(Exact name of registrant as specified in its charter) | |||||
(State or other jurisdiction of incorporation) | |||||
(Commission File Number) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip Code) | ||||
( | |||||
(Registrant’s telephone number, including area code) | |||||
(Former name or former address, if changed since last report) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Exhibit Number | Description | |||||||
23 | ||||||||
99.1 | ||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
BAXTER INTERNATIONAL INC. | ||||||||
By: | /s/ James K. Saccaro | |||||||
Name: | James K. Saccaro | |||||||
Title: | Executive Vice President and | |||||||
Chief Financial Officer |
years ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Gross Margin | |||||||||||
Intangible asset amortization expense | $ | (222) | $ | (183) | $ | (169) | |||||
Intangible asset impairment1 | (17) | (31) | — | ||||||||
Business optimization items2 | (53) | (69) | (49) | ||||||||
Product-related items3 | (29) | — | 6 | ||||||||
Acquisition and integration expenses4 | (11) | (30) | (27) | ||||||||
Litigation5 | — | — | (8) | ||||||||
Hurricane Maria insurance recoveries6 | — | — | 32 | ||||||||
European medical devices regulation7 | (33) | (25) | (6) | ||||||||
Investigation and related costs8 | (3) | — | — | ||||||||
Total Special Items | $ | (368) | $ | (338) | $ | (221) | |||||
Impact on Gross Margin Ratio | (3.1 pts) | (3.0 pts) | (2.0 pts) | ||||||||
Selling, General and Administrative (SG&A) Expenses | |||||||||||
Business optimization items2 | $ | 78 | $ | 70 | $ | 145 | |||||
Acquisition and integration expenses4 | 9 | 20 | 23 | ||||||||
Litigation5 | — | — | 2 | ||||||||
Investigation and related costs8 | 19 | 8 | — | ||||||||
Total Special Items | $ | 106 | $ | 98 | $ | 170 | |||||
Impact on SG&A Expense Ratio | 1.0 pts | 0.9 pts | 1.5 pts | ||||||||
R&D Expenses | |||||||||||
Business optimization items2 | $ | 3 | $ | 45 | $ | 26 | |||||
Acquisition and integration expenses4 | 22 | 8 | 7 | ||||||||
European medical devices regulation7 | — | — | 3 | ||||||||
Investigation and related costs8 | 1 | — | — | ||||||||
Total Special Items | $ | 26 | $ | 53 | $ | 36 | |||||
Impact on R&D Expense Ratio | 0.3 pts | 0.4 pts | 0.3 pts | ||||||||
Other Operating Income, net | |||||||||||
Business optimization items2 | $ | (17) | $ | — | $ | — | |||||
Acquisition and integration expenses4 | (2) | (4) | — | ||||||||
Hurricane Maria insurance recoveries6 | — | (100) | (10) | ||||||||
Claris Settlement⁹ | — | — | (80) | ||||||||
Insurance recoveries from a legacy product-related matter10 | — | (37) | — | ||||||||
Total Special Items | $ | (19) | $ | (141) | $ | (90) | |||||
Other (Income) Expense, Net | |||||||||||
Acquisition and integration activities4 | $ | — | $ | — | $ | (24) | |||||
Pension settlements11 | 43 | 755 | — | ||||||||
Loss on debt extinguishment12 | 110 | — | — | ||||||||
Total Special Items | $ | 153 | $ | 755 | $ | (24) | |||||
Income Tax Expense | |||||||||||
Tax effects of special items and impact of U.S. Tax Reform13 | $ | (139) | $ | (387) | $ | (277) | |||||
Total Special Items | $ | (139) | $ | (387) | $ | (277) | |||||
Impact on Effective Tax Rate | (2.6 pts) | (20.9) pts | (13.7) pts |
Percent change | |||||||||||||||||||||||||||||
At actual currency rates | At constant currency rates | ||||||||||||||||||||||||||||
years ended December 31 (in millions) | 2020 | 2019 | 2018 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
United States | $ | 4,878 | $ | 4,826 | $ | 4,723 | 1 | % | 2 | % | 1 | % | 2 | % | |||||||||||||||
International | 6,795 | 6,536 | 6,376 | 4 | % | 3 | % | 5 | % | 7 | % | ||||||||||||||||||
Total net sales | $ | 11,673 | $ | 11,362 | $ | 11,099 | 3 | % | 2 | % | 3 | % | 5 | % |
Percent change | |||||||||||||||||||||||||||||
At actual currency rates | At constant currency rates | ||||||||||||||||||||||||||||
years ended December 31 (in millions) | 2020 | 2019 | 2018 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Renal Care | $ | 3,757 | $ | 3,639 | $ | 3,651 | 3 | % | — | % | 4 | % | 3 | % | |||||||||||||||
Medication Delivery | 2,691 | 2,739 | 2,626 | (2) | % | 4 | % | (1) | % | 6 | % | ||||||||||||||||||
Pharmaceuticals | 2,098 | 2,119 | 2,067 | (1) | % | 3 | % | (1) | % | 5 | % | ||||||||||||||||||
Clinical Nutrition | 910 | 860 | 867 | 6 | % | (1) | % | 6 | % | 2 | % | ||||||||||||||||||
Advanced Surgery | 886 | 875 | 797 | 1 | % | 10 | % | 1 | % | 12 | % | ||||||||||||||||||
Acute Therapies | 740 | 535 | 515 | 38 | % | 4 | % | 39 | % | 7 | % | ||||||||||||||||||
BioPharma Solutions | 486 | 469 | 449 | 4 | % | 4 | % | 3 | % | 7 | % | ||||||||||||||||||
Other | 105 | 126 | 127 | (17) | % | (1) | % | (17) | % | — | % | ||||||||||||||||||
Total Baxter | $ | 11,673 | $ | 11,362 | $ | 11,099 | 3 | % | 2 | % | 3 | % | 5 | % |
2020 | 2019 | |||||||||||||||||||||||||||||||||||||
years ended December 31 | 2020 | % of net sales | 2019 | % of net sales | 2018 | % of net sales | $ change | % change | $ change | % change | ||||||||||||||||||||||||||||
Gross margin | $ | 4,587 | 39.3 | % | $ | 4,761 | 41.9 | % | $ | 4,759 | 42.9 | % | $ | (174) | (3.7) | % | $ | 2 | — | % | ||||||||||||||||||
SG&A | $ | 2,469 | 21.2 | % | $ | 2,535 | 22.3 | % | $ | 2,620 | 23.6 | % | $ | (66) | (2.6) | % | $ | (85) | (3.2) | % | ||||||||||||||||||
R&D | $ | 521 | 4.5 | % | $ | 595 | 5.2 | % | $ | 654 | 5.9 | % | $ | (74) | (12.4) | % | $ | (59) | (9.0) | % |
Net sales | Operating income | ||||||||||||||||||||||
years ended December 31 (in millions) | 2020 | 2019 | 2018 | 2020 | 2019 | 2018 | |||||||||||||||||
Americas | $ | 6,321 | $ | 6,306 | $ | 6,156 | $ | 2,389 | $ | 2,499 | $ | 2,533 | |||||||||||
EMEA | 2,877 | 2,756 | 2,741 | 523 | 527 | 544 | |||||||||||||||||
APAC | 2,475 | 2,300 | 2,202 | 591 | 549 | 532 | |||||||||||||||||
Corporate and other | — | — | — | (1,887) | (1,803) | (2,025) | |||||||||||||||||
Total | $ | 11,673 | $ | 11,362 | $ | 11,099 | $ | 1,616 | $ | 1,772 | $ | 1,584 |
Standard & Poor’s | Fitch | Moody’s | |||||||||
Ratings | |||||||||||
Senior debt | A- | A- | Baa1 | ||||||||
Short-term debt | A2 | F2 | P2 | ||||||||
Outlook | Stable | Stable | Stable |
(in millions) | Total | Less than one year | One to three years | Three to five years | More than five years | ||||||||||||
Long-term debt and finance lease obligations, including current maturities | 6,233 | 406 | 212 | 1,664 | 3,951 | ||||||||||||
Interest on short- and long-term debt and finance lease obligations 1 | 1,627 | 142 | 267 | 251 | 967 | ||||||||||||
Operating leases | 673 | 121 | 186 | 126 | 240 | ||||||||||||
Other non-current liabilities2 | 408 | — | 84 | 48 | 276 | ||||||||||||
Purchase obligations3 | 1,209 | 485 | 352 | 198 | 174 | ||||||||||||
Contractual obligations2 | $ | 10,150 | $ | 1,154 | $ | 1,101 | $ | 2,287 | $ | 5,608 |
• | demand for, market acceptance risks for and competitive pressures related to new and existing products (including challenges with our ability to accurately predict these pressures and the resulting impact on customer inventory levels and the impact of reduced hospital admission rates and elective surgery volumes), and the impact of those products on quality and patient safety concerns; |
• | product development risks, including satisfactory clinical performance, the ability to manufacture at appropriate scale, and the general unpredictability associated with the product development cycle; |
• | our ability to finance and develop new products or enhancements on commercially acceptable terms or at all; |
• | our ability to identify business development and growth opportunities and to successfully execute on business development strategies; |
• | product quality or patient safety issues, leading to product recalls, withdrawals, launch delays, warning letters, import bans, sanctions, seizures, litigation, or declining sales; |
• | the impact of global economic conditions (including potential trade wars) and pandemics, epidemics or other public health crises, such as COVID-19, on us and our customers and suppliers, including foreign governments in countries in which we operate; |
• | the continuity, availability and pricing of acceptable raw materials and component supply, and the related continuity of our manufacturing and distribution; |
• | inability to create additional production capacity in a timely manner or the occurrence of other manufacturing, sterilization or supply difficulties (including as a result of natural disaster, public health crises and epidemics/pandemics, regulatory actions or otherwise); |
• | breaches or failures of our information technology systems or products, including by cyber-attack, data leakage, unauthorized access or theft (as a result of increased remote working arrangements or otherwise); |
• | future actions of (or failures to act or delays in acting by) FDA, the European Medicines Agency or any other regulatory body or government authority (including the SEC, DOJ or the Attorney General of any State) that could delay, limit or suspend product development, manufacturing or sale or result in seizures, recalls, injunctions, monetary sanctions or criminal or civil liabilities, including the continued delay in lifting the warning letter at our Ahmedabad facility or proceedings related to the misstatements in previously reported non-operating income related to foreign exchange gains and losses; |
• | developments that would require the correction of additional misstatements in our previously issued financial statements; |
• | failures with respect to our quality, compliance or ethics programs; |
• | future actions of third parties, including third-party payers, the impact of healthcare reform and its implementation, suspension, repeal, replacement, amendment, modification and other similar actions undertaken by the United States or foreign governments, including with respect to pricing, reimbursement, taxation and rebate policies; legislation, regulation and other governmental pressures in the United States or globally, including the cost of compliance and potential penalties for purported noncompliance thereof, all of which may affect pricing, reimbursement, taxation and rebate policies of government agencies and private payers or other elements of our business, including new or amended laws, rules and regulations (such as the California Consumer Privacy Act of 2018, the European Union’s General Data Protection Regulation and proposed regulatory changes of the U.S. Department of Health and Human Services in kidney health policy and reimbursement, which may substantially change the U.S. end stage renal disease market and demand for our peritoneal dialysis products, necessitating significant multi-year capital expenditures, which are difficult to estimate in advance, for example); |
• | the outcome of pending or future litigation or government investigations, including the opioid litigation and litigation related to the internal investigation of foreign exchange gains and losses; |
• | the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; |
• | global regulatory, trade and tax policies; |
• | the ability to protect or enforce our owned or in-licensed patent or other proprietary rights (including trademarks, copyrights, trade secrets and know-how) or patents of third parties preventing or restricting our manufacture, sale or use of affected products or technology; |
• | the impact of any goodwill or other intangible asset impairments on our operating results; |
• | any failure by Baxalta or Shire to satisfy its obligations under the separation agreements, including the tax matters agreement, or that certain letter agreement entered into with Shire and Baxalta; |
• | fluctuations in foreign exchange and interest rates; |
• | any changes in law concerning the taxation of income (whether with respect to current or future tax reform), including income earned outside the United States and potential taxes associated with the Base Erosion and Anti-Abuse Tax; |
• | actions by tax authorities in connection with ongoing tax audits; |
• | loss of key employees or inability to identify and recruit new employees; |
• | other factors identified elsewhere in this Annual Report on Form 10-K including those factors described in Item 1A and other filings with the SEC, all of which are available on our website. |
as of December 31 (in millions, except share information) | 2020 | 2019 | |||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance of $ | |||||||||||
Inventories | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Goodwill | |||||||||||
Other intangible assets, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Other non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
Current liabilities: | |||||||||||
Short-term debt | $ | $ | |||||||||
Current maturities of long-term debt and finance lease obligations | |||||||||||
Accounts payable and accrued liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt and finance lease obligations | |||||||||||
Operating lease liabilities | |||||||||||
Other non-current liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Equity: | |||||||||||
Common stock, $ | |||||||||||
Common stock in treasury, at cost, | ( | ( | |||||||||
Additional contributed capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive (loss) income | ( | ( | |||||||||
Total Baxter stockholders’ equity | |||||||||||
Noncontrolling interests | |||||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ |
years ended December 31 (in millions, except per share data) | 2020 | 2019 | 2018 | ||||||||
Net sales | $ | $ | $ | ||||||||
Cost of sales | |||||||||||
Gross margin | |||||||||||
Selling, general and administrative expenses | |||||||||||
Research and development expenses | |||||||||||
Other operating income, net | ( | ( | ( | ||||||||
Operating income | |||||||||||
Interest expense, net | |||||||||||
Other (income) expense, net | ( | ||||||||||
Income from continuing operations before income taxes | |||||||||||
Income tax expense (benefit) | ( | ||||||||||
Income from continuing operations | |||||||||||
Loss from discontinued operations, net of tax | ( | ||||||||||
Net income | |||||||||||
Less: Net income attributable to noncontrolling interests | |||||||||||
Net income attributable to Baxter stockholders | $ | $ | $ | ||||||||
Earnings per share from continuing operations | |||||||||||
Basic | $ | $ | $ | ||||||||
Diluted | $ | $ | $ | ||||||||
Loss per share from discontinued operations | |||||||||||
Basic | $ | $ | $ | ( | |||||||
Diluted | $ | $ | $ | ( | |||||||
Earnings per share | |||||||||||
Basic | $ | $ | $ | ||||||||
Diluted | $ | $ | $ | ||||||||
Weighted-average number of shares outstanding | |||||||||||
Basic | |||||||||||
Diluted |
years ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Net income | $ | $ | $ | ||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||
Currency translation adjustments, net of tax expense (benefit) of ($ | ( | ( | |||||||||
Pension and other postretirement benefit plans, net of tax expense of $ | |||||||||||
Hedging activities, net of tax expense (benefit) of ($ | ( | ( | |||||||||
Total other comprehensive (loss) income, net of tax | ( | ||||||||||
Comprehensive income | |||||||||||
Less: Comprehensive income attributable to noncontrolling interests | |||||||||||
Comprehensive income attributable to Baxter stockholders | $ | $ | $ |
Baxter International Inc. stockholders' equity | ||||||||||||||||||||||||||||||||
(in millions) | 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 | ||||||||||||||||||||||
Balance as of January 1, 2018 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||
Adoption of new accounting standards | — | — | — | — | — | ( | ( | $ | ( | — | $ | ( | ||||||||||||||||||||
Net income | — | — | — | — | — | — | $ | — | $ | |||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||
Purchases of treasury stock | — | — | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||
Stock issued under employee benefit plans and other | — | — | ( | ( | — | — | ||||||||||||||||||||||||||
Dividends declared on common stock | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||
Changes in noncontrolling interests | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Balance as of December 31, 2018 | $ | $ | ( | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||
Adoption of new accounting standard | — | — | — | — | — | ( | — | — | ||||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Purchases of treasury stock | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||
Stock issued under employee benefit plans and other | — | — | ( | ( | — | — | ||||||||||||||||||||||||||
Dividends declared on common stock | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||
Changes in noncontrolling interests | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||
Balance as of December 31, 2019 | $ | $ | ( | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||
Adoption of new accounting standard | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Purchases of treasury stock | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||
Stock issued under employee benefit plans and other | — | — | ( | — | — | |||||||||||||||||||||||||||
Dividends declared on common stock | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||
Changes in noncontrolling interests | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||
Balance as of December 31, 2020 | $ | $ | ( | $ | $ | $ | ( | $ | $ | $ |
years ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Cash flows from operations | |||||||||||
Net income | $ | $ | $ | ||||||||
Adjustments to reconcile income from continuing operations to net cash from operating activities: | |||||||||||
Loss from discontinued operations, net of tax | |||||||||||
Depreciation and amortization | |||||||||||
Pension settlement charges | |||||||||||
Net periodic pension benefit and other postretirement costs | |||||||||||
Deferred income taxes | ( | ( | ( | ||||||||
Stock compensation | |||||||||||
Loss on debt extinguishment | |||||||||||
Intangible asset impairments | |||||||||||
Settlement of interest rate derivative contracts | ( | ||||||||||
Other | |||||||||||
Changes in balance sheet items: | |||||||||||
Accounts receivable, net | ( | ( | ( | ||||||||
Inventories | ( | ( | |||||||||
Accounts payable and accrued liabilities | ( | ||||||||||
Other | ( | ( | ( | ||||||||
Cash flows from operations – continuing operations | |||||||||||
Cash flows from operations – discontinued operations | ( | ( | |||||||||
Cash flows from operations | |||||||||||
Cash flows from investing activities | |||||||||||
Capital expenditures | ( | ( | ( | ||||||||
Acquisitions and investments, net of cash acquired | ( | ( | ( | ||||||||
Other investing activities, net | |||||||||||
Cash flows from investing activities | ( | ( | ( | ||||||||
Cash flows from financing activities | |||||||||||
Issuances of long-term debt | |||||||||||
Payments of long-term debt | ( | ||||||||||
(Repayments) borrowings under revolving credit facility | ( | ||||||||||
Cash dividends on common stock | ( | ( | ( | ||||||||
Proceeds from stock issued under employee benefit plans | |||||||||||
Purchases of treasury stock | ( | ( | ( | ||||||||
Other financing activities, net | ( | ( | ( | ||||||||
Cash flows from financing activities | ( | ( | |||||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | ( | ( | |||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||
Cash, cash equivalents and restricted cash at beginning of year | |||||||||||
Cash, cash equivalents and restricted cash at end of year (1) | $ | $ | $ |
As of December 31 (in millions) | 2020 | ||||
Cash and cash equivalents | $ | ||||
Restricted cash included in prepaid expenses and other current assets | |||||
Cash, cash equivalents and restricted cash | $ |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
as of December 31 (in millions) | 2020 | 2019 | ||||||
Contract manufacturing services | $ | $ | ||||||
Software sales | ||||||||
Bundled equipment and consumable medical products contracts | ||||||||
Contract assets | $ | $ |
as of December 31 (in millions) | 2020 | 2019 | ||||||
Accounts receivable, net | $ | $ | ||||||
Other non-current assets | ||||||||
Contract assets | $ | $ | ||||||
Accounts payable and accrued liabilities | $ | $ | ||||||
Other non-current liabilities | ||||||||
Contract liabilities | $ | $ |
2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||
years ended December 31 (in millions) | U.S. | International | Total | U.S. | International | Total | U.S. | International | Total | ||||||||||||||||||||||||||
Renal Care1 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
Medication Delivery2 | |||||||||||||||||||||||||||||||||||
Pharmaceuticals3 | |||||||||||||||||||||||||||||||||||
Clinical Nutrition4 | |||||||||||||||||||||||||||||||||||
Advanced Surgery5 | |||||||||||||||||||||||||||||||||||
Acute Therapies6 | |||||||||||||||||||||||||||||||||||
BioPharma Solutions7 | |||||||||||||||||||||||||||||||||||
Other8 | |||||||||||||||||||||||||||||||||||
Total Baxter | $ | $ | $ | $ | $ | $ | $ | $ | $ |
years ended December 31 (in millions) | 2020 | 2019 | ||||||
Balance at beginning of period | $ | $ | ||||||
Adoption of new accounting standard | ||||||||
Charged to costs and expenses | ||||||||
Write-offs | ( | ( | ||||||
Currency translation adjustments | ( | |||||||
Balance at end of period | $ | $ |
ACQUISITIONS AND OTHER ARRANGEMENTS |
(in millions) | |||||
Assets acquired | |||||
Inventories | $ | ||||
Goodwill | |||||
Other intangible assets | |||||
Total assets acquired | $ |
(in millions) | |||||
Cash consideration transferred | $ | ||||
Contingent consideration | |||||
Total consideration | $ |
(in millions) | |||||
Assets acquired and liabilities assumed | |||||
Cash | $ | ||||
Accounts receivable, net | |||||
Inventories | |||||
Prepaid expenses and other current assets | |||||
Property, plant and equipment | |||||
Goodwill | |||||
Other intangible assets | |||||
Operating lease right-of-use assets | |||||
Accounts payable and accrued liabilities | ( | ||||
Other non-current liabilities | ( | ||||
Total assets acquired and liabilities assumed | $ |
(in millions) | |||||
Cash consideration transferred | $ | ||||
Contingent consideration | |||||
Total consideration | $ |
(in millions) | |||||
Assets acquired | |||||
Accounts receivable, net | $ | ||||
Inventory | |||||
Goodwill | |||||
Other intangible assets | |||||
Total assets acquired | $ |
(in millions) | |||||
Consideration transferred | |||||
Cash | $ | ||||
Fair value of equity investment | |||||
Noncontrolling interest | |||||
Total consideration transferred | $ |
(in millions) | |||||
Assets acquired and liabilities assumed | |||||
Cash | $ | ||||
Accounts receivable, net | |||||
Inventories | |||||
Property, plant and equipment | |||||
Goodwill | |||||
Other intangible assets | |||||
Other non-current assets | |||||
Short-term debt | ( | ||||
Accounts payable and accrued liabilities | ( | ||||
Other non-current liabilities | ( | ||||
Total assets acquired and liabilities assumed | $ |
SUPPLEMENTAL FINANCIAL INFORMATION |
as of December 31 (in millions) | 2020 | 2019 | ||||||
Raw materials | $ | $ | ||||||
Work in process | ||||||||
Finished goods | ||||||||
Inventories | $ | $ |
as of December 31 (in millions) | 2020 | 2019 | ||||||
Prepaid value added taxes | $ | $ | ||||||
Prepaid income taxes | ||||||||
Other | ||||||||
Prepaid expenses and other current assets | $ | $ |
as of December 31 (in millions) | 2020 | 2019 | ||||||
Land and land improvements | $ | $ | ||||||
Buildings and leasehold improvements | ||||||||
Machinery and equipment | ||||||||
Equipment with customers | ||||||||
Construction in progress | ||||||||
Total property, plant and equipment (PP&E), at cost | ||||||||
Accumulated depreciation | ( | ( | ||||||
PP&E, net | $ | $ |
as of December 31 (in millions) | 2020 | 2019 | ||||||
Deferred tax assets | $ | $ | ||||||
Non-current receivables, net | ||||||||
Contract assets | ||||||||
Capitalized implementation costs in hosting arrangements | ||||||||
Pension and other postretirement benefits | ||||||||
Investments | ||||||||
Other | ||||||||
Other non-current assets | $ | $ |
as of December 31 (in millions) | 2020 | 2019 | ||||||
Accounts payable | $ | $ | ||||||
Common stock dividends payable | ||||||||
Employee compensation and withholdings | ||||||||
Property, payroll and certain other taxes | ||||||||
Restructuring liabilities | ||||||||
Accrued rebates | ||||||||
Operating lease liabilities | ||||||||
Income taxes payable | ||||||||
Pension and other postretirement benefits | ||||||||
Other | ||||||||
Accounts payable and accrued liabilities | $ | $ |
as of December 31 (in millions) | 2020 | 2019 | ||||||
Pension and other postretirement benefits | $ | $ | ||||||
Deferred tax liabilities | ||||||||
Long-term tax liabilities | ||||||||
Interest rate contracts | ||||||||
Litigation and environmental reserves | ||||||||
Restructuring liabilities | ||||||||
Other | ||||||||
Other non-current liabilities | $ | $ |
years ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Interest costs | $ | $ | $ | ||||||||
Interest costs capitalized | ( | ( | ( | ||||||||
Interest expense | |||||||||||
Interest income | ( | ( | ( | ||||||||
Interest expense, net | $ | $ | $ |
years ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Foreign exchange losses (gains), net | $ | $ | $ | ( | |||||||
Investment gains | ( | ( | ( | ||||||||
Saudi Arabia joint venture gain | ( | ||||||||||
Loss on debt extinguishment | |||||||||||
Pension settlements | |||||||||||
Pension and other postretirement benefit plans | ( | ( | ( | ||||||||
Other, net | ( | ||||||||||
Other (income) expense, net | $ | $ | $ | ( |
year ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Interest paid, net of portion capitalized | $ | $ | $ | ||||||||
Income taxes paid | $ | $ | $ |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET |
(in millions) | Americas | EMEA | APAC | Total | ||||||||||
December 31, 2018 | $ | $ | $ | $ | ||||||||||
Additions | ||||||||||||||
Acquisition accounting adjustments | ( | ( | ( | |||||||||||
Currency translation | ( | ( | ( | ( | ||||||||||
December 31, 2019 | $ | $ | $ | $ | ||||||||||
Additions | ||||||||||||||
Acquisition accounting adjustments | ( | ( | ( | ( | ||||||||||
Currency translation | ||||||||||||||
December 31, 2020 | $ | $ | $ | $ |
(in millions) | Developed technology, including patents | Other amortized intangible assets | Indefinite-lived intangible assets | Total | ||||||||||
December 31, 2020 | ||||||||||||||
Gross other intangible assets | $ | $ | $ | $ | ||||||||||
Accumulated amortization | ( | ( | — | $ | ( | |||||||||
Other intangible assets, net | $ | $ | $ | $ | ||||||||||
December 31, 2019 | ||||||||||||||
Gross other intangible assets | $ | $ | $ | $ | ||||||||||
Accumulated amortization | ( | ( | — | $ | ( | |||||||||
Other intangible assets, net | $ | $ | $ | $ |
DEBT AND CREDIT FACILITIES |
as of December 31 (in millions) | Effective interest rate in 2020¹ | 20201 | 20191 | |||||||||||
Variable-rate loan due 2020 | % | $ | $ | |||||||||||
% | ||||||||||||||
% | ||||||||||||||
% | ||||||||||||||
% | ||||||||||||||
% | ||||||||||||||
% | ||||||||||||||
% | ||||||||||||||
% | ||||||||||||||
% | ||||||||||||||
% | ||||||||||||||
% | ||||||||||||||
% | ||||||||||||||
% | ||||||||||||||
% | ||||||||||||||
Finance leases and other | % | |||||||||||||
Total debt | ||||||||||||||
Current portion | ( | ( | ||||||||||||
Long-term portion | $ | $ |
as of and for the years ended December 31 (in millions) | Debt maturities | ||||
2021 | $ | ||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 | |||||
Thereafter | |||||
Total obligations and commitments | |||||
Discounts, premiums, and adjustments relating to hedging instruments | ( | ||||
Total debt | $ |
LEASES |
(in millions) | 2020 | 2019 | |||||||||
Operating lease cost | $ | $ | |||||||||
Finance lease cost | |||||||||||
Amortization of right-of-use assets | |||||||||||
Interest on lease liabilities | |||||||||||
Variable lease cost | |||||||||||
Lease cost | $ | $ |
(in millions) | 2020 | 2019 | |||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
Operating cash flows from operating leases | $ | $ | |||||||||
Operating cash flows from finance leases | |||||||||||
Financing cash flows from finance leases | |||||||||||
Right-of-use operating lease assets obtained in exchange for lease obligations | |||||||||||
Right-of-use finance lease assets obtained in exchange for lease obligations |
(in millions) | December 31, 2020 | December 31, 2019 | |||||||||
Operating leases | |||||||||||
Operating lease right-of-use assets | $ | $ | |||||||||
$ | $ | ||||||||||
Operating lease liabilities | |||||||||||
Total operating lease liabilities | $ | $ | |||||||||
Finance leases | |||||||||||
Property, plant and equipment, at cost | $ | $ | |||||||||
Accumulated depreciation | ( | ( | |||||||||
Property, plant and equipment, net | $ | $ | |||||||||
Current maturities of long-term debt and finance lease obligations | $ | $ | |||||||||
Long-term debt and finance lease obligations | |||||||||||
Total finance lease liabilities | $ | $ |
December 31, 2020 | December 31, 2019 | ||||||||||
Weighted-average remaining lease term (years) | |||||||||||
Operating leases | |||||||||||
Finance leases | |||||||||||
Weighted-average discount rate | |||||||||||
Operating leases | % | % | |||||||||
Finance leases | % | % |
(in millions) | Finance Leases | Operating Leases | ||||||
2021 | $ | $ | ||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
Thereafter | ||||||||
Total minimum lease payments | ||||||||
Less: imputed interest | ( | ( | ||||||
Present value of lease liabilities | $ | $ |
(in millions) | 2020 | 2019 | |||||||||
Sales-type lease revenue | $ | $ | |||||||||
Operating lease revenue | |||||||||||
Variable lease revenue | |||||||||||
Total lease revenue | $ | $ |
(in millions) | 2020 | 2019 | |||||||||
Minimum lease payments | $ | $ | |||||||||
Unguaranteed residual values | |||||||||||
Net investment in leases | $ | $ |
(in millions) | December 31, 2020 | December 31, 2019 | |||||||||
Accounts receivable, net | $ | $ | |||||||||
Other non-current assets | |||||||||||
Total | $ | $ |
(in millions) | Sales-type Leases | Operating Leases | ||||||
2021 | $ | $ | ||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
Thereafter | ||||||||
Total minimum lease payments | $ | |||||||
Less: imputed interest | ( | |||||||
Present value of minimum lease payments | $ |
COMMITMENTS AND CONTINGENCIES |
STOCKHOLDERS’ EQUITY |
years ended December 31 | 2020 | 2019 | 2018 | ||||||||
Expected volatility | % | % | % | ||||||||
Expected life (in years) | |||||||||||
Risk-free interest rate | % | % | % | ||||||||
Dividend yield | % | % | % | ||||||||
Fair value per stock option | $ | $ | $ |
(options and aggregate intrinsic values in thousands) | Options | Weighted- average exercise price | Weighted- average remaining contractual term (in years) | Aggregate intrinsic value | ||||||||||
Outstanding as of January 1, 2020 | $ | |||||||||||||
Granted | $ | |||||||||||||
Exercised | ( | $ | ||||||||||||
Forfeited | ( | $ | ||||||||||||
Expired | ( | $ | ||||||||||||
Outstanding as of December 31, 2020 | $ | $ | ||||||||||||
Vested or expected to vest as of December 31, 2020 | $ | $ | ||||||||||||
Exercisable as of December 31, 2020 | $ | $ |
(share units in thousands) | Share units | Weighted- average grant-date fair value | ||||||
Nonvested RSUs as of January 1, 2020 | $ | |||||||
Granted | $ | |||||||
Vested | ( | $ | ||||||
Forfeited | ( | $ | ||||||
Nonvested RSUs as of December 31, 2020 | $ |
years ended December 31 | 2020 | 2019 | 2018 | ||||||||
Baxter volatility | % | % | % | ||||||||
Peer group volatility | |||||||||||
Correlation of returns | |||||||||||
Risk-free interest rate | % | % | % | ||||||||
Fair value per PSU | $ | $ | $ |
(share units in thousands) | Share units | Weighted- average grant-date fair value | ||||||
Nonvested PSUs as of January 1, 2020 | $ | |||||||
Granted | $ | |||||||
Vested | ( | $ | ||||||
Forfeited | ( | $ | ||||||
Nonvested PSUs as of December 31, 2020 | $ |
ACCUMULATED OTHER COMPREHENSIVE INCOME |
(in millions) | CTA | Pension and OPEB plans | Hedging activities | Total | ||||||||||
Gains (losses) | ||||||||||||||
Balance as of December 31, 2019 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
Other comprehensive (loss) income before reclassifications | ( | |||||||||||||
Amounts reclassified from AOCI (a) | ||||||||||||||
Net other comprehensive (loss) income | ( | |||||||||||||
Balance as of December 31, 2020 | $ | ( | $ | ( | $ | ( | $ | ( |
(in millions) | CTA | Pension and OPEB plans | Hedging activities | Total | ||||||||||
Gains (losses) | ||||||||||||||
Balance as of December 31, 2018 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
Adoption of new accounting standard | ( | ( | ( | |||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | ( | ||||||||||
Amounts reclassified from AOCI (a) | ( | |||||||||||||
Net other comprehensive (loss) income | ( | ( | ||||||||||||
Balance as of December 31, 2019 | $ | ( | $ | ( | $ | ( | $ | ( |
Amounts reclassified from AOCI (a) | |||||||||||
(in millions) | 2020 | 2019 | Location of impact in income statement | ||||||||
Pension and OPEB items | |||||||||||
Amortization of net losses and prior service costs or credits | $ | ( | $ | ( | Other (income) expense, net | ||||||
Settlement charges | ( | ( | Other (income) expense, net | ||||||||
( | ( | Total before tax | |||||||||
Less: Tax effect | Income tax expense | ||||||||||
$ | ( | $ | ( | Net of tax | |||||||
Gains (losses) on hedging activities | |||||||||||
Foreign exchange contracts | $ | ( | $ | Cost of sales | |||||||
Interest rate contracts | ( | Interest expense, net | |||||||||
( | Total before tax | ||||||||||
Less: Tax effect | ( | Income tax expense | |||||||||
$ | ( | $ | Net of tax | ||||||||
Total reclassification for the period | $ | ( | $ | ( | Total net of tax |
BUSINESS OPTIMIZATION CHARGES |
years ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Restructuring charges | $ | $ | $ | ||||||||
Costs to implement business optimization programs | |||||||||||
Accelerated depreciation | |||||||||||
Total business optimization charges | $ | $ | $ |
2020 | ||||||||||||||
(in millions) | COGS | SG&A | R&D | Total | ||||||||||
Employee termination costs | $ | $ | $ | $ | ||||||||||
Contract termination and other costs | ||||||||||||||
Asset impairments | ||||||||||||||
Total restructuring charges | $ | $ | $ | $ | ||||||||||
2019 | ||||||||||||||
(in millions) | COGS | SG&A | R&D | Total | ||||||||||
Employee termination costs | $ | $ | $ | $ | ||||||||||
Contract termination and other costs | ||||||||||||||
Asset impairments | ||||||||||||||
Total restructuring charges | $ | $ | $ | $ | ||||||||||
2018 | ||||||||||||||
(in millions) | COGS | SG&A | R&D | Total | ||||||||||
Employee termination costs | $ | $ | $ | $ | ||||||||||
Contract termination and other costs | ||||||||||||||
Asset impairments | ||||||||||||||
Total restructuring charges | $ | $ | $ | $ |
(in millions) | |||||
Liability balance as of December 31, 2017 | $ | ||||
Charges | |||||
Payments | ( | ||||
Reserve adjustments | ( | ||||
Currency translation | ( | ||||
Liability balance as of December 31, 2018 | |||||
Charges | |||||
Payments | ( | ||||
Reserve adjustments | ( | ||||
Currency translation | ( | ||||
Liability balance as of December 31, 2019 | |||||
Charges | |||||
Payments | ( | ||||
Reserve adjustments | ( | ||||
Currency translation | |||||
Liability balance as of December 31, 2020 | $ |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS |
Pension benefits | OPEB | ||||||||||||||||
as of and for the years ended December 31 (in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Benefit obligations | |||||||||||||||||
Beginning of period | $ | $ | $ | $ | |||||||||||||
Service cost | |||||||||||||||||
Interest cost | |||||||||||||||||
Participant contributions | |||||||||||||||||
Actuarial loss | |||||||||||||||||
Benefit payments | ( | ( | ( | ( | |||||||||||||
Settlements | ( | ( | |||||||||||||||
Curtailment | ( | ( | |||||||||||||||
Foreign exchange and other | ( | ||||||||||||||||
End of period | |||||||||||||||||
Fair value of plan assets | |||||||||||||||||
Beginning of period | |||||||||||||||||
Actual return on plan assets | |||||||||||||||||
Employer contributions | |||||||||||||||||
Participant contributions | |||||||||||||||||
Benefit payments | ( | ( | ( | ( | |||||||||||||
Settlements | ( | ( | |||||||||||||||
Foreign exchange and other | |||||||||||||||||
End of period | |||||||||||||||||
Funded status at December 31 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
Amounts recognized in the consolidated balance sheets | |||||||||||||||||
Noncurrent asset | $ | $ | $ | $ | |||||||||||||
Current liability | ( | ( | ( | ( | |||||||||||||
Noncurrent liability | ( | ( | ( | ( | |||||||||||||
Net liability recognized at December 31 | $ | ( | $ | ( | $ | ( | $ | ( |
as of December 31 (in millions) | 2020 | 2019 | ||||||
ABO | $ | $ | ||||||
Fair value of plan assets | $ | $ |
as of December 31 (in millions) | 2020 | 2019 | ||||||
PBO | $ | $ | ||||||
Fair value of plan assets | $ | $ |
(in millions) | Pension benefits | OPEB | ||||||
2021 | $ | $ | ||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
2026 through 2030 | ||||||||
Total expected net benefit payments for next 10 years | $ | $ |
(in millions) | Pension benefits | OPEB | ||||||
Actuarial loss (gain) | $ | $ | ( | |||||
Prior service credit and transition obligation | ( | ( | ||||||
Total pre-tax loss (gain) recognized in AOCI at December 31, 2020 | $ | $ | ( | |||||
Actuarial loss (gain) | $ | $ | ( | |||||
Prior service credit and transition obligation | ( | ( | ||||||
Total pre-tax loss (gain) recognized in AOCI at December 31, 2019 | $ | $ | ( |
Year ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Gain (loss) arising during the year, net of tax of $ | $ | $ | ( | $ | ( | ||||||
Amortization of loss to earnings, net of tax of $ | |||||||||||
Settlement charges, net of tax of $ | $ | $ | $ | ||||||||
Pension and other employee benefits | $ | $ | $ |
Year ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Pension benefits | |||||||||||
Service cost | $ | $ | $ | ||||||||
Interest cost | |||||||||||
Expected return on plan assets | ( | ( | ( | ||||||||
Amortization of net losses and other deferred amounts | |||||||||||
Settlement charges | |||||||||||
Net periodic pension benefit cost | $ | $ | $ | ||||||||
OPEB | |||||||||||
Service cost | $ | $ | $ | ||||||||
Interest cost | |||||||||||
Amortization of net losses and prior service credit | ( | ( | ( | ||||||||
Net periodic OPEB cost | $ | ( | $ | ( | $ | ( |
Pension benefits | OPEB | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
Discount rate | |||||||||||||||||
U.S. and Puerto Rico plans | % | % | % | % | |||||||||||||
International plans | % | % | n/a | n/a | |||||||||||||
Rate of compensation increase | |||||||||||||||||
U.S. and Puerto Rico plans | % | % | n/a | n/a | |||||||||||||
International plans | % | % | n/a | n/a | |||||||||||||
Annual rate of increase in the per-capita cost | n/a | n/a | % | % | |||||||||||||
Rate decreased to | n/a | n/a | % | % | |||||||||||||
by the year ended | n/a | n/a | 2027 | 2027 |
Pension benefits | OPEB | ||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | ||||||||||||||||||
Discount rate | |||||||||||||||||||||||
U.S. and Puerto Rico plans | % | % | % | % | % | % | |||||||||||||||||
International plans | % | % | % | n/a | n/a | n/a | |||||||||||||||||
Expected return on plan assets | |||||||||||||||||||||||
U.S. and Puerto Rico plans | % | % | % | n/a | n/a | n/a | |||||||||||||||||
International plans | % | % | % | n/a | n/a | n/a | |||||||||||||||||
Rate of compensation increase | |||||||||||||||||||||||
U.S. and Puerto Rico plans | % | % | % | n/a | n/a | n/a | |||||||||||||||||
International plans | % | % | % | n/a | n/a | n/a | |||||||||||||||||
Annual rate of increase in the per-capita cost | n/a | n/a | n/a | % | % | % | |||||||||||||||||
Rate decreased to | n/a | n/a | n/a | % | % | % | |||||||||||||||||
by the year ended | n/a | n/a | n/a | 2027 | 2027 | 2027 |
Basis of fair value measurement | |||||||||||||||||
(in millions) | Balance at December 31, 2020 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Measured at NAV (a) | ||||||||||||
Assets | |||||||||||||||||
Fixed income securities | |||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||||
U.S. government and government agency issues | |||||||||||||||||
Corporate bonds | |||||||||||||||||
Equity securities | |||||||||||||||||
Common stock | |||||||||||||||||
Mutual funds | |||||||||||||||||
Common/collective trust funds | |||||||||||||||||
Partnership investments | |||||||||||||||||
Other holdings | |||||||||||||||||
Collateral held on loaned securities | |||||||||||||||||
Liabilities | |||||||||||||||||
Collateral to be paid on loaned securities | ( | ( | |||||||||||||||
Fair value of pension plan assets | $ | $ | $ | $ | $ |
Basis of fair value measurement | |||||||||||||||||
(in millions) | Balance at December 31, 2019 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Measured at NAV (a) | ||||||||||||
Assets | |||||||||||||||||
Fixed income securities | |||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||||
U.S. government and government agency issues | |||||||||||||||||
Corporate bonds | |||||||||||||||||
Equity securities | |||||||||||||||||
Common stock | |||||||||||||||||
Mutual funds | |||||||||||||||||
Common/collective trust funds | |||||||||||||||||
Partnership investments | |||||||||||||||||
Other holdings | |||||||||||||||||
Collateral held on loaned securities | |||||||||||||||||
Liabilities | |||||||||||||||||
Collateral to be paid on loaned securities | ( | ( | |||||||||||||||
Fair value of pension plan assets | $ | $ | $ | $ | $ |
(in millions) | Other holdings | ||||
Balance at December 31, 2018 | $ | ||||
Purchases | |||||
Balance at December 31, 2019 | |||||
Purchases | |||||
Balance at December 31, 2020 | $ |
Investment category | Valuation methodology | ||||
Cash and cash equivalents | These largely consist of a short-term investment fund, U.S. dollars and foreign currency. The fair value of the short-term investment fund is based on the net asset value. | ||||
U.S. government and government agency issues | Values are based on reputable pricing vendors, who typically use pricing matrices or models that use observable inputs. | ||||
Corporate bonds | Values are based on reputable pricing vendors, who typically use pricing matrices or models that use observable inputs. | ||||
Common stock | Values are based on the closing prices on the valuation date in an active market on national and international stock exchanges. | ||||
Mutual funds | Values are based on the net asset value of the units held in the respective fund which are obtained from national and international exchanges or based on the net asset value of the underlying assets of the fund provided by the fund manager. | ||||
Common/collective trust funds | Values are based on the net asset value of the units held at year end. | ||||
Partnership investments | Values are based on the net asset value of the participation by us in the investment as determined by the general partner or investment manager of the respective partnership. | ||||
Other holdings | The value of these assets vary by investment type, but primarily are determined by reputable pricing vendors, who use pricing matrices or models that use observable inputs. | ||||
Collateral held on loaned securities | Values are based on the net asset value per unit of the fund in which the collateral is invested. | ||||
Collateral to be paid on loaned securities | Values are based on the fair value of the underlying securities loaned on the valuation date. |
United States and Puerto Rico | International | |||||||||||||||||||
as of December 31, 2020 (in millions) | Qualified plans | Nonqualified plan | Funded plans | Unfunded plans | Total | |||||||||||||||
Fair value of plan assets | $ | n/a | $ | n/a | $ | |||||||||||||||
PBO | $ | $ | ||||||||||||||||||
Funded status percentage | % | n/a | % | n/a | % |
INCOME TAXES |
years ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
United States | $ | ( | $ | ( | $ | ||||||
International | |||||||||||
Income from continuing operations before income taxes | $ | $ | $ |
years ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Current | |||||||||||
United States | |||||||||||
Federal | $ | $ | $ | ||||||||
State and local | ( | ( | |||||||||
International | |||||||||||
Current income tax expense | |||||||||||
Deferred | |||||||||||
United States | |||||||||||
Federal | ( | ( | ( | ||||||||
State and local | ( | ||||||||||
International | ( | ( | |||||||||
Deferred income tax expense (benefit) | ( | ( | ( | ||||||||
Income tax expense (benefit) | $ | $ | ( | $ |
as of December 31 (in millions) | 2020 | 2019 | ||||||
Deferred tax assets | ||||||||
Accrued liabilities and other | $ | $ | ||||||
Pension and other postretirement benefits | ||||||||
Tax credit and net operating loss carryforwards | ||||||||
Swiss tax reform net asset basis step-up | ||||||||
Operating lease liabilities | ||||||||
Valuation allowances | ( | ( | ||||||
Total deferred tax assets | ||||||||
Deferred tax liabilities | ||||||||
Subsidiaries’ unremitted earnings | ||||||||
Long-lived assets and other | ||||||||
Operating lease right-of-use assets | ||||||||
Total deferred tax liabilities | ||||||||
Net deferred tax asset | $ | $ |
years ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Income tax expense at U.S. statutory rate | $ | $ | $ | ||||||||
Tax incentives | ( | ( | ( | ||||||||
State and local taxes, net of federal benefit | ( | ( | |||||||||
Impact of foreign taxes | |||||||||||
Swiss tax reform net asset basis step-up | ( | ||||||||||
Deferred tax revaluation due to 2017 Tax Act and foreign tax reform | ( | ( | |||||||||
Transition tax due to 2017 Tax Act | ( | ( | |||||||||
U.S. valuation allowance due to 2017 Tax Act | ( | ||||||||||
Other valuation allowances | |||||||||||
Stock compensation windfall tax benefits | ( | ( | ( | ||||||||
Research and development tax credits | ( | ( | ( | ||||||||
Unutilized foreign tax credits | |||||||||||
Other, net | ( | ||||||||||
Income tax expense (benefit) | $ | $ | ( | $ |
as of and for the years ended (in millions) | 2020 | 2019 | 2018 | ||||||||
Balance at beginning of the year | $ | $ | $ | ||||||||
Increase associated with tax positions taken during the current year | |||||||||||
Increase (decrease) associated with tax positions taken during a prior year | ( | ( | |||||||||
Settlements | ( | ( | ( | ||||||||
Decrease associated with lapses in statutes of limitations | ( | ( | ( | ||||||||
Balance at end of the year | $ | $ | $ |
EARNINGS PER SHARE |
years ended December 31(in millions) | 2020 | 2019 | 2018 | |||||||||||
Income from continuing operations | $ | $ | $ | |||||||||||
Less: Income from continuing operations attributable to noncontrolling interests | ||||||||||||||
Income from continuing operations attributable to Baxter stockholders | ||||||||||||||
Loss from discontinued operations attributable to Baxter stockholders | ( | |||||||||||||
Net income attributable to Baxter stockholders | $ | $ | $ |
years ended December 31(in millions) | 2020 | 2019 | 2018 | ||||||||
Basic shares | |||||||||||
Effect of dilutive securities | |||||||||||
Diluted shares |
FINANCIAL INSTRUMENTS, DERIVATIVES AND HEDGING ACTIVITIES |
as of and for the years ended December 31 (in millions) | 2020 | 2019 | 2018 | |||||||||||
Sold receivables at beginning of year | $ | $ | $ | |||||||||||
Proceeds from sales of receivables | ||||||||||||||
Cash collections (remitted to the owners of the receivables) | ( | ( | ( | |||||||||||
Effect of foreign exchange rate changes | ||||||||||||||
Sold receivables at end of year | $ | $ | $ |
(in millions) | Gain (loss) recognized in OCI | Location of gain (loss) in income statement | Gain (loss) reclassified from AOCI into income | ||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | ||||||||||||||||||
Cash flow hedges | |||||||||||||||||||||||
Interest rate contracts | $ | ( | $ | ( | $ | ( | Interest expense, net | $ | ( | $ | $ | ||||||||||||
Foreign exchange contracts | ( | ( | Cost of sales | ( | ( | ||||||||||||||||||
Net investment hedges | ( | Other (income) expense, net | |||||||||||||||||||||
Total | $ | ( | $ | ( | $ | $ | ( | $ | $ | ( |
Location of gain (loss) in income statement | Gain (loss) recognized in income | ||||||||||||||||
(in millions) | 2020 | 2019 | 2018 | ||||||||||||||
Fair value hedges | |||||||||||||||||
Interest rate contracts | Interest expense, net | $ | $ | $ | ( | ||||||||||||
Undesignated derivative instruments | |||||||||||||||||
Foreign exchange contracts | Other (income) expense, net | $ | $ | $ |
as of and for the year ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Accumulated other comprehensive income (loss) balance at beginning of year | $ | ( | $ | ( | $ | ( | |||||
Adoption of new accounting standard | ( | ||||||||||
(Loss) gain in fair value of derivatives during the year | ( | ( | ( | ||||||||
Amount reclassified to earnings during the year | ( | ||||||||||
Accumulated other comprehensive income (loss) balance at end of year | $ | ( | $ | ( | $ | ( |
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 | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | $ | Accounts payable and accrued liabilities | $ | |||||||||||||
Total derivative instruments designated as hedges | |||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | Accounts payable and accrued liabilities | |||||||||||||||
Total derivative instruments | $ | $ |
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 non-current assets | $ | Other non-current liabilities | $ | |||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | Accounts payable and accrued liabilities | |||||||||||||||
Total derivative instruments designated as hedges | |||||||||||||||||
Undesignated derivative instruments | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | Accounts payable and accrued liabilities | |||||||||||||||
Total derivative instruments | $ | $ |
December 31, 2020 | December 31, 2019 | ||||||||||||||||
(in millions) | Asset | Liability | Asset | Liability | |||||||||||||
Gross amounts recognized in the consolidated balance sheets | $ | $ | $ | $ | |||||||||||||
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheets | ( | ( | ( | ( | |||||||||||||
Total | $ | $ | $ | $ |
Carrying amount of hedged item | Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged item (a) | ||||||||||||||||
(in millions) | Balance as of December 31, 2020 | Balance as of December 31, 2019 | Balance as of December 31, 2020 | Balance as of December 31, 2019 | |||||||||||||
Long-term debt | $ | $ | $ | $ |
FAIR VALUE MEASUREMENTS |
Basis of fair value measurement | ||||||||||||||
(in millions) | Balance as of December 31, 2020 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||
Assets | ||||||||||||||
Foreign exchange contracts | $ | $ | $ | $ | ||||||||||
Debt securities | ||||||||||||||
Marketable equity securities | ||||||||||||||
Total | $ | $ | $ | $ | ||||||||||
Liabilities | ||||||||||||||
Foreign exchange contracts | $ | $ | $ | $ | ||||||||||
Contingent payments related to acquisitions | ||||||||||||||
Total | $ | $ | $ | $ |
Basis of fair value measurement | ||||||||||||||
(in millions) | Balance as of December 31, 2019 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||
Assets | ||||||||||||||
Foreign exchange contracts | $ | $ | $ | $ | ||||||||||
Interest rate contracts | ||||||||||||||
Marketable equity securities | ||||||||||||||
Total | $ | $ | $ | $ | ||||||||||
Liabilities | ||||||||||||||
Foreign exchange contracts | $ | $ | $ | $ | ||||||||||
Interest rate contracts | ||||||||||||||
Contingent payments related to acquisitions | ||||||||||||||
Total | $ | $ | $ | $ |
as of and for the years ended December 31 (in millions) | 2020 | 2019 | ||||||
Fair value at beginning of period | $ | $ | ||||||
Additions | ||||||||
Change in fair value recognized in earnings | ( | ( | ||||||
Payments | ( | ( | ||||||
Fair value at end of period | $ | $ |
Book values | Fair values(a) | ||||||||||||||||
as of December 31 (in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Liabilities | |||||||||||||||||
Short-term debt | $ | $ | $ | $ | |||||||||||||
Current maturities of long-term debt and finance lease obligations | |||||||||||||||||
Long-term debt and finance lease obligations |
SEGMENT INFORMATION |
for the years ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Net sales: | |||||||||||
Americas | $ | $ | $ | ||||||||
EMEA | |||||||||||
APAC | |||||||||||
Total net sales | $ | $ | $ | ||||||||
Operating income: | |||||||||||
Americas | $ | $ | $ | ||||||||
EMEA | |||||||||||
APAC | |||||||||||
Total segment operating income | $ | $ | $ | ||||||||
Depreciation Expense: | |||||||||||
Americas | $ | $ | $ | ||||||||
EMEA | |||||||||||
APAC | |||||||||||
Corporate and other | |||||||||||
Total depreciation expense | $ | $ | $ | ||||||||
Capital expenditures: | |||||||||||
Americas | $ | $ | $ | ||||||||
EMEA | |||||||||||
APAC | |||||||||||
Corporate and other | |||||||||||
Total capital expenditures | $ | $ | $ |
for the years ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Total segment operating income | $ | $ | $ | ||||||||
Corporate and other | ( | ( | ( | ||||||||
Total operating income | |||||||||||
Net interest expense | |||||||||||
Other (income) expense, net | ( | ||||||||||
Income from continuing operations before income taxes | $ | $ | $ |
for the years ended December 31 (in millions) | 2020 | 2019 | 2018 | ||||||||
Net sales: | |||||||||||
United States | $ | $ | $ | ||||||||
Latin America and Canada | |||||||||||
EMEA | |||||||||||
APAC | |||||||||||
Total net sales | $ | $ | $ |
as of December 31 (in millions) | 2020 | 2019 | ||||||
PP&E and operating lease right-of-use assets, net: | ||||||||
United States | $ | $ | ||||||
EMEA | ||||||||
APAC | ||||||||
Latin America and Canada | ||||||||
Consolidated PP&E and operating lease right-of-use assets, net | $ | $ |
QUARTERLY FINANCIAL DATA (UNAUDITED) |
years ended December 31 (in millions, except per share data) | First quarter | Second quarter | Third quarter | Fourth quarter² | Full year¹ | ||||||||||||
2020 | |||||||||||||||||
Net sales | $ | $ | $ | $ | $ | ||||||||||||
Gross margin | |||||||||||||||||
Net income attributable to Baxter stockholders | |||||||||||||||||
Earnings per share | |||||||||||||||||
Basic | |||||||||||||||||
Diluted | |||||||||||||||||
First quarter | Second quarter | Third quarter | Fourth quarter³ | Full year | |||||||||||||
2019 | |||||||||||||||||
Net sales | $ | $ | $ | $ | $ | ||||||||||||
Gross margin | |||||||||||||||||
Net income (loss) attributable to Baxter stockholders | ( | ||||||||||||||||
Earnings (loss) per share | |||||||||||||||||
Basic | ( | ||||||||||||||||
Diluted | ( | ||||||||||||||||
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 125 | $ 112 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, authorized (in shares) | 2,000,000,000 | 2,000,000,000 |
Common stock, issued (in shares) | 683,494,944 | 683,494,944 |
Treasury stock, shares (in shares) | 178,580,208 | 177,340,358 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 1,110 | $ 1,011 | $ 1,546 |
Other comprehensive (loss) income, net of tax: | |||
Currency translation adjustments, net of tax expense (benefit) of ($51) in 2020, ($5) in 2019 and $(52) in 2018 | 367 | (95) | (323) |
Pension and other postretirement benefit plans, net of tax expense of $40 in 2020 $130 in 2019, and $10 in 2018 | 141 | 408 | 33 |
Hedging activities, net of tax expense (benefit) of ($34) in 2020, $(11) in 2019, and $3 in 2018 | (112) | (39) | |
Hedging activities, net of tax expense (benefit) of ($34) in 2020, $(11) in 2019, and $3 in 2018 | 9 | ||
Total other comprehensive (loss) income, net of tax | 396 | 274 | (281) |
Comprehensive income | 1,506 | 1,285 | 1,265 |
Less: Comprehensive income attributable to noncontrolling interests | 8 | 10 | 0 |
Comprehensive income attributable to Baxter stockholders | $ 1,498 | $ 1,275 | $ 1,265 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | |||
Currency translation adjustments, tax | $ (51) | $ (5) | $ (52) |
Pension and other postretirement benefits, tax | 40 | 130 | 10 |
Hedging activities, tax | $ (34) | $ (11) | |
Hedging activities, tax | $ 3 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Nature of Operations Baxter International Inc., through our subsidiaries (collectively, Baxter, we, our or us), provides a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies; sterile intravenous (IV) solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. These products are used by hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctors’ offices and patients at home under physician supervision. Our global footprint and the critical nature of our products and services play a key role in expanding access to healthcare in emerging and developed countries. We operate in three segments: Americas, EMEA and APAC, which are described in Note 16. Risks and Uncertainties Related to COVID-19 Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus (COVID-19). COVID-19 has had, and we expect will continue to have, an adverse impact on our operations, supply chains and distribution systems and has increased and we expect will continue to increase our expenses, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments are taking. These measures have led to unprecedented restrictions on, disruptions in, and other related impacts on businesses and personal activities. In addition to travel restrictions put in place in early 2020, governments have closed borders, imposed prolonged quarantines and may continue those measures or implement other restrictions and requirements in light of the continuing spread of the pandemic. We expect that these evolving restrictions and requirements, as well as the corresponding need to adapt to new methods of conducting business remotely, will continue to have an adverse effect on our business. Use of Estimates The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (U.S. GAAP) requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. Basis of Presentation The consolidated financial statements include the accounts of Baxter and our majority-owned subsidiaries that we control, after elimination of intra-company transactions. Certain reclassifications have been made to conform the prior period consolidated financial statements to the current period presentation. On February 14, 2020, we completed the acquisition of the product rights to Seprafilm Adhesion Barrier (Seprafilm) from Sanofi for approximately $342 million in cash. Beginning February 14, 2020, our financial statements include the assets, liabilities and operating results of Seprafilm. Refer to Note 2 for additional information. On October 25, 2019, we acquired 100 percent of Cheetah Medical, Inc. (Cheetah) for total cash consideration of $188 million, net of cash acquired, with the potential for additional cash consideration, up to $40 million, based on clinical and commercial milestones for which the acquisition date fair value was $18 million. Beginning October 25, 2019, our financial statements include the assets, liabilities and operating results of Cheetah. Refer to Note 2 for additional information. On November 18, 2018, we acquired a controlling financial interest in our joint venture in Saudi Arabia. The acquisition allows us to increase manufacturing output and utilize the facilities for additional capacity for certain products in the region. Beginning November 18, 2018, we consolidated the financial statements of the joint venture with our consolidated financial statements. Refer to Note 2 for additional information. On March 16, 2018, we acquired two hemostat and sealant products from Mallinckrodt plc: Recothrom Thrombin topical (Recombinant) and Preveleak Surgical Sealant for total consideration of $184 million. Beginning March 16, 2018, our financial statements include the assets, liabilities and operating results of Recothrom and Preveleak. Refer to Note 2 for additional information. Revenue Recognition Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Some of our contracts have multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Our global payment terms are typically between 30-90 days. The majority of our performance obligations are satisfied at a point in time. This includes sales of our broad portfolio of essential healthcare products across our geographic segments, including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. For a majority of these sales, our performance obligation is satisfied upon delivery to the customer. Shipping and handling activities are considered to be fulfillment activities and are not considered to be a separate performance obligation. To a lesser extent, in all of our segments, we enter into other types of contracts, including contract manufacturing arrangements, equipment leases, and certain subscription software and licensing arrangements. We recognize revenue for these arrangements over time or at a point in time depending on our evaluation of when the customer obtains control of the promised goods or services. Revenue is recognized over time when we are creating or enhancing an asset that the customer controls as the asset is created or enhanced or when our performance does not create an asset with an alternative use and we have an enforceable right to payment for performance completed. As of December 31, 2020, we had $7.6 billion of transaction price allocated to remaining performance obligations related to executed contracts with an original duration of one year or more, which are primarily included in the Americas segment. Some contracts in the United States included in this amount contain index-dependent price increases, which are not known at this time. We expect to recognize approximately 35% of this amount as revenue in 2021, 25% in 2022, 20% in 2023, 10% in each of 2024 and 2025, and the remaining balance thereafter. Significant Judgments Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration primarily related to rebates and wholesaler chargebacks. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are included in accounts receivable, net and accounts payable and accrued liabilities on the consolidated balance sheets. Management's estimates take into consideration historical experience, current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract using the expected value method. The amount of variable consideration included in the net sales price is limited to the amount that is probable not to result in a significant reversal in the amount of the cumulative revenue recognized in a future period. Revenue recognized in the years ended December 31, 2020, 2019 and 2018 related to performance obligations satisfied in prior periods was not material. Additionally, our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately and determining the allocation of the transaction price may require significant judgment. Contract Balances The timing of revenue recognition, billings and cash collections results in the recognition of trade accounts receivable, unbilled receivables, contract assets, and customer advances and deposits (contract liabilities) on our consolidated balance sheets. Net trade accounts receivable was $1.7 billion and $1.8 billion as of December 31, 2020 and 2019, respectively. For contract manufacturing arrangements, revenue is primarily recognized throughout the production cycle, which typically lasts up to 90 days, resulting in the recognition of contract assets until the related services are completed and the customers are billed. Additionally, for arrangements containing a performance obligation to deliver software that can be used with medical devices, we recognize revenue upon delivery of the software, which results in the recognition of contract assets when customers are billed over time, generally over one to five years. For bundled contracts involving equipment delivered up-front and consumable medical products to be delivered over time, total contract revenue is allocated between the equipment and consumable medical products. In certain of those arrangements, a contract asset is created for the difference between the amount of equipment revenue recognized upon delivery and the amount of consideration initially receivable from the customer. In those arrangements, the contract asset becomes a trade account receivable as consumable medical products are provided and billed, generally over one to seven years. The following table summarizes our contract assets:
The following table summarizes the classification of contract assets and contract liabilities as reported in the consolidated balance sheet:
In 2020, 2019 and 2018, the amount of revenue recognized that was included in contract liabilities as of December 31, 2019, 2018 and 2017 was not significant. Practical Expedients We apply a practical expedient to expense as incurred costs to obtain a contract with a customer when the amortization period would have been one year or less. We do not disclose the value of the transaction price that is allocated to unsatisfied performance obligations for contracts with an original expected length of one year or less. We have elected to use the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component if it is expected, at contract inception, that the period between when we transfer a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Additionally, all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer are excluded from revenue. Disaggregation of Net Sales Beginning in the first quarter of 2021, our product category net sales disclosures (previously referred to as global business units (GBUs)) separately present net sales from our BioPharma Solutions business, which was previously included within Other. Concurrent with that disaggregation of net sales from our BioPharma Solutions business, we have also allocated certain previously unallocated sales deductions from Other to various categories, primarily based on their respective net sales. Net sales for 2020, 2019 and 2018 have been recast to conform to this presentation. The following tables disaggregate our net sales from contracts with customers by product category between the U.S. and international:
1 Renal Care includes sales of our peritoneal dialysis (PD), hemodialysis (HD) and additional dialysis therapies and services. 2 Medication Delivery includes sales of our IV therapies, infusion pumps, administration sets and drug reconstitution devices. 3 Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services. 4 Clinical Nutrition includes sales of our parenteral nutrition (PN) therapies and related products. 5 Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention. 6 Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU). 7 BioPharma Solutions includes sales of contracted services we provide to various pharmaceutical and biopharmaceutical companies. 8 Other includes sales of miscellaneous product and service offerings. Accounts Receivable and Allowance for Doubtful Accounts In the normal course of business, we provide credit to our customers, perform credit evaluations of these customers and maintain reserves for potential credit losses. In determining the amount of the allowance for doubtful accounts, we consider, among other items, historical credit losses, the past-due status of receivables, payment histories, other customer-specific information, current economic conditions and reasonable and supportable future forecasts. Receivables are written off when we determine they are uncollectible. The following table summarizes the allowance for doubtful accounts.
Shipping and Handling Costs Shipping costs, which are costs incurred to physically move product from our premises to the customer’s premises, are classified as selling, general and administrative (SG&A) expenses. Handling costs, which are costs incurred to store, move and prepare products for shipment, are classified as cost of sales. Approximately $325 million in 2020, $324 million in 2019 and $329 million in 2018 of shipping costs were classified in SG&A expenses. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include cash, certificates of deposit and money market and other short-term funds with original maturities of three months or less. Restricted cash represents cash balances restricted as to withdrawal or use and are included in prepaid expenses and other current assets on the consolidated balance sheets. Inventories Inventories are stated at the lower of cost or net realizable value determined by the first-in, first-out method. We review inventories on hand at least quarterly and record provisions for estimated excess, slow-moving and obsolete inventory, as well as inventory with a carrying value in excess of net realizable value. Property, Plant and Equipment, Net Property, plant and equipment are stated at cost. Depreciation expense is calculated using the straight-line method over the estimated useful lives of the related assets, which range from 20 to 50 years for buildings and improvements and from 3 to 15 years for machinery and equipment. Leasehold improvements are amortized over the life of the related facility lease (including any renewal periods, if appropriate) or the asset, whichever is shorter. We capitalize certain computer software and software development costs incurred in connection with developing or obtaining software for internal use. Capitalized software costs are included within machinery and equipment and are amortized on a straight-line basis over the estimated useful lives of the software, which generally range from to five years. Research and Development Research and development (R&D) costs, including R&D acquired in transactions that are not business combinations, are expensed as incurred. Pre-regulatory approval contingent milestone obligations to counterparties in collaborative arrangements, which include acquired R&D, are expensed when the milestone is achieved. Contingent milestone payments made to such counterparties on or after regulatory approval are capitalized and amortized over the remaining useful life of the related product. Amounts capitalized for such payments are included in other intangible assets, net. Acquired in-process R&D (IPR&D) is the value assigned to technology or products under development acquired in a business combination which have not received regulatory approval and have no alternative future use. Acquired IPR&D is capitalized as an indefinite-lived intangible asset. Development costs incurred after the acquisition are expensed as incurred. Upon receipt of regulatory approval of the related technology or product, the indefinite-lived intangible asset is accounted for as a finite-lived intangible asset and amortized on a straight-line basis over the estimated economic life of the related technology or product, subject to annual impairment reviews as discussed below. If the R&D project is abandoned, the indefinite-lived asset is charged to expense. Collaborative Arrangements We enter into collaborative arrangements in the normal course of business. These collaborative arrangements take a number of forms and structures and are designed to enhance and expedite long-term sales and profitability growth. These arrangements may provide for us to obtain commercialization rights to a product under development, and require us to make upfront payments, contingent milestone payments, profit-sharing, and/or royalty payments. We may be responsible for ongoing costs associated with the arrangements, including R&D cost reimbursements to the counterparty. See the R&D section of this note regarding the accounting treatment of upfront and contingent milestone payments. Any royalty and profit-sharing payments during the commercialization phase are expensed as cost of sales when they become due and payable. Restructuring Charges We record liabilities for costs associated with exit or disposal activities in the period in which the liability is incurred. Employee termination costs are primarily recorded when actions are probable and estimable. Costs for one-time termination benefits in which the employee is required to render service until termination in order to receive the benefits are recognized ratably over the future service period. Refer to the discussion below regarding the accounting for asset impairment charges. Goodwill, Intangible Assets, and Other Long-Lived Assets Goodwill is the excess of the purchase price over the fair value of acquired assets and liabilities in a business combination. Goodwill is not amortized but is subject to an impairment review annually and whenever indicators of impairment exist. We have the option to assess goodwill for impairment by initially performing a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If we determine that it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is not required to be performed. If we determine that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, or if we do not elect the option to perform an initial qualitative assessment, we perform a quantitative goodwill impairment test. In the quantitative impairment test, we calculate the estimated fair value of the reporting unit. If the carrying amount of the reporting unit exceeds the estimated fair value, an impairment charge is recorded for the amount that its carrying amount, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. Indefinite-lived intangible assets, such as IPR&D acquired in business combinations and certain trademarks with indefinite lives, are subject to an impairment review annually and whenever indicators of impairment exist. We have the option to assess indefinite-lived intangible assets for impairment by first performing qualitative assessments to determine whether it is more-likely-than-not that the fair values of the indefinite-lived intangible assets are less than the carrying amounts. If we determine that it is more-likely-than-not that an indefinite-lived intangible asset is impaired, or if we elect not to perform an initial qualitative assessment, we then perform the quantitative impairment test by comparing the fair value of the indefinite-lived intangible asset with its carrying amount. If the carrying amount exceeds the fair value of the indefinite-lived intangible asset, we write the carrying amount down to the fair value. We review the carrying amounts of long-lived assets, other than goodwill and intangible assets not subject to amortization, for potential impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating recoverability, we group assets and liabilities at the lowest level such that the identifiable cash flows relating to the group are largely independent of the cash flows of other assets and liabilities. We then compare the carrying amounts of the assets or asset groups with the related estimated undiscounted future cash flows. In the event impairment exists, an impairment charge is recorded as the amount by which the carrying amount of the asset or asset group exceeds the fair value. Investments in Equity Securities Our investments in marketable equity securities are classified as other non-current assets and are measured at fair value with gains and losses recognized in other (income) expense, net. We have elected to apply the measurement alternative to equity securities without readily determinable fair values. As such, our non-marketable equity securities are measured at cost, less any impairment, and are adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the same issuer. Gains and losses on non-marketable equity securities are also recognized in other (income) expense, net. Noncontrolling investments in common stock or in-substance common stock are accounted for under the equity method if we have significant influence over the operating and financial policies of the investee. Income Taxes Deferred taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting based on enacted tax laws and rates. We maintain valuation allowances unless it is more-likely-than-not that the deferred tax asset will be realized. With respect to uncertain tax positions, we determine whether the position is more-likely-than-not to be sustained upon examination based on the technical merits of the position. Any tax position that meets the more-likely-than-not recognition threshold is measured and recognized in the consolidated financial statements at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The liability relating to uncertain tax positions is classified as current in the consolidated balance sheets to the extent that we anticipate making a payment within one year. Interest and penalties associated with income taxes are classified in the income tax expense line in the consolidated statements of income. Refer to the Recently Adopted Accounting Pronouncements section of this note and Note 12 for additional information related to the Tax Cuts and Jobs Act of 2017 (2017 Tax Act). Foreign Currency Translation Currency translation adjustments (CTA) related to foreign operations are included in other comprehensive income (OCI). For foreign operations in highly inflationary economies, translation gains and losses are included in other (income) expense, net, and were not material in 2020, 2019 and 2018. Derivatives and Hedging Activities All derivative instruments are recognized as either assets or liabilities at fair value in the consolidated balance sheets and are generally classified as short-term or long-term based on the scheduled maturity of the instrument. We designate certain of our derivatives and foreign-currency denominated debt as hedging instruments in cash flow, fair value or net investment hedges. For each derivative instrument that is designated and effective as a cash flow hedge, the gain or loss on the derivative is recorded in accumulated other comprehensive income (AOCI) and then recognized in earnings consistent with the underlying hedged item. Option premiums or net premiums paid are initially recorded as assets and reclassified to OCI over the life of the option, and then recognized in earnings consistent with the underlying hedged item. Cash flow hedges are classified in cost of sales and interest expense, net, and are primarily related to forecasted third-party sales denominated in foreign currencies, forecasted intra-company sales denominated in foreign currencies and forecasted interest payments on anticipated issuances of debt, respectively. For each derivative instrument that is designated and effective as a fair value hedge, the gain or loss on the derivative is recognized immediately to earnings, and offsets changes in fair value attributable to a particular risk, such as changes in interest rates, of the hedged item, which are also recognized in earnings. Fair value hedges are classified in interest expense, net, as they hedge the interest rate risk associated with certain of our fixed-rate debt. We have designated our Euro-denominated senior notes as hedges of our net investment in our European operations and, as a result, mark to spot rate adjustments on the outstanding debt balances are recorded as a component of AOCI. For derivative instruments that are not designated as hedges, the change in fair value is recorded directly to other (income) expense, net. If it is determined that a derivative or nonderivative hedging instrument is no longer highly effective as a hedge, we discontinue hedge accounting prospectively. Gains or losses relating to terminations of effective cash flow hedges generally continue to be deferred and are recognized consistent with the loss or income recognition of the underlying hedged items. However, if it is probable that the hedged forecasted transactions will not occur, any gains or losses would be immediately reclassified from AOCI to earnings. If we terminate a fair value hedge, an amount equal to the cumulative fair value adjustment to the hedged item at the date of termination is amortized to earnings over the remaining term of the hedged item. If we remove a net investment hedge designation, any gains or losses recognized in AOCI are not reclassified to earnings until we sell, liquidate, or deconsolidate the foreign investments that were being hedged. Cash flows related to the settlement of derivative instruments designated as net investment hedges of foreign operations are classified in the consolidated statements of cash flows within investing activities. Cash flows for all other derivatives, including those that are not designated as a hedge, are classified in the same line item as the cash flows of the related hedged item, which is generally within operating activities. Refer to Note 14 for further information regarding our derivative and hedging activities. New Accounting Standards Recently adopted accounting pronouncements As of January 1, 2020, we adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses, which requires the measurement of expected lifetime credit losses, rather than incurred losses, for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. We adopted this ASU using the modified retrospective approach. The impact of the adoption of this ASU was an increase to our allowance for doubtful accounts and a decrease to retained earnings of $4 million. As of January 1, 2020, we adopted ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Our policies for capitalizing implementation costs incurred in a hosting arrangement were not impacted by this ASU. However, we have historically classified those capitalized costs within property, plant and equipment, net on our consolidated balance sheets and as capital expenditures on our consolidated statements of cash flows. Under the new ASU, those capitalized costs are presented as other non-current assets on our consolidated balance sheets and within operating cash flows on our consolidated statements of cash flows. We adopted this ASU on a prospective basis and capitalized $44 million of implementation costs related to hosting arrangements that are service contracts during the year ended December 31, 2020. As of January 1, 2020, we adopted ASU No. 2017-04, Intangibles – Goodwill and Other, Simplifying the Test for Goodwill Impairment. This standard eliminates Step 2 of the goodwill impairment test and requires a goodwill impairment to be measured as the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of its goodwill. The adoption of this standard did not impact our consolidated financial statements. As of January 1, 2020, we adopted ASU No. 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Topic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans. This ASU amends ASC 715 to remove certain disclosures, clarify certain existing disclosures and add additional disclosures. The adoption of this standard did not have a material impact on our consolidated financial statements. As of January 1, 2019, we adopted ASU No. 2016-02, Leases (Topic 842). Under this guidance, lessees are required to recognize a right-of-use asset and a lease liability on the balance sheet for all operating leases, other than those that meet the definition of a short-term lease. We adopted Topic 842 using the modified retrospective method. We elected the following practical expedients when assessing the transition impact: i) not to reassess whether any expired or existing contracts as of the adoption date are or contain leases; ii) not to reassess the lease classification for any expired or existing leases as of the adoption date; and iii) not to reassess initial direct costs for any existing leases as of the adoption date. The adjustment to record operating lease right-of-use assets and operating lease liabilities was $502 million as of January 1, 2019. The impact to the consolidated statements of income was not material and there was no net impact to the consolidated statements of cash flows. As of January 1, 2019, we adopted ASU No. 2018-02, Reclassification of Certain Tax Effects from AOCI. As a result of the enactment of the 2017 Tax Act, this guidance provides for a reclassification of certain tax effects from AOCI to retained earnings. The impact of the adoption of this standard was a $161 million increase to retained earnings. As of January 1, 2018, we adopted ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory (ASU No. 2016-16) using the modified retrospective method. ASU No. 2016-16 generally accelerates the recognition of income tax consequences for intra-company asset transfers other than inventory. We recorded a $70 million reduction to retained earnings upon adoption of the standard on January 1, 2018 related to the unrecognized income tax effects of asset transfers that occurred prior to adoption. Net income increased $14 million for the year ended December 31, 2018 as a result of the adoption of the standard. As of January 1, 2018, we adopted 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 to receive when products are transferred to customers. The primary impact of the new standard relates to our contract manufacturing operations and software arrangements. Certain contract manufacturing arrangements require revenue recognition over-time in situations in which we produce products that have no alternative use and we have an enforceable right to payment for performance completed to date, inclusive of a reasonable profit margin. This results in an acceleration of revenue recognition for certain contractual arrangements as compared to recognition under prior accounting literature. The new guidance also impacts our arrangements subject to previous software revenue recognition guidance, as we are required to recognize as revenue a significant portion of the contract consideration upon delivery of the software compared to the previous practice of recognizing the contract consideration ratably over time for certain arrangements. We adopted Topic 606 using the modified retrospective method. The adjustment upon adoption increased our opening balance of retained earnings by approximately $45 million, net of tax, on January 1, 2018. The impact to net sales as a result of the adoption was an increase of $7 million for the year ended December 31, 2018. The impact to cost of sales was not material for the year ended December 31, 2018. In December 2017, the SEC issued guidance for situations where the accounting for certain elements of the 2017 Tax Act could not be completed prior to the release of a company's financial statements. For specific elements of the 2017 Tax Act, we determined a reasonable estimate for certain effects and recorded that estimate as a provisional amount in 2017. The guidance provided a measurement period to allow a company to account for these specific elements, which began in the reporting period that included the enactment of the 2017 Tax Act and ended when we obtained, prepared and analyzed the information needed in order to complete its accounting assessments or one year, whichever occurred sooner. The resulting tax effects were to be recognized in the period the assessment was complete, and included in income tax expense, accompanied by appropriate disclosures. The measurement period closed in 2018 and we recorded adjustments to reduce income tax expense by $207 million in 2018. Refer to Note 12 for additional information related to the 2017 Tax Act.
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ACQUISITIONS AND OTHER ARRANGEMENTS |
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ACQUISITIONS AND OTHER ARRANGEMENTS |
Results of operations of acquired companies are included in our results of operations as of the respective acquisition dates. The purchase price of each acquisition is allocated to the net assets acquired based on estimates of their fair values at the date of the acquisition. Any purchase price in excess of these net assets is recorded as goodwill. The allocation of purchase price in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. Contingent consideration related to business combinations is recognized at its estimated fair value on the acquisition date. Subsequent changes to the fair value of those contingent consideration arrangements are recognized in earnings. Contingent consideration related to acquisitions may consist of development, regulatory and commercial milestone payments, and sales or earnings-based payments, and are valued using discounted cash flow techniques. The fair value of development, regulatory and commercial milestone payments reflects management’s expectations of the probability of payment, and increases or decreases as the probability of payment or expectation of timing or amount of payments changes. The fair value of sales-based payments is based upon probability-weighted future revenue estimates and increases or decreases as revenue estimates or expectation of timing or amount of payments changes. Seprafilm Adhesion Barrier On February 14, 2020, we completed the acquisition of the product rights to Seprafilm Adhesion Barrier (Seprafilm) from Sanofi for approximately $342 million in cash. Seprafilm is indicated for use in patients undergoing abdominal or pelvic laparotomy as an adjunct intended to reduce the incidence, extent and severity of postoperative adhesions between the abdominal wall and the underlying viscera such as omentum, small bowel, bladder, and stomach, and between the uterus and surrounding structures such as tubes and ovaries, large bowel, and bladder. We concluded that the acquired assets met the definition of a business and accounted for the transaction as a business combination using the acquisition method of accounting. The following table summarizes the fair values of the assets acquired as of the acquisition date:
For the year ended December 31, 2020, the results of operations of the acquired business have been included in our consolidated statement of income since the date the business was acquired. The acquisition contributed $94 million of net sales and $18 million of pretax income for the year ended December 31, 2020. Acquisition and integration costs, primarily incremental cost of sales relating to inventory fair value step-ups, associated with the acquisition were $15 million for the year ended December 31, 2020. We allocated $286 million and $10 million of the total consideration to the Seprafilm developed product rights and customer relationships with useful lives of 10 and 7 years, respectively. The fair values of the intangible assets were determined using the income approach. The discount rates used to measure the developed product rights and customer relationship intangible assets were 14.8% and 11.0%, respectively. We consider the fair values of the intangible assets to be Level 3 measurements due to the significant estimates and assumptions we used in establishing the estimated fair values. The goodwill, which is deductible for tax purposes, includes the value of the overall strategic benefits provided to our product portfolio of hemostats and sealants and is included in the Americas and APAC segments. Cheetah Medical, Inc. On October 25, 2019, we acquired 100 percent of Cheetah Medical, Inc. (Cheetah), a leading provider of hemodynamic monitoring technologies, for total upfront cash consideration of $195 million, net of cash acquired, with the potential for additional cash consideration, up to $40 million, based on clinical and commercial milestones for which the acquisition date fair value was $18 million. In 2020, we received $7 million from the sellers as a result of an acquisition price adjustment in accordance with the acquisition agreement. Additionally, we recorded measurement period adjustments in 2020 to decrease the net deferred tax liabilities acquired by $20 million. The measurement period adjustments reduced goodwill and did not impact our results of operations. The fair value of the potential contingent consideration payments was estimated by applying a probability-weighted expected payment model for the clinical milestone and a Monte Carlo simulation model for the commercial milestone, which were then discounted to present value. The fair value measurements were based on Level 3 inputs. The following table summarizes the fair value of consideration transferred:
The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date:
The results of operations of the acquired business have been included in our consolidated statement of income since the date the business was acquired and were not significant. Acquisition and integration costs associated with the acquisition were $5 million and $3 million in 2020 and 2019, respectively. We allocated $123 million of the total consideration to the developed product rights with a weighted-average useful life of 15 years and $8 million to customer relationships with a useful life of 13 years. The fair values of the intangible assets were determined using the income approach. The discount rates used to measure the intangible assets were 11.0% for developed product rights and 10.0% for customer relationships. We consider the fair value of the intangible assets to be Level 3 measurements due to the significant estimates and assumptions used by management in establishing the estimated fair values. The goodwill, which is not deductible for tax purposes, includes the value of potential future technologies as well as the overall strategic benefits provided to our product portfolio and is included primarily in the Americas segment. Recothrom and Preveleak On March 16, 2018, we acquired two hemostat and sealant products from Mallinckrodt plc: Recothrom Thrombin topical (Recombinant), the first and only stand-alone recombinant thrombin, and Preveleak Surgical Sealant, which is used in vascular reconstruction. We concluded that the acquired assets met the definition of a business and accounted for the transaction as a business combination using the acquisition method of accounting. The purchase price included an upfront payment of approximately $163 million in 2018. In addition, the purchase price included new and assumed contingent payments in the future related to inventory and technology transfer milestones and net revenue royalty payments with an estimated fair value of $21 million as of the acquisition date. The maximum aggregate amounts payable for the inventory and technology transfer and net revenue royalties were $7 million, $15 million and $143 million, respectively. The fair value of the potential contingent consideration payments was estimated by applying a probability-weighted expected payment model for the inventory and technology transfer payments and a Monte Carlo simulation model for contingent royalty payments, which were then discounted to present value. The following table summarizes the fair value of consideration transferred:
The following table summarizes the fair value of the assets acquired as of the acquisition date:
The results of operations of the acquired business have been included in our consolidated statement of income since the date the business was acquired. The Recothrom and Preveleak acquisitions contributed $80 million and $52 million of net sales for the years ended December 31, 2019 and 2018, respectively. Acquisition and integration costs, including incremental cost of sales relating to inventory fair value step-ups, associated with the acquisition were $20 million and $17 million, respectively, in 2019 and 2018. We allocated $100 million of the total consideration to the Recothrom and Preveleak developed product rights with a weighted-average useful life of 10 years. The fair value of the intangible assets was determined using the income approach. The discount rates used to measure the Recothrom and Preveleak intangible assets were 12.5% and 13.0%, respectively. We consider the fair value of the intangible assets to be Level 3 measurements due to the significant estimates and assumptions used by management in establishing the estimated fair values. The goodwill, which is deductible for tax purposes, includes the value of potential future technologies as well as the overall strategic benefits provided to our surgical portfolio of hemostats and sealants, and is included in the Americas segment. Saudi Arabia Joint Venture In November 2018, we acquired additional equity to obtain a 51% controlling financial interest of our joint venture in Saudi Arabia that was previously accounted for under the equity method of accounting. The acquisition allows us to increase manufacturing output and utilize the facilities for additional capacity for certain products in the region. Beginning in the fourth quarter of 2018, we consolidated the financial statements of the joint venture with our consolidated financial statements. The results of operations of the joint venture have been included in our consolidated statement of income since the date the business was acquired and were not significant. The guidance on accounting for business combinations requires that an acquirer remeasure its previously held equity interest in an acquiree at its acquisition date fair value and recognize the resulting gain or loss in earnings. Thus, in connection with the acquisition, the carrying amount of our previously held equity interest in the joint venture was remeasured to fair value at the acquisition date, resulting in a gain in the fourth quarter of 2018 of $24 million, which was included in other (income) expense, net in the consolidated statement of income. The fair value of the equity interest on the acquisition date was $39 million and we consider the fair value to be a Level 3 measurement due to the significant estimates and assumptions used by management in establishing the estimated fair value. The following table summarizes the fair value of consideration transferred:
The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date:
The goodwill, which is not deductible for tax purposes, includes the value to create a more fully integrated supply chain and go-to-market business model and is included in the EMEA segment. In connection with the acquisition, we reacquired certain license rights which had provided the joint venture with the exclusive and perpetual rights to manufacture and distribute our products for sale in specified territories. Reacquired license rights with fair values totaling $10 million were assigned a useful life of 12 years. Other amortizable intangible assets consist of customer relationships and have a weighted-average estimated useful life of 10 years. The intangible assets were valued using the income approach. The discount rates used to measure the reacquired rights and customer relationship intangible assets were 13.0% and 14.0%, respectively. We consider the fair value of each of the acquired intangible assets to be Level 3 measurements due to the significant estimates and assumptions used by management in establishing the estimated fair values. The fair value of the 49% noncontrolling interest in the joint venture is estimated to be $39 million. The fair value of the noncontrolling interest was estimated using the income approach applied to the projected cash flows of the joint venture. As the joint venture is a private company, the fair value measurement is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement. Claris Injectables Limited On July 27, 2017, we acquired 100 percent of Claris Injectables Limited (Claris), a wholly owned subsidiary of Claris Lifesciences Limited, for total cash consideration of approximately $629 million, net of cash acquired. Through the acquisition, we added capabilities in production of essential generic injectable medicines, such as anesthesia and analgesics, renal, anti-infectives and critical care in a variety of presentations including bags, vials and ampoules. In the first quarter of 2018, we settled certain claims with Claris Lifesciences Limited related to the acquired operations and terminated a development agreement with Dorizoe Lifesciences Limited. As a result, we received cash of $73 million in February 2018 and were released from an accrued liability to Claris Lifesciences Limited of $7 million. The total of $80 million is reflected as a benefit within other operating income, net in the 2018 consolidated statement of income. Other Business Combinations Total consideration transferred for other acquisitions totaled $18 million, $10 million and $36 million in 2020, 2019 and 2018, respectively, and primarily resulted in the recognition of goodwill and other intangible assets. These acquisitions did not materially affect our results of operations. We have not presented pro forma financial information for any of the 2020, 2019 or 2018 acquisitions because their results are not material to our consolidated financial statements. Other Business Development Activities Transderm Scop In February 2021, we agreed to acquire the rights to Transderm Scop from subsidiaries of GlaxoSmithKline for an upfront purchase price of $55 million plus the cost of acquired inventory and the potential for additional cash consideration of $30 million based upon a successful technology transfer by a specified date. We currently sell this product under a distribution license to the U.S. institutional market. Transderm Scop is indicated for post-operative nausea and vomiting in the U.S. and motion sickness in European markets. We expect the transaction to close late in the first quarter or early in the second quarter of 2021, subject to the satisfaction of closing conditions. Caelyx and Doxil In December 2020, we agreed to acquire the rights to Caelyx and Doxil, the branded versions of liposomal doxorubicin, from a subsidiary of Johnson & Johnson for specified territories outside of the U.S. for $325 million. We previously acquired the U.S. rights to this product in 2019. Liposomal doxorubicin is a chemotherapy medicine used to treat various types of cancer. We expect the transaction to close late in the first quarter or early in the second quarter of 2021, subject to the satisfaction of regulatory approvals and other closing conditions. Celerity Pharmaceuticals, LLC In September 2013, we entered into an agreement with Celerity Pharmaceutical, LLC (Celerity) to develop certain acute care generic injectable premix and oncolytic products through regulatory approval. We transferred our rights in these products to Celerity and Celerity assumed ownership and responsibility for development of the products. We are obligated to purchase the individual product rights from Celerity if the products obtain regulatory approval. We did not purchase any product rights from Celerity in 2020. In 2019 and 2018, we paid $86 million and $72 million, respectively, to acquire the rights to various products that have received regulatory approval. The payment in 2018 for one of the products was based on tentative approval from the U.S. Food and Drug Administration (FDA). Full approval from FDA was received in the third quarter of 2018. We capitalized the purchase prices of products that were purchased upon regulatory approval as intangible assets and are amortizing the assets over their estimated useful lives of 12 years. As of December 31, 2020, our contingent future payments total up to $77 million upon Celerity’s achievement of specified regulatory approvals. In December 2020, we entered into an agreement with a third party to divest one of the products that is currently being developed by Celerity if that product receives regulatory approval in the U.S. and/or European Union. If regulatory approval is obtained, we would incur a loss ranging from $30 million to $60 million for the difference between our purchase price and the divestiture proceeds in connection with that transaction. Other Asset Acquisitions During 2020, we acquired the rights to multiple products for $73 million. The purchase prices were capitalized as developed-technology intangible assets and are being amortized over a weighted-average estimated useful life of 11 years. During 2020, we also entered into distribution license arrangements for multiple products that have not yet obtained regulatory approval for upfront cash payments of $22 million. The cash paid was treated as R&D expenses on our consolidated statement of income. We could make additional payments of up to $44 million upon the achievement of certain development, regulatory or commercial milestones. During 2019, we acquired the rights to multiple products for an aggregate purchase price of $80 million. The purchase prices were capitalized primarily as developed-technology intangible assets and are being amortized over a weighted-average useful of 10 years. Other In addition to the significant arrangements described above, we have entered into several other collaborative arrangements. We could make additional payments of up to $25 million upon the achievement of certain development and regulatory milestones, in addition to future payments related to contingent commercialization milestones, profit-sharing and royalties.
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SUPPLEMENTAL FINANCIAL INFORMATION |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL FINANCIAL INFORMATION |
Inventories
Prepaid Expenses and Other Current Assets
Property, Plant and Equipment, Net
Depreciation expense was $601 million in 2020, $606 million in 2019 and $602 million in 2018. Other Non-Current Assets
Accounts Payable and Accrued Liabilities
Other Non-Current Liabilities
Interest Expense, net
Other (Income) Expense, net
Supplemental Cash Flow Information Non-Cash Investing Activities Purchases of property, plant and equipment included in accounts payable and accrued liabilities as of December 31, 2020, 2019 and 2018 was $102 million, $87 million and $97 million, respectively. Other Supplemental Information
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GOODWILL AND OTHER INTANGIBLE ASSETS, NET |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS, NET |
Goodwill The following table is a summary of the activity in goodwill by segment.
As of December 31, 2020, there were no reductions in goodwill relating to impairment losses. Other Intangible Assets, Net The following table is a summary of our other intangible assets.
Intangible asset amortization expense was $222 million in 2020, $183 million in 2019, and $169 million in 2018. The anticipated annual amortization expense for definite-lived intangible assets recorded as of December 31, 2020 is $231 million in 2021, $227 million in 2022, $212 million in 2023, $189 million in 2024 and $155 million in 2025. In the second quarters of 2020 and 2019, we recognized impairment charges of $17 million and $31 million, respectively, related to developed-technology intangible assets due to declines in market expectations for the related products. The fair values of the intangible assets were measured using a discounted cash flow approach and the charges are classified within cost of sales in the accompanying consolidated statements of income for the years ended December 31, 2020 and December 31, 2019. We consider the fair values of the assets to be Level 3 measurements due to the significant estimates and assumptions we used in establishing the estimated fair values.
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DEBT AND CREDIT FACILITIES |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT AND CREDIT FACILITIES |
Debt Outstanding At December 31, 2020 and 2019, we had the following debt outstanding:
1Book values include any discounts, premiums and adjustments related to hedging instruments and effective interest rates reflect amortization of those items. Significant Debt Activity In May 2019, we issued €750 million of 0.40% senior notes due May 2024 and €750 million of 1.3% senior notes due May 2029. We have designated these debt instruments as net investment hedges of our European operations. Refer to Note 14 for additional information. In March 2020, we issued $750 million of 3.75% senior notes due in October 2025 and $500 million of 3.95% senior notes due in April 2030 (collectively, the March 2020 senior notes). Pursuant to a registration rights agreement (the March 2020 Registration Rights Agreement) with the initial purchasers of the March 2020 senior notes, we agreed to use our commercially reasonable efforts to file a registration statement with respect to a registered offer to exchange the March 2020 senior notes for new notes with terms substantially identical in all material respects to the March 2020 senior notes and to have such registration statement declared effective under the U.S. Securities Act of 1933. If we fail to have such registration statement declared effective by September 17, 2021 (a registration default), the annual interest rate on the March 2020 senior notes would increase by 0.25% for the 90-day period immediately following such registration default and by an additional 0.25% thereafter. The maximum additional interest rate is 0.50% per annum and if a registration default is corrected, the March 2020 senior notes would revert to the original interest rates. The payment of additional interest is the sole remedy for the holders of the March 2020 senior notes in the event of a registration default. In October 2020, we repaid $322 million of variable-rate loans that matured in 2020. In November 2020, we issued $650 million of 1.73% senior notes due in April 2031 (the November 2020 senior notes). Pursuant to a registration rights agreement (the November 2020 Registration Rights Agreement) with the initial purchasers of the November 2020 senior notes, we agreed to use our commercially reasonable efforts to file a registration statement with respect to a registered offer to exchange the November 2020 senior notes for new notes with terms substantially identical in all material respects to the November 2020 senior notes and to have such registration statement declared effective under the U.S. Securities Act of 1933. If we fail to have such registration statement declared effective by April 26, 2022 (a registration default), the annual interest rate on the November 2020 senior notes would increase by 0.25% for the 90-day period immediately following such registration default and by an additional 0.25% thereafter. The maximum additional interest rate is 0.50% per annum and if a registration default is corrected, the November 2020 senior notes would revert to the original interest rates. The payment of additional interest is the sole remedy for the holders of the November 2020 senior notes in the event of a registration default. We used the proceeds from the November 2020 senior notes, along with cash on hand, to redeem the $750 million of 3.75% senior notes due in October 2025 that were issued in March 2020. In connection with the redemption of the $750 million of 3.75% senior notes due in October 2025, including the payment of a $104 million make-whole premium to the debt holders, we recognized a pre-tax loss of $110 million from the early extinguishment of the debt, which is included in other (income) expense, net in 2020. Credit Facilities In December 2019, we entered into new U.S. and Euro-denominated credit facilities. Our U.S. dollar-denominated revolving credit facility has a capacity of $2.0 billion and our Euro-denominated revolving credit facility has a capacity of approximately €200 million. Each of the facilities matures in 2024. As of December 31, 2020, we had no borrowings outstanding under our U.S. dollar-denominated or Euro-denominated credit facilities. As of December 31, 2019, we had €200 million ($224 million) outstanding under our Euro-denominated facility at a 0.91% interest rate and no borrowings outstanding under our U.S. dollar-denominated credit facility. The facilities enable us to borrow funds on an unsecured basis at variable interest rates, and contain various covenants, including a maximum net leverage ratio. Fees under the credit facilities are 0.09% annually as of December 31, 2020 and are based on our credit ratings and the total capacity of the facility. We also maintain other credit arrangements, which totaled approximately $200 million as of December 31, 2020 and 2019, respectively. There were no amounts outstanding under these arrangements as of December 31, 2020 and there was $2 million outstanding as of December 31, 2019. As of December 31, 2020, we were in compliance with the financial covenants in these agreements. The non-performance of any financial institution supporting any of the credit facilities would reduce the maximum capacity of these facilities by each institution’s respective commitment. Future Debt Maturities
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES |
Lessee Activity We have entered into operating and finance leases primarily for office, manufacturing, warehouse and R&D facilities, vehicles and equipment. Our leases have remaining terms from 1 to 42 years and some of those leases include options that provide us with the ability to extend the lease term for periods ranging from 1 to 16 years. Such options are included in the lease term when it is reasonably certain that the option will be exercised. Certain of our leases include provisions for variable lease payments which are based on, but not limited to, maintenance, insurance, taxes, index escalations and usage-based amounts. For all asset classes, we have elected to apply a practical expedient to account for other services within lease contracts as components of the lease. We also have elected to apply a practical expedient for short-term leases whereby we do not recognize a lease liability and right-of-use asset for leases with a term of less than 12 months. We classify our leases as operating or finance at the lease commencement date. Finance leases are generally those leases for which we will pay substantially all of the underlying asset’s fair value or will use the asset for all or a major part of its economic life, including circumstances in which we will ultimately own the asset. All other leases are operating leases. For finance leases, we recognize interest expense using the effective interest method and we recognize amortization expense on the right-of-use asset over the shorter of the lease term or the useful life of the asset. For operating leases, we recognize lease cost on a straight-line basis over the term of the lease. Lease liabilities and right-of-use assets are recognized at the lease commencement date based on the present value of minimum lease payments over the lease term. We determine the present value of payments under a lease based on our incremental borrowing rate as of the lease commencement date. The incremental borrowing rate is equal to the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. For operating leases that commenced prior to our adoption of Topic 842, we measured the lease liabilities and right-of-use assets using our incremental borrowing rate as of January 1, 2019. The components of lease cost for the years ended December 31, 2020 and 2019 were:
For the year ended December 31, 2018, rent expense was $152 million. The following table contains supplemental cash flow information related to leases for the years ended December 31, 2020 and 2019:
We have entered into lease agreements with aggregate future payments of $46 million for leases that have not yet commenced as of December 31, 2020. Supplemental balance sheet information related to leases as of December 31, 2020 and 2019 include:
Lease term and discount rates as of December 31, 2020 and 2019 were:
Maturities of operating and finance lease liabilities as of December 31, 2020 were:
Lessor Activity We lease medical equipment, such as renal dialysis equipment and infusion pumps, to customers, primarily in conjunction with arrangements to provide consumable medical products such as dialysis therapies, intravenous (IV) fluids and inhaled anesthetics. Certain of our equipment leases are classified as sales-type leases and the remainder are operating leases. The terms of the related contracts, including the proportion of fixed versus variable payments and any options to shorten or extend the lease term, vary by customer. We allocate revenue between equipment leases and medical products based on their standalone selling prices. The components of lease revenue for the years ended December 31, 2020 and 2019 were:
The components of our net investment in sales-type leases as of December 31, 2020 and 2019 were:
Our net investment in sales-type leases is classified as follows in the accompanying consolidated balance sheets:
Our net investment in sales-type leases was $134 million as of December 31, 2020, of which $11 million originated in 2016 and prior, $14 million in 2017, $35 million in 2018, $36 million in 2019 and $38 million in 2020. Maturities of sales-type and operating leases as of December 31, 2020 were:
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LEASES |
Lessee Activity We have entered into operating and finance leases primarily for office, manufacturing, warehouse and R&D facilities, vehicles and equipment. Our leases have remaining terms from 1 to 42 years and some of those leases include options that provide us with the ability to extend the lease term for periods ranging from 1 to 16 years. Such options are included in the lease term when it is reasonably certain that the option will be exercised. Certain of our leases include provisions for variable lease payments which are based on, but not limited to, maintenance, insurance, taxes, index escalations and usage-based amounts. For all asset classes, we have elected to apply a practical expedient to account for other services within lease contracts as components of the lease. We also have elected to apply a practical expedient for short-term leases whereby we do not recognize a lease liability and right-of-use asset for leases with a term of less than 12 months. We classify our leases as operating or finance at the lease commencement date. Finance leases are generally those leases for which we will pay substantially all of the underlying asset’s fair value or will use the asset for all or a major part of its economic life, including circumstances in which we will ultimately own the asset. All other leases are operating leases. For finance leases, we recognize interest expense using the effective interest method and we recognize amortization expense on the right-of-use asset over the shorter of the lease term or the useful life of the asset. For operating leases, we recognize lease cost on a straight-line basis over the term of the lease. Lease liabilities and right-of-use assets are recognized at the lease commencement date based on the present value of minimum lease payments over the lease term. We determine the present value of payments under a lease based on our incremental borrowing rate as of the lease commencement date. The incremental borrowing rate is equal to the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. For operating leases that commenced prior to our adoption of Topic 842, we measured the lease liabilities and right-of-use assets using our incremental borrowing rate as of January 1, 2019. The components of lease cost for the years ended December 31, 2020 and 2019 were:
For the year ended December 31, 2018, rent expense was $152 million. The following table contains supplemental cash flow information related to leases for the years ended December 31, 2020 and 2019:
We have entered into lease agreements with aggregate future payments of $46 million for leases that have not yet commenced as of December 31, 2020. Supplemental balance sheet information related to leases as of December 31, 2020 and 2019 include:
Lease term and discount rates as of December 31, 2020 and 2019 were:
Maturities of operating and finance lease liabilities as of December 31, 2020 were:
Lessor Activity We lease medical equipment, such as renal dialysis equipment and infusion pumps, to customers, primarily in conjunction with arrangements to provide consumable medical products such as dialysis therapies, intravenous (IV) fluids and inhaled anesthetics. Certain of our equipment leases are classified as sales-type leases and the remainder are operating leases. The terms of the related contracts, including the proportion of fixed versus variable payments and any options to shorten or extend the lease term, vary by customer. We allocate revenue between equipment leases and medical products based on their standalone selling prices. The components of lease revenue for the years ended December 31, 2020 and 2019 were:
The components of our net investment in sales-type leases as of December 31, 2020 and 2019 were:
Our net investment in sales-type leases is classified as follows in the accompanying consolidated balance sheets:
Our net investment in sales-type leases was $134 million as of December 31, 2020, of which $11 million originated in 2016 and prior, $14 million in 2017, $35 million in 2018, $36 million in 2019 and $38 million in 2020. Maturities of sales-type and operating leases as of December 31, 2020 were:
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LEASES |
Lessee Activity We have entered into operating and finance leases primarily for office, manufacturing, warehouse and R&D facilities, vehicles and equipment. Our leases have remaining terms from 1 to 42 years and some of those leases include options that provide us with the ability to extend the lease term for periods ranging from 1 to 16 years. Such options are included in the lease term when it is reasonably certain that the option will be exercised. Certain of our leases include provisions for variable lease payments which are based on, but not limited to, maintenance, insurance, taxes, index escalations and usage-based amounts. For all asset classes, we have elected to apply a practical expedient to account for other services within lease contracts as components of the lease. We also have elected to apply a practical expedient for short-term leases whereby we do not recognize a lease liability and right-of-use asset for leases with a term of less than 12 months. We classify our leases as operating or finance at the lease commencement date. Finance leases are generally those leases for which we will pay substantially all of the underlying asset’s fair value or will use the asset for all or a major part of its economic life, including circumstances in which we will ultimately own the asset. All other leases are operating leases. For finance leases, we recognize interest expense using the effective interest method and we recognize amortization expense on the right-of-use asset over the shorter of the lease term or the useful life of the asset. For operating leases, we recognize lease cost on a straight-line basis over the term of the lease. Lease liabilities and right-of-use assets are recognized at the lease commencement date based on the present value of minimum lease payments over the lease term. We determine the present value of payments under a lease based on our incremental borrowing rate as of the lease commencement date. The incremental borrowing rate is equal to the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. For operating leases that commenced prior to our adoption of Topic 842, we measured the lease liabilities and right-of-use assets using our incremental borrowing rate as of January 1, 2019. The components of lease cost for the years ended December 31, 2020 and 2019 were:
For the year ended December 31, 2018, rent expense was $152 million. The following table contains supplemental cash flow information related to leases for the years ended December 31, 2020 and 2019:
We have entered into lease agreements with aggregate future payments of $46 million for leases that have not yet commenced as of December 31, 2020. Supplemental balance sheet information related to leases as of December 31, 2020 and 2019 include:
Lease term and discount rates as of December 31, 2020 and 2019 were:
Maturities of operating and finance lease liabilities as of December 31, 2020 were:
Lessor Activity We lease medical equipment, such as renal dialysis equipment and infusion pumps, to customers, primarily in conjunction with arrangements to provide consumable medical products such as dialysis therapies, intravenous (IV) fluids and inhaled anesthetics. Certain of our equipment leases are classified as sales-type leases and the remainder are operating leases. The terms of the related contracts, including the proportion of fixed versus variable payments and any options to shorten or extend the lease term, vary by customer. We allocate revenue between equipment leases and medical products based on their standalone selling prices. The components of lease revenue for the years ended December 31, 2020 and 2019 were:
The components of our net investment in sales-type leases as of December 31, 2020 and 2019 were:
Our net investment in sales-type leases is classified as follows in the accompanying consolidated balance sheets:
Our net investment in sales-type leases was $134 million as of December 31, 2020, of which $11 million originated in 2016 and prior, $14 million in 2017, $35 million in 2018, $36 million in 2019 and $38 million in 2020. Maturities of sales-type and operating leases as of December 31, 2020 were:
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LEASES |
Lessee Activity We have entered into operating and finance leases primarily for office, manufacturing, warehouse and R&D facilities, vehicles and equipment. Our leases have remaining terms from 1 to 42 years and some of those leases include options that provide us with the ability to extend the lease term for periods ranging from 1 to 16 years. Such options are included in the lease term when it is reasonably certain that the option will be exercised. Certain of our leases include provisions for variable lease payments which are based on, but not limited to, maintenance, insurance, taxes, index escalations and usage-based amounts. For all asset classes, we have elected to apply a practical expedient to account for other services within lease contracts as components of the lease. We also have elected to apply a practical expedient for short-term leases whereby we do not recognize a lease liability and right-of-use asset for leases with a term of less than 12 months. We classify our leases as operating or finance at the lease commencement date. Finance leases are generally those leases for which we will pay substantially all of the underlying asset’s fair value or will use the asset for all or a major part of its economic life, including circumstances in which we will ultimately own the asset. All other leases are operating leases. For finance leases, we recognize interest expense using the effective interest method and we recognize amortization expense on the right-of-use asset over the shorter of the lease term or the useful life of the asset. For operating leases, we recognize lease cost on a straight-line basis over the term of the lease. Lease liabilities and right-of-use assets are recognized at the lease commencement date based on the present value of minimum lease payments over the lease term. We determine the present value of payments under a lease based on our incremental borrowing rate as of the lease commencement date. The incremental borrowing rate is equal to the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. For operating leases that commenced prior to our adoption of Topic 842, we measured the lease liabilities and right-of-use assets using our incremental borrowing rate as of January 1, 2019. The components of lease cost for the years ended December 31, 2020 and 2019 were:
For the year ended December 31, 2018, rent expense was $152 million. The following table contains supplemental cash flow information related to leases for the years ended December 31, 2020 and 2019:
We have entered into lease agreements with aggregate future payments of $46 million for leases that have not yet commenced as of December 31, 2020. Supplemental balance sheet information related to leases as of December 31, 2020 and 2019 include:
Lease term and discount rates as of December 31, 2020 and 2019 were:
Maturities of operating and finance lease liabilities as of December 31, 2020 were:
Lessor Activity We lease medical equipment, such as renal dialysis equipment and infusion pumps, to customers, primarily in conjunction with arrangements to provide consumable medical products such as dialysis therapies, intravenous (IV) fluids and inhaled anesthetics. Certain of our equipment leases are classified as sales-type leases and the remainder are operating leases. The terms of the related contracts, including the proportion of fixed versus variable payments and any options to shorten or extend the lease term, vary by customer. We allocate revenue between equipment leases and medical products based on their standalone selling prices. The components of lease revenue for the years ended December 31, 2020 and 2019 were:
The components of our net investment in sales-type leases as of December 31, 2020 and 2019 were:
Our net investment in sales-type leases is classified as follows in the accompanying consolidated balance sheets:
Our net investment in sales-type leases was $134 million as of December 31, 2020, of which $11 million originated in 2016 and prior, $14 million in 2017, $35 million in 2018, $36 million in 2019 and $38 million in 2020. Maturities of sales-type and operating leases as of December 31, 2020 were:
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COMMITMENTS AND CONTINGENCIES |
12 Months Ended | ||||||
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Dec. 31, 2020 | |||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||
COMMITMENTS AND CONTINGENCIES |
Refer to Note 2 for information regarding our unfunded contingent payments associated with collaborative and other arrangements. Indemnifications During the normal course of business, we make indemnities, commitments and guarantees pursuant to which we may be required to make payments related to specific transactions. Indemnifications include: (i) intellectual property indemnities to customers in connection with the use, sales or license of products and services; (ii) indemnities to customers in connection with losses incurred while performing services on their premises; (iii) indemnities to vendors and service providers pertaining to claims based on negligence or willful misconduct; (iv) indemnities involving the representations and warranties in certain contracts; (v) contractual indemnities related to the separation and distribution as set forth in certain of the agreements entered into in connection with such transactions (including the separation and distribution agreement and the tax matters agreement with Baxalta); and (vi) contractual indemnities for our directors and certain of our executive officers for services provided to or at the request of us. In addition, under our Amended and Restated Certificate of Incorporation, and consistent with Delaware General Corporation Law, we have agreed to indemnify our directors and officers for certain losses and expenses upon the occurrence of certain prescribed events. The majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum potential for future payments that we could be obligated to make. To help address some of these risks, we maintain various insurance coverages. Based on historical experience and evaluation of the agreements, we do not believe that any payments related to our indemnities will have a material impact on our financial condition or results of operations. Legal Contingencies We are involved in product liability, patent, commercial, and other legal matters that arise in the normal course of our business. We record a liability when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, and no amount within the range is a better estimate, the minimum amount in the range is accrued. If a loss is not probable or a probable loss cannot be reasonably estimated, no liability is recorded. As of December 31, 2020 and 2019, our total recorded reserves with respect to legal and environmental matters were $40 million and $56 million, respectively, and there were no related receivables. We have established reserves for certain of the matters discussed below. We are 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 our liability in connection with these claims cannot be estimated and the resolution thereof in any reporting period could have a significant impact on our 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 our consolidated financial position. While we believe that we have valid defenses in the matters set forth below, litigation is inherently uncertain, excessive verdicts do occur, and we may incur material judgments or enter into material settlements of claims. In addition to the matters described below, we remain 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 our operations and monetary sanctions, including significant civil or criminal penalties. With respect to intellectual property, we may be exposed to significant litigation concerning the scope of our 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. Environmental We are involved as a potentially responsible party (PRP) for environmental clean-up costs at six Superfund sites. Under the U.S. Superfund statute and many state laws, generators of hazardous waste sent to a disposal or recycling site are liable for site cleanup if contaminants from that property later leak into the environment. The laws generally provide that a PRP may be held jointly and severally liable for the costs of investigating and remediating the site. Separate from the Superfund cases noted above, we are involved in ongoing environmental remediations associated with historic operations at certain of our facilities. As of December 31, 2020 and 2019, our environmental reserves, which are measured on an undiscounted basis, were $20 million and $18 million, respectively. After considering these reserves, the outcome of these matters is not expected to have a material adverse effect on our financial position or results of operations. General litigation In November 2016, a putative antitrust class action complaint seeking monetary and injunctive relief was filed in the United States District Court for the Northern District of Illinois. The complaint alleges a conspiracy among manufacturers of IV solutions to restrict output and affect pricing in connection with a shortage of such solutions. Similar parallel actions subsequently were filed. In January 2017, a single consolidated complaint covering these matters was filed in the Northern District of Illinois. We filed a motion to dismiss the consolidated complaint in February 2017. The court granted our motion to dismiss the consolidated complaint without prejudice in July 2018. The plaintiffs filed an amended complaint, which we moved to dismiss on November 9, 2018. The court granted our motion to dismiss the amended complaint with prejudice on April 3, 2020. The plaintiffs did not file an appeal. In April 2017, we became aware of a criminal investigation by the U.S. Department of Justice (DOJ), Antitrust Division and a federal grand jury in the United States District Court for the Eastern District of Pennsylvania. We and an employee received subpoenas seeking production of documents and testimony regarding the manufacturing, selling, pricing and shortages of IV solutions and containers (including saline solutions and certain other injectable medicines sold by us) and communications with competitors regarding the same. On November 30, 2018, the DOJ notified us that it had closed the investigation. The New York Attorney General has also requested that we provide information regarding business practices in the IV saline industry. We have cooperated with the New York Attorney General. In August 2019, we were named in an amended complaint filed by Fayette County, Georgia in the MDL In re: National Prescription Opiate Litigation pending in the U.S. District Court, Northern District of Ohio. The complaint alleges that multiple manufacturers and distributors of opiate products improperly marketed and diverted these products, which caused harm to Fayette County. The complaint is limited in its allegations as to Baxter and does not distinguish between injectable opiate products and orally administered opiates. We manufactured generic injectable opiate products in our facility in Cherry Hill, NJ, which we divested in 2011. In November 2019, we and certain of our officers were named in a class action complaint captioned Ethan E. Silverman et al. v. Baxter International Inc. et al. that was filed in the United States District Court for the Northern District of Illinois. The plaintiff, who allegedly purchased shares of our common stock during the specified class period, filed this putative class action on behalf of himself and shareholders who acquired Baxter common stock between February 21, 2019 and October 23, 2019. The plaintiff alleges that we and certain officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements and failing to disclose material facts relating to certain intra-company transactions undertaken for the purpose of generating foreign exchange gains or avoiding foreign exchange losses, as well as our internal controls over financial reporting. On January 29, 2020, the Court appointed Varma Mutual Pension Insurance Company and Louisiana Municipal Police Employees Retirement System as lead plaintiffs in the case. Plaintiffs filed an amended complaint on June 25, 2020 containing substantially the same allegations. On August 24, 2020, we filed a motion to dismiss the amended complaint. On January 12, 2021, the Court granted our motion to dismiss the amended complaint but gave plaintiffs an opportunity to file a further-amended complaint. In addition, we have received a stockholder request for inspection of our books and records in connection with the announcement made in our Form 8-K on October 24, 2019 that we had commenced an internal investigation into certain intra-company transactions that impacted our previously reported non-operating foreign exchange gains and losses. As initially disclosed on October 24, 2019, we also voluntarily advised the staff of the SEC of our internal investigation and we are continuing to cooperate with the staff of the SEC. In March 2020, two lawsuits were filed against us in the Northern District of Illinois by plaintiffs alleging injuries as a result of exposure to ethylene oxide used in our manufacturing facility in Mountain Home, Arkansas to sterilize certain of our products. The plaintiffs seek damages, including compensatory and punitive damages in an unspecified amount, and unspecified injunctive and declaratory relief. Other As previously disclosed, in 2008 we recalled our heparin sodium injection products in the United States. Following the recall, more than 1,000 lawsuits alleging that plaintiffs suffered various reactions to a heparin contaminant, in some cases resulting in fatalities, were filed. In January 2019, the last of these cases was settled. In 2019, following the resolution of an insurance dispute, we received cash proceeds of $39 million for our allocation of the insurance proceeds under a settlement and cost-sharing agreement related to the defense of the heparin product liability cases. We recognized a $37 million gain in connection with the resolution of the dispute with the insurer that is classified within other operating income, net on the consolidated statement of income for the year ended December 31, 2019. In September 2017, Hurricane Maria caused damage to certain of our assets in Puerto Rico and disrupted operations. Insurance, less applicable deductibles and subject to any coverage exclusions, covered the repair or replacement of our assets that suffered loss or damage, and also provided coverage for interruption to our business, including lost profits, and reimbursement for other expenses and costs that have been incurred relating to the damages and losses suffered. In 2017, we recorded $32 million of pre-tax charges related to damages caused by the hurricane, including $11 million related to the impairment of damaged inventory and fixed assets as well as $21 million of idle facility and other costs. These amounts were recorded as a component of cost of sales in the consolidated statement of income for year ended December 31, 2017. In 2019 and 2018, we recognized $100 million and $42 million, respectively, of insurance recoveries related to the previously mentioned asset impairments and idle facility and other costs suffered as a result of the hurricane. These benefits were recorded as a reduction of cost of sales and within other operating income, net on the consolidated statements of income for the years ended December 31, 2019 and 2018. No further insurance recoveries are expected.
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STOCKHOLDERS’ EQUITY |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY |
Stock-Based Compensation Our stock-based compensation generally includes stock options, restricted stock units (RSUs), performance share units (PSUs) and purchases under our employee stock purchase plan. Shares issued relating to our stock-based plans are generally issued out of treasury stock. As of December 31, 2020, approximately 17 million authorized shares are available for future awards under our stock-based compensation plans. Stock Compensation Expense Stock compensation expense was $130 million, $122 million and $115 million in 2020, 2019 and 2018, respectively. The related tax benefit recognized was $53 million in 2020, $70 million in 2019 and $61 million in 2018. Included in the benefit in 2020, 2019 and 2018 were realized excess tax benefits for stock-based compensation of $27 million, $54 million and $40 million, respectively. Stock compensation expense is recorded at the corporate level and is not allocated to the segments. Approximately 75% of stock compensation expense is classified in SG&A expenses, with the remainder classified in cost of sales and R&D expenses. Costs capitalized in the consolidated balance sheets at December 31, 2020 and 2019 were not material. Stock compensation expense is based on awards expected to vest, and therefore has been reduced by estimated forfeitures. Stock Options Stock options are granted to employees and non-employee directors with exercise prices equal to 100% of the market value on the date of grant. Stock options granted to employees generally vest in one-third increments over a three-year period. Stock options granted to non-employee directors generally vest immediately on the grant date and are issued with a six-month claw-back provision. Stock options typically have a contractual term of 10 years. The grant-date fair value, adjusted for estimated forfeitures, is recognized as expense on a straight-line basis over the substantive vesting period. The fair value of stock options is determined using the Black-Scholes model. The weighted-average assumptions used in estimating the fair value of stock options granted during each year, along with the weighted-average grant-date fair values, were as follows:
The following table summarizes stock option activity for the year ended December 31, 2020 and the outstanding stock options as of December 31, 2020.
The aggregate intrinsic value in the table above represents the difference between the exercise price and our closing stock price on the last trading day of the year. The total intrinsic value of options exercised in 2020, 2019 and 2018 was $131 million, $272 million and $222 million, respectively. As of December 31, 2020, $60 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over a weighted-average period of approximately 1.8 years. RSUs RSUs are granted to employees and non-employee directors. RSUs granted to employees generally vest in one-third increments over a three-year period. RSUs granted to non-employee directors generally vest immediately on the grant date and are issued with a six-month claw-back provision. The grant-date fair value, adjusted for estimated forfeitures, is recognized as expense on a straight-line basis over the substantive vesting period. The fair value of RSUs is determined based on the number of shares granted and the closing price of our common stock on the date of grant. The following table summarizes nonvested RSU activity for the year ended December 31, 2020.
As of December 31, 2020, $45 million of unrecognized compensation cost related to RSUs is expected to be recognized as expense over a weighted-average period of approximately 1.8 years. The weighted-average grant-date fair value of RSUs granted in 2020, 2019 and 2018 was $77.51, $75.60 and $67.11, respectively. The fair value of RSUs vested in 2020, 2019 and 2018 was $52 million, $57 million and $69 million, respectively. PSUs Our annual equity awards stock compensation program for senior management includes the issuance of PSUs. In 2020, the PSUs awarded were based on our compound annual sales growth rate (CAGR) performance, our adjusted return on invested capital (ROIC) performance and on our stock performance relative to our peer group. PSUs awarded between 2016 and 2019 were based on adjusted operating margin as well as stock performance relative to our peer group. The vesting condition for CAGR and ROIC PSUs is set at the beginning of the 3-year service period while the vesting condition for adjusted operating margin is set at the beginning of each year for each tranche of the award during the 3-year service period. Compensation cost for the CAGR, adjusted ROIC and adjusted operating margin PSUs is measured based on the fair value of the awards on the date that the specific vesting terms for each award are established and the fair value of the awards is determined based on the quoted price of our stock on the grant date of the award. The compensation cost for CAGR, adjusted ROIC and adjusted operating margin PSUs is adjusted at each reporting date to reflect the estimated vesting outcome. The fair value for PSUs based on our stock performance relative to our peer group is determined using a Monte Carlo model. The assumptions used in estimating the fair value of these PSUs granted during the period, along with the grant-date fair values, were as follows:
The following table summarizes nonvested PSU activity for the year ended December 31, 2020.
Unrecognized compensation cost related to all unvested PSUs of $24 million at December 31, 2020 is expected to be recognized as expense over a weighted-average period of 1.7 years. Employee Stock Purchase Plan Nearly all employees are eligible to participate in our employee stock purchase plan. The employee purchase price is 85% of the closing market price on the purchase date. The Baxter International Inc. Employee Stock Purchase Plan provides for 10 million shares of common stock available for issuance to eligible participants, of which approximately two million shares were available for future purchases as of December 31, 2020. During 2020, 2019, and 2018, we issued approximately 0.7 million, 0.7 million and 0.8 million shares, respectively, under the employee stock purchase plan. Stock Options Award Modification In the first quarter of 2020, we modified the terms of stock option awards granted to 123 employees. Specifically, we extended the term for certain stock options that were scheduled to expire in the first quarter of 2020 as applicable employees were not permitted to exercise these awards due to our announcement in February 2020 that our previously issued financial statements should no longer be relied upon. The stock options were extended in order to allow impacted employees to exercise their stock option awards for a brief period once we became current with our SEC reporting obligations, which occurred in March 2020. As a result of the modifications, we recognized an additional $8 million of stock compensation expense during the first quarter of 2020. Cash Dividends Total cash dividends declared per share for 2020, 2019, and 2018 were $0.955, $0.850 and $0.730, respectively. A quarterly dividend of $0.22 per share ($0.88 on an annualized basis) was declared in February 2020 and was paid in April 2020. Quarterly dividends of $0.245 per share ($0.980 on an annualized basis) were declared in May and July of 2020 and were paid in July and October of 2020, respectively. Our Board of Directors declared a quarterly dividend of $0.245 per share in November of 2020, which was paid in January of 2021. Stock Repurchase Programs As authorized by the Board of Directors, we repurchase our stock depending on our cash flows, net debt level and market conditions. In July 2012, the Board of Directors authorized the repurchase of up to $2.0 billion of our common stock. The Board of Directors increased this authority by an additional $1.5 billion in each of November 2016 and February 2018, by an additional $2.0 billion in November 2018 and by an additional $1.5 billion in October 2020. We repurchased 6.3 million shares under this authority pursuant to a Rule 10b5-1 plan for $500 million in cash in 2020, 16.5 million shares under this authority pursuant to Rule 10b5-1 plans and otherwise for $1.3 billion in cash in 2019 and 35.8 million shares under this authority pursuant to Rule 10b5-1 plans and otherwise for $2.5 billion in cash in 2018. We had $1.9 billion of purchase authority available as of December 31, 2020. Accelerated Share Repurchase Agreement In December 2018, we entered into a $300 million accelerated share repurchase agreement (ASR Agreement) with an investment bank. We funded the ASR Agreement with available cash. The ASR Agreement was executed pursuant to the 2012 Repurchase Authorization described above. Under the ASR Agreement, we received 3.6 million shares upon execution. Based on the volume-weighted average price of our common stock during the term of the ASR Agreement, we received an additional 0.6 million shares from the investment bank at settlement in May 2019.
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ACCUMULATED OTHER COMPREHENSIVE INCOME |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME |
Comprehensive income includes all changes in stockholders’ equity that do not arise from transactions with stockholders, and consists of net income, CTA, certain gains and losses from other postretirement benefit (OPEB) plans and gains and losses on cash flow hedges. The following table is a net-of-tax summary of the changes in AOCI by component for the years ended December 31, 2020 and 2019.
(a) See table below for details about these reclassifications. The following table is a summary of the amounts reclassified from AOCI to net income during the years ended December 31, 2020 and 2019.
(a)Amounts in parentheses indicate reductions to net income. Refer to Note 11 for additional information regarding the amortization of pension and OPEB items and Note 14 for additional information regarding hedging activity.
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BUSINESS OPTIMIZATION CHARGES |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS OPTIMIZATION CHARGES |
In recent years, we have undertaken actions to transform our cost structure and enhance operational efficiency. These efforts include restructuring the organization, optimizing the manufacturing footprint, R&D operations and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions. From the commencement of our business optimization activities through December 31, 2020, we have incurred cumulative pre-tax costs of approximately $1.1 billion related to these actions. These costs consisted primarily of employee termination costs, implementation costs, contract termination costs, asset impairments and accelerated depreciation. We currently expect to incur additional pre-tax cash costs of approximately $14 million through the completion of the initiatives that are currently underway, primarily related to implementation costs. We continue to pursue cost savings initiatives and, to the extent further cost savings opportunities are identified, we may incur additional restructuring charges and costs to implement business optimization programs in future periods. We recorded the following charges related to business optimization programs in 2020, 2019, and 2018:
For segment reporting, business optimization charges are unallocated expenses. Costs to implement business optimization programs for the years ended December 31, 2020, 2019 and 2018, respectively, consisted primarily of external consulting and transition costs, including employee compensation and related costs. The costs were generally included within cost of sales, SG&A expense and R&D expense. For the years ended December 31, 2019 and 2018, respectively, we recognized accelerated depreciation, primarily associated with facilities to be closed. The costs were recorded within cost of sales and SG&A expense. During the years ended December 31, 2020, 2019 and 2018, we recorded the following restructuring charges:
In conjunction with our business optimization initiatives, we sold property that resulted in a gain of $17 million in 2020. This benefit is reflected within other operating income, net in our consolidated statement of income for the year ended December 31, 2020. The following table summarizes activity in the liability related to our restructuring initiatives.
Reserve adjustments primarily relate to employee termination cost reserves established in prior periods. Substantially all of our restructuring liabilities as of December 31, 2020 relate to employee termination costs, with the remaining liabilities attributable to contract termination costs. Substantially all of the cash payments for those liabilities are expected to be disbursed by the end of 2022.
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PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS |
We sponsor a number of qualified and nonqualified pension plans for eligible employees. We also sponsor certain unfunded contributory healthcare and life insurance benefits for substantially all domestic retired employees. Newly hired employees in the United States and Puerto Rico are not eligible to participate in the pension plans but receive a higher level of company contributions in the defined contribution plans. Reconciliation of Pension and Other Postretirement Benefit Plan Obligations, Assets and Funded Status The benefit plan information in the table below pertains to all of our pension and OPEB plans, both in the United States and in other countries.
Actuarial gains and losses result from changes in actuarial assumptions (such as changes in the discount rate and revised mortality rates). Actuarial losses in 2020 and 2019 related to plan benefit obligations were primarily the result of changes in discount rates. The pension obligation information in the table above represents the projected benefit obligation (PBO). The PBO incorporates assumptions relating to future compensation levels. The accumulated benefit obligation (ABO) is the same as the PBO except that it includes no assumptions relating to future compensation levels. The ABO for all of our pension plans was $4.1 billion and $3.7 billion at the 2020 and 2019 measurement dates, respectively. The information in the funded status table above represents the totals for all of our pension plans. The following table is information relating to the individual plans in the funded status table above that have an ABO in excess of plan assets.
The following table presents information relating to the individual plans in the funded status table above that have a PBO in excess of plan assets (many of which also have an ABO in excess of assets and are therefore also included in the table directly above).
Expected Net Pension and OPEB Plan Payments for the Next 10 Years
The expected net benefit payments above reflect the total net benefits expected to be paid from the plans’ assets (for funded plans) or from our assets (for unfunded plans). The federal subsidies relating to the Medicare Prescription Drug, Improvement and Modernization Act are not expected to be significant. Amounts Recognized in AOCI The pension and OPEB plans’ gains or losses, prior service costs or credits, and transition assets or obligations not yet recognized in net periodic benefit cost are recognized on a net-of-tax basis in AOCI and will be amortized from AOCI to net periodic benefit cost in the future. For active employees, we utilize the average future working lifetime as the amortization period for prior service. For inactive employees, we utilize the average remaining life expectancy as the amortization period for prior service. The following table is a summary of the pre-tax losses included in AOCI at December 31, 2020 and December 31, 2019.
Refer to Note 9 for the net-of-tax balances included in AOCI as of each of the year-end dates. The following table is a summary of the net-of-tax amounts recorded in OCI relating to pension and OPEB plans.
In 2020, OCI activity for pension and OPEB plans was primarily related to actuarial gains and losses. In 2019, OCI activity for pension and OPEB plans was primarily related to the U.S. pension settlement charge and actuarial gains and losses. In 2018, OCI activity for pension and OPEB plans was primarily related to actuarial gains and losses. Net Periodic Benefit Cost
Weighted-Average Assumptions Used in Determining Benefit Obligations at the Measurement Date
The assumptions above, which were used in calculating the December 31, 2020 measurement date benefit obligations, will be used in the calculation of net periodic benefit cost in 2021. Weighted-Average Assumptions Used in Determining Net Periodic Benefit Cost
We established the expected return on plan assets assumption primarily based on a review of historical compound average asset returns, both company-specific and relating to the broad market (based on our asset allocation), as well as an analysis of current market and economic information and future expectations. We plan to use a 5.50% assumption for our U.S. and Puerto Rico plans for 2021. Pension Plan Assets An investment committee of members of senior management is responsible for supervising, monitoring and evaluating the invested assets of our funded pension plans. The investment committee, which meets at least quarterly, abides by documented policies and procedures relating to investment goals, targeted asset allocations, risk management practices, allowable and prohibited investment holdings, diversification, use of derivatives, the relationship between plan assets and benefit obligations, and other relevant factors and considerations. The investment committee’s policies and procedures include the following: •Ability to pay all benefits when due; •Targeted long-term performance expectations relative to applicable market indices, such as Russell, MSCI EAFE, and other indices; •Targeted asset allocation percentage ranges (summarized below), and periodic reviews of these allocations; •Diversification of assets among third-party investment managers, and by geography, industry, stage of business cycle and other measures; •Specified investment holding and transaction prohibitions (for example, private placements or other restricted securities, securities that are not traded in a sufficiently active market, short sales, certain derivatives, commodities and margin transactions); •Specified portfolio percentage limits on holdings in a single corporate or other entity (generally 5% at time of purchase, except for holdings in U.S. government or agency securities); •Specified average credit quality for the fixed-income securities portfolio (at least A- by Standard & Poor’s or A3 by Moody’s); •Specified portfolio percentage limits on foreign holdings; and •Periodic monitoring of investment manager performance and adherence to the investment committee’s policies. Plan assets are invested using a total return investment approach whereby a mix of equity securities, debt securities and other investments are used to preserve asset values, diversify risk and exceed the planned benchmark investment return. Investment strategies and asset allocations are based on consideration of plan liabilities, the plans’ funded status and other factors, such as the plans’ demographics and liability durations. Investment performance is reviewed by the investment committee on a quarterly basis and asset allocations are reviewed at least annually. Plan assets are managed in a balanced portfolio comprised of two major components: return-seeking investments and liability hedging investments. The target allocations for plan assets are 50% in return-seeking investments and 50% in liability hedging investments and other holdings. The documented policy includes an allocation range based on each individual investment type within the major components that allows for a variance from the target allocations depending on the investment type. Return-seeking investments primarily include common stock of U.S. and international companies, common/collective trust funds, mutual funds, hedge funds, and partnership investments. Liability hedging investments and other holdings primarily include cash, money market funds with an original maturity of three months or less, U.S. and foreign government and governmental agency issues, corporate bonds, municipal securities, derivative contracts and asset-backed securities. While the investment committee provides oversight over plan assets for U.S. and international plans, the summary above is specific to the plans in the United States. The plan assets for international plans are managed and allocated by the entities in each country, with input and oversight provided by the investment committee. The plan assets for the U.S. and international plans are included in the table below. The following tables summarize our pension plan financial instruments that are measured at fair value on a recurring basis.
(a) Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
(a) Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The following table is a reconciliation of changes in fair value measurements that used significant unobservable inputs (Level 3).
The assets and liabilities of our pension plans are valued using the following valuation methods:
Expected Pension and OPEB Plan Funding Our funding policy for our pension plans is to contribute amounts sufficient to meet legal funding requirements, plus any additional amounts that we may determine to be appropriate considering the funded status of the plans, tax deductibility, the cash flows generated by us, and other factors. Volatility in the global financial markets could have an unfavorable impact on future funding requirements. We have no obligation to fund our principal plans in the United States and Puerto Rico in 2021. We continually reassess the amount and timing of any discretionary contributions. In 2021, we expect to make contributions of at least $45 million to our foreign pension plans. We expect to have net cash outflows relating to our OPEB plan of approximately $18 million in 2021. The following table details the funded status percentage of our pension plans as of December 31, 2020, including certain plans that are unfunded in accordance with the guidelines of our funding policy outlined above.
Pension Settlement Transactions In October 2020, we offered certain former U.S. employees with vested pension benefits a limited-time option to take a lump sum distribution in lieu of future monthly payments. This option expired in November 2020 and approximately 40% of the eligible participants accepted the offer. Payments from plan assets to participants who accepted the offer were made in December 2020 and totaled $252 million. As a result of these transactions, we recognized non-cash pretax pension settlement charges of $43 million in the fourth quarter of 2020. As part of our continued effort to reduce pension plan obligations, we transferred approximately $2.4 billion of U.S. qualified pension plan liabilities to an insurance company through the purchase of a group annuity contract in October 2019. As a result of this transaction, we recognized a non-cash pretax pension settlement charge of $755 million in the fourth quarter of 2019. Pension Plan Amendments In January 2018, we announced changes to our U.S. pension plans. We spun off the assets and liabilities of the qualified plan attributable to current employees into a new plan and will freeze the pay and service amounts used to calculate pension benefits for active participants in the U.S. pension plans as of December 31, 2022. The assets and liabilities attributable to retired and former company employees remained with the original qualified plan. Years of additional service earned and eligible compensation received after December 31, 2022 will not be included in the determination of the benefits payable to participants. These changes resulted in a $57 million decline in the PBO upon the effective date of the changes. U.S. Defined Contribution Plan Most U.S. employees are eligible to participate in a qualified defined contribution plan. We recognized expense of $61 million in 2020, $53 million in 2019 and $50 million in 2018 related to contributions to this plan.
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INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES |
Income from Continuing Operations Before Income Tax Expense by Category
Income Tax Expense (Benefit) Related to Continuing Operations
Deferred Tax Assets and Liabilities
At December 31, 2020, we had U.S. state operating loss carryforwards totaling $1.2 billion, U.S. federal operating loss carryforwards totaling $150 million and tax credit carryforwards totaling $430 million, which includes a U.S. foreign tax credit carryforward of $373 million. The U.S. federal and state operating loss and tax credit carryforwards expire between 2021 and 2040, with $38 million of the operating loss carryforwards having no expiration date. At December 31, 2020, with respect to our operations outside the U.S., we had foreign operating loss carryforwards totaling $1.2 billion and foreign tax credit carryforwards totaling $18 million. The foreign operating loss carryforwards expire between 2021 and 2032 with $886 million having no expiration date. Substantially all of the foreign tax credit carryforwards have no expiration date. Realization of the U.S. and foreign operating loss and tax credit carryforwards depends on generating sufficient future earnings. A valuation allowance of $454 million and $420 million was recognized as of December 31, 2020 and 2019, respectively, to reduce the deferred tax assets associated with net operating loss and tax credit carryforwards because we do not believe it is more likely than not that these assets will be fully realized prior to expiration. After evaluating the 2017 Tax Act and related U.S. Treasury Regulations, any elections or other opportunities that may be available, and the future expiration of certain U.S. tax provisions that will impact the utilization of our U.S. foreign tax credit carryforwards, management expects to be able to realize some, but not all, of the U.S. foreign tax credit deferred tax assets up to its overall domestic loss (ODL) balance plus other recurring and non-recurring foreign inclusions. Therefore, a valuation allowance of $157 million and $180 million was recognized with respect to the foreign tax credit carryforwards as of December 31, 2020 and 2019, respectively. We will continue to evaluate the need for additional valuation allowances and, as circumstances change, the valuation allowance may change. As a result of Swiss tax reform legislation enacted during 2019, we recognized an $863 million net asset basis step-up that is amortizable as a tax deduction ratably over tax years 2025 through 2029. Accordingly, a deferred tax asset of $174 million and $159 million was recognized as of December 31, 2020 and 2019, respectively. We expect to realize some, but not all, of the Swiss deferred tax assets based principally on expected future earnings generated by the Swiss subsidiary during the period in which the tax basis will be amortized. Therefore, a valuation allowance of $72 million and $69 million was recognized on the Swiss deferred tax assets as of December 31, 2020 and 2019, respectively. Income Tax Expense (Benefit) Reconciliation
The enactment of the 2017 Tax Act created a territorial tax system that allows companies to repatriate certain foreign earnings without incurring additional U.S. federal tax by providing for a 100% dividend exemption. Under the dividend-exemption provision, 100% of the foreign-source portion of dividends paid by certain foreign corporations to a U.S. corporate stockholder are exempt from U.S. federal taxation. As a result of the U.S. change to a territorial tax system and the incurrence of the one-time transition tax charge, we plan to repatriate our foreign earnings that were previously considered indefinitely reinvested with the exception of approximately $243 million of accumulated earnings as of December 31, 2020 related to one of our foreign operations. Additional withholding taxes of $24 million would be incurred if such earnings were remitted currently. Our tax provisions for 2020, 2019 and 2018 do not include any tax charges related to either the Base Erosion and Anti-Abuse Tax (BEAT) or Global Intangible Low Taxed Income (GILTI) provisions, except for the inability to fully utilize foreign tax credits against such GILTI. While we are not expecting to be subject to a tax charge under the 2017 Tax Act GILTI provisions in the near term, our accounting policy is to recognize this charge as a period cost. Our effective income tax rate can differ from the 21% U.S. federal statutory rate due to a number of factors, including foreign rate differences, tax incentives, increases or decreases in valuation allowances and liabilities for uncertain tax positions and excess tax benefits on stock compensation awards. In 2020, our effective tax rate was impacted favorably by geographic earnings mix and excess tax benefits on stock compensation awards. In 2019, Switzerland and India enacted tax reform legislation that had a material impact on our effective tax rate. We recognized a deferred tax benefit of $90 million to reflect a tax basis step-up, net of a valuation allowance, partially offset by a $5 million deferred tax revaluation to reflect an increase in the statutory tax rate, under the newly enacted Swiss tax laws. We also recognized a net deferred tax benefit of $24 million associated with deferred tax revaluation in India to reflect a decrease in the statutory tax rate. Our effective tax rate was also favorably impacted by $57 million in 2019 related to a notional interest deduction on the share capital of a foreign subsidiary. The gross tax benefit of the deduction is included in the table above within impact of foreign taxes and the portion not expected to be realized is included within other valuation allowances. In 2018, we completed our one-year measurement period adjustments to the 2017 Tax Act provisional amounts in accordance with SAB 118, which resulted in tax benefits comprised of the items described in the following paragraphs. These benefits were partially offset by the tax impact of non-deductible corrections of misstatements related to foreign exchange gains and losses for the year ended December 31, 2018 which are included above within the impact of foreign taxes. The 2017 Tax Act reduced the U.S. statutory tax rate from 35% to 21% for years after 2017. In 2018, we collected all of the necessary data to complete our analysis of the effect of the 2017 Tax Act on the remeasurement of the underlying deferred taxes and recognized an additional deferred tax benefit of $8 million. The 2017 Tax Act requires us to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8% on the remaining earnings. In 2018, after further study of the 2017 Tax Act and related U.S. Treasury Regulations, and further analysis of historical earnings and profits and tax pools, as well as refinements of the cash portion of the charge, which was provisional due to certain foreign subsidiaries with non-calendar tax year-ends, we reduced our one-time transitional tax expense by $5 million. Additionally, the 2017 Tax Act changed the rules that enabled taxpayers to generate foreign source income related to export sales that were eligible to utilize foreign tax credits. After studying the 2017 Tax Act and related U.S. Treasury Regulations and evaluating any elections or other opportunities that may be available, we currently expect to be able to realize some, but not all, of the foreign tax credit deferred tax assets up to our ODL balance plus recurring and non-recurring foreign inclusions. Accordingly, we reduced our provisional foreign tax credit deferred tax asset valuation allowance and recognized a 2018 benefit of $194 million. Unrecognized Tax Benefits We classify interest and penalties associated with income taxes in income tax expense (benefit) within the consolidated statements of income. Net interest and penalties recognized were not significant during 2020, 2019 and 2018. The liability recognized related to interest and penalties was $17 million and $21 million as of December 31, 2020 and 2019, respectively. The total amount of gross unrecognized tax benefits that, if recognized, would impact the effective tax rate are $48 million, $70 million and $84 million as of December 31, 2020, 2019 and 2018, respectively. The following table is a reconciliation of our unrecognized tax benefits, including those related to discontinued operations, for the years ended December 31, 2020, 2019 and 2018.
Of the gross unrecognized tax benefits, $47 million and $62 million were recognized as liabilities in the consolidated balance sheets as of December 31, 2020 and 2019, respectively. We have recognized net indemnification receivables from Baxalta in the amount of $2 million, $6 million and $6 million as of December 31, 2020, 2019 and 2018, respectively, related to the unrecognized tax benefits for which we are the primary obligor but economically relate to Baxalta operations. Tax Incentives We have received tax incentives in Puerto Rico, Switzerland, Dominican Republic, Costa Rica and Thailand. The financial impact of the reductions as compared to the statutory tax rates is indicated in the income tax expense reconciliation table above. The tax reductions as compared to the local statutory rate favorably impacted earnings per diluted share from continuing operations by $0.33 in 2020, $0.27 in 2019, and $0.29 in 2018. The above grants provide that our manufacturing operations are and will be partially exempt from local taxes with varying expirations from 2025 to 2029. Examinations of Tax Returns As of December 31, 2020, we had ongoing audits in the United States, Germany, United Kingdom, China and other jurisdictions. Tax years 2016 and forward remain under examination by the IRS and tax years 2012 and forward remain under examination by various foreign taxing authorities. We believe that it is reasonably possible that our gross unrecognized tax benefits will be reduced within the next 12 months by $5 million. While the final outcome of these matters is inherently uncertain, we believe we have made adequate tax provisions for all years subject to examination.
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EARNINGS PER SHARE |
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EARNINGS PER SHARE |
The numerator for both basic and diluted earnings per share (EPS) is net income attributable to Baxter stockholders. The denominator for basic EPS is the weighted-average number of shares outstanding during the period. The dilutive effect of outstanding stock options, RSUs and PSUs is reflected in the denominator for diluted EPS using the treasury stock method. The following table is a reconciliation of income from continuing operations to net income attributable to Baxter stockholders.
The following table is a reconciliation of basic shares to diluted shares.
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 4 million, 4 million, and 3 million equity awards in 2020, 2019, and 2018, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS. Refer to Note 8 for additional information regarding items impacting basic shares.
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FINANCIAL INSTRUMENTS, DERIVATIVES AND HEDGING ACTIVITIES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS, DERIVATIVES AND HEDGING ACTIVITIES |
Accounts Receivable Sales For accounts receivable originated in Japan, we have entered into agreements with financial institutions in which the entire interest in and ownership of the receivable is sold. We continue to service the receivables in this arrangement. Servicing assets or liabilities are not recognized because we receive adequate compensation to service the sold receivables. The Japanese arrangement includes limited recourse provisions, which are not material. The following is a summary of the activity relating to the arrangement.
The net losses relating to the sales of accounts receivable were immaterial for each year. Concentrations of Credit Risk We invest excess cash in certificates of deposit or money market or other funds and diversify the concentration of cash among different financial institutions. With respect to financial instruments, where appropriate, we have diversified our selection of counterparties, and have arranged collateralization and master-netting agreements to minimize the risk of loss. Global economic conditions and liquidity issues in certain countries have resulted, and may continue to result, in delays in the collection of receivables and credit losses. Global economic conditions, governmental actions and customer-specific factors may require us to re-evaluate the collectability of our receivables and we could potentially incur additional credit losses. These conditions may also impact the stability of the Euro. Foreign Currency and Interest Rate Risk Management We operate on a global basis and are exposed to the risk that our earnings, cash flows and equity could be adversely impacted by fluctuations in foreign exchange and interest rates. Our hedging policy attempts to manage these risks to an acceptable level based on our judgment of the appropriate trade-off between risk, opportunity and costs. We are 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, Colombian Peso, Brazilian Real, Mexican Peso, Indian Rupee and Swedish Krona. We manage our foreign currency exposures on a consolidated basis, which allows us to net exposures and take advantage of any natural offsets. In addition, we use derivative and nonderivative instruments to further reduce the net exposure to foreign exchange risk. Gains and losses on the hedging instruments offset losses and gains on the hedged transactions and reduce the earnings and equity volatility resulting from changes in foreign exchange rates. Financial market and currency volatility may limit our ability to cost-effectively hedge these exposures. We are also exposed to the risk that our earnings and cash flows could be adversely impacted by fluctuations in interest rates. Our policy is to manage interest costs using the mix of fixed- and floating-rate debt that we believe is appropriate at that time. To manage this mix in a cost-efficient manner, we periodically enter into interest rate swaps in which we agree to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional amount. We do not hold any instruments for trading purposes and none of our outstanding derivative instruments contain credit-risk-related contingent features. Cash Flow Hedges We 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. We periodically use treasury rate locks to hedge the risk to earnings associated with movements in interest rates relating to anticipated issuances of debt. The notional amounts of foreign exchange contracts designated as cash flow hedges were $345 million and $617 million as of December 31, 2020 and 2019, respectively. The maximum term over which we have cash flow hedge contracts in place related to forecasted transactions at December 31, 2020 is 12 months for foreign exchange contracts. The total notional amounts of interest rate contracts designated as cash flow hedges were $550 million as of December 31, 2019. Those interest rate contracts were hedging the variability in future benchmark interest payments attributable to changes in interest rates on the forecasted issuance of fixed-rate debt and were terminated in 2020 when we issued $650 million of senior notes due in 2031. There were no outstanding interest rate contracts designated as cash flow hedges as of December 31, 2020. Fair Value Hedges We periodically use interest rate swaps to convert a portion of our fixed-rate debt into variable-rate debt. These instruments hedge our earnings from changes in the fair value of debt due to fluctuations in the designated benchmark interest rate. There were no outstanding interest rate contracts designated as fair value hedges as of December 31, 2020 and 2019. Net Investment Hedges In May 2017, we issued €600 million of senior notes due May 2025. In May 2019, we issued €750 million of senior notes due May 2024 and €750 million of senior notes due May 2029. We have designated these debt obligations as hedges of our net investment in our European operations and, as a result, mark to spot rate adjustments of the outstanding debt balances are recorded as a component of AOCI. As of December 31, 2020, we had an accumulated pre-tax unrealized translation loss in AOCI of $245 million related to the Euro-denominated senior notes. In May 2019, we entered into forward contracts designated as net investment hedges to reduce exposure to changes in currency rates on €1.2 billion of our net investment in our European operations. Those hedges were entered into in advance of the issuance of our senior notes mentioned above, were settled in the second quarter of 2019 and resulted in an insignificant loss. Dedesignations If it is determined that a derivative or nonderivative hedging instrument is no longer highly effective as a hedge, we discontinue hedge accounting prospectively. Gains or losses relating to terminations of effective cash flow hedges generally continue to be deferred and are recognized consistent with the loss or income recognition of the underlying hedged items. However, if it is probable that hedged forecasted transactions will not occur, any gains or losses would be immediately reclassified from AOCI to earnings. There were no cash flow hedge dedesignations in 2020, 2019 or 2018 resulting from changes in our assessment of the probability that the hedged forecasted transactions would occur. In 2020, we terminated interest rate contracts with a notional amount of $550 million for $173 million in cash payments. The losses relating to these terminations continue to be deferred and are being recognized consistent with the underlying hedged item, interest expense on the issuance of debt. If we terminate a fair value hedge, an amount equal to the cumulative fair value adjustment to the hedged item at the date of termination is amortized to earnings over the remaining term of the hedged item. There were no fair value hedges terminated in 2020 or 2019. In 2018, we terminated our interest rate fair value hedges and the cumulative fair value adjustment to the hedged item was insignificant. If we remove a net investment hedge designation, any gain or loss recognized in AOCI is not reclassified to earnings until we sell, liquidate, or deconsolidate the foreign investments that were being hedged. In 2019, we dedesignated €1.2 billion of forward contracts designated as a net investment hedge of our European operations. There were no net investment hedges terminated in 2020 or 2018. Undesignated Derivative Instruments We use forward contracts to hedge earnings from the effects of foreign exchange relating to certain of our intra-company and third-party receivables and payables denominated in a foreign currency. These derivative instruments are generally not formally designated as hedges and the terms of these instruments generally do not exceed one month. The total notional amount of undesignated derivative instruments was $1.0 billion and $619 million as of December 31, 2020 and 2019, respectively. Gains and Losses on Hedging Instruments and Undesignated Derivative Instruments The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our consolidated financial statements for the years ended December 31, 2020, 2019, and 2018.
For our fair value hedges, an equal and offsetting gain of $4 million was recognized in interest expense, net as an adjustment to the underlying hedged item, fixed-rate debt, in 2018. The following table summarizes net-of-tax activity in AOCI, a component of stockholders’ equity, related to our cash flow hedges.
As of December 31, 2020, $23 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. Derivative Assets and Liabilities The following table summarizes the classification and fair values of derivative instruments reported in the consolidated balance sheet as of December 31, 2020.
The following table summarizes the classification and fair values of derivative instruments reported in the consolidated balance sheet as of December 31, 2019.
While some of our derivatives are subject to master netting arrangements, we present our assets and liabilities related to derivative instruments on a gross basis within the consolidated balance sheets. Additionally, we are not required to post collateral for any of our outstanding derivatives. The following table provides information on our derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty.
The following table presents the amounts recorded on the consolidated balance sheets related to fair value hedges:
(a) These fair value hedges were terminated prior to December 31, 2018.
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS |
The fair value hierarchy consists of the following three levels: •Level 1 — Quoted prices in active markets that we have the ability to access for identical assets or liabilities; •Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market; and •Level 3 — Valuations using significant inputs that are unobservable in the market and include the use of judgment by management about the assumptions market participants would use in pricing the asset or liability. The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis.
As of December 31, 2020 and 2019, cash and cash equivalents of $3.7 billion and $3.3 billion, respectively, included money market and other short-term funds of approximately $1.8 billion and $1.7 billion, respectively, which are considered Level 2 in the fair value hierarchy. For assets that are measured using quoted prices in active markets, the fair value is the published market price per unit multiplied by the number of units held, without consideration of transaction costs. The majority of the derivatives entered into by us 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, which are considered observable and vary depending on the type of derivative, include contractual terms, interest rate yield curves, foreign exchange rates and volatility. Contingent payments related to acquisitions, which consist of milestone payments and sales-based payments, are valued using discounted cash flow techniques. The fair value of milestone payments reflects management’s expectations of probability of payment, and increases as the probability of payment increases or the expected 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 increases or the expected timing of payment is accelerated. The following table is a reconciliation of our recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions.
Financial Instruments Not Measured at Fair Value In addition to the financial instruments that we are required to recognize at fair value in the consolidated balance sheets, we have certain financial instruments that are recognized at amortized cost or some basis other than fair value. For these financial instruments, the following table provides the values recognized in the consolidated balance sheets and the estimated fair values.
(a) These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs. The carrying value of short-term debt approximates its fair value due to the short-term maturities of the obligations. The estimated fair values of current and long-term debt were computed by multiplying price by the notional amount of the respective debt instruments. Price is calculated using the stated terms of the respective debt instrument and yield curves commensurate with our credit risk. The carrying values of other financial instruments, such as accounts receivable and accounts payable, approximate their fair values due to the short-term maturities of most of those assets and liabilities. Equity investments not measured at fair value are comprised of other equity investments without readily determinable fair values and were $105 million and $73 million at December 31, 2020 and 2019, respectively. These amounts are included in Other non-current assets on our consolidated balance sheets.
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SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION |
We manage our business based on three geographical segments: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific). Our segments provide a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. In the first quarter of 2021, the information provided to our Chief Executive Officer for purposes of allocating resources and assessing performance was updated to reallocate contracted services activities performed at a German manufacturing facility from our EMEA segment to our Americas segment. The contracted services performed at that facility are part of our BioPharma Solutions business, which is managed as part of the Americas segment. Accordingly, the reported financial results of the Americas segment now include the contracted services activities performed at that facility. Segment results for 2020, 2019 and 2018 have been recast to conform to this presentation. We use operating income on a segment basis to make resource allocation decisions and assess the ongoing performance of our business segments. Intersegment sales are eliminated in consolidation. Certain items are maintained at Corporate and are not allocated to a segment. They primarily include the majority of foreign currency hedging activities, corporate headquarters costs, certain R&D costs, certain product category support costs, stock compensation expense, certain employee benefit plan costs, and certain gains, losses, and other charges (such as business optimization, acquisition and integration costs, intangible asset amortization and asset impairments). Our chief operating decision maker does not receive any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Financial information for our segments is as follows:
The following table is a reconciliation of segment operating income to income from continuing operations before income taxes per the consolidated statements of income.
Geographic information
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QUARTERLY FINANCIAL DATA (UNAUDITED) |
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QUARTERLY FINANCIAL DATA (UNAUDITED) |
¹Totals may not add across due to rounding. ²Results for the fourth quarter and full year of 2020 include a pre-tax charge of $110 million ($90 million, or $0.17 per diluted share, on an after-tax basis) related to the November 2020 early extinguishment of $750 million of 3.75% senior notes that were issued in March 2020, a pre-tax charge of $29 million ($22 million, or $0.04 per diluted share, on an after-tax basis) related to Sigma Spectrum infusion pump inspection and remediation activities and a pre-tax charge of $43 million ($33 million, or $0.06 per diluted share, on an after-tax basis) related to lump-sum settlement distributions made to certain former U.S. employees with vested pension benefits. ³Results for the fourth quarter and full year of 2019 include a pre-tax charge of $755 million ($568 million, or $1.09 per diluted share, on an after-tax basis) related to the annuitization of a portion of our U.S. pension plan.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations Baxter International Inc., through our subsidiaries (collectively, Baxter, we, our or us), provides a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies; sterile intravenous (IV) solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. These products are used by hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctors’ offices and patients at home under physician supervision. Our global footprint and the critical nature of our products and services play a key role in expanding access to healthcare in emerging and developed countries. We operate in three segments: Americas, EMEA and APAC, which are described in Note 16. Risks and Uncertainties Related to COVID-19 Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus (COVID-19). COVID-19 has had, and we expect will continue to have, an adverse impact on our operations, supply chains and distribution systems and has increased and we expect will continue to increase our expenses, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments are taking. These measures have led to unprecedented restrictions on, disruptions in, and other related impacts on businesses and personal activities. In addition to travel restrictions put in place in early 2020, governments have closed borders, imposed prolonged quarantines and may continue those measures or implement other restrictions and requirements in light of the continuing spread of the pandemic. We expect that these evolving restrictions and requirements, as well as the corresponding need to adapt to new methods of conducting business remotely, will continue to have an adverse effect on our business.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (U.S. GAAP) requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates.
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Basis of Presentation | Basis of Presentation The consolidated financial statements include the accounts of Baxter and our majority-owned subsidiaries that we control, after elimination of intra-company transactions. Certain reclassifications have been made to conform the prior period consolidated financial statements to the current period presentation.
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Revenue Recognition | Revenue Recognition Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Some of our contracts have multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Our global payment terms are typically between 30-90 days. The majority of our performance obligations are satisfied at a point in time. This includes sales of our broad portfolio of essential healthcare products across our geographic segments, including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. For a majority of these sales, our performance obligation is satisfied upon delivery to the customer. Shipping and handling activities are considered to be fulfillment activities and are not considered to be a separate performance obligation. To a lesser extent, in all of our segments, we enter into other types of contracts, including contract manufacturing arrangements, equipment leases, and certain subscription software and licensing arrangements. We recognize revenue for these arrangements over time or at a point in time depending on our evaluation of when the customer obtains control of the promised goods or services. Revenue is recognized over time when we are creating or enhancing an asset that the customer controls as the asset is created or enhanced or when our performance does not create an asset with an alternative use and we have an enforceable right to payment for performance completed. As of December 31, 2020, we had $7.6 billion of transaction price allocated to remaining performance obligations related to executed contracts with an original duration of one year or more, which are primarily included in the Americas segment. Some contracts in the United States included in this amount contain index-dependent price increases, which are not known at this time. We expect to recognize approximately 35% of this amount as revenue in 2021, 25% in 2022, 20% in 2023, 10% in each of 2024 and 2025, and the remaining balance thereafter. Significant Judgments Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration primarily related to rebates and wholesaler chargebacks. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are included in accounts receivable, net and accounts payable and accrued liabilities on the consolidated balance sheets. Management's estimates take into consideration historical experience, current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract using the expected value method. The amount of variable consideration included in the net sales price is limited to the amount that is probable not to result in a significant reversal in the amount of the cumulative revenue recognized in a future period. Revenue recognized in the years ended December 31, 2020, 2019 and 2018 related to performance obligations satisfied in prior periods was not material. Additionally, our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately and determining the allocation of the transaction price may require significant judgment. Contract Balances The timing of revenue recognition, billings and cash collections results in the recognition of trade accounts receivable, unbilled receivables, contract assets, and customer advances and deposits (contract liabilities) on our consolidated balance sheets. Net trade accounts receivable was $1.7 billion and $1.8 billion as of December 31, 2020 and 2019, respectively. For contract manufacturing arrangements, revenue is primarily recognized throughout the production cycle, which typically lasts up to 90 days, resulting in the recognition of contract assets until the related services are completed and the customers are billed. Additionally, for arrangements containing a performance obligation to deliver software that can be used with medical devices, we recognize revenue upon delivery of the software, which results in the recognition of contract assets when customers are billed over time, generally over one to five years. For bundled contracts involving equipment delivered up-front and consumable medical products to be delivered over time, total contract revenue is allocated between the equipment and consumable medical products. In certain of those arrangements, a contract asset is created for the difference between the amount of equipment revenue recognized upon delivery and the amount of consideration initially receivable from the customer. In those arrangements, the contract asset becomes a trade account receivable as consumable medical products are provided and billed, generally over one to seven years.
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Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful AccountsIn the normal course of business, we provide credit to our customers, perform credit evaluations of these customers and maintain reserves for potential credit losses. In determining the amount of the allowance for doubtful accounts, we consider, among other items, historical credit losses, the past-due status of receivables, payment histories, other customer-specific information, current economic conditions and reasonable and supportable future forecasts. |
Shipping and Handling Costs | Shipping and Handling CostsShipping costs, which are costs incurred to physically move product from our premises to the customer’s premises, are classified as selling, general and administrative (SG&A) expenses. Handling costs, which are costs incurred to store, move and prepare products for shipment, are classified as cost of sales. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include cash, certificates of deposit and money market and other short-term funds with original maturities of three months or less. Restricted cash represents cash balances restricted as to withdrawal or use and are included in prepaid expenses and other current assets on the consolidated balance sheets.
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Inventories | Inventories Inventories are stated at the lower of cost or net realizable value determined by the first-in, first-out method. We review inventories on hand at least quarterly and record provisions for estimated excess, slow-moving and obsolete inventory, as well as inventory with a carrying value in excess of net realizable value.
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Property, Plant and Equipment, Net | Property, Plant and Equipment, NetProperty, plant and equipment are stated at cost. Depreciation expense is calculated using the straight-line method over the estimated useful lives of the related assets, which range from 20 to 50 years for buildings and improvements and from 3 to 15 years for machinery and equipment. Leasehold improvements are amortized over the life of the related facility lease (including any renewal periods, if appropriate) or the asset, whichever is shorter. We capitalize certain computer software and software development costs incurred in connection with developing or obtaining software for internal use. Capitalized software costs are included within machinery and equipment and are amortized on a straight-line basis over the estimated useful lives of the software, which generally range from | to five years.
Research and Development | Research and Development Research and development (R&D) costs, including R&D acquired in transactions that are not business combinations, are expensed as incurred. Pre-regulatory approval contingent milestone obligations to counterparties in collaborative arrangements, which include acquired R&D, are expensed when the milestone is achieved. Contingent milestone payments made to such counterparties on or after regulatory approval are capitalized and amortized over the remaining useful life of the related product. Amounts capitalized for such payments are included in other intangible assets, net. Acquired in-process R&D (IPR&D) is the value assigned to technology or products under development acquired in a business combination which have not received regulatory approval and have no alternative future use. Acquired IPR&D is capitalized as an indefinite-lived intangible asset. Development costs incurred after the acquisition are expensed as incurred. Upon receipt of regulatory approval of the related technology or product, the indefinite-lived intangible asset is accounted for as a finite-lived intangible asset and amortized on a straight-line basis over the estimated economic life of the related technology or product, subject to annual impairment reviews as discussed below. If the R&D project is abandoned, the indefinite-lived asset is charged to expense.
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Collaborative Arrangements | Collaborative Arrangements We enter into collaborative arrangements in the normal course of business. These collaborative arrangements take a number of forms and structures and are designed to enhance and expedite long-term sales and profitability growth. These arrangements may provide for us to obtain commercialization rights to a product under development, and require us to make upfront payments, contingent milestone payments, profit-sharing, and/or royalty payments. We may be responsible for ongoing costs associated with the arrangements, including R&D cost reimbursements to the counterparty. See the R&D section of this note regarding the accounting treatment of upfront and contingent milestone payments. Any royalty and profit-sharing payments during the commercialization phase are expensed as cost of sales when they become due and payable.
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Restructuring Charges | Restructuring Charges We record liabilities for costs associated with exit or disposal activities in the period in which the liability is incurred. Employee termination costs are primarily recorded when actions are probable and estimable. Costs for one-time termination benefits in which the employee is required to render service until termination in order to receive the benefits are recognized ratably over the future service period. Refer to the discussion below regarding the accounting for asset impairment charges.
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Goodwill, Intangible Assets, and Other Long-Lived Assets | Goodwill, Intangible Assets, and Other Long-Lived Assets Goodwill is the excess of the purchase price over the fair value of acquired assets and liabilities in a business combination. Goodwill is not amortized but is subject to an impairment review annually and whenever indicators of impairment exist. We have the option to assess goodwill for impairment by initially performing a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If we determine that it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is not required to be performed. If we determine that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, or if we do not elect the option to perform an initial qualitative assessment, we perform a quantitative goodwill impairment test. In the quantitative impairment test, we calculate the estimated fair value of the reporting unit. If the carrying amount of the reporting unit exceeds the estimated fair value, an impairment charge is recorded for the amount that its carrying amount, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. Indefinite-lived intangible assets, such as IPR&D acquired in business combinations and certain trademarks with indefinite lives, are subject to an impairment review annually and whenever indicators of impairment exist. We have the option to assess indefinite-lived intangible assets for impairment by first performing qualitative assessments to determine whether it is more-likely-than-not that the fair values of the indefinite-lived intangible assets are less than the carrying amounts. If we determine that it is more-likely-than-not that an indefinite-lived intangible asset is impaired, or if we elect not to perform an initial qualitative assessment, we then perform the quantitative impairment test by comparing the fair value of the indefinite-lived intangible asset with its carrying amount. If the carrying amount exceeds the fair value of the indefinite-lived intangible asset, we write the carrying amount down to the fair value. We review the carrying amounts of long-lived assets, other than goodwill and intangible assets not subject to amortization, for potential impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating recoverability, we group assets and liabilities at the lowest level such that the identifiable cash flows relating to the group are largely independent of the cash flows of other assets and liabilities. We then compare the carrying amounts of the assets or asset groups with the related estimated undiscounted future cash flows. In the event impairment exists, an impairment charge is recorded as the amount by which the carrying amount of the asset or asset group exceeds the fair value.
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Income Taxes | Income Taxes Deferred taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting based on enacted tax laws and rates. We maintain valuation allowances unless it is more-likely-than-not that the deferred tax asset will be realized. With respect to uncertain tax positions, we determine whether the position is more-likely-than-not to be sustained upon examination based on the technical merits of the position. Any tax position that meets the more-likely-than-not recognition threshold is measured and recognized in the consolidated financial statements at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The liability relating to uncertain tax positions is classified as current in the consolidated balance sheets to the extent that we anticipate making a payment within one year. Interest and penalties associated with income taxes are classified in the income tax expense line in the consolidated statements of income. Refer to the Recently Adopted Accounting Pronouncements section of this note and Note 12 for additional information related to the Tax Cuts and Jobs Act of 2017 (2017 Tax Act).
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Foreign Currency Translation | Foreign Currency TranslationCurrency translation adjustments (CTA) related to foreign operations are included in other comprehensive income (OCI). |
Derivatives and Hedging Activities | Derivatives and Hedging Activities All derivative instruments are recognized as either assets or liabilities at fair value in the consolidated balance sheets and are generally classified as short-term or long-term based on the scheduled maturity of the instrument. We designate certain of our derivatives and foreign-currency denominated debt as hedging instruments in cash flow, fair value or net investment hedges. For each derivative instrument that is designated and effective as a cash flow hedge, the gain or loss on the derivative is recorded in accumulated other comprehensive income (AOCI) and then recognized in earnings consistent with the underlying hedged item. Option premiums or net premiums paid are initially recorded as assets and reclassified to OCI over the life of the option, and then recognized in earnings consistent with the underlying hedged item. Cash flow hedges are classified in cost of sales and interest expense, net, and are primarily related to forecasted third-party sales denominated in foreign currencies, forecasted intra-company sales denominated in foreign currencies and forecasted interest payments on anticipated issuances of debt, respectively. For each derivative instrument that is designated and effective as a fair value hedge, the gain or loss on the derivative is recognized immediately to earnings, and offsets changes in fair value attributable to a particular risk, such as changes in interest rates, of the hedged item, which are also recognized in earnings. Fair value hedges are classified in interest expense, net, as they hedge the interest rate risk associated with certain of our fixed-rate debt. We have designated our Euro-denominated senior notes as hedges of our net investment in our European operations and, as a result, mark to spot rate adjustments on the outstanding debt balances are recorded as a component of AOCI. For derivative instruments that are not designated as hedges, the change in fair value is recorded directly to other (income) expense, net. If it is determined that a derivative or nonderivative hedging instrument is no longer highly effective as a hedge, we discontinue hedge accounting prospectively. Gains or losses relating to terminations of effective cash flow hedges generally continue to be deferred and are recognized consistent with the loss or income recognition of the underlying hedged items. However, if it is probable that the hedged forecasted transactions will not occur, any gains or losses would be immediately reclassified from AOCI to earnings. If we terminate a fair value hedge, an amount equal to the cumulative fair value adjustment to the hedged item at the date of termination is amortized to earnings over the remaining term of the hedged item. If we remove a net investment hedge designation, any gains or losses recognized in AOCI are not reclassified to earnings until we sell, liquidate, or deconsolidate the foreign investments that were being hedged. Cash flows related to the settlement of derivative instruments designated as net investment hedges of foreign operations are classified in the consolidated statements of cash flows within investing activities. Cash flows for all other derivatives, including those that are not designated as a hedge, are classified in the same line item as the cash flows of the related hedged item, which is generally within operating activities.
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New Accounting Standards | New Accounting Standards Recently adopted accounting pronouncements As of January 1, 2020, we adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses, which requires the measurement of expected lifetime credit losses, rather than incurred losses, for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. We adopted this ASU using the modified retrospective approach. The impact of the adoption of this ASU was an increase to our allowance for doubtful accounts and a decrease to retained earnings of $4 million. As of January 1, 2020, we adopted ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Our policies for capitalizing implementation costs incurred in a hosting arrangement were not impacted by this ASU. However, we have historically classified those capitalized costs within property, plant and equipment, net on our consolidated balance sheets and as capital expenditures on our consolidated statements of cash flows. Under the new ASU, those capitalized costs are presented as other non-current assets on our consolidated balance sheets and within operating cash flows on our consolidated statements of cash flows. We adopted this ASU on a prospective basis and capitalized $44 million of implementation costs related to hosting arrangements that are service contracts during the year ended December 31, 2020. As of January 1, 2020, we adopted ASU No. 2017-04, Intangibles – Goodwill and Other, Simplifying the Test for Goodwill Impairment. This standard eliminates Step 2 of the goodwill impairment test and requires a goodwill impairment to be measured as the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of its goodwill. The adoption of this standard did not impact our consolidated financial statements. As of January 1, 2020, we adopted ASU No. 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Topic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans. This ASU amends ASC 715 to remove certain disclosures, clarify certain existing disclosures and add additional disclosures. The adoption of this standard did not have a material impact on our consolidated financial statements. As of January 1, 2019, we adopted ASU No. 2016-02, Leases (Topic 842). Under this guidance, lessees are required to recognize a right-of-use asset and a lease liability on the balance sheet for all operating leases, other than those that meet the definition of a short-term lease. We adopted Topic 842 using the modified retrospective method. We elected the following practical expedients when assessing the transition impact: i) not to reassess whether any expired or existing contracts as of the adoption date are or contain leases; ii) not to reassess the lease classification for any expired or existing leases as of the adoption date; and iii) not to reassess initial direct costs for any existing leases as of the adoption date. The adjustment to record operating lease right-of-use assets and operating lease liabilities was $502 million as of January 1, 2019. The impact to the consolidated statements of income was not material and there was no net impact to the consolidated statements of cash flows. As of January 1, 2019, we adopted ASU No. 2018-02, Reclassification of Certain Tax Effects from AOCI. As a result of the enactment of the 2017 Tax Act, this guidance provides for a reclassification of certain tax effects from AOCI to retained earnings. The impact of the adoption of this standard was a $161 million increase to retained earnings. As of January 1, 2018, we adopted ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory (ASU No. 2016-16) using the modified retrospective method. ASU No. 2016-16 generally accelerates the recognition of income tax consequences for intra-company asset transfers other than inventory. We recorded a $70 million reduction to retained earnings upon adoption of the standard on January 1, 2018 related to the unrecognized income tax effects of asset transfers that occurred prior to adoption. Net income increased $14 million for the year ended December 31, 2018 as a result of the adoption of the standard. As of January 1, 2018, we adopted 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 to receive when products are transferred to customers. The primary impact of the new standard relates to our contract manufacturing operations and software arrangements. Certain contract manufacturing arrangements require revenue recognition over-time in situations in which we produce products that have no alternative use and we have an enforceable right to payment for performance completed to date, inclusive of a reasonable profit margin. This results in an acceleration of revenue recognition for certain contractual arrangements as compared to recognition under prior accounting literature. The new guidance also impacts our arrangements subject to previous software revenue recognition guidance, as we are required to recognize as revenue a significant portion of the contract consideration upon delivery of the software compared to the previous practice of recognizing the contract consideration ratably over time for certain arrangements. We adopted Topic 606 using the modified retrospective method. The adjustment upon adoption increased our opening balance of retained earnings by approximately $45 million, net of tax, on January 1, 2018. The impact to net sales as a result of the adoption was an increase of $7 million for the year ended December 31, 2018. The impact to cost of sales was not material for the year ended December 31, 2018. In December 2017, the SEC issued guidance for situations where the accounting for certain elements of the 2017 Tax Act could not be completed prior to the release of a company's financial statements. For specific elements of the 2017 Tax Act, we determined a reasonable estimate for certain effects and recorded that estimate as a provisional amount in 2017. The guidance provided a measurement period to allow a company to account for these specific elements, which began in the reporting period that included the enactment of the 2017 Tax Act and ended when we obtained, prepared and analyzed the information needed in order to complete its accounting assessments or one year, whichever occurred sooner. The resulting tax effects were to be recognized in the period the assessment was complete, and included in income tax expense, accompanied by appropriate disclosures. The measurement period closed in 2018 and we recorded adjustments to reduce income tax expense by $207 million in 2018. Refer to Note 12 for additional information related to the 2017 Tax Act.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract with Customer, Contract Asset | The following table summarizes our contract assets:
The following table summarizes the classification of contract assets and contract liabilities as reported in the consolidated balance sheet:
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Disaggregation of Revenue | The following tables disaggregate our net sales from contracts with customers by product category between the U.S. and international:
1 Renal Care includes sales of our peritoneal dialysis (PD), hemodialysis (HD) and additional dialysis therapies and services. 2 Medication Delivery includes sales of our IV therapies, infusion pumps, administration sets and drug reconstitution devices. 3 Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services. 4 Clinical Nutrition includes sales of our parenteral nutrition (PN) therapies and related products. 5 Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention. 6 Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU). 7 BioPharma Solutions includes sales of contracted services we provide to various pharmaceutical and biopharmaceutical companies. 8 Other includes sales of miscellaneous product and service offerings.
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Schedule of New Accounting Standards | The following table summarizes the allowance for doubtful accounts.
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ACQUISITIONS AND OTHER ARRANGEMENTS (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fair Value of Assets Acquired and Liabilities Assumed | The following table summarizes the fair values of the assets acquired as of the acquisition date:
The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date:
The following table summarizes the fair value of the assets acquired as of the acquisition date:
The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date:
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Schedule of Total Consideration | The following table summarizes the fair value of consideration transferred:
The following table summarizes the fair value of consideration transferred:
The following table summarizes the fair value of consideration transferred:
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SUPPLEMENTAL FINANCIAL INFORMATION (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories
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Prepaid Expenses and Other | Prepaid Expenses and Other Current Assets
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Property, Plant and Equipment, Net | Property, Plant and Equipment, Net
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Other Long-Term Assets |
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Accounts Payable and Accrued Liabilities |
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Other Long-Term Liabilities |
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Net Interest Expense |
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Other (Income) Expense, Net |
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Supplemental Cash Flow Information |
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GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | The following table is a summary of the activity in goodwill by segment.
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Other Intangible Assets, Net | The following table is a summary of our other intangible assets.
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DEBT AND CREDIT FACILITIES (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Outstanding | At December 31, 2020 and 2019, we had the following debt outstanding:
1Book values include any discounts, premiums and adjustments related to hedging instruments and effective interest rates reflect amortization of those items.
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Schedule of Maturities of Long-term Debt | Future Debt Maturities
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LEASES (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost | The components of lease cost for the years ended December 31, 2020 and 2019 were:
For the year ended December 31, 2018, rent expense was $152 million. The following table contains supplemental cash flow information related to leases for the years ended December 31, 2020 and 2019:
Lease term and discount rates as of December 31, 2020 and 2019 were:
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Assets And Liabilities, Lessee | Supplemental balance sheet information related to leases as of December 31, 2020 and 2019 include:
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Lessee, Operating Lease, Liability, Maturity | Maturities of operating and finance lease liabilities as of December 31, 2020 were:
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Finance Lease, Liability, Maturity | Maturities of operating and finance lease liabilities as of December 31, 2020 were:
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Operating Lease, Lease Income | The components of lease revenue for the years ended December 31, 2020 and 2019 were:
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Sales-type Lease, Lease Income | The components of our net investment in sales-type leases as of December 31, 2020 and 2019 were:
Our net investment in sales-type leases is classified as follows in the accompanying consolidated balance sheets:
Our net investment in sales-type leases was $134 million as of December 31, 2020, of which $11 million originated in 2016 and prior, $14 million in 2017, $35 million in 2018, $36 million in 2019 and $38 million in 2020.
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Sales-type and Direct Financing Leases, Lease Receivable, Maturity | Maturities of sales-type and operating leases as of December 31, 2020 were:
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Lessor, Operating Lease, Payments to be Received, Maturity | Maturities of sales-type and operating leases as of December 31, 2020 were:
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STOCKHOLDERS’ EQUITY (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options Fair Value Assumptions | The weighted-average assumptions used in estimating the fair value of stock options granted during each year, along with the weighted-average grant-date fair values, were as follows:
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Summary of Stock Option Activity | The following table summarizes stock option activity for the year ended December 31, 2020 and the outstanding stock options as of December 31, 2020.
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Summary of Nonvested RSU Activity | The following table summarizes nonvested RSU activity for the year ended December 31, 2020.
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Performance Stock Units Fair Value | The assumptions used in estimating the fair value of these PSUs granted during the period, along with the grant-date fair values, were as follows:
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Summary of Nonvested Performance Stock Unit Activity | The following table summarizes nonvested PSU activity for the year ended December 31, 2020.
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ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 years ended December 31, 2020 and 2019.
(a) See table below for details about these reclassifications.
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Summary of Reclassification from AOCI to Net Income | The following table is a summary of the amounts reclassified from AOCI to net income during the years ended December 31, 2020 and 2019.
(a)Amounts in parentheses indicate reductions to net income.
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BUSINESS OPTIMIZATION CHARGES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Optimization Charges | We recorded the following charges related to business optimization programs in 2020, 2019, and 2018:
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Components of Restructuring Costs | During the years ended December 31, 2020, 2019 and 2018, we recorded the following restructuring charges:
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Summary of Activity in Reserves related to Business Optimization Initiatives | The following table summarizes activity in the liability related to our restructuring initiatives.
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PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Pension and OPEB Plan Obligations, Assets and Funded Status | The benefit plan information in the table below pertains to all of our pension and OPEB plans, both in the United States and in other countries.
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Information Relating to Individual Plans in Funded Status that have ABO in Excess of Plan Assets | The following table is information relating to the individual plans in the funded status table above that have an ABO in excess of plan assets.
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Information Relating to Individual Plans in Funded Status that have PBO in Excess of Plan Assets | The following table presents information relating to the individual plans in the funded status table above that have a PBO in excess of plan assets (many of which also have an ABO in excess of assets and are therefore also included in the table directly above).
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Expected Net Pension and OPEB Plan Payments for Next 10 Years |
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Summary of Pre-Tax losses Included in AOCI | The following table is a summary of the pre-tax losses included in AOCI at December 31, 2020 and December 31, 2019.
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Summary of Net-of-Tax Amounts Recorded in OCI Relating to Pension and OPEB Plans | The following table is a summary of the net-of-tax amounts recorded in OCI relating to pension and OPEB plans.
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Net Periodic Benefit Cost - Continuing Operations |
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Weighted-Average Assumptions Used in Determining Benefit Obligations at Measurement Date |
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Fair Value of Pension Plan Assets and Liabilities | The following tables summarize our pension plan financial instruments that are measured at fair value on a recurring basis.
(a) Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
(a) Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
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Changes in Fair Value Measurements that Used Significant Unobservable Inputs | The following table is a reconciliation of changes in fair value measurements that used significant unobservable inputs (Level 3).
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Funded Status Percentage of Pension Plans | The following table details the funded status percentage of our pension plans as of December 31, 2020, including certain plans that are unfunded in accordance with the guidelines of our funding policy outlined above.
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INCOME TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Before Income Tax Expense by Category |
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Income Tax Expense |
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Deferred Tax Assets and Liabilities |
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Income Tax Expense (Benefit) Reconciliation | Income Tax Expense (Benefit) Reconciliation
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Reconciliation of Unrecognized Tax Benefits | The following table is a reconciliation of our unrecognized tax benefits, including those related to discontinued operations, for the years ended December 31, 2020, 2019 and 2018.
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EARNINGS PER SHARE (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table is a reconciliation of income from continuing operations to net income attributable to Baxter stockholders.
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Reconciliation of Basic Shares to Diluted Shares | The following table is a reconciliation of basic shares to diluted shares.
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FINANCIAL INSTRUMENTS, DERIVATIVES AND HEDGING ACTIVITIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Activity Relating to Securitization Arrangement | The following is a summary of the activity relating to the arrangement.
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Summary of Gains and Losses on Derivative Instruments | The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our consolidated financial statements for the years ended December 31, 2020, 2019, and 2018.
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Net of Tax Activity in Accumulated Other Comprehensive Income Related to Cash Flow Hedges | The following table summarizes net-of-tax activity in AOCI, a component of stockholders’ equity, related to our cash flow hedges.
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Classification and Fair Value Amounts of Derivative Instruments | The following table summarizes the classification and fair values of derivative instruments reported in the consolidated balance sheet as of December 31, 2020.
The following table summarizes the classification and fair values of derivative instruments reported in the consolidated balance sheet as of December 31, 2019.
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Derivative Positions Presented on Net Basis | The following table provides information on our derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty.
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Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location | The following table presents the amounts recorded on the consolidated balance sheets related to fair value hedges:
(a) These fair value hedges were terminated prior to December 31, 2018.
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FAIR VALUE MEASUREMENTS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis.
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Reconciliation of Fair Value Measurements that Use Significant Unobservable Inputs | The following table is a reconciliation of our recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions.
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Book Values and Fair Values of Financial Instruments | For these financial instruments, the following table provides the values recognized in the consolidated balance sheets and the estimated fair values.
(a) These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs.
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SEGMENT INFORMATION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Financial information for our segments is as follows:
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Operating Income to Income from Continuing Operations Reconciliation | The following table is a reconciliation of segment operating income to income from continuing operations before income taxes per the consolidated statements of income.
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Geographic Information |
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QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Results and Market for Company's Stock |
¹Totals may not add across due to rounding. ²Results for the fourth quarter and full year of 2020 include a pre-tax charge of $110 million ($90 million, or $0.17 per diluted share, on an after-tax basis) related to the November 2020 early extinguishment of $750 million of 3.75% senior notes that were issued in March 2020, a pre-tax charge of $29 million ($22 million, or $0.04 per diluted share, on an after-tax basis) related to Sigma Spectrum infusion pump inspection and remediation activities and a pre-tax charge of $43 million ($33 million, or $0.06 per diluted share, on an after-tax basis) related to lump-sum settlement distributions made to certain former U.S. employees with vested pension benefits. ³Results for the fourth quarter and full year of 2019 include a pre-tax charge of $755 million ($568 million, or $1.09 per diluted share, on an after-tax basis) related to the annuitization of a portion of our U.S. pension plan.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Nature of Operations - Additional Information (Details) |
12 Months Ended |
---|---|
Dec. 31, 2020
segment
| |
Accounting Policies [Abstract] | |
Number of segments | 3 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Basis of Presentation - Additional Information (Details) $ in Millions |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Oct. 25, 2019
USD ($)
|
Mar. 16, 2018
USD ($)
Product
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
Feb. 14, 2020
USD ($)
|
|
Summary Of Significant Accounting Policies [Line Items] | ||||||
Total cash consideration, net of cash acquired | $ 494 | $ 418 | $ 268 | |||
Seprafilm Adhesion Barrier | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Total assets acquired | $ 342 | |||||
Cheetah Medical, Inc. | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Total assets acquired | $ 208 | |||||
Percentage of ownership acquired | 100.00% | |||||
Total cash consideration, net of cash acquired | $ 188 | |||||
Consideration transferred, additional potential amounts | 40 | |||||
Contingent consideration | 18 | |||||
Consideration transferred | $ 208 | |||||
Mallinckrodt plc | RECOTHROM and PREVELEAK | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Contingent consideration | $ 21 | |||||
Number of products acquired | Product | 2 | |||||
Consideration transferred | $ 184 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition - Additional Information (Details) - USD ($) $ in Billions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Summary Of Significant Accounting Policies [Line Items] | ||
Transaction price allocated to remaining performance obligations | $ 7.6 | |
Net trade accounts receivable | $ 1.7 | $ 1.8 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01 | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Remaining performance obligations period | 1 year | |
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 35.00% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-01-01 | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Remaining performance obligations period | 1 year | |
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 25.00% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-01-01 | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Remaining performance obligations period | 1 year | |
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 20.00% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01 | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Remaining performance obligations period | 1 year | |
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 10.00% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01 | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Remaining performance obligations period | ||
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 10.00% | |
Minimum | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Global payment terms | 30 days | |
Maximum | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Global payment terms | 90 days | |
Amortization period for cost incurred to obtain contract | 1 year | |
Contract with customer period for goods or service transfers and customer pays for goods or service | 1 year |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Contract Assets and Contract Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Summary Of Significant Accounting Policies [Line Items] | ||
Contract assets | $ 134 | $ 131 |
Contract liabilities | 66 | 12 |
Accounts receivable, net | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Contract assets | 70 | 63 |
Other non-current assets | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Contract assets | 64 | 68 |
Accounts payable and accrued liabilities | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Contract liabilities | 32 | 0 |
Other non-current liabilities | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Contract liabilities | 34 | 12 |
Contract manufacturing services | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Contract assets | 47 | 36 |
Software sales | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Contract assets | 40 | 43 |
Bundled equipment and consumable medical products contracts | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Contract assets | $ 47 | $ 52 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Disaggregation of Revenue (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | $ 11,673 | $ 11,362 | $ 11,099 |
Renal Care | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 3,757 | 3,639 | 3,651 |
Medication Delivery | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 2,691 | 2,739 | 2,626 |
Pharmaceuticals | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 2,098 | 2,119 | 2,067 |
Clinical Nutrition | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 910 | 860 | 867 |
Advanced Surgery | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 886 | 875 | 797 |
Acute Therapies | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 740 | 535 | 515 |
BioPharma Solutions | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 486 | 469 | 449 |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 105 | 126 | 127 |
U.S. and Puerto Rico plans | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 4,878 | 4,826 | 4,723 |
U.S. and Puerto Rico plans | Renal Care | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 848 | 791 | 816 |
U.S. and Puerto Rico plans | Medication Delivery | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 1,738 | 1,762 | 1,652 |
U.S. and Puerto Rico plans | Pharmaceuticals | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 849 | 904 | 976 |
U.S. and Puerto Rico plans | Clinical Nutrition | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 330 | 308 | 313 |
U.S. and Puerto Rico plans | Advanced Surgery | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 516 | 533 | 465 |
U.S. and Puerto Rico plans | Acute Therapies | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 286 | 184 | 174 |
U.S. and Puerto Rico plans | BioPharma Solutions | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 234 | 257 | 244 |
U.S. and Puerto Rico plans | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 77 | 87 | 83 |
International | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 6,795 | 6,536 | 6,376 |
International | Renal Care | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 2,909 | 2,848 | 2,835 |
International | Medication Delivery | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 953 | 977 | 974 |
International | Pharmaceuticals | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 1,249 | 1,215 | 1,091 |
International | Clinical Nutrition | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 580 | 552 | 554 |
International | Advanced Surgery | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 370 | 342 | 332 |
International | Acute Therapies | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 454 | 351 | 341 |
International | BioPharma Solutions | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | 252 | 212 | 205 |
International | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer | $ 28 | $ 39 | $ 44 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Changes In Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2020 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Balance at beginning of period | $ 112 | $ 110 | |
Adoption of new accounting standard | 4 | 0 | |
Charged to costs and expenses | 11 | 12 | |
Write-offs | (4) | (8) | |
Currency translation adjustments | 2 | (2) | |
Balance at end of period | $ 112 | $ 110 | $ 125 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shipping and Handling Costs - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Accounting Policies [Abstract] | |||
Shipping costs included in marketing and administrative expenses | $ 325 | $ 324 | $ 329 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment, Net - Additional Information (Details) |
12 Months Ended |
---|---|
Dec. 31, 2020 | |
Minimum | Building and Building Improvements | |
Summary Of Significant Accounting Policies [Line Items] | |
Estimated useful life | 20 years |
Minimum | Machinery and equipment | |
Summary Of Significant Accounting Policies [Line Items] | |
Estimated useful life | 3 years |
Minimum | Software and Software Development Costs | |
Summary Of Significant Accounting Policies [Line Items] | |
Estimated useful life | 3 years |
Maximum | Building and Building Improvements | |
Summary Of Significant Accounting Policies [Line Items] | |
Estimated useful life | 50 years |
Maximum | Machinery and equipment | |
Summary Of Significant Accounting Policies [Line Items] | |
Estimated useful life | 15 years |
Maximum | Software and Software Development Costs | |
Summary Of Significant Accounting Policies [Line Items] | |
Estimated useful life | 5 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - New Accounting Standards - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 01, 2019 |
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Jan. 01, 2020 |
Jan. 01, 2018 |
|
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||
Retained earnings, adjustment | $ 16,328 | $ 15,718 | $ 16,328 | $ 15,718 | ||||||||||
Service contracts, implementation costs | 44 | |||||||||||||
Operating lease right-of-use assets | 603 | 608 | 603 | 608 | ||||||||||
Retained earnings | 16,328 | 15,718 | 16,328 | 15,718 | ||||||||||
Net income | 1,110 | 1,011 | $ 1,546 | |||||||||||
Net sales | $ 3,181 | $ 2,972 | $ 2,718 | $ 2,802 | $ 3,039 | $ 2,851 | $ 2,834 | $ 2,638 | $ 11,673 | 11,362 | 11,099 | |||
Tax cuts and jobs act, measurement period adjustment, income tax expense (benefit) | 207 | |||||||||||||
Cumulative Effect, Period of Adoption, Adjustment | ||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||
Retained earnings, adjustment | $ (70) | |||||||||||||
Retained earnings | (70) | |||||||||||||
Net income | $ 14 | |||||||||||||
Accounting Standards Update 2019-03 | ||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||
Retained earnings, adjustment | $ 4 | |||||||||||||
Retained earnings | $ 4 | |||||||||||||
ASU 2016-02, Leases | ||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||
Operating lease right-of-use assets | $ 502 | |||||||||||||
Accounting Standards Update 2018-02 | ||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||
Tax cuts and jobs act, reclassification from AOCI to retained earnings, tax effect | $ 161 | |||||||||||||
ASU No. 2014-09, Revenue from Contracts with Customers | Adjustments | ||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||
Retained earnings, adjustment | 45 | |||||||||||||
Retained earnings | $ 45 | |||||||||||||
Net sales | $ 7 |
ACQUISITIONS AND OTHER ARRANGEMENTS - Seprafilm Adhesion Barrier (Details) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Feb. 14, 2020
USD ($)
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Acquisitions And Collaborations [Line Items] | ||||
Goodwill | $ 3,217 | $ 3,030 | $ 3,002 | |
Seprafilm Adhesion Barrier | ||||
Acquisitions And Collaborations [Line Items] | ||||
Cash consideration transferred | $ 342 | |||
Inventories | 18 | |||
Goodwill | 28 | |||
Other intangible assets | 296 | |||
Total assets acquired and liabilities assumed | 342 | |||
Net sales | 94 | |||
Pre-tax gain | 18 | |||
Integration related costs | $ 15 | |||
Seprafilm Adhesion Barrier | Developed Product Rights | ||||
Acquisitions And Collaborations [Line Items] | ||||
Fair value of asset acquired | $ 286 | |||
Weighted-average useful life | 10 years | |||
Seprafilm Adhesion Barrier | Developed Product Rights | Measurement Input Discount Rate | ||||
Acquisitions And Collaborations [Line Items] | ||||
Discount rate used to measure intangible assets | 0.148 | |||
Seprafilm Adhesion Barrier | Customer Relationship | ||||
Acquisitions And Collaborations [Line Items] | ||||
Fair value of asset acquired | $ 10 | |||
Weighted-average useful life | 7 years | |||
Seprafilm Adhesion Barrier | Customer Relationship | Measurement Input Discount Rate | ||||
Acquisitions And Collaborations [Line Items] | ||||
Discount rate used to measure intangible assets | 0.110 |
ACQUISITIONS AND OTHER ARRANGEMENTS - Cheetah Medical, Inc. Narrative (Details) - Cheetah Medical, Inc. - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Oct. 25, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Acquisitions And Collaborations [Line Items] | |||
Percentage of ownership acquired | 100.00% | ||
Total upfront cash consideration | $ 195 | ||
Maximum contingent future payments | 40 | ||
Contingent consideration | 18 | ||
Post-close payment received | $ 7 | ||
Deferred tax assets, adjustment | 20 | ||
Integration related costs | $ 5 | $ 3 | |
Other intangible assets | 131 | ||
Developed Product Rights | |||
Acquisitions And Collaborations [Line Items] | |||
Other intangible assets | $ 123 | ||
Weighted-average useful life | 15 years | ||
Customer Relationship | |||
Acquisitions And Collaborations [Line Items] | |||
Other intangible assets | $ 8 | ||
Weighted-average useful life | 13 years | ||
Measurement Input Discount Rate | Developed Product Rights | |||
Acquisitions And Collaborations [Line Items] | |||
Discount rate used to measure intangible assets | 0.110 | ||
Measurement Input Discount Rate | Customer Relationship | |||
Acquisitions And Collaborations [Line Items] | |||
Discount rate used to measure intangible assets | 0.100 |
ACQUISITIONS AND OTHER ARRANGEMENTS - Schedule of Total Consideration for Cheetah Medical, Inc. (Details) - Cheetah Medical, Inc. $ in Millions |
Oct. 25, 2019
USD ($)
|
---|---|
Acquisitions And Collaborations [Line Items] | |
Cash consideration transferred | $ 190 |
Contingent consideration | 18 |
Total consideration transferred | $ 208 |
ACQUISITIONS AND OTHER ARRANGEMENTS - Summary of Fair Value of Assets Acquired and Liabilities Assumed for Cheetah Medical, Inc. (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
Oct. 25, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|
Acquisitions And Collaborations [Line Items] | ||||
Goodwill | $ 3,217 | $ 3,030 | $ 3,002 | |
Cheetah Medical, Inc. | ||||
Acquisitions And Collaborations [Line Items] | ||||
Cash | $ 2 | |||
Accounts receivable, net | 3 | |||
Inventories | 1 | |||
Prepaid expenses and other current assets | 1 | |||
Property, plant and equipment | 1 | |||
Goodwill | 84 | |||
Other intangible assets | 131 | |||
Operating lease right-of-use assets | 1 | |||
Accounts payable and accrued liabilities | (4) | |||
Other non-current liabilities | (12) | |||
Total assets acquired and liabilities assumed | $ 208 |
ACQUISITIONS AND OTHER ARRANGEMENTS - Recothrom and Preveleak Narrative (Details) $ in Millions |
3 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 16, 2018
USD ($)
Product
|
Dec. 31, 2020
USD ($)
|
Sep. 30, 2020
USD ($)
|
Jun. 30, 2020
USD ($)
|
Mar. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
Sep. 30, 2019
USD ($)
|
Jun. 30, 2019
USD ($)
|
Mar. 31, 2019
USD ($)
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Acquisitions And Collaborations [Line Items] | ||||||||||||
Net sales | $ 3,181 | $ 2,972 | $ 2,718 | $ 2,802 | $ 3,039 | $ 2,851 | $ 2,834 | $ 2,638 | $ 11,673 | $ 11,362 | $ 11,099 | |
Mallinckrodt plc | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Net sales | 80 | 52 | ||||||||||
RECOTHROM and PREVELEAK | Mallinckrodt plc | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Number of products acquired | Product | 2 | |||||||||||
Cash consideration transferred | $ 163 | 163 | ||||||||||
Contingent payments related to acquisitions | 21 | |||||||||||
Maximum contingent future payments | 7 | |||||||||||
Integration related costs | $ 20 | $ 17 | ||||||||||
Other intangible assets | $ 100 | |||||||||||
Weighted-average useful life | 10 years | |||||||||||
RECOTHROM and PREVELEAK | Mallinckrodt plc | Minimum | Measurement Input Discount Rate | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Discount rate used to measure intangible assets | 0.125 | |||||||||||
RECOTHROM and PREVELEAK | Mallinckrodt plc | Maximum | Measurement Input Discount Rate | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Discount rate used to measure intangible assets | 0.130 | |||||||||||
Technology Transfer | Mallinckrodt plc | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Maximum contingent future payments | $ 15 | |||||||||||
Net Revenue Royalties | Mallinckrodt plc | ||||||||||||
Acquisitions And Collaborations [Line Items] | ||||||||||||
Maximum contingent future payments | $ 143 |
ACQUISITIONS AND OTHER ARRANGEMENTS - Schedule of Total Consideration for Mallinckrodt Plc (Details) - RECOTHROM and PREVELEAK - Mallinckrodt plc - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Mar. 16, 2018 |
Dec. 31, 2018 |
|
Acquisitions And Collaborations [Line Items] | ||
Cash consideration transferred | $ 163 | $ 163 |
Contingent consideration | 21 | |
Total consideration transferred | $ 184 |
ACQUISITIONS AND OTHER ARRANGEMENTS - Summary of Fair Value of Assets Acquired and Liabilities Assumed for Mallinckrodt Plc (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Mar. 16, 2018 |
---|---|---|---|---|
Acquisitions And Collaborations [Line Items] | ||||
Goodwill | $ 3,217 | $ 3,030 | $ 3,002 | |
RECOTHROM and PREVELEAK | Mallinckrodt plc | ||||
Acquisitions And Collaborations [Line Items] | ||||
Accounts receivable, net | $ 2 | |||
Inventories | 80 | |||
Goodwill | 2 | |||
Other intangible assets | 100 | |||
Total assets acquired | $ 184 |
ACQUISITIONS AND OTHER ARRANGEMENTS - Saudia Arabia Joint Venture Narrative (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Nov. 30, 2018 |
Dec. 31, 2018 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Acquisitions And Collaborations [Line Items] | |||||
Cash | $ 0 | $ 0 | $ 24 | ||
Estimated useful lives | 10 years | ||||
Percentage of common stock retained | 100.00% | ||||
Saudi Arabia Joint Venture | |||||
Acquisitions And Collaborations [Line Items] | |||||
Percentage of ownership acquired | 51.00% | ||||
Cash | $ 24 | ||||
Percentage of common stock retained | 49.00% | ||||
Estimated noncontrolling interest in joint venture | $ 39 | ||||
Saudi Arabia Joint Venture | Customer Relationship | |||||
Acquisitions And Collaborations [Line Items] | |||||
Weighted-average useful life | 10 years | ||||
Saudi Arabia Joint Venture | Customer Relationship | Measurement Input Discount Rate | |||||
Acquisitions And Collaborations [Line Items] | |||||
Discount rate used to measure intangible assets | 0.140 | ||||
Saudi Arabia Joint Venture | Reacquired License Rights | |||||
Acquisitions And Collaborations [Line Items] | |||||
Reacquired license rights fair value total | $ 10 | ||||
Estimated useful lives | 12 years | ||||
Saudi Arabia Joint Venture | Reacquired License Rights | Measurement Input Discount Rate | |||||
Acquisitions And Collaborations [Line Items] | |||||
Discount rate used to measure intangible assets | 0.130 | ||||
Saudi Arabia Joint Venture | Significant unobservable inputs (Level 3) | |||||
Acquisitions And Collaborations [Line Items] | |||||
Fair value of equity interest | $ 39 |
ACQUISITIONS AND OTHER ARRANGEMENTS - Schedule of Total Consideration for Saudia Arabia Joint Venture (Details) - Saudi Arabia Joint Venture $ in Millions |
1 Months Ended |
---|---|
Nov. 30, 2018
USD ($)
| |
Acquisitions And Collaborations [Line Items] | |
Cash | $ 2 |
Fair value of equity investment | 39 |
Noncontrolling interest | 39 |
Total consideration transferred | $ 80 |
ACQUISITIONS AND OTHER ARRANGEMENTS - Summary of Fair Value of Assets Acquired and Liabilities Assumed for Saudia Arabia Joint Venture (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Nov. 30, 2018 |
---|---|---|---|---|
Acquisitions And Collaborations [Line Items] | ||||
Goodwill | $ 3,217 | $ 3,030 | $ 3,002 | |
Saudi Arabia Joint Venture | ||||
Acquisitions And Collaborations [Line Items] | ||||
Cash | $ 4 | |||
Accounts receivable, net | 25 | |||
Inventories | 8 | |||
Property, plant and equipment | 12 | |||
Goodwill | 17 | |||
Other intangible assets | 40 | |||
Other non-current assets | 2 | |||
Short-term debt | (4) | |||
Accounts payable and accrued liabilities | (16) | |||
Other non-current liabilities | (8) | |||
Total assets acquired | $ 80 |
ACQUISITIONS AND OTHER ARRANGEMENTS - Claris Injectables Limited Narrative (Details) - USD ($) $ in Millions |
1 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Jul. 27, 2017 |
Feb. 28, 2018 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Acquisitions And Collaborations [Line Items] | |||||
Total cash consideration, net of cash acquired | $ 494 | $ 418 | $ 268 | ||
Claris Injectables Limited | |||||
Acquisitions And Collaborations [Line Items] | |||||
Percentage of ownership acquired | 100.00% | ||||
Total cash consideration, net of cash acquired | $ 629 | ||||
Business acquisition settlement claims received | $ 73 | ||||
Accrued liabilities released | $ 7 | ||||
Business acquisition benefit of settlement claims and accrued liabilities released | $ 80 |
ACQUISITIONS AND OTHER ARRANGEMENTS - Other Business Acquisitions (Details) - USD ($) $ in Millions |
1 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Feb. 28, 2021 |
Dec. 31, 2020 |
Jan. 31, 2020 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Acquisitions And Collaborations [Line Items] | ||||||
Estimated useful lives | 10 years | |||||
Licensing Agreements | ||||||
Acquisitions And Collaborations [Line Items] | ||||||
Payment to acquire the rights | $ 22 | |||||
Payments for development regulatory and commercial milestones | 44 | |||||
Developed Technology Rights Acquisition | ||||||
Acquisitions And Collaborations [Line Items] | ||||||
Reacquired license rights fair value total | $ 80 | |||||
Developed Technology Rights | Developed Technology Rights Acquisition | ||||||
Acquisitions And Collaborations [Line Items] | ||||||
Estimated useful lives | 11 years | |||||
Asset acquisition, consideration transferred | 73 | |||||
Other Acquisitions | ||||||
Acquisitions And Collaborations [Line Items] | ||||||
Consideration transferred | 18 | 10 | $ 36 | |||
Development and regulatory milestone payments, maximum | $ 25 | 25 | ||||
GlaxoSmithKline | Transderm Scop | Forecast | ||||||
Acquisitions And Collaborations [Line Items] | ||||||
Cash consideration transferred | $ 55 | |||||
Maximum contingent future payments | $ 30 | |||||
Caelyx and Doxil | ||||||
Acquisitions And Collaborations [Line Items] | ||||||
Cash consideration transferred | 325 | |||||
Celerity Pharmaceutical LLC | ||||||
Acquisitions And Collaborations [Line Items] | ||||||
Maximum contingent future payments | 77 | $ 77 | ||||
Payment to acquire the rights | $ 86 | $ 72 | ||||
Celerity Pharmaceutical LLC | Minimum | ||||||
Acquisitions And Collaborations [Line Items] | ||||||
Loss on acquisition | 30 | |||||
Celerity Pharmaceutical LLC | Maximum | ||||||
Acquisitions And Collaborations [Line Items] | ||||||
Loss on acquisition | $ 60 | |||||
Celerity Pharmaceutical LLC | Developed Technology Rights | ||||||
Acquisitions And Collaborations [Line Items] | ||||||
Estimated useful lives | 12 years |
SUPPLEMENTAL FINANCIAL INFORMATION - Inventories (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 460 | $ 377 |
Work in process | 196 | 185 |
Finished goods | 1,260 | 1,091 |
Inventories | $ 1,916 | $ 1,653 |
SUPPLEMENTAL FINANCIAL INFORMATION - Prepaid Expenses and Other (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Prepaid expenses and other | ||
Prepaid value added taxes | $ 163 | $ 140 |
Prepaid income taxes | 183 | 164 |
Other | 342 | 315 |
Prepaid expenses and other current assets | $ 688 | $ 619 |
SUPPLEMENTAL FINANCIAL INFORMATION - Property, Plant and Equipment, Net (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, at cost | $ 11,271 | $ 10,660 | |
Accumulated depreciation | (6,549) | (6,148) | |
Property, plant and equipment (PP&E), net | 4,722 | 4,512 | |
Depreciation expense | 601 | 606 | $ 602 |
Land and land improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, at cost | 166 | 148 | |
Buildings and leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, at cost | 1,849 | 1,761 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, at cost | 6,884 | 6,671 | |
Equipment with customers | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, at cost | 1,671 | 1,489 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, at cost | $ 701 | $ 591 |
SUPPLEMENTAL FINANCIAL INFORMATION - Other Long-Term Assets (Detail) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Other Assets, Noncurrent | ||
Deferred tax assets | $ 748 | $ 621 |
Non-current receivables, net | 158 | 163 |
Contract assets | 64 | 68 |
Capitalized implementation costs in hosting arrangements | 68 | 0 |
Pension and other postretirement benefits | 155 | 77 |
Investments | 135 | 76 |
Other | 67 | 64 |
Other non-current assets | $ 1,395 | $ 1,069 |
SUPPLEMENTAL FINANCIAL INFORMATION - Accrued Expenses and Other Current Liabilities (Detail) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Accounts Payable and Accrued Liabilities, Current | ||
Accounts payable | $ 1,043 | $ 892 |
Common stock dividends payable | 125 | 111 |
Employee compensation and withholdings | 415 | 456 |
Property, payroll and certain other taxes | 148 | 113 |
Restructuring liabilities | 92 | 83 |
Accrued rebates | 239 | 208 |
Operating lease liabilities | 111 | 101 |
Income taxes payable | 135 | 85 |
Pension and other postretirement benefits | 48 | 45 |
Other | 571 | 595 |
Accounts payable and accrued liabilities | $ 2,927 | $ 2,689 |
SUPPLEMENTAL FINANCIAL INFORMATION - Other Long-Term Liabilities (Detail) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Other Liabilities Noncurrent | ||
Pension and other postretirement benefits | $ 1,214 | $ 1,260 |
Deferred tax liabilities | 143 | 192 |
Long-term tax liabilities | 84 | 81 |
Interest rate contracts | 0 | 52 |
Litigation and environmental reserves | 29 | 30 |
Restructuring liabilities | 21 | 9 |
Other | 182 | 108 |
Other non-current liabilities | $ 1,673 | $ 1,732 |
SUPPLEMENTAL FINANCIAL INFORMATION - Net Interest Expense (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Interest Income Expense Net | |||
Interest costs | $ 162 | $ 120 | $ 105 |
Interest costs capitalized | (9) | (9) | (12) |
Interest expense | 153 | 111 | 93 |
Interest income | (19) | (40) | (48) |
Interest expense, net | $ 134 | $ 71 | $ 45 |
SUPPLEMENTAL FINANCIAL INFORMATION - Other (Income) Expense, net (Detail) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Other Income, net | ||||
Foreign exchange losses (gains), net | $ 49 | $ 37 | $ (14) | |
Investment gains | (13) | (1) | (3) | |
Saudi Arabia joint venture gain | 0 | 0 | (24) | |
Loss on debt extinguishment | $ 110 | 110 | 0 | 0 |
Pension settlement charges | 46 | 755 | 1 | |
Pension and other postretirement benefit plans | (3) | (53) | (49) | |
Other, net | 1 | (7) | 11 | |
Other (income) expense, net | $ 190 | $ 731 | $ (78) |
SUPPLEMENTAL FINANCIAL INFORMATION - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Property, Plant and Equipment [Line Items] | |||
Interest paid, net of portion capitalized | $ 137 | $ 103 | $ 94 |
Income taxes paid | 249 | 294 | 301 |
Property, Plant and Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Capital expenditures incurred but not yet paid | $ 102 | $ 87 | $ 97 |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Schedule of Goodwill (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 3,030 | $ 3,002 |
Additions | 34 | 111 |
Acquisition accounting adjustments | (53) | (7) |
Currency translation | 206 | (76) |
Goodwill, ending balance | 3,217 | 3,030 |
Americas | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 2,428 | 2,386 |
Additions | 26 | 101 |
Acquisition accounting adjustments | (45) | (2) |
Currency translation | 165 | (57) |
Goodwill, ending balance | 2,574 | 2,428 |
EMEA | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 385 | 393 |
Additions | 1 | 10 |
Acquisition accounting adjustments | (6) | (5) |
Currency translation | 26 | (13) |
Goodwill, ending balance | 406 | 385 |
APAC | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 217 | 223 |
Additions | 7 | 0 |
Acquisition accounting adjustments | (2) | 0 |
Currency translation | 15 | (6) |
Goodwill, ending balance | $ 237 | $ 217 |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Other Intangible Assets, Net (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Intangible Asset Excluding Goodwill [Line Items] | ||
Accumulated amortization | $ (1,706) | $ (1,475) |
Gross other intangible assets | 3,377 | 2,946 |
Other intangible assets, net | 1,671 | 1,471 |
Indefinite-lived intangible assets | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets, indefinite-lived intangible assets | 169 | 173 |
Developed technology, including patents | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets, developed technology including patents | 2,713 | 2,309 |
Accumulated amortization | (1,374) | (1,190) |
Other intangible assets, net | 1,339 | 1,119 |
Other amortized intangible assets | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets, developed technology including patents | 495 | 464 |
Accumulated amortization | (332) | (285) |
Other intangible assets, net | $ 163 | $ 179 |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Additional Information (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Intangible Asset Excluding Goodwill [Line Items] | |||||
Goodwill, impairment loss | $ 0 | ||||
Intangible asset amortization expense | 222,000,000 | $ 183,000,000 | $ 169,000,000 | ||
Anticipated annual amortization expense of other intangible assets for 2021 | 231,000,000 | ||||
Anticipated annual amortization expense of other intangible assets for 2022 | 227,000,000 | ||||
Anticipated annual amortization expense of other intangible assets for 2023 | 212,000,000 | ||||
Anticipated annual amortization expense of other intangible assets for 2024 | 189,000,000 | ||||
Anticipated annual amortization expense of other intangible assets for 2025 | 155,000,000 | ||||
Intangible asset impairments | 17,000,000 | 31,000,000 | 0 | ||
Goodwill | 3,217,000,000 | 3,030,000,000 | 3,002,000,000 | ||
EMEA | |||||
Intangible Asset Excluding Goodwill [Line Items] | |||||
Goodwill | $ 406,000,000 | $ 385,000,000 | $ 393,000,000 | ||
Developed Technology Rights | |||||
Intangible Asset Excluding Goodwill [Line Items] | |||||
Intangible asset impairments | $ 17,000,000 | $ 31,000,000 |
DEBT AND CREDIT FACILITIES - Schedule of Debt (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Oct. 31, 2020 |
Dec. 31, 2019 |
May 31, 2019 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Debt and capital lease obligations | $ 6,192 | $ 5,124 | ||
Current portion | (406) | (315) | ||
Long-term portion | $ 5,786 | 4,809 | ||
Variable-rate loan due 2020 | ||||
Debt Instrument [Line Items] | ||||
Effective Interest Rate | 1.00% | |||
Debt and capital lease obligations | $ 0 | $ 322 | 313 | |
1.7% notes due 2021 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 1.70% | |||
Effective Interest Rate | 1.90% | |||
Debt and capital lease obligations | $ 400 | 398 | ||
2.4% notes due 2022 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 2.40% | |||
Effective Interest Rate | 2.50% | |||
Debt and capital lease obligations | $ 203 | 203 | ||
0.40% notes due 2024 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 0.40% | 0.40% | ||
Effective Interest Rate | 0.60% | |||
Debt and capital lease obligations | $ 915 | 834 | ||
1.3% notes due in 2025 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 1.30% | |||
Effective Interest Rate | 1.40% | |||
Debt and capital lease obligations | $ 734 | 669 | ||
2.6% notes due 2026 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 2.60% | |||
Effective Interest Rate | 2.70% | |||
Debt and capital lease obligations | $ 746 | 746 | ||
7.65% debentures due 2027 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 7.65% | |||
Effective Interest Rate | 7.70% | |||
Debt and capital lease obligations | $ 5 | 5 | ||
6.625% debentures due 2028 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 6.625% | |||
Effective Interest Rate | 5.60% | |||
Debt and capital lease obligations | $ 97 | 98 | ||
1.3% notes due 2029 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 1.30% | 1.30% | ||
Effective Interest Rate | 1.40% | |||
Debt and capital lease obligations | $ 912 | 830 | ||
3.95% notes due 2030 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 3.95% | |||
Effective Interest Rate | 4.00% | |||
Debt and capital lease obligations | $ 495 | 0 | ||
1.73% notes due 2031 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 1.73% | |||
Effective Interest Rate | 3.20% | |||
Debt and capital lease obligations | $ 644 | 0 | ||
6.25% notes due 2037 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 6.25% | |||
Effective Interest Rate | 6.30% | |||
Debt and capital lease obligations | $ 265 | 265 | ||
3.65% notes due 2042 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 3.65% | |||
Effective Interest Rate | 3.70% | |||
Debt and capital lease obligations | $ 6 | 6 | ||
4.5% notes due 2043 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 4.50% | |||
Effective Interest Rate | 4.60% | |||
Debt and capital lease obligations | $ 256 | 255 | ||
3.5% notes due 2046 | ||||
Debt Instrument [Line Items] | ||||
Senior notes, coupon rates | 3.50% | |||
Effective Interest Rate | 3.60% | |||
Debt and capital lease obligations | $ 440 | 440 | ||
Finance leases and other | ||||
Debt Instrument [Line Items] | ||||
Effective Interest Rate | 9.20% | |||
Debt and capital lease obligations | $ 74 | $ 62 |
DEBT AND CREDIT FACILITIES - Additional Information (Details) |
1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2020
USD ($)
|
Mar. 31, 2020
USD ($)
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2020
EUR (€)
|
Dec. 31, 2020
USD ($)
|
Oct. 31, 2020
USD ($)
|
Dec. 31, 2019
EUR (€)
|
Dec. 31, 2019
USD ($)
|
May 31, 2019
EUR (€)
|
|
Debt Instrument [Line Items] | ||||||||||||
Annual interest rate, potential increase | 0.25% | 0.25% | ||||||||||
Annual interest rate, maximum potential increase | 0.50% | 0.50% | ||||||||||
Debt and capital lease obligations | $ 6,192,000,000 | $ 5,124,000,000 | ||||||||||
Loss on debt extinguishment | $ 110,000,000 | $ 110,000,000 | $ 0 | $ 0 | ||||||||
Fees under the credit facilities | 0.09% | |||||||||||
Foreign Line of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility, current capacity | € 200,000,000 | $ 224,000,000 | ||||||||||
Line of credit facility, interest rate at period end | 0.91% | 0.91% | ||||||||||
Other Line Of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility, maximum capacity | 200,000,000 | $ 200,000,000 | ||||||||||
Line of credit, borrowings outstanding | $ 0 | 2,000,000 | ||||||||||
0.40% Senior Notes due May 2024 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Senior notes | € | € 750,000,000 | |||||||||||
Senior notes, coupon rates | 0.40% | 0.40% | 0.40% | |||||||||
Debt and capital lease obligations | $ 915,000,000 | 834,000,000 | ||||||||||
0.40% Senior Notes due May 2024 | Domestic Line of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility, current capacity | 2,000,000,000.0 | |||||||||||
Line of credit facility, current outstanding | $ 0 | 0 | ||||||||||
0.40% Senior Notes due May 2024 | Foreign Line of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility, current capacity | € | € 200,000,000 | |||||||||||
Line of credit facility, current outstanding | € | € 0 | |||||||||||
1.3% Senior Notes due May 2029 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Senior notes | € | € 750,000,000 | |||||||||||
Senior notes, coupon rates | 1.30% | 1.30% | 1.30% | |||||||||
Debt and capital lease obligations | $ 912,000,000 | 830,000,000 | ||||||||||
Senior Notes Due 2025 | Senior Notes | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Senior notes | $ 750,000,000 | |||||||||||
Senior notes, coupon rates | 3.75% | |||||||||||
Payment to debt holders | $ 104,000,000 | |||||||||||
Senior Notes Due 2030 | Senior Notes | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Senior notes | $ 500,000,000 | |||||||||||
Senior notes, coupon rates | 3.95% | |||||||||||
Variable-rate loan due 2020 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt and capital lease obligations | $ 0 | $ 322,000,000 | $ 313,000,000 | |||||||||
Senior Notes Due 2031 | Senior Notes | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Senior notes | $ 650,000,000 | |||||||||||
Senior notes, coupon rates | 1.73% |
DEBT AND CREDIT FACILITIES - Schedule of Maturities of Long-term Debt (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Debt Disclosure [Abstract] | ||
2021 | $ 406 | |
2022 | 208 | |
2023 | 4 | |
2024 | 924 | |
2025 | 740 | |
Thereafter | 3,951 | |
Total obligations and commitments | 6,233 | |
Discounts, premiums, and adjustments relating to hedging instruments | (41) | |
Total debt | $ 6,192 | $ 5,124 |
LEASES - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2018 |
Dec. 31, 2019 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Leases [Line Items] | |||||
Operating lease rent expense | $ 152 | ||||
Operating lease, leases not yet commenced, liability | $ 46 | ||||
Lessee, operating lease, liability, to be paid | 673 | ||||
Net investment in sales-type leases | 134 | $ 121 | |||
Sales-type leases, receivables | $ 38 | $ 36 | |||
Sales-type leases, receivables | $ 35 | $ 14 | $ 11 | ||
Minimum | |||||
Leases [Line Items] | |||||
Lessee operating and finance lease remaining term of contract | 1 year | ||||
Lessee, renewal term | 1 year | ||||
Maximum | |||||
Leases [Line Items] | |||||
Lessee operating and finance lease remaining term of contract | 42 years | ||||
Lessee, renewal term | 16 years |
LEASES - Components of Lease Cost (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Leases [Abstract] | ||
Operating lease cost | $ 115 | $ 121 |
Finance lease cost | ||
Amortization of right-of-use assets | 5 | 5 |
Interest on lease liabilities | 5 | 5 |
Variable lease cost | 54 | 89 |
Lease cost | $ 179 | $ 220 |
LEASES - Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Leases [Abstract] | ||
Operating cash flows from operating leases | $ 127 | $ 119 |
Operating cash flows from finance leases | 4 | 4 |
Financing cash flows from finance leases | 4 | 4 |
Right-of-use operating lease assets obtained in exchange for lease obligations | 67 | 207 |
Right-of-use finance lease assets obtained in exchange for lease obligations | $ 8 | $ 0 |
LEASES - Assets and Liabilities of Lessee (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Operating leases | ||
Operating lease right-of-use assets | $ 603 | $ 608 |
Accounts payable and accrued liabilities | 111 | 101 |
Operating lease liabilities | 501 | 510 |
Total operating lease liabilities | 612 | 611 |
Finance leases | ||
Property, plant and equipment, at cost | 76 | 63 |
Accumulated depreciation | (28) | (19) |
Property, plant and equipment, net | 48 | 44 |
Current maturities of long-term debt and finance lease obligations | 1 | 0 |
Long-term debt and finance lease obligations | 64 | 54 |
Total finance lease liabilities | $ 65 | $ 54 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccountsPayableAndAccruedLiabilitiesCurrent | us-gaap:AccountsPayableAndAccruedLiabilitiesCurrent |
LEASES - Schedule of Lease Term and Discount Rates (Details) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Leases [Abstract] | ||
Operating lease, weighted average remaining lease term | 9 years | 10 years |
Finance lease, weighted average remaining lease term | 13 years | 15 years |
Operating lease, weighted average discount rate | 2.20% | 2.80% |
Finance lease, weighted average discount rate | 10.30% | 10.60% |
LEASES - Maturities of Operating and Finance Lease Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Finance Leases | ||
2021 | $ 9 | |
2022 | 9 | |
2023 | 8 | |
2024 | 8 | |
2025 | 8 | |
Thereafter | 78 | |
Total minimum lease payments | 120 | |
Less: imputed interest | (55) | |
Total finance lease liabilities | 65 | $ 54 |
Operating Leases | ||
2021 | 121 | |
2022 | 102 | |
2023 | 84 | |
2024 | 69 | |
2025 | 57 | |
Thereafter | 240 | |
Total minimum lease payments | 673 | |
Less: imputed interest | (61) | |
Total operating lease liabilities | $ 612 | $ 611 |
LEASES - Components of Operating Lease Income (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Leases [Abstract] | ||
Sales-type lease revenue | $ 38 | $ 35 |
Operating lease revenue | 84 | 61 |
Variable lease revenue | 80 | 85 |
Total lease revenue | $ 202 | $ 181 |
LEASES - Components of Net Investment in Sales-type Lease (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Leases [Abstract] | ||
Minimum lease payments | $ 122 | $ 110 |
Unguaranteed residual values | 12 | 11 |
Net investment in leases | $ 134 | $ 121 |
LEASES - Components of Sales Type Lease Income (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Leases [Abstract] | ||
Accounts receivable, net | $ 39 | $ 45 |
Other non-current assets | 95 | 76 |
Total | $ 134 | $ 121 |
LEASES - Maturities of Sales-type and Operating Leases (Details) $ in Millions |
Dec. 31, 2020
USD ($)
|
---|---|
Sales-type Leases | |
2021 | $ 51 |
2022 | 34 |
2023 | 26 |
2024 | 17 |
2025 | 4 |
Thereafter | 2 |
Total minimum lease payments | 134 |
Less: imputed interest | (12) |
Total minimum lease payments | 122 |
Operating Leases | |
2021 | 85 |
2022 | 76 |
2023 | 72 |
2024 | 54 |
2025 | 28 |
Thereafter | 7 |
Present value of minimum lease payments | $ 322 |
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2020
USD ($)
site
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2008
Lawsuit
|
|
Loss Contingencies [Line Items] | |||||
Litigation reserve | $ 40,000,000 | $ 56,000,000 | |||
Insurance settlements receivable | $ 0 | 0 | |||
Proceeds from legal settlements | 39,000,000 | ||||
Gain related litigation settlement | 37,000,000 | ||||
Hurricane Maria | |||||
Loss Contingencies [Line Items] | |||||
Pre-tax charges related to damages caused by hurricane | $ 32,000,000 | ||||
Impairment of Damaged Inventory and Fixed Assets | Hurricane Maria | |||||
Loss Contingencies [Line Items] | |||||
Pre-tax charges related to damages caused by hurricane | 11,000,000 | ||||
Idle Facility and Other Costs | Hurricane Maria | |||||
Loss Contingencies [Line Items] | |||||
Pre-tax charges related to damages caused by hurricane | $ 21,000,000 | ||||
Asset Impairments and Idle Facility and Other Costs | Hurricane Maria | |||||
Loss Contingencies [Line Items] | |||||
Insurance recoveries | 100,000,000 | $ 42,000,000 | |||
Minimum | |||||
Loss Contingencies [Line Items] | |||||
Number of law suits filed | Lawsuit | 1,000 | ||||
Environmental Clean-up | Superfund Sites | |||||
Loss Contingencies [Line Items] | |||||
Number of sites | site | 6 | ||||
Environmental reserves | $ 20,000,000 | $ 18,000,000 |
STOCKHOLDERS’ EQUITY - Stock-based Compensation Narrative (Details) - USD ($) shares in Millions, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Stockholders Equity Note [Line Items] | |||
Shares available for future awards under the stock-based compensation plans (in shares) | 17 | ||
Stock compensation | $ 130 | $ 122 | $ 115 |
Tax benefit related to stock based compensation | 53 | 70 | 61 |
Excess tax benefit for stock based compensation | $ 27 | $ 54 | $ 40 |
Marketing and Administrative Expenses | |||
Stockholders Equity Note [Line Items] | |||
Stock compensation expense allocation percentage | 75.00% | 75.00% |
STOCKHOLDERS’ EQUITY - Stock Options Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Stockholders Equity Note [Line Items] | |||
Percentage of common stock retained | 100.00% | ||
Employee stock option | |||
Stockholders Equity Note [Line Items] | |||
Target service period | 3 years | ||
Stock repurchase program, period in force | 6 months | ||
Stock options granted contractual term | 10 years | ||
Total intrinsic value of stock options exercised | $ 131 | $ 272 | $ 222 |
Unrecognized compensation cost related to all unvested | $ 60 | ||
Weighted-average period for all unvested | 1 year 9 months 18 days |
STOCKHOLDERS’ EQUITY - Stock Options Fair Value Assumptions (Details) - Employee stock option - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 26.00% | 19.00% | 18.00% |
Expected life (in years) | 5 years 6 months | 5 years 6 months | 5 years 6 months |
Risk-free interest rate | 0.60% | 2.50% | 2.60% |
Dividend yield | 1.20% | 1.00% | 1.00% |
Fair value per stock option (in USD per share) | $ 16 | $ 15 | $ 13 |
STOCKHOLDERS’ EQUITY - Summary of Stock Option Activity (Detail) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2020
USD ($)
$ / shares
shares
| |
Number of options | |
Number of options, Outstanding at beginning of year (in shares) | shares | 20,344 |
Number of options, Granted (in shares) | shares | 3,895 |
Number of options, Exercised (in shares) | shares | (3,570) |
Number of options, Forfeited (in shares) | shares | (425) |
Number of options, Expired (in shares) | shares | (48) |
Number of options, Outstanding at end of year (in shares) | shares | 20,196 |
Number of options, Vested or expected to vest at end of year (in shares) | shares | 19,864 |
Number of options , Exercisable at end of year (in shares) | shares | 13,215 |
Stock options grant weighted-average exercise price | |
Weighted-average exercise price, Outstanding at beginning of year (in dollars per share) | $ / shares | $ 50.99 |
Weighted-average exercise price, Granted (in dollars per share) | $ / shares | 76.28 |
Weighted-average exercise price, Exercised (in dollars per share) | $ / shares | 42.79 |
Weighted-average exercise price, Forfeited (in dollars per share) | $ / shares | 73.21 |
Weighted-average exercise price, Expired (in dollars per share) | $ / shares | 41.42 |
Weighted Average Exercise Price Outstanding at end of year (in dollars per share) | $ / shares | 56.88 |
Weighted Average Exercise Price Vested or expected to vest at end of year (in dollars per share) | $ / shares | 56.57 |
Weighted Average Exercise Price Exercisable at end of year (in dollars per share) | $ / shares | $ 47.70 |
Stock options grant Weighted-average remaining contractual life | |
Weighted average remaining contractual life, Outstanding at end of year | 6 years 1 month 6 days |
Weighted average remaining contractual life, Vested or expected to vest at end of year | 6 years 1 month 6 days |
Weighted average remaining contractual life, Exercisable at end of year | 4 years 10 months 24 days |
Stock options grant aggregate intrinsic value | |
Aggregate intrinsic value, outstanding, ending balance | $ | $ 473,216 |
Aggregate intrinsic value, vested or expected to vest at end of year | $ | 471,778 |
Aggregate intrinsic value, Exercisable at end of year | $ | $ 430,350 |
STOCKHOLDERS’ EQUITY - Summary of Nonvested Restricted Stock Units Activity (Detail) - Restricted Stock Units - $ / shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
RSUs shares | |||
Nonvested Units at beginning of year (in shares) | 1,274 | ||
Granted (in shares) | 594 | ||
Vested (in shares) | (637) | ||
Forfeited (in shares) | (93) | ||
Nonvested Units at end of year (in shares) | 1,138 | 1,274 | |
RSUs weighted-average grant date fair value | |||
Weighted-average grant date fair value Nonvested Units at beginning of year (in dollars per share) | $ 66.46 | ||
Weighted-average grant date fair value Granted (in dollars per share) | 77.51 | $ 75.60 | $ 67.11 |
Weighted-average grant date fair value Vested (in dollars per share) | 63.94 | ||
Weighted-average grant date fair value Forfeited (in dollars per share) | 72.82 | ||
Weighted-average grant date fair value Nonvested Units at end of year (in dollars per share) | $ 73.11 | $ 66.46 |
STOCKHOLDERS’ EQUITY - RSUs Narrative (Details) - Restricted Stock Units - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Stockholders Equity Note [Line Items] | |||
Target service period | 3 years | ||
Stock repurchase program, period in force | 6 months | ||
Unrecognized compensation cost related to all unvested | $ 45 | ||
Weighted-average period for all unvested | 1 year 9 months 18 days | ||
Weighted average fair value (in dollars per share) | $ 77.51 | $ 75.60 | $ 67.11 |
Fair value of RSUs and restricted stock vested | $ 52 | $ 57 | $ 69 |
STOCKHOLDERS' EQUITY - Performance Stock Units Fair Value Assumptions (Detail) - Performance Shares - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Baxter volatility | 26.00% | 19.00% | 19.00% |
Peer group volatility | |||
Peer group volatility minimum | 23.00% | 18.00% | 16.00% |
Peer group volatility maximum | 95.00% | 113.00% | 53.00% |
Correlation of returns | |||
Correlation of returns minimum | 0.19 | 0.13 | 0.16 |
Correlation of returns maximum | 0.70 | 0.63 | 0.61 |
Risk-free interest rate | 0.40% | 2.50% | 2.30% |
Fair value per PSU (in dollars per share) | $ 108 | $ 106 | $ 90 |
STOCKHOLDERS’ EQUITY - PSUs Narrative (Details) - Performance Shares $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2020
USD ($)
| |
Stockholders Equity Note [Line Items] | |
Target service period | 3 years |
Unrecognized compensation cost related to all unvested | $ 24 |
Weighted-average period for all unvested | 1 year 8 months 12 days |
STOCKHOLDERS' EQUITY - Summary of Nonvested Performance Stock Unit Activity (Detail) - Performance Shares shares in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2020
$ / shares
shares
| |
PSUs shares | |
Nonvested Units at beginning of year (in shares) | shares | 930 |
Granted (in shares) | shares | 420 |
Vested (in shares) | shares | (568) |
Forfeited (in shares) | shares | (22) |
Nonvested Units at end of year (in shares) | shares | 760 |
PSUs weighted-average grant date fair value | |
Weighted-average grant date fair value Nonvested Units at beginning of year (in dollars per share) | $ / shares | $ 75.50 |
Weighted-average grant date fair value Granted (in dollars per share) | $ / shares | 82.98 |
Weighted-average grant date fair value Vested (in dollars per share) | $ / shares | 65.53 |
Weighted-average grant date fair value Forfeited (in dollars per share) | $ / shares | 87.73 |
Weighted-average grant date fair value Nonvested Units at end of year (in dollars per share) | $ / shares | $ 86.69 |
STOCKHOLDERS’ EQUITY - Employee Purchase Plan Narrative (Details) |
1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 07, 2019
shares
|
Nov. 30, 2020
$ / shares
|
Jul. 31, 2020
$ / shares
|
May 31, 2020
$ / shares
|
Apr. 30, 2020
$ / shares
|
Feb. 29, 2020
$ / shares
|
Mar. 31, 2020
USD ($)
employee
|
Dec. 31, 2020
USD ($)
$ / shares
shares
|
Dec. 31, 2019
USD ($)
$ / shares
shares
|
Dec. 31, 2018
USD ($)
$ / shares
shares
|
Oct. 31, 2020
USD ($)
|
Nov. 30, 2018
USD ($)
|
Feb. 28, 2018
USD ($)
|
Nov. 30, 2016
USD ($)
|
Jul. 31, 2012
USD ($)
|
|
Stockholders Equity Note [Line Items] | |||||||||||||||
Shares available for future awards under the stock-based compensation plans (in shares) | shares | 17,000,000 | ||||||||||||||
Number of employees affected | employee | 123 | ||||||||||||||
Cash dividends declared per common share (in dollars per share) | $ / shares | $ 0.245 | $ 0.245 | $ 0.245 | $ 0.22 | $ 0.22 | $ 0.955 | $ 0.850 | $ 0.730 | |||||||
Cash dividends declared per common share annualized basis (in dollars per share) | $ / shares | $ 0.980 | $ 0.980 | $ 0.88 | $ 0.88 | |||||||||||
Stock repurchase program, authorized amount | $ | $ 2,000,000,000.0 | ||||||||||||||
Stock repurchase program, additional authorized amount | $ | $ 1,500,000,000 | $ 2,000,000,000.0 | $ 1,500,000,000 | $ 1,500,000,000 | |||||||||||
Purchases of common stock (in shares) | shares | 6,300,000 | 16,500,000 | 35,800,000 | ||||||||||||
Purchases of treasury stock | $ | $ (500,000,000) | $ (1,247,000,000) | $ (2,475,000,000) | ||||||||||||
Remaining value available under stock repurchase programs | $ | $ 1,900,000,000 | ||||||||||||||
Common stock in treasury | |||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||
Purchases of common stock (in shares) | shares | 6,000,000 | 16,000,000 | 36,000,000 | ||||||||||||
Purchases of treasury stock | $ | $ (500,000,000) | $ (1,293,000,000) | $ (2,415,000,000) | ||||||||||||
ASR Agreement | |||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||
Stock repurchase program, authorized amount | $ | $ 300,000,000 | ||||||||||||||
Purchases of common stock (in shares) | shares | 600,000 | 3,600,000 | |||||||||||||
Employee Stock Purchase Plan | |||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||
Employee purchase price, percent | 85.00% | ||||||||||||||
Authorized shares available for future awards under the stock-based compensation plans (in shares) | shares | 10,000,000 | ||||||||||||||
Shares available for future awards under the stock-based compensation plans (in shares) | shares | 2,000,000 | ||||||||||||||
Share issued, ESPP (in shares) | shares | 700,000 | 700,000 | 800,000 | ||||||||||||
Employee stock option | |||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||
Incremental compensation cost | $ | $ 8,000,000 |
ACCUMULATED OTHER COMPREHENSIVE INCOME - Summary of Changes in AOCI by Component (Detail) - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Jan. 01, 2018 |
|
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning of year | $ 7,912 | $ 7,866 | $ 9,109 | |
Adoption of new accounting standard | 7,912 | 7,866 | 7,866 | $ (161) |
Other comprehensive income (loss) before reclassifications | 309 | (315) | ||
Amounts reclassified from AOCI | 87 | 589 | ||
Net other comprehensive (loss) income | 396 | 274 | (281) | |
End of year | 8,726 | 7,912 | 7,866 | |
CTA | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning of year | (2,954) | (2,868) | ||
Adoption of new accounting standard | (2,954) | (2,954) | (2,868) | 9 |
Other comprehensive income (loss) before reclassifications | 367 | (95) | ||
Amounts reclassified from AOCI | 0 | 0 | ||
Net other comprehensive (loss) income | 367 | (95) | ||
End of year | (2,587) | (2,954) | (2,868) | |
Pension and OPEB plans | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning of year | (715) | (954) | ||
Adoption of new accounting standard | (574) | (954) | (954) | (169) |
Other comprehensive income (loss) before reclassifications | 59 | (184) | ||
Amounts reclassified from AOCI | 82 | 592 | ||
Net other comprehensive (loss) income | 141 | 408 | ||
End of year | (574) | (715) | (954) | |
Hedging activities | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning of year | (41) | |||
Adoption of new accounting standard | (153) | (41) | ||
Other comprehensive income (loss) before reclassifications | (117) | |||
Amounts reclassified from AOCI | 5 | |||
Net other comprehensive (loss) income | (112) | |||
End of year | (153) | (41) | ||
Hedging activities | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning of year | (41) | (1) | ||
Adoption of new accounting standard | (41) | (41) | (1) | $ (1) |
Other comprehensive income (loss) before reclassifications | (36) | |||
Amounts reclassified from AOCI | (3) | |||
Net other comprehensive (loss) income | (39) | |||
End of year | (41) | (1) | ||
Accumulated Other Comprehensive Income (Loss) | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Beginning of year | (3,710) | (3,823) | ||
Adoption of new accounting standard | (3,710) | (3,710) | (3,823) | |
End of year | $ (3,314) | $ (3,710) | $ (3,823) |
ACCUMULATED OTHER COMPREHENSIVE INCOME - Summary of Amounts Reclassification from AOCI to Net Income (Detail) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Amortization of net losses and prior service costs or credits | $ (190) | $ (731) | $ 78 | ||||||||
Settlement charges | $ (43) | $ (755) | (46) | (755) | (1) | ||||||
Income from continuing operations before income taxes | 1,292 | 970 | 1,617 | ||||||||
Cost of sales | (7,086) | (6,601) | (6,340) | ||||||||
Reclassifications, Income tax expense (benefit) | (182) | 41 | (65) | ||||||||
Net income attributable to Baxter stockholders | $ 168 | $ 356 | $ 246 | $ 332 | $ (23) | $ 369 | $ 313 | $ 342 | 1,102 | 1,001 | $ 1,546 |
Reclassification out of Accumulated Other Comprehensive Income | |||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Net income attributable to Baxter stockholders | (87) | (589) | |||||||||
Amortization of pension and other employee benefits items | Reclassification out of Accumulated Other Comprehensive Income | |||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Amortization of net losses and prior service costs or credits | (59) | (31) | |||||||||
Settlement charges | (46) | (755) | |||||||||
Income from continuing operations before income taxes | (105) | (786) | |||||||||
Reclassifications, Income tax expense (benefit) | 23 | 194 | |||||||||
Net income attributable to Baxter stockholders | (82) | (592) | |||||||||
Hedging activities | Reclassification out of Accumulated Other Comprehensive Income | |||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Income from continuing operations before income taxes | (6) | 4 | |||||||||
Reclassifications, Income tax expense (benefit) | 1 | (1) | |||||||||
Net income attributable to Baxter stockholders | (5) | 3 | |||||||||
Hedging activities | Reclassification out of Accumulated Other Comprehensive Income | Foreign exchange contracts | |||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Cost of sales | (5) | 4 | |||||||||
Hedging activities | Reclassification out of Accumulated Other Comprehensive Income | Interest rate contracts | |||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Interest expense, net | $ (1) | $ 0 |
BUSINESS OPTIMIZATION CHARGES - Additional Information (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2020
USD ($)
| |
Restructuring and Related Activities [Abstract] | |
Cumulative pre-tax costs incurred | $ 1,100 |
Expected additional pre-tax cash costs | 14 |
Sale of properties | $ 17 |
BUSINESS OPTIMIZATION CHARGES - Schedule of Business Optimization Charges (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Restructuring and Related Activities [Abstract] | |||
Restructuring charges | $ 111 | $ 134 | $ 117 |
Costs to implement business optimization programs | 23 | 45 | 94 |
Accelerated depreciation | 0 | 5 | 9 |
Total business optimization charges | $ 134 | $ 184 | $ 220 |
BUSINESS OPTIMIZATION CHARGES - Components of Restructuring Costs (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 111 | $ 134 | $ 117 |
Employee termination costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 92 | 75 | 100 |
Contract termination and other costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 8 | 11 | 10 |
Asset impairments | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 11 | 48 | 7 |
COGS | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 48 | 60 | 35 |
COGS | Employee termination costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 36 | 13 | 30 |
COGS | Contract termination and other costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 4 | 10 | 4 |
COGS | Asset impairments | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 8 | 37 | 1 |
SG&A | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 61 | 40 | 63 |
SG&A | Employee termination costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 54 | 37 | 51 |
SG&A | Contract termination and other costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 4 | 1 | 6 |
SG&A | Asset impairments | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 3 | 2 | 6 |
R&D | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 2 | 34 | 19 |
R&D | Employee termination costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 2 | 25 | 19 |
R&D | Contract termination and other costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 0 | 0 | 0 |
R&D | Asset impairments | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 0 | $ 9 | $ 0 |
BUSINESS OPTIMIZATION CHARGES - Summary of Activity in Reserves related to Business Optimization Initiatives (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Restructuring Reserve [Roll Forward] | |||
Restructuring charges | $ 111 | $ 134 | $ 117 |
Severance and Other Employee Related Costs | |||
Restructuring Reserve [Roll Forward] | |||
Reserve, beginning balance | 92 | 101 | 112 |
Restructuring charges | 116 | 113 | 126 |
Payments | (86) | (93) | (96) |
Reserve adjustments | (16) | (27) | (16) |
Currency translation | 7 | (2) | (25) |
Reserve, ending balance | $ 113 | $ 92 | $ 101 |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Reconciliation of Pension and OPEB Plan Obligations, Assets and Funded Status (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Benefit obligations | |||
End of period | $ 4,313 | ||
Fair value of plan assets | |||
Beginning of period | 2,973 | ||
End of period | 3,434 | $ 2,973 | |
Amounts recognized in the consolidated balance sheets | |||
Noncurrent asset | 155 | 77 | |
Pension benefits | |||
Benefit obligations | |||
Beginning of period | 3,973 | 5,635 | |
Service cost | 83 | 74 | $ 87 |
Interest cost | 95 | 172 | 178 |
Participant contributions | 4 | 4 | |
Actuarial loss | 401 | 924 | |
Benefit payments | (109) | (267) | |
Settlements | (271) | (2,550) | |
Curtailment | (4) | (13) | |
Foreign exchange and other | 141 | (6) | |
End of period | 4,313 | 3,973 | 5,635 |
Fair value of plan assets | |||
Beginning of period | 2,973 | 4,774 | |
Actual return on plan assets | 688 | 939 | |
Employer contributions | 74 | 69 | |
Participant contributions | 4 | 4 | |
Benefit payments | (109) | (267) | |
Settlements | (271) | (2,550) | |
Foreign exchange and other | 75 | 4 | |
End of period | 3,434 | 2,973 | 4,774 |
Funded status | (879) | (1,000) | |
Amounts recognized in the consolidated balance sheets | |||
Noncurrent asset | 155 | 77 | |
Current liability | (30) | (25) | |
Noncurrent liability | (1,004) | (1,052) | |
Net liability recognized | (879) | (1,000) | |
OPEB | |||
Benefit obligations | |||
Beginning of period | 228 | 211 | |
Service cost | 1 | 1 | 1 |
Interest cost | 6 | 8 | 7 |
Participant contributions | 0 | 0 | |
Actuarial loss | 13 | 26 | |
Benefit payments | (20) | (18) | |
Settlements | 0 | 0 | |
Curtailment | 0 | 0 | |
Foreign exchange and other | 0 | 0 | |
End of period | 228 | 228 | 211 |
Fair value of plan assets | |||
Beginning of period | 0 | 0 | |
Actual return on plan assets | 0 | 0 | |
Employer contributions | 20 | 18 | |
Participant contributions | 0 | 0 | |
Benefit payments | (20) | (18) | |
Settlements | 0 | 0 | |
Foreign exchange and other | 0 | 0 | |
End of period | 0 | 0 | $ 0 |
Funded status | (228) | (228) | |
Amounts recognized in the consolidated balance sheets | |||
Noncurrent asset | 0 | 0 | |
Current liability | (18) | (20) | |
Noncurrent liability | (210) | (208) | |
Net liability recognized | $ (228) | $ (228) |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Accumulated benefit obligation of company's pension plans | $ 4,100 | $ 3,700 |
Allowed variance from target allocation of plan assets | 5.50% | |
General investment portfolio limits on holdings, description | 5.00% | |
International plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, expected future employer contributions, next fiscal year | $ 45 | |
OPEB | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, expected future employer contributions, next fiscal year | $ 18 | |
Return-Seeking Investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target allocation for plan assets | 50.00% | |
Liability Hedging Investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target allocation for plan assets | 50.00% |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Information Relating to Individual Plans in Funded Status Table above that have ABO in Excess of Plan Assets (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Information relating to the individual plans in the funded status table above that have an ABO in excess of plan assets | ||
ABO | $ 2,920 | $ 3,240 |
Fair value of plan assets | $ 2,047 | $ 2,339 |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Information Relating to Individual Plans in Funded Status Table that have PBO in Excess of Plan Assets (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Information relating to the individual plans in the funded status table above that have a PBO in excess of plan assets | ||
PBO | $ 3,421 | $ 3,688 |
Fair value of plan assets | $ 2,387 | $ 2,611 |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Expected Net Pension and OPEB Plan Payments for Next 10 Years (Details) $ in Millions |
Dec. 31, 2020
USD ($)
|
---|---|
Pension benefits | |
Expected Net Pension and OPEB Plan Payments for the Next 10 Years | |
2021 | $ 104 |
2022 | 116 |
2023 | 130 |
2024 | 146 |
2025 | 161 |
2026 through 2030 | 917 |
Total expected net benefit payments for next 10 years | 1,574 |
OPEB | |
Expected Net Pension and OPEB Plan Payments for the Next 10 Years | |
2021 | 18 |
2022 | 16 |
2023 | 16 |
2024 | 16 |
2025 | 15 |
2026 through 2030 | 67 |
Total expected net benefit payments for next 10 years | $ 148 |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Summary of Pre-Tax losses Included in AOCI (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Pension benefits | ||
Summary of the pre-tax losses included in AOCI | ||
Actuarial loss (gain) | $ 811 | $ 1,025 |
Prior service credit and transition obligation | (9) | (9) |
Total pre-tax loss (gain) recognized in AOCI | 802 | 1,016 |
OPEB | ||
Summary of the pre-tax losses included in AOCI | ||
Actuarial loss (gain) | (23) | (41) |
Prior service credit and transition obligation | (45) | (59) |
Total pre-tax loss (gain) recognized in AOCI | $ (68) | $ (100) |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Summary of Net-of-Tax Amounts Recorded in OCI Relating to Pension and OPEB Plans (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Summary of the net-of-tax amounts recorded in OCI relating to pension and OPEB plans | |||
Gain (loss) arising during the year, net of tax of $17 in 2020, $(64) in 2019 and $(4) in 2018 | $ 59 | $ (184) | $ (22) |
Amortization of loss to earnings, net of tax of $12 in 2020, $6 in 2019 and $14 in 2018 | 47 | 25 | 55 |
Settlement charges, net of tax of $11 in 2020 and $188 in 2019 | 35 | 567 | 0 |
Pension and other employee benefits | 141 | 408 | 33 |
Gain (loss) arising during the year, tax expense (benefit) | 17 | (64) | (4) |
Amortization of loss to earnings, tax benefit | 12 | 6 | $ 14 |
Settlement, tax benefit | $ 11 | $ 188 |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Net Periodic Benefit Cost - Continuing Operations (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Net periodic benefit cost | |||||
Settlement charges | $ (43) | $ (755) | $ (46) | $ (755) | $ (1) |
Pension benefits | |||||
Net periodic benefit cost | |||||
Service cost | 83 | 74 | 87 | ||
Interest cost | 95 | 172 | 178 | ||
Expected return on plan assets | (163) | (264) | (303) | ||
Amortization of net losses and other deferred amounts | 77 | 58 | 94 | ||
Net periodic benefit cost | 138 | 795 | 57 | ||
OPEB | |||||
Net periodic benefit cost | |||||
Service cost | 1 | 1 | 1 | ||
Interest cost | 6 | 8 | 7 | ||
Amortization of net losses and prior service credit | (18) | (27) | (25) | ||
Net periodic benefit cost | $ (11) | $ (18) | $ (17) |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Weighted-Average Assumptions Used in Determining (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Pension benefits | Unfunded Plan | International plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 1.00% | 1.34% | |
Rate of compensation increase | 3.03% | 3.03% | |
Discount rate | 1.34% | 2.02% | 2.02% |
Expected return on plan assets | 4.23% | 5.45% | 5.58% |
Rate of compensation increase | 3.03% | 3.08% | 3.05% |
Pension benefits | Nonqualified Plan | U.S. and Puerto Rico plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 2.73% | 3.44% | |
Rate of compensation increase | 3.68% | 3.68% | |
Discount rate | 3.44% | 4.18% | 3.60% |
Expected return on plan assets | 6.50% | 6.29% | 6.25% |
Rate of compensation increase | 3.68% | 3.66% | 3.42% |
OPEB | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Annual rate of increase in the per-capita cost | 6.50% | 6.75% | |
Rate decreased to | 5.00% | 5.00% | |
Annual rate of increase in the per-capita cost | 6.50% | 6.75% | 7.00% |
Rate decreased to | 5.00% | 5.00% | 5.00% |
OPEB | Nonqualified Plan | U.S. and Puerto Rico plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 2.33% | 3.16% | |
Discount rate | 3.16% | 4.20% | 3.51% |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Fair Value of Pension Plan Assets and Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | $ 3,434 | $ 2,973 | |
Quoted prices in active markets for identical assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 764 | 705 | |
Significant other observable inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 1,933 | 1,548 | |
Significant unobservable inputs (Level 3) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 11 | 10 | |
Fair Value, Measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 726 | 710 | |
Cash and cash equivalents | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 265 | 224 | |
Cash and cash equivalents | Quoted prices in active markets for identical assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 91 | 72 | |
Cash and cash equivalents | Significant other observable inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 174 | 152 | |
Cash and cash equivalents | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | ||
Cash and cash equivalents | Fair Value, Measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | ||
U.S. government and government agency issues | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 280 | 452 | |
U.S. government and government agency issues | Quoted prices in active markets for identical assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
U.S. government and government agency issues | Significant other observable inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 280 | 452 | |
U.S. government and government agency issues | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
U.S. government and government agency issues | Fair Value, Measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Corporate bonds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 744 | 352 | |
Corporate bonds | Quoted prices in active markets for identical assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Corporate bonds | Significant other observable inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 744 | 352 | |
Corporate bonds | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Corporate bonds | Fair Value, Measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Common stock | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 453 | 426 | |
Common stock | Quoted prices in active markets for identical assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 453 | 426 | |
Common stock | Significant other observable inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Common stock | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Common stock | Fair Value, Measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Mutual funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 510 | 442 | |
Mutual funds | Quoted prices in active markets for identical assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 217 | 189 | |
Mutual funds | Significant other observable inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 293 | 253 | |
Mutual funds | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Mutual funds | Fair Value, Measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Common/collective trust funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 771 | 668 | |
Common/collective trust funds | Quoted prices in active markets for identical assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 19 | |
Common/collective trust funds | Significant other observable inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 341 | 272 | |
Common/collective trust funds | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Common/collective trust funds | Fair Value, Measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 430 | 377 | |
Partnership investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 296 | 333 | |
Partnership investments | Quoted prices in active markets for identical assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Partnership investments | Significant other observable inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Partnership investments | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Partnership investments | Fair Value, Measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 296 | 333 | |
Other holdings | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 115 | 76 | |
Other holdings | Quoted prices in active markets for identical assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 22 | 8 | |
Other holdings | Significant other observable inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 82 | 58 | |
Other holdings | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 11 | 10 | $ 10 |
Other holdings | Fair Value, Measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Collateral held on loaned securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 19 | 9 | |
Collateral held on loaned securities | Quoted prices in active markets for identical assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Collateral held on loaned securities | Significant other observable inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 19 | 9 | |
Collateral held on loaned securities | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Collateral held on loaned securities | Fair Value, Measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of pension plan assets | 0 | 0 | |
Collateral to be paid on loaned securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Collateral to be paid on loaned securities | (19) | (9) | |
Collateral to be paid on loaned securities | Quoted prices in active markets for identical assets (Level 1) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Collateral to be paid on loaned securities | (19) | (9) | |
Collateral to be paid on loaned securities | Significant other observable inputs (Level 2) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Collateral to be paid on loaned securities | 0 | 0 | |
Collateral to be paid on loaned securities | Significant unobservable inputs (Level 3) | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Collateral to be paid on loaned securities | 0 | 0 | |
Collateral to be paid on loaned securities | Fair Value, Measured at NAV | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Collateral to be paid on loaned securities | $ 0 | $ 0 |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Changes in Fair Value Measurements that Used Significant Unobservable Inputs (Details) - Other holdings - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Defined Benefit Plan, Change in Fair Value of Plan Assets, Level 3 Reconciliation [Roll Forward] | ||
Beginning of period | $ 76 | |
End of period | 115 | $ 76 |
Significant unobservable inputs (Level 3) | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets, Level 3 Reconciliation [Roll Forward] | ||
Beginning of period | 10 | 10 |
Purchases | 1 | 0 |
End of period | $ 11 | $ 10 |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Funded Status Percentage of Company's Pension Plans (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Funded status percentage of the company's pension plans | ||
Fair value of plan assets | $ 3,434 | $ 2,973 |
PBO | $ 4,313 | |
Funded status percentage | 80.00% | |
Qualified Pension Plan | U.S. and Puerto Rico plans | ||
Funded status percentage of the company's pension plans | ||
Fair value of plan assets | $ 2,362 | |
PBO | $ 2,366 | |
Funded status percentage | 100.00% | |
Qualified Pension Plan | International plans | ||
Funded status percentage of the company's pension plans | ||
Fair value of plan assets | $ 1,072 | |
PBO | $ 1,155 | |
Funded status percentage | 93.00% | |
Non Qualified Pension Plan | U.S. and Puerto Rico plans | ||
Funded status percentage of the company's pension plans | ||
PBO | $ 269 | |
Non Qualified Pension Plan | International plans | ||
Funded status percentage of the company's pension plans | ||
PBO | $ 523 |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Pension Plan Amendments (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Jan. 31, 2018 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Oct. 31, 2019 |
|
Defined Benefit Plan Disclosure [Line Items] | |||||||
Pension settlement, offer acceptance, percentage | 40.00% | ||||||
Payment for participants | $ 252 | ||||||
Settlement charges | $ 43 | $ 755 | $ 46 | $ 755 | $ 1 | ||
Defined benefit plan, decline in projected benefit obligation | $ (57) | ||||||
Pension benefits | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Pension plan liabilities | $ 2,400 |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - U.S. Defined Contribution Plan (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Retirement Benefits [Abstract] | |||
Defined contribution plan, contributions by employer | $ 61 | $ 53 | $ 50 |
INCOME TAXES - Income From Continuing Operations Before Income Tax Expense by Category (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
United States | $ (329) | $ (586) | $ 7 |
International | 1,621 | 1,556 | 1,610 |
Income from continuing operations before income taxes | $ 1,292 | $ 970 | $ 1,617 |
INCOME TAXES - Income Tax Expense Related To Continuing Operations (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Current | |||
Federal | $ 7 | $ 8 | $ 21 |
State and local | (7) | 3 | (1) |
International | 270 | 258 | 308 |
Current income tax expense | 270 | 269 | 328 |
Deferred | |||
Federal | (99) | (140) | (228) |
State and local | 5 | (29) | 0 |
International | 6 | (141) | (35) |
Deferred income tax expense (benefit) | (88) | (310) | (263) |
Income tax expense (benefit) | $ 182 | $ (41) | $ 65 |
INCOME TAXES - Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Deferred tax assets | ||
Accrued liabilities and other | $ 376 | $ 209 |
Pension and other postretirement benefits | 218 | 258 |
Tax credit and net operating loss carryforwards | 905 | 928 |
Swiss tax reform net asset basis step-up | 174 | 159 |
Operating lease liabilities | 148 | 153 |
Valuation allowances | (454) | (420) |
Total deferred tax assets | 1,367 | 1,287 |
Deferred tax liabilities | ||
Subsidiaries’ unremitted earnings | 77 | 57 |
Long-lived assets and other | 539 | 649 |
Operating lease right-of-use assets | 146 | 152 |
Total deferred tax liabilities | 762 | 858 |
Net deferred tax asset | $ 605 | $ 429 |
INCOME TAXES - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Taxes [Line Items] | ||||
Valuation allowance | $ 454 | $ 420 | ||
Net asset basis step-up | 863 | |||
Swiss tax reform net asset basis step-up | 174 | 159 | ||
Deferred tax asset, swiss tax reform net asset basis step-up, valuation allowance | 72 | 69 | ||
One time transitional tax expense | 243 | $ 5 | ||
Expense (benefit), would be incurred if earnings remitted | 24 | |||
Deferred tax assets, net of valuation allowance | 1,367 | 1,287 | ||
Deferred tax assets | 605 | 429 | ||
Increase (decrease) due to notional interest deduction | 57 | |||
Deferred tax benefit recognized due to reduced U.S tax rate and other effects of tax act | 0 | 19 | $ 8 | |
Income tax expense (benefit) | (182) | 41 | (65) | |
Unrecognized interest and penalties expense | 17 | 21 | ||
Unrecognized tax benefits that, if recognized, would impact effective tax rate | 48 | 70 | 84 | |
Gross unrecognized tax benefit liability | 47 | 62 | ||
Net indemnification receivables | 2 | 6 | 6 | |
Expected reduction in gross unrecognized tax benefits | $ 5 | |||
Maximum | ||||
Income Taxes [Line Items] | ||||
U.S statutory tax rate, percent | 35.00% | |||
Minimum | ||||
Income Taxes [Line Items] | ||||
U.S statutory tax rate, percent | 21.00% | |||
Tax Year No Expiration | ||||
Income Taxes [Line Items] | ||||
Operating loss carryforwards | $ 38 | |||
State and Local Jurisdiction | ||||
Income Taxes [Line Items] | ||||
Operating loss carryforwards | 1,200 | |||
Domestic Tax Authority | ||||
Income Taxes [Line Items] | ||||
Operating loss carryforwards | 150 | |||
Tax credit carryforwards | 430 | |||
Foreign tax credit carryforward | 373 | |||
Foreign Tax Authority | ||||
Income Taxes [Line Items] | ||||
Operating loss carryforwards | 1,200 | |||
Tax credit carryforwards | 18 | |||
Valuation allowance | $ 157 | 180 | ||
Deferred tax assets, net of valuation allowance | 90 | |||
Valuation allowance, deferred tax asset, increase (decrease), amount | 5 | |||
Deferred tax assets | $ 24 | |||
Income tax expense (benefit) | $ 194 | |||
Impact on earnings from continuing operations per diluted shares | $ 0.33 | $ 0.27 | $ 0.29 | |
Foreign Tax Authority | Tax Year No Expiration | ||||
Income Taxes [Line Items] | ||||
Operating loss carryforwards | $ 886 |
INCOME TAXES - Income Tax Expense Reconciliation (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Income Tax Expense Reconciliation | |||
Income tax expense at U.S. statutory rate | $ 271 | $ 204 | $ 340 |
Tax incentives | (169) | (140) | (161) |
State and local taxes, net of federal benefit | (2) | (17) | 5 |
Impact of foreign taxes | 88 | 65 | 122 |
Swiss tax reform net asset basis step-up | 0 | (159) | 0 |
Deferred tax revaluation due to 2017 Tax Act and foreign tax reform | 0 | (19) | (8) |
Transition tax due to 2017 Tax Act | 0 | (16) | (5) |
U.S. valuation allowance due to 2017 Tax Act | 0 | 0 | (194) |
Other valuation allowances | 8 | 110 | 21 |
Stock compensation windfall tax benefits | (27) | (54) | (40) |
Research and development tax credits | (7) | (13) | (17) |
Unutilized foreign tax credits | 15 | 5 | 0 |
Other, net | 5 | (7) | 2 |
Income tax expense (benefit) | $ 182 | $ (41) | $ 65 |
INCOME TAXES - Reconciliation of Company's Unrecognized Tax Benefits (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Reconciliation Of Unrecognized Tax Benefits Excluding Amounts Pertaining To Examined Tax Returns | |||
Balance at beginning of the year | $ 111 | $ 127 | $ 108 |
Increase associated with tax positions taken during the current year | 8 | 8 | 33 |
Increase (decrease) associated with tax positions taken during a prior year | (1) | (3) | 13 |
Settlements | (18) | (20) | (5) |
Decrease associated with lapses in statutes of limitations | (10) | (1) | (22) |
Balance at end of the year | $ 90 | $ 111 | $ 127 |
EARNINGS PER SHARE - Reconciliation of Basic Shares to Diluted Shares (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | |||||||||||
Income from continuing operations | $ 1,110 | $ 1,011 | $ 1,552 | ||||||||
Less: Net income attributable to noncontrolling interests | 8 | 10 | 0 | ||||||||
Less: Income from continuing operations attributable to noncontrolling interests | 1,102 | 1,001 | 1,552 | ||||||||
Loss from discontinued operations, net of tax | 0 | 0 | (6) | ||||||||
Net income attributable to Baxter stockholders | $ 168 | $ 356 | $ 246 | $ 332 | $ (23) | $ 369 | $ 313 | $ 342 | $ 1,102 | $ 1,001 | $ 1,546 |
Basic (in shares) | 509 | 509 | 534 | ||||||||
Effect of dilutive securities (in shares) | 8 | 10 | 12 | ||||||||
Diluted (in shares) | 517 | 519 | 546 |
EARNINGS PER SHARE - Additional Information (Details) - shares shares in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Earnings Per Share [Abstract] | |||
Anti-dilutive securities excluded from computation of EPS | 4 | 4 | 3 |
FINANCIAL INSTRUMENTS, DERIVATIVES AND HEDGING ACTIVITIES (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Trade Receivables Held-for-sale, Net, Reconciliation to Cash Flow [Roll Forward] | |||
Sold receivables at beginning of year | $ 79 | $ 69 | $ 70 |
Proceeds from sales of receivables | 348 | 292 | 267 |
Cash collections (remitted to the owners of the receivables) | (335) | (282) | (270) |
Effect of foreign exchange rate changes | 4 | 0 | 2 |
Sold receivables at end of year | $ 96 | $ 79 | $ 69 |
FINANCIAL INSTRUMENTS, DERIVATIVES AND HEDGING ACTIVITIES - Additional Information (Details) |
1 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
May 31, 2019
EUR (€)
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
Nov. 30, 2020
USD ($)
|
May 31, 2017
EUR (€)
|
|
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, notional amount | $ 0 | $ 0 | ||||
Terminated fair value hedges | 550,000,000 | |||||
Currency transaction and translation adjustment, net of tax | $ 367,000,000 | (95,000,000) | $ (323,000,000) | |||
Payments of derivative issuance costs | 173,000,000 | |||||
1.30% Senior Notes due May 2025 | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Senior notes | € | € 600,000,000 | |||||
0.40% Senior Notes due May 2024 | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Senior notes | € | € 750,000,000 | |||||
1.3% Senior Notes due May 2029 | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Senior notes | € | 750,000,000 | |||||
Senior Notes Due 2031 | Senior Notes | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Senior notes | $ 650,000,000 | |||||
Designated as Hedging Instrument | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, notional amount | 0 | |||||
Not Designated as Hedging Instrument | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, notional amount | 1,000,000,000.0 | 619,000,000 | ||||
Net investment hedge | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Accumulated pre-tax unrealized translation losses in AOCI related to euro-denominated senior notes | 245,000,000 | |||||
Net investment hedge | Designated as Hedging Instrument | Forward Contracts | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Currency transaction and translation adjustment, net of tax | € | € 1,200,000,000 | |||||
Foreign exchange contracts | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, notional amount | $ 345,000,000 | 617,000,000 | ||||
Maximum length of time hedge in cash flow hedge | 12 months | |||||
Interest rate contracts | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, notional amount | $ 550,000,000 | |||||
Interest rate contracts | Fair value hedges | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, notional amount | $ 0 | $ 0 |
FINANCIAL INSTRUMENTS, DERIVATIVES AND HEDGING ACTIVITIES - Summary of Gains and Losses on Derivative Instruments (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | |||
Total, gain (loss) recognized in OCI | $ (376) | $ (34) | $ 32 |
Total, gain (loss) reclassified from AOCI into income | (6) | 4 | |
Total, gain (loss) reclassified from AOCI into income | (12) | ||
Gain (loss) recognized in income, fair value hedges | 4 | ||
Other (income) expense, net | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Net investment hedges | 0 | 0 | |
Net investment hedges | 0 | ||
Interest rate contracts | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in income, fair value hedges | 0 | 0 | (4) |
Foreign exchange contracts | Other (income) expense, net | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in income, undesignated derivative instruments | 49 | 17 | 0 |
Cash Flow Hedges | Interest rate contracts | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in OCI | (131) | (37) | |
Gain (loss) recognized in OCI | (3) | ||
Cash Flow Hedges | Interest rate contracts | Interest expense, net | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) reclassified from AOCI into income | (1) | 0 | |
Gain (loss) reclassified from AOCI into income | 0 | ||
Cash Flow Hedges | Foreign exchange contracts | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) recognized in OCI | (21) | (9) | |
Gain (loss) recognized in OCI | 3 | ||
Cash Flow Hedges | Foreign exchange contracts | COGS | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (loss) reclassified from AOCI into income | (5) | 4 | |
Gain (loss) reclassified from AOCI into income | (12) | ||
Net investment hedge | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Net investment hedges | $ (224) | $ 12 | |
Net investment hedges | $ 32 |
FINANCIAL INSTRUMENTS, DERIVATIVES AND HEDGING ACTIVITIES - Net of Tax Activity in Accumulated Other Comprehensive Income Related to Cash Flow Hedges (Details) - USD ($) $ in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
|
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||
Accumulated other comprehensive income (loss) balance at beginning of year | $ (3,710) | ||||
Adoption of new accounting standard | 8,726 | $ 7,912 | $ 7,866 | $ (161) | $ 9,109 |
(Loss) gain in fair value of derivatives during the year | (112) | (39) | |||
Amount reclassified to earnings during the year | 12 | ||||
Accumulated other comprehensive income (loss) balance at end of year | (3,314) | (3,710) | |||
Deferred, net after-tax gains on derivative instruments | 23 | ||||
Continuing Operations | |||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||
Accumulated other comprehensive income (loss) balance at beginning of year | (41) | (1) | (10) | ||
Adoption of new accounting standard | 0 | (1) | $ 0 | ||
(Loss) gain in fair value of derivatives during the year | (117) | (36) | |||
(Loss) gain in fair value of derivatives during the year | (1) | ||||
Amount reclassified to earnings during the year | 5 | (3) | |||
Amount reclassified to earnings during the year | 10 | ||||
Accumulated other comprehensive income (loss) balance at end of year | $ (153) | $ (41) | $ (1) |
FINANCIAL INSTRUMENTS, DERIVATIVES AND HEDGING ACTIVITIES - Classification and Fair Value Amounts of Derivative Instruments (Detail) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | $ 11 | $ 21 |
Derivative liability, fair value | 19 | 54 |
Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 0 | 20 |
Derivative liability, fair value | 17 | 52 |
Designated as Hedging Instrument | Interest rate contracts | Other non-current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 10 | |
Designated as Hedging Instrument | Interest rate contracts | Other non-current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | 52 | |
Designated as Hedging Instrument | Foreign exchange contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 0 | 10 |
Designated as Hedging Instrument | Foreign exchange contracts | Accounts payable and accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | 17 | 0 |
Not Designated as Hedging Instrument | Foreign exchange contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 11 | 1 |
Not Designated as Hedging Instrument | Foreign exchange contracts | Accounts payable and accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | $ 2 | $ 2 |
FINANCIAL INSTRUMENTS, DERIVATIVES AND HEDGING ACTIVITIES - Derivative Positions Presented On Net Basis (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross amounts recognized in the consolidated balance sheet, Asset | $ 11 | $ 21 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, asset | (6) | (11) |
Total, Asset | 5 | 10 |
Gross amounts recognized in the consolidated balance sheet, Liability | 19 | 54 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, liability | (6) | (11) |
Total, Liability | $ 13 | $ 43 |
FINANCIAL INSTRUMENTS, DERIVATIVES AND HEDGING ACTIVITIES - Amounts Recorded on Condensed Consolidated Balance Sheet Related to Fair Value Hedges (Details) - Long-term debt - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Carrying amount of hedged item | $ 102 | $ 103 |
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged item | $ 5 | $ 6 |
FAIR VALUE MEASUREMENTS - Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign exchange contracts | $ 11 | $ 11 |
Debt securities | 13 | |
Interest rate contracts | 10 | |
Marketable equity securities | 17 | 3 |
Total assets | 41 | 24 |
Foreign exchange contracts | 19 | 2 |
Interest rate contracts | 52 | |
Contingent payments related to acquisitions | 30 | 39 |
Total liabilities | 49 | 93 |
Quoted prices in active markets for identical assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign exchange contracts | 0 | 0 |
Debt securities | 0 | |
Interest rate contracts | 0 | |
Marketable equity securities | 17 | 3 |
Total assets | 17 | 3 |
Foreign exchange contracts | 0 | 0 |
Interest rate contracts | 0 | |
Contingent payments related to acquisitions | 0 | 0 |
Total liabilities | 0 | 0 |
Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign exchange contracts | 11 | 11 |
Debt securities | 13 | |
Interest rate contracts | 10 | |
Marketable equity securities | 0 | 0 |
Total assets | 24 | 21 |
Foreign exchange contracts | 19 | 2 |
Interest rate contracts | 52 | |
Contingent payments related to acquisitions | 0 | 0 |
Total liabilities | 19 | 54 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign exchange contracts | 0 | 0 |
Debt securities | 0 | |
Interest rate contracts | 0 | |
Marketable equity securities | 0 | 0 |
Total assets | 0 | 0 |
Foreign exchange contracts | 0 | 0 |
Interest rate contracts | 0 | |
Contingent payments related to acquisitions | 30 | 39 |
Total liabilities | $ 30 | $ 39 |
FAIR VALUE MEASUREMENTS - Financial Instruments and Related Fair Value Measurements - Additional Information (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Financial Instruments and Fair Value [Line Items] | ||
Cash and cash equivalents | $ 3,730 | $ 3,335 |
Other Assets | ||
Financial Instruments and Fair Value [Line Items] | ||
Other equity investments without readily determinable fair values | 105 | 73 |
Fair Value, Inputs, Level 2 | ||
Financial Instruments and Fair Value [Line Items] | ||
Cash and cash equivalents | 3,700 | 3,300 |
Money market funds, at carrying value | $ 1,800 | $ 1,700 |
FAIR VALUE MEASUREMENTS - Reconciliation of Fair Value Measurements that Use Significant Unobservable Inputs (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Contingent payments, Fair value as of beginning of period | $ 39 | $ 32 |
Contingent payments, additions | 4 | 18 |
Contingent payments, change in fair value recognized in earnings | (2) | (4) |
Contingent payments, payments | (11) | (7) |
Contingent payments, Fair value as of end of period | $ 30 | $ 39 |
FAIR VALUE MEASUREMENTS - Book Values and Fair Values of Financial Instruments (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Book values | ||
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ||
Short-term debt | $ 0 | $ 226 |
Current maturities of long-term debt and finance lease obligations | 406 | 315 |
Long-term debt and finance lease obligations | 5,786 | 4,809 |
Fair values | ||
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ||
Short-term debt | 0 | 226 |
Current maturities of long-term debt and finance lease obligations | 409 | 315 |
Long-term debt and finance lease obligations | $ 6,471 | $ 5,156 |
SEGMENT INFORMATION - Financial Information of Segments (Details) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020
USD ($)
u_baxGeographical
|
Sep. 30, 2020
USD ($)
|
Jun. 30, 2020
USD ($)
|
Mar. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
Sep. 30, 2019
USD ($)
|
Jun. 30, 2019
USD ($)
|
Mar. 31, 2019
USD ($)
|
Dec. 31, 2020
USD ($)
u_baxGeographical
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Segment Reporting Information [Line Items] | |||||||||||
Number geographical segments | u_baxGeographical | 3 | 3 | |||||||||
Net sales | $ 3,181 | $ 2,972 | $ 2,718 | $ 2,802 | $ 3,039 | $ 2,851 | $ 2,834 | $ 2,638 | $ 11,673 | $ 11,362 | $ 11,099 |
Total segment operating income | 1,616 | 1,772 | 1,584 | ||||||||
Depreciation expense | 601 | 606 | 602 | ||||||||
Capital expenditures | 724 | 686 | 692 | ||||||||
Americas | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 6,321 | 6,306 | 6,156 | ||||||||
EMEA | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 2,877 | 2,756 | 2,741 | ||||||||
APAC | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 2,475 | 2,300 | 2,202 | ||||||||
Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total segment operating income | 3,503 | 3,575 | 3,609 | ||||||||
Operating Segments | Americas | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total segment operating income | 2,389 | 2,499 | 2,533 | ||||||||
Depreciation expense | 249 | 255 | 229 | ||||||||
Capital expenditures | 380 | 325 | 296 | ||||||||
Operating Segments | EMEA | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total segment operating income | 523 | 527 | 544 | ||||||||
Depreciation expense | 150 | 149 | 158 | ||||||||
Capital expenditures | 157 | 143 | 140 | ||||||||
Operating Segments | APAC | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total segment operating income | 591 | 549 | 532 | ||||||||
Depreciation expense | 94 | 85 | 95 | ||||||||
Capital expenditures | 103 | 98 | 122 | ||||||||
Corporate and other | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total segment operating income | (1,887) | (1,803) | (2,025) | ||||||||
Depreciation expense | 108 | 117 | 120 | ||||||||
Capital expenditures | $ 84 | $ 120 | $ 134 |
SEGMENT INFORMATION - Operating Income to Income from Continuing Operations Reconciliation (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Operating Income (Loss) | $ 1,616 | $ 1,772 | $ 1,584 |
Interest expense, net | 134 | 71 | 45 |
Other (income) expense, net | 190 | 731 | (78) |
Income from continuing operations before income taxes | 1,292 | 970 | 1,617 |
Operating Segments | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Operating Income (Loss) | 3,503 | 3,575 | 3,609 |
Corporate and other | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Operating Income (Loss) | $ (1,887) | $ (1,803) | $ (2,025) |
SEGMENT INFORMATION - Geographic Information (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total net sales | $ 3,181 | $ 2,972 | $ 2,718 | $ 2,802 | $ 3,039 | $ 2,851 | $ 2,834 | $ 2,638 | $ 11,673 | $ 11,362 | $ 11,099 |
Consolidated PP&E and operating lease right-of-use assets, net | 5,325 | 5,120 | 5,325 | 5,120 | |||||||
United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total net sales | 4,878 | 4,826 | 4,723 | ||||||||
Consolidated PP&E and operating lease right-of-use assets, net | 1,888 | 1,889 | 1,888 | 1,889 | |||||||
Latin America and Canada | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total net sales | 1,191 | 1,268 | 1,228 | ||||||||
Consolidated PP&E and operating lease right-of-use assets, net | 857 | 825 | 857 | 825 | |||||||
EMEA | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total net sales | 3,129 | 2,968 | 2,946 | ||||||||
Consolidated PP&E and operating lease right-of-use assets, net | 1,556 | 1,447 | 1,556 | 1,447 | |||||||
APAC | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total net sales | 2,475 | 2,300 | $ 2,202 | ||||||||
Consolidated PP&E and operating lease right-of-use assets, net | $ 1,024 | $ 959 | $ 1,024 | $ 959 |
QUARTERLY FINANCIAL DATA (UNAUDITED) - Quarterly Financial Results (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net sales | $ 3,181 | $ 2,972 | $ 2,718 | $ 2,802 | $ 3,039 | $ 2,851 | $ 2,834 | $ 2,638 | $ 11,673 | $ 11,362 | $ 11,099 |
Gross margin | 1,191 | 1,195 | 1,038 | 1,163 | 1,298 | 1,230 | 1,153 | 1,080 | 4,587 | 4,761 | 4,759 |
Net income attributable to Baxter stockholders | $ 168 | $ 356 | $ 246 | $ 332 | $ (23) | $ 369 | $ 313 | $ 342 | $ 1,102 | $ 1,001 | $ 1,546 |
Earnings per share | |||||||||||
Basic (in dollars per share) | $ 0.33 | $ 0.70 | $ 0.48 | $ 0.65 | $ (0.05) | $ 0.72 | $ 0.61 | $ 0.67 | $ 2.17 | $ 1.97 | $ 2.90 |
Diluted (in dollars per share) | $ 0.33 | $ 0.69 | $ 0.48 | $ 0.64 | $ (0.05) | $ 0.71 | $ 0.60 | $ 0.66 | $ 2.13 | $ 1.93 | $ 2.83 |
QUARTERLY FINANCIAL DATA (UNAUDITED) - Narrative (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2020 |
|
Quarterly Financial Information [Line Items] | ||||||
Loss on debt extinguishment | $ 110,000,000 | $ 110,000,000 | $ 0 | $ 0 | ||
Loss on extinguishment of debt, after tax | $ 90,000,000 | |||||
Loss on extinguishment of debt, after tax, per diluted share (in dollars per share) | $ 0.17 | |||||
Inspection and remediation activities expense | $ 29,000,000 | |||||
Inspection and remediation activities expense, after tax | $ 22,000,000 | |||||
Inspection and remediation activities expense, after tax, per diluted share (in dollars per share) | $ 0.04 | |||||
Settlement charges | $ 43,000,000 | $ 755,000,000 | $ 46,000,000 | $ 755,000,000 | $ 1,000,000 | |
Settlement charges, after tax | $ 33,000,000 | $ 568,000,000 | ||||
Settlement charges, after tax, per diluted share (in dollars per share) | $ 0.06 | $ 1.09 | ||||
Senior Notes Due 2025 | Senior Notes | ||||||
Quarterly Financial Information [Line Items] | ||||||
Senior notes | $ 750,000,000 | |||||
Senior notes, coupon rates | 3.75% |
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