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RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Changes and Error Corrections [Abstract]

Schedule of Quantifying Prior Year Misstatements Corrected in Current Year Financial Statements


Baxter International Inc.
Consolidated Balance Sheet
(in millions, except per share)

	December 31, 2018
	As previously reported		Restatement impacts		Restatement reference	As restated
Current assets:
Cash and cash equivalents	$	1,832	$	6	(e)	$	1,838
Accounts receivable, net	1,812		28		(e)(g)	1,840
Inventories	1,653		14		(e)(g)	1,667
Prepaid expenses and other current assets	622		(8)		(b)(e)(g)	614
Total current assets	5,919		40			5,959
Property, plant and equipment, net	4,542		(12)		(c)(e)	4,530
Goodwill	2,958		44		(e)	3,002
Other intangible assets, net	1,398		12		(e)(g)	1,410
Other non-current assets	824		(5)		(a)(c)(e)(g)	819
Total assets	$	15,641	$	79		$	15,720
Current liabilities:
Short-term debt	$	2	$	—		$	2
Current maturities of long-term debt and finance lease obligations	2		—			2
Accounts payable and accrued liabilities	2,832		(22)		(b)(e)(g)	2,810
Total current liabilities	2,836		(22)			2,814
Long-term debt and finance lease obligations	3,473		8		(e)	3,481
Other non-current liabilities	1,516		43		(a)(c)(e)(g)	1,559
Total liabilities	7,825		29			7,854
Commitments and contingencies
Equity:
Common stock, $1 par value, authorized 2,000,000,000 shares, issued 683,494,944 shares	683		—			683
Common stock in treasury, at cost, 170,495,859 shares	(9,989)		—			(9,989)
Additional contributed capital	5,898		—			5,898
Retained earnings	15,626		(551)		(a)(b)(c)(e)(g)	15,075
Accumulated other comprehensive (loss) income	(4,424)		601		(a)(e)	(3,823)
Total Baxter stockholders’ equity	7,794		50			7,844
Noncontrolling interests	22		—			22
Total equity	7,816		50			7,866
Total liabilities and equity	$	15,641	$	79		$	15,720

(a) Foreign Currency Denominated Monetary Assets and Liabilities—The correction of these misstatements resulted in decreases to retained earnings of $487 million and accumulated other comprehensive loss of $482 million and increases to other non-current assets of $8 million and other non-current liabilities of $13 million as of December 31, 2018.

(b) Foreign Currency Derivative Contracts—The correction of these misstatements resulted in increases to prepaid expenses and other current assets of $2 million, accounts payable and accrued liabilities of $1 million, and retained earnings of $1 million as of December 31, 2018.

(c) Equipment Leased to Customers under Operating Leases—The correction of these misstatements resulted in decreases to property, plant and equipment, net of $53 million, other non-current liabilities of $5 million, and retained earnings of $38 million and an increase to other non-current assets of $10 million as of December 31, 2018.

(e) Translation of the Financial Position and Results of Operations of our Foreign Operations into U.S. Dollars—The correction of these misstatements resulted in increases to cash and cash equivalents of $6 million, accounts receivable, net of $22 million, inventories of $19 million, prepaid expenses and other current assets of $2 million, property, plant and equipment of $41 million, goodwill of $44 million, other intangible assets, net of $13 million, other non-current assets of $6 million, accounts payable and accrued liabilities of $24 million, long-term debt and finance lease obligations of $8 million and other non-current liabilities of $19 million as of December 31, 2018. The correction of these misstatements also resulted in decreases to retained earnings of $17 million and accumulated other comprehensive loss of $119 million as of December 31, 2018.

(g) Other miscellaneous adjustments - The correction of these misstatements resulted in decreases to inventories of $5 million, prepaid expenses and other current assets of $12 million, other intangible assets, net of $1 million, other non-current assets of $29 million, accounts payable and accrued liabilities of $47 million, and retained earnings of $10 million, and increases to accounts receivable, net of $6 million and other non-current liabilities of $16 million as of December 31, 2018.


Baxter International Inc.
Consolidated Statement of Income
(in millions, except per share)

	Year ended December 31, 2018
	As previously reported		Restatement impacts		Restatement reference	As restated
Net sales	$	11,127	$	(28)	(e)	$	11,099
Cost of sales	6,346		(6)		(c)(e)	6,340
Gross margin	4,781		(22)			4,759
Selling, general and administrative expenses	2,617		3		(e)(f)	2,620
Research and development expenses	655		(1)		(e)	654
Other operating income, net	(90)		(9)		(f)	(99)
Operating income	1,599		(15)			1,584
Interest expense, net	45		—			45
Other (income) expense, net	(139)		61		(a)(b)(e)	(78)
Income from continuing operations before income taxes	1,693		(76)			1,617
Income tax expense (benefit)	63		2		(c)(e)(g)	65
Income from continuing operations	1,630		(78)			1,552
Loss from discontinued operations, net of tax	(6)		—			(6)
Net income	$	1,624	$	(78)		$	1,546
Earnings per share from continuing operations
Basic	$	3.05	$	(0.14)		$	2.91
Diluted	$	2.99	$	(0.15)		$	2.84
Loss per share from discontinued operations
Basic	$	(0.01)	$	—		$	(0.01)
Diluted	$	(0.02)	$	0.01		$	(0.01)
Earnings per share
Basic	$	3.04	$	(0.14)		$	2.90
Diluted	$	2.97	$	(0.14)		$	2.83
Weighted-average number of shares outstanding
Basic	534		—			534
Diluted	546		—			546

(a) Foreign Currency Denominated Monetary Assets and Liabilities—The correction of these misstatements resulted in a decrease to other (income) expense, net of $64 million for the year ended December 31, 2018.

(b) Foreign Currency Derivative Contracts—The correction of these misstatements resulted in an increase to other (income) expense, net of $5 million for the year ended December 31, 2018.

(c) Equipment Leased to Customers under Operating Leases—The correction of these misstatements resulted in an increase to cost of sales of $11 million and a decrease to income tax expense of $3 million for the year ended December 31, 2018.

(e) Translation of the Financial Position and Results of Operations of our Foreign Operations into U.S. Dollars—The correction of these misstatements resulted in decreases to net sales of $28 million, cost of sales of $17 million, SG&A expense of $6 million, R&D expense of $1 million, other (income) expense, net of $2 million, and income tax expense of $2 million for the year ended December 31, 2018.

(f) Income Statement Classification of Transition Services Income—The correction of these misstatements resulted in increases to SG&A expense and other operating income, net of $9 million for the year ended December 31, 2018.

(g) Other miscellaneous adjustments - The correction of these misstatements resulted in an increase to income tax expense of $7 million for the year ended December 31, 2018.


Baxter International Inc.
Consolidated Statement of Income
(in millions, except per share)

	Year ended December 31, 2017
	As previously reported		Restatement impacts		Restatement reference	As restated
Net sales	$	10,561	$	23	(e)	$	10,584
Cost of sales	6,091		19		(c)(e)	6,110
Gross margin	4,470		4			4,474
Selling, general and administrative expenses	2,566		61		(e)(f)	2,627
Research and development expenses	613		2		(e)	615
Other operating income, net	—		(56)		(f)	(56)
Operating income	1,291		(3)			1,288
Interest expense, net	55		—			55
Other (income) expense, net	19		114		(a)(b)(e)	133
Income from continuing operations before income taxes	1,217		(117)			1,100
Income tax expense (benefit)	493		(2)		(c)(e)	491
Income from continuing operations	724		(115)			609
Loss from discontinued operations, net of tax	(7)		$	—		(7)
Net income	$	717	$	(115)		$	602
Earnings per share from continuing operations
Basic	$	1.33	$	(0.21)		$	1.12
Diluted	$	1.30	$	(0.20)		$	1.10
Loss per share from discontinued operations
Basic	$	(0.01)	$	—		$	(0.01)
Diluted	$	(0.01)	$	(0.01)		$	(0.02)
Earnings per share
Basic	$	1.32	$	(0.21)		$	1.11
Diluted	$	1.29	$	(0.21)		$	1.08
Weighted-average number of shares outstanding
Basic	543		—			543
Diluted	555		—			555

(a) Foreign Currency Denominated Monetary Assets and Liabilities—The correction of these misstatements resulted in an increase to other (income) expense, net of $96 million.

(b) Foreign Currency Derivative Contracts—The correction of these misstatements resulted in an increase to other (income) expense, net of $17 million.

(c) Equipment Leased to Customers under Operating Leases—The correction of these misstatements resulted in an increase to cost of sales of $8 million and a decrease to income tax expense of $3 million for the year ended December 31, 2017.

(e) Translation of the Financial Position and Results of Operations of our Foreign Operations into U.S. Dollars—The correction of these misstatements resulted in increases to net sales of $23 million, cost of sales of $11 million, SG&A expense of $5 million, R&D expense of $2 million, other (income) expense, net of $1 million and income tax expense of $1 million for the year ended December 31, 2017.


Baxter International Inc.
Consolidated Statement of Comprehensive Income
(in millions)

	Year ended December 31, 2018
	As previously reported		Restatement impacts		As restated
Net income	$	1,624	$	(78)	$	1,546
Other comprehensive (loss) income, net of tax:
Currency translation adjustments	(461)		138		(323)
Pension and other postretirement benefit plans	32		1		33
Hedging activities	9		—		9
Total other comprehensive (loss) income, net of tax	(420)		139		(281)
Comprehensive income	$	1,204	$	61	$	1,265


Baxter International Inc.
Consolidated Statement of Comprehensive Income
(in millions)

	Year ended December 31, 2017
	As previously reported		Restatement impacts		As restated
Net income	$	717	$	(115)	$	602
Other comprehensive (loss) income, net of tax:
Currency translation adjustments	425		174		599
Pension and other postretirement benefit plans	141		(7)		134
Hedging activities	(13)		—		(13)
Available-for-sale securities	2		—		2
Total other comprehensive (loss) income, net of tax	555		167		722
Comprehensive income	$	1,272	$	52	$	1,324


Baxter International Inc.
Consolidated Statement of Changes in Equity
(in millions)
	Baxter International Inc. stockholders' equity
	Common stock shares	Common stock		Common stock shares in treasury	Common stock in treasury		Additional contributed capital		Retained earnings		Accumulated other comprehensive income (loss)		Total Baxter stockholders' equity		Noncontrolling interests		Total equity
As previously reported
Balance as of January 1, 2018	683	$	683	142	$	(7,981)	$	5,940	$	14,483	$	(4,001)	$	9,124	$	(8)	$	9,116
Adoption of new accounting standards	—	—		—	—		—		(18)		(3)		(21)		—		(21)
Net income	—	—		—	—		—		1,624		—		1,624		—		1,624
Other comprehensive income (loss)	—	—		—	—		—		—		(420)		(420)		—		(420)
Purchases of treasury stock	—	—		36	(2,415)		(60)		—		—		(2,475)		—		(2,475)
Stock issued under employee benefit plans and other	—	—		(8)	407		18		(71)		—		354		—		354
Dividends declared on common stock	—	—		—	—		—		(392)		—		(392)		—		(392)
Changes in noncontrolling interests	—	—		—	—		—		—		—		—		30		30
Balance as of December 31, 2018	683	$	683	170	$	(9,989)	$	5,898	$	15,626	$	(4,424)	$	7,794	$	22	$	7,816
Restatement impacts
Balance as of January 1, 2018	—	$	—	—	$	—	$	—	$	(469)	$	462	$	(7)	$	—	$	(7)
Adoption of new accounting standards	—	—		—	—		—		(4)		—		(4)		—		(4)
Net income	—	—		—	—		—		(78)		—		(78)		—		(78)
Other comprehensive income (loss)	—	—		—	—		—		—		139		139		—		139
Balance as of December 31, 2018	—	$	—	—	$	—	$	—	$	(551)	$	601	$	50	$	—	$	50
As restated
Balance as of January 1, 2018	683	$	683	142	$	(7,981)	$	5,940	$	14,014	$	(3,539)	$	9,117	$	(8)	$	9,109
Adoption of new accounting standards	—	—		—	—		—		(22)		(3)		(25)		—		(25)
Net income	—	—		—	—		—		1,546		—		1,546		—		1,546
Other comprehensive income (loss)	—	—		—	—		—		—		(281)		(281)		—		(281)
Purchases of treasury stock	—	—		36	(2,415)		(60)		—		—		(2,475)		—		(2,475)
Stock issued under employee benefit plans and other	—	—		(8)	407		18		(71)		—		354		—		354
Dividends declared on common stock	—	—		—	—		—		(392)		—		(392)		—		(392)
Changes in noncontrolling interests	—	—		—	—		—		—		—		—		30		30
Balance as of December 31, 2018	683	683		170	(9,989)		5,898		15,075		(3,823)		7,844		22		7,866

See descriptions of the net income and other comprehensive income impacts in the consolidated statement of income and consolidated statement of comprehensive income for the year ended December 31, 2018 sections above. Additionally, we recorded an adjustment to the opening balance of retained earnings on January 1, 2018 for the adoption of ASU No. 2016-16, which was impacted by our adjustments to equipment leased to customers under operating leases.


Baxter International Inc.
Consolidated Statement of Changes in Equity
(in millions)
	Baxter International Inc. stockholders' equity
	Common stock shares	Common stock		Common stock shares in treasury	Common stock in treasury		Additional contributed capital		Retained earnings		Accumulated other comprehensive income (loss)		Total Baxter stockholders' equity		Noncontrolling interests		Total equity
As previously reported
Balance as of January 1, 2017	683	$	683	144	$	(7,995)	$	5,958	$	14,200	$	(4,556)	$	8,290	$	(10)	$	8,280
Net income	—	—		—	—		—		717		—		$	717	—		$	717
Other comprehensive income (loss)	—	—		—	—		—		—		555		555		—		555
Purchases of treasury stock	—	—		9	(564)		—		—		—		(564)		—		(564)
Stock issued under employee benefit plans and other	—	—		(11)	578		(18)		(134)		—		426		—		426
Dividends declared on common stock	—	—		—	—		—		(334)		—		(334)		—		(334)
Distribution of Baxalta	—	—		—	—		—		34		—		34		—		34
Changes in noncontrolling interests	—	—		—	—		—		—		—		—		2		2
Balance as of December 31, 2017	683	$	683	142	$	(7,981)	$	5,940	$	14,483	$	(4,001)	$	9,124	$	(8)	$	9,116
Restatement impacts
Balance as of January 1, 2017	—	$	—	—	$	—	$	—	$	(354)	$	295	$	(59)	$	—	$	(59)
Net income	—	—		—	—		—		(115)		—		(115)		—		(115)
Other comprehensive income (loss)	—	—		—	—		—		—		167		167		—		167
Balance as of December 31, 2017	—	$	—	—	$	—	$	—	$	(469)	$	462	$	(7)	$	—	$	(7)
As restated
Balance as of January 1, 2017	683	$	683	144	$	(7,995)	$	5,958	$	13,846	$	(4,261)	$	8,231	$	(10)	$	8,221
Net income	—	—		—	—		—		602		—		602		—		602
Other comprehensive income (loss)	—	—		—	—		—		—		722		722		—		722
Purchases of treasury stock	—	—		9	(564)		—		—		—		(564)		—		(564)
Stock issued under employee benefit plans and other	—	—		(11)	578		(18)		(134)		—		426		—		426
Dividends declared on common stock	—	—		—	—		—		(334)		—		(334)		—		(334)
Distribution of Baxalta	—	—		—	—		—		34		—		34		—		34
Changes in noncontrolling interests	—	—		—	—		—		—		—		—		2		2
Balance as of December 31, 2017	683	$	683	142	$	(7,981)	$	5,940	$	14,014	$	(3,539)	$	9,117	$	(8)	$	9,109

The adjustment to the January 1, 2017 retained earnings and accumulated other comprehensive loss represent the cumulative impacts of foreign exchange gains and losses and the translation of our financial position and results of operations for our foreign operations into U.S. dollars for the periods prior to January 1, 2017. Retained earnings also includes the cumulative impacts of equipment leased to customers under operating leases and other miscellaneous adjustments for the periods prior to January 1, 2017.


Baxter International Inc.
Consolidated Statement of Cash Flows
(in millions)

	Year ended December 31, 2018
	As previously reported		Restatement impacts		Restatement reference	As restated
Cash flows from operations
Net income	$	1,624	$	(78)		$	1,546
Adjustments to reconcile income from continuing operations to net cash from operating activities:
Loss from discontinued operations, net of tax	6		—			6
Depreciation and amortization	785		(14)		(c)(g)	771
Pension settlement charges	1		—			1
Net periodic pension benefit and other postretirement costs	39		—			39
Deferred income taxes	(267)		4		(c)(g)	(263)
Stock compensation	115		—			115
Other	43		7		(d)	50
Changes in balance sheet items:
Accounts receivable, net	(12)		—			(12)
Inventories	(197)		—			(197)
Accounts payable and accrued liabilities	64		(4)		(b)	60
Other	(105)		6		(b)(e)(g)	(99)
Cash flows from operations	2,096		(79)			2,017
Cash flows from investing activities
Capital expenditures	(681)		22		(c)	(659)
Acquisitions and investments, net of cash acquired	(268)		—			(268)
Other investing activities, net	11		—			11
Cash flows from investing activities	(938)		22			(916)
Cash flows from financing activities
Cash dividends on common stock	(376)		—			(376)
Proceeds from stock issued under employee benefit plans	258		—			258
Purchases of treasury stock	(2,452)		—			(2,452)
Other financing activities, net	(33)		—			(33)
Cash flows from financing activities	(2,603)		—			(2,603)
Effect of foreign exchange rate changes on cash and cash equivalents	(117)		54		(a)(d)(e)	(63)
Increase (decrease) in cash and cash equivalents	(1,562)		(3)			(1,565)
Cash and cash equivalents at beginning of year	3,394		9		(e)	3,403
Cash and cash equivalents at end of year	$	1,832	$	6	(e)	$	1,838
Other supplemental information
Interest paid, net of portion capitalized	$	94	—			$	94
Income taxes paid	$	302	(1)		(e)	$	301

The $78 million decrease to net income was driven by the items described above in the consolidated statement of income for the year ended December 31, 2018 section.

(b) Foreign Currency Derivative Contracts—The correction of these misstatements resulted in decreases to changes in accounts payable and accrued liabilities of $4 million and other changes in balance sheet items of $1 million for the year ended December 31, 2018.

(c) Equipment Leased to Customers under Operating Leases—The correction of these misstatements resulted in decreases to depreciation and amortization of $11 million, deferred income taxes of $3 million and capital expenditures of $22 million for the year ended December 31, 2018.

(d) Classification of Foreign Currency Gains and Losses in our Consolidated Statements of Cash Flows - The corrections of these misstatements resulted in a decrease to the effect of foreign exchange rate changes on cash and cash equivalents and an increase to other adjustments to reconcile net income to net cash from operating activities of $7 million for the year ended December 31, 2018.

(e) Translation of the Financial Position and Results of Operations of our Foreign Operations into U.S. Dollars - The corrections of these misstatements resulted in increases to cash and cash equivalents at the beginning of the period of $9 million, at the end of the period of $6 million, and to other changes in balance sheet items of $4 million and decreases in the effect of foreign exchange rate changes on cash and cash equivalents of $3 million and income taxes paid of $1 million for the year ended December 31, 2018.

(g) Other miscellaneous adjustments - The correction of these misstatements resulted in a decrease to depreciation and amortization of $3 million and increases to deferred income taxes of $7 million and other changes in balance sheet items of $3 million for the year ended December 31, 2018.


Baxter International Inc.
Consolidated Statement of Cash Flows
(in millions)

	Year ended December 31, 2017
	As previously reported		Restatement impacts		Restatement reference	As restated
Cash flows from operations
Net income	$	717	$	(115)		$	602
Adjustments to reconcile income from continuing operations to net cash from operating activities:
Loss from discontinued operations, net of tax	7		—			7
Depreciation and amortization	761		(11)		(c)(g)	750
Pension settlement charges	2		—			2
Net periodic pension benefit and other postretirement costs	123		—			123
Deferred income taxes	211		—			211
Stock compensation	107		—			107
Other	43		(5)		(d)(g)	38
Changes in balance sheet items:
Accounts receivable, net	30		—			30
Inventories	76		—			76
Accounts payable and accrued liabilities	5		6		(b)	11
Other	(229)		2		(b)(c)(e)	(227)
Cash flows from operations - continuing operations	1,853		(123)			1,730
Cash flows from operations - discontinued operations	(16)		—			(16)
Cash flows from operations	1,837		(123)			1,714
Cash flows from investing activities
Capital expenditures	(634)		18		(c)	(616)
Acquisitions and investments, net of cash acquired	(686)		—			(686)
Other investing activities, net	10		—			10
Cash flows from investing activities	(1,310)		18			(1,292)
Cash flows from financing activities
Issuances of debt	633		32		(a)	665
Cash dividends on common stock	(315)		—			(315)
Proceeds from stock issued under employee benefit plans	347		—			347
Purchases of treasury stock	(564)		—			(564)
Other financing activities, net	(40)		—			(40)
Cash flows from financing activities	61		32			93
Effect of foreign exchange rate changes on cash and cash equivalents	5		97		(a)(d)(e)	102
Increase (decrease) in cash and cash equivalents	593		24			617
Cash and cash equivalents at beginning of year	2,801		(15)		(e)	2,786
Cash and cash equivalents at end of year	$	3,394	$	9	(e)	$	3,403
Other supplemental information
Interest paid, net of portion capitalized	$	80	—			$	80
Income taxes paid	$	255	(2)		(e)	$	253

The $115 million decrease to net income was driven by the items described above in the consolidated statement of income for the year ended December 31, 2017 section.

(a) Foreign Currency Denominated Monetary Assets and Liabilities—The correction of these misstatements resulted in an increase to the effect of foreign exchange rate changes on cash and cash equivalents of $99 million for the year ended December 31, 2017. Additionally, issuances of debt increased $32 million with an offsetting decrease to the effect of foreign exchange rate changes on cash and cash equivalents to remeasure the proceeds received from the issuance of our Euro-denominated senior notes in May 2017.

(b) Foreign Currency Derivative Contracts—The correction of these misstatements resulted in increases to changes in accounts payable and accrued liabilities of $6 million and other changes in balance sheet items of $8 million for the year ended December 31, 2017.

(c) Equipment Leased to Customers under Operating Leases—The correction of these misstatements resulted in decreases to depreciation and amortization of $10 million, other changes in balance sheet items of $3 million and capital expenditures of $18 million for the year ended December 31, 2017.

(d) Classification of Foreign Currency Gains and Losses in our Consolidated Statements of Cash Flows - The corrections of these misstatements resulted in an increase to the effect of foreign exchange rate changes on cash and cash equivalents and a decrease to other adjustments to reconcile net income to net cash from operating activities of $6 million for the year ended December 31, 2017.

(e) Translation of the Financial Position and Results of Operations of our Foreign Operations into U.S. Dollars - The corrections of these misstatements resulted in increases in cash and cash equivalents at the end of the period of $9 million and the effect of foreign exchange rate changes on cash and cash equivalents of $24 million and decreases to cash and cash equivalents at the beginning of the period of $15 million, other changes in balance sheet items of $3 million and income taxes paid of $2 million for the year ended December 31, 2017.

(g) Other miscellaneous adjustments - The correction of these misstatements resulted in a decrease to depreciation and amortization and an increase to other adjustments to reconcile net income to net changes from operating activities of $1 million for the year ended December 31, 2017.