividend yield | 1.20% | 3.00% |
Fair value per stock option | $ 7 | $ 9 |
Net Periodic Benefit Cost - Con
Net Periodic Benefit Cost - Continuing Operations (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Pension Benefits, Defined Benefit | ||
Net periodic benefit cost | ||
Service cost | $ 23 | $ 23 |
Interest cost | 46 | 49 |
Expected return on plan assets | (75) | (61) |
Amortization of net losses and other deferred amounts | 37 | 43 |
Net periodic OPEB cost | 31 | 54 |
Other Postretirement Benefit Plans, Defined Benefit | ||
Net periodic benefit cost | ||
Service cost | 1 | 1 |
Interest cost | 2 | 6 |
Amortization of net loss and prior service credit | (4) | (1) |
Net periodic OPEB cost | $ (1) | $ 6 |
Summary of Changes in AOCI by C
Summary of Changes in AOCI by Component (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Currency translation adjustment, Beginning Balance | $ (3,191) | $ (2,323) | |
Currency translation adjustment, other comprehensive income (loss) before reclassifications | 92 | (1,138) | |
Currency translation adjustment, amounts reclassified from AOCI | [1] | 0 | 0 |
Currency translation adjustment, net other comprehensive (loss) income | 92 | (1,138) | |
Currency translation adjustment, Ending Balance | (3,099) | (3,461) | |
Pension and other employee benefit, Beginning Balance | (1,064) | (1,427) | |
Pension and other employee benefit, Other comprehensive income (loss) before reclassifications | (1) | 33 | |
Pension and other employee benefit, Amounts reclassified from AOCI | [1],[2] | 22 | 35 |
Pension and other employee benefit, Net other comprehensive (loss) income | 21 | 68 | |
Pension and other employee benefit, Ending Balance | (1,043) | (1,359) | |
Hedging activities, Beginning Balance | 7 | 34 | |
Hedging activities, Other comprehensive income (loss) before reclassifications | (3) | 6 | |
Hedging activities, Amounts reclassified from AOCI | [1],[2] | (3) | (16) |
Hedging activities, Net other comprehensive income (loss) | (6) | (10) | |
Hedging activities, Ending Balance | 1 | 24 | |
Available-for-sale securities, Beginning Balance | 4,472 | 66 | |
Available-for-sale securities, Other comprehensive income (loss) before reclassifications | 22 | 14 | |
Available-for-sale securities, Amounts reclassified from AOCI | [1],[2] | (3,388) | 7 |
Available-for-sale securities, Net other comprehensive (loss) income | (3,366) | 21 | |
Available-for-sale securities, Ending Balance | 1,106 | 87 | |
Total, Beginning Balance | 224 | (3,650) | |
Total, Other comprehensive income (loss) before reclassifications | 110 | (1,085) | |
Total, Amounts reclassified from AOCI | [1],[2] | (3,369) | 26 |
Total other comprehensive income (loss), net of tax | (3,259) | (1,059) | |
Total, Ending Balance | $ (3,035) | $ (4,709) | |
[1] | See table below for details about these reclassifications. | ||
[2] | Amounts in parentheses indicate reductions to net income. |
Summary of Amounts Reclassifica
Summary of Amounts Reclassification from AOCI to Net Income (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
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 | [1] | $ (33) | $ (50) |
Amortization of pension and other employee benefits items Actuarial losses and other reclassified from AOCI to net income, tax benefit | [1] | 11 | 15 |
Amortization of pension and other employee benefits items Actuarial losses and other reclassified from AOCI to net income, net of tax | [1],[2] | (22) | (35) |
Gains on hedging activities reclassified from AOCI to net income, before tax | [1] | 5 | 25 |
Gains on hedging activities reclassified from AOCI to net income, tax expense | [1] | (2) | (9) |
Gains on hedging activities reclassified from AOCI to net income, net of tax | [1],[2] | 3 | 16 |
Gains on available for sale securities reclassified from AOCI to net income, before tax | [1] | 3,388 | (9) |
Gains on available for sale securities reclassified from AOCI to net income, tax benefit | [1] | 2 | |
Available-for-sale securities reclassified from AOCI to net income, net of tax | [1],[2] | 3,388 | (7) |
Total reclassification for the period | [1],[2] | 3,369 | (26) |
Other income, net | Equity securities | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Gains on sale securities sale reclassified from AOCI to net income, before tax | [1] | 3,388 | |
Gains on sale securities Other-than-temporary impairment of reclassified from AOCI to net income, before tax | [1] | (9) | |
Interest rate contract | Net Interest Expense | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Gains on hedging activities reclassified from AOCI to net income, before tax | [1] | 4 | |
Foreign exchange contract | Cost of Sales | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Gains on hedging activities reclassified from AOCI to net income, before tax | [1] | 1 | 25 |
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 | [1],[3] | $ (33) | $ (50) |
[1] | Amounts in parentheses indicate reductions to net income. | ||
[2] | See table below for details about these reclassifications. | ||
[3] | These AOCI components are included in the computation of net periodic benefit cost disclosed in Note 10. |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Taxes [Line Items] | ||
Effective income tax rate | (1.70%) | 9.50% |
Effective income tax rate excluding discrete items | 22.00% | |
Decrease in gross unrecognized tax benefits | $ 85 | |
Baxalta Inc | ||
Income Taxes [Line Items] | ||
Decrease in gross unrecognized tax benefits | 34 | |
Internal Revenue Service (IRS) | ||
Income Taxes [Line Items] | ||
Payment made for partially settlement on US Federal income tax audit for the period 2008-2013 | $ 303 | |
Internal Revenue Service (IRS) | Earliest Tax Year | ||
Income Taxes [Line Items] | ||
Income tax period under audit | 2,008 | |
Internal Revenue Service (IRS) | Latest Tax Year | ||
Income Taxes [Line Items] | ||
Income tax period under audit | 2,013 | |
Federal Ministry of Finance, Germany | Earliest Tax Year | ||
Income Taxes [Line Items] | ||
Income tax period under audit | 2,008 | |
Federal Ministry of Finance, Germany | Latest Tax Year | ||
Income Taxes [Line Items] | ||
Income tax period under audit | 2,011 |
Legal Proceedings - Additional
Legal Proceedings - Additional Information (Detail) $ in Millions | Mar. 31, 2016USD ($) |
Loss Contingencies [Line Items] | |
Litigation reserve | $ 34 |
Litigation related receivables | $ 10 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2016Segment | |
Segment Reporting Information [Line Items] | |
Number of segments | 2 |
Segment Information (Detail)
Segment Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Segment Reporting Information [Line Items] | ||
Net sales | $ 2,375 | $ 2,403 |
Segment EBITDA | 631 | 572 |
Renal | ||
Segment Reporting Information [Line Items] | ||
Net sales | 898 | 913 |
Segment EBITDA | 122 | 85 |
Hospital Products | ||
Segment Reporting Information [Line Items] | ||
Net sales | 1,477 | 1,490 |
Segment EBITDA | $ 509 | $ 487 |
Segment Information Related to
Segment Information Related to Total Assets (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 17,350 | $ 20,962 |
Operating Segments | Renal | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 4,719 | 4,609 |
Operating Segments | Hospital Products | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 6,787 | 6,632 |
Corporate, Non-Segment | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 5,844 | $ 9,721 |
EBITDA to Income from Continuin
EBITDA to Income from Continuing Operations Reconciliation (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Total segment EBITDA | $ 631 | $ 572 |
Reconciling items | ||
Depreciation and amortization | (189) | (187) |
Stock compensation | (23) | (29) |
Net interest expense | (28) | (30) |
Business optimization items | (5) | |
Certain foreign currency fluctuations and hedging activities | 22 | 108 |
Net realized gains on Retained Shares transactions | 3,239 | |
Net loss on debt extinguishment | (101) | |
Other Corporate items | (217) | (286) |
Income from continuing operations before income taxes | $ 3,329 | $ 148 |