SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

SEGMENT INFORMATION

NOTE 17

SEGMENT INFORMATION

Baxter’s two segments are strategic businesses that are managed separately as 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 business provides products and services to treat end-stage renal disease, or irreversible kidney failure, along with other renal therapies. The Renal business offers a comprehensive portfolio to meet the needs of patients across the treatment continuum, including technologies and therapies for peritoneal dialysis (PD), hemodialysis (HD), continuous renal replacement therapy (CRRT) and additional dialysis services.

The Hospital Products business manufactures intravenous (IV) solutions and administration sets, premixed drugs and drug-reconstitution systems, oncology injectable drugs, IV nutrition products, infusion pumps, inhalation anesthetics and biosurgery products. The business also provides products and services related to pharmacy compounding, drug formulation and packaging technologies.

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 impairments). Financial information for the company’s segments is as follows:

for the years ended December 31 (in millions)	2016		2015		2014
Net sales
Renal	$	3,855	$	3,789	$	4,172
Hospital Products		6,308		6,179		6,547
Total net sales	$	10,163	$	9,968	$	10,719
EBITDA
Renal	$	703	$	566	$	666
Hospital Products		2,273		1,998		2,237
Total segment EBITDA	$	2,976	$	2,564	$	2,903

(in millions)	2016		2015		2014
Total assets
Renal	$	4,315	$	4,609	$	4,928
Hospital Products		6,407		6,632		6,915
Total segment assets	$	10,722	$	11,241	$	11,843

The following table is a reconciliation of segment EBITDA to income from continuing operations before income taxes per the consolidated statements of income.

for the years ended December 31 (in millions)	2016			2015			2014
Total segment EBITDA	$	2,976		$	2,564		$	2,903
Reconciling items
Depreciation and amortization		(800	)		(759	)		(792	)
Stock compensation		(115	)		(126	)		(126	)
Net interest expense		(66	)		(126	)		(145	)
Restructuring charges, net		(285	)		(130	)		6
Certain foreign exchange fluctuations and hedging activities		34			197			37
Net realized gains on Retained Shares transactions		4,387			—			—
Net loss on debt extinguishment		(153	)		(130	)		—
Other Corporate items		(1,024	)		(1,062	)		(1,393	)
Income from continuing operations before income taxes	$	4,954		$	428		$	490

The following table is a reconciliation of segment assets to consolidated total assets per the consolidated balance sheets.

as of December 31 (in millions)	2016		2015		2014
Total segment assets	$	10,722	$	11,241	$	11,843
Cash and equivalents		2,801		2,213		2,925
Deferred income taxes		629		354		531
PP&E, net		805		932		1,039
Assets held for disposition		50		245		9,363
Other Corporate assets		539		5,977		437
Consolidated total assets	$	15,546	$	20,962	$	26,138

Geographic Information

Net sales are based on product shipment destination and assets are based on physical location.

years ended December 31 (in millions)	2016		2015		2014
Net sales
United States	$	4,259	$	4,001	$	3,999
Europe		2,697		2,774		3,257
Asia-Pacific		2,029		1,972		2,079
Latin America and Canada		1,178		1,221		1,384
Consolidated net sales	$	10,163	$	9,968	$	10,719

as of December 31 (in millions)	2016		2015		2014
PP&E, net
United States	$	1,751	$	1,746	$	1,625
Europe		1,166		1,298		1,466
Asia-Pacific		752		757		753
Latin America and Canada		620		585		590
Consolidated PP&E, net	$	4,289	$	4,386	$	4,434

Net Sales by Franchise

The following table represents net sales by commercial franchise.

years ended December 31	2016		2015		2014
Total Renal1	$	3,855	$	3,789	$	4,172
Fluid Systems2		2,300		2,106		2,129
Integrated Pharmacy Solutions3		2,245		2,297		2,535
Surgical Care4		1,321		1,323		1,373
Other5		442		453		510
Total Hospital Products	$	6,308	$	6,179	$	6,547

¹ The Renal segment is presented as a separate commercial franchise and includes sales of the company’s PD, HD and CRRT.

² Principally includes IV therapies, infusion pumps, and administration sets.

³ Includes sales of the company’s premixed and oncology drug platforms, nutrition products and pharmacy compounding services.

⁴ Includes sales of the company’s inhaled anesthesia products as well as biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention.

⁵ Principally includes sales from the company’s pharmaceutical partnering business.