Baxter International Inc. (NYSE:BAX)

The analysis of the property, plant, and equipment (PP&E) data reveals several notable trends and significant fluctuations in asset values from 2011 to 2015.

Land

Land values remained relatively stable in the first four years, showing a slight increase from US$184 million in 2011 to US$225 million in 2014. However, there is a marked decrease to US$116 million in 2015, indicating a possible sale or impairment of land assets during that period.

Buildings and Leasehold Improvements

Buildings and leasehold improvements showed steady growth from US$2,099 million in 2011 to US$2,673 million in 2014. This was followed by a sharp decline to US$1,389 million in 2015, suggesting significant disposals, impairments, or reclassifications in that year.

Machinery and Equipment

This category experienced consistent growth from US$6,384 million in 2011 to a peak of US$7,687 million in 2014. Similar to other fixed asset categories, there is a notable reduction to US$5,414 million in 2015, reflecting substantial asset disposals or impairments.

Equipment with Customers

Equipment with customers increased moderately from US$1,205 million in 2011 to US$1,361 million in 2013, then slightly decreased and remained relatively stable around US$1,238 million by 2015. This suggests a more stable or mature asset base in this category compared to others.

Construction in Progress

Construction in progress showed robust growth over the first four years, rising from US$1,101 million in 2011 to US$2,870 million in 2014. This indicates active capital expenditure and asset development during this time frame. However, there is a sharp decline to US$833 million in 2015, possibly reflecting project completions or reclassification of assets into fixed categories.

Property, Plant, and Equipment, at Cost

The total cost of PP&E increased steadily year-over-year from US$10,973 million in 2011 to US$14,808 million in 2014, supporting the observation of active capital investments. The subsequent sharp reduction to US$8,990 million in 2015 corresponds with the declines seen across major asset categories, underscoring significant asset disposals or write-downs.

Accumulated Depreciation

Accumulated depreciation grew moderately from -US$5,448 million in 2011 to -US$6,110 million in 2014, consistent with ongoing usage and aging of assets. The decrease in accumulated depreciation to -US$4,604 million in 2015 aligns with the reduction in gross PP&E values, suggesting that disposed or impaired assets also lowered the accumulated depreciation balance.

Net Property, Plant, and Equipment (PP&E)

The net book value of PP&E increased consistently from US$5,525 million in 2011 to a peak of US$8,698 million in 2014, reflecting asset growth and ongoing investments. The significant decline to US$4,386 million in 2015 indicates major asset reductions likely from disposals, impairments, or reclassifications, which greatly impacted the company's fixed asset base.

Average Age Ratio

The average age ratio exhibits a generally declining trend from 50.5% at the end of 2011 to 41.9% in 2014, indicating a reduction in the relative age of property, plant, and equipment over this period. However, there is a notable increase to 51.88% in 2015, suggesting either a slowdown in asset renewal or aging of the asset base during that year.

Estimated Total Useful Life

The estimated total useful life of the assets remains relatively stable around 19 to 20 years from 2011 to 2013. There is a slight decrease to 18 years in 2014, followed by a more significant reduction to 15 years in 2015. This downward adjustment may reflect revised asset longevity assumptions, possible changes in asset composition, or updated depreciation policies.

Estimated Age (Time Elapsed Since Purchase)

The estimated average age of the assets shows a minimal decline from 10 years in 2011 and 2012 to 9 years in 2013, then remains steady at 8 years through 2014 and 2015. This suggests a gradual introduction of newer assets and possible disposal or retirement of older assets, contributing to a slightly younger asset base over time.

Estimated Remaining Life

The estimated remaining life of the assets increases from 9 years in 2011 to 11 years in 2013, indicating an extension in the expected usability period of the assets during that time. It then slightly decreases to 10 years in 2014 and sharply declines to 7 years in 2015. This pattern aligns with the reduced total useful life metric, implying reassessments of asset viability and potentially signaling the need for future capital expenditures.

Property, Plant and Equipment, at Cost

The value of property, plant, and equipment at cost showed an increasing trend from 2011 to 2014, rising from $10,973 million in 2011 to $14,808 million in 2014. However, there was a notable decline in 2015, where the value dropped significantly to $8,990 million. This suggests a possible disposal, revaluation, or impairment event impacting the asset base in 2015.

Accumulated Depreciation

Accumulated depreciation increased steadily from $5,448 million in 2011 to a peak of $6,110 million in 2014, reflecting ongoing depreciation charges consistent with asset aging and usage. In 2015, it decreased sharply to $4,604 million, which may indicate asset disposals or adjustments consistent with the decline in asset cost observed for that year.

Land

The value of land gradually increased from $184 million in 2011 to $225 million in 2014, indicating acquisitions or revaluations. In 2015, the land value decreased sharply to $116 million, suggesting possible disposals or reclassification of land assets in that year.

Average Age Ratio

The average age ratio of property, plant, and equipment exhibited a decreasing trend from 50.5% in 2011 to 41.9% in 2014, implying that assets were becoming younger on average, possibly due to additions or replacements of older assets. However, this ratio increased to 51.88% in 2015, suggesting a relative aging of the asset base, potentially impacted by the large disposals or reductions in asset value that year.

Property, Plant and Equipment, at Cost

The recorded cost of property, plant, and equipment increased steadily from 2011 through 2014, rising from 10,973 million USD to 14,808 million USD. This growth suggests ongoing investments or acquisitions in physical assets during this period. However, a notable decline occurred in 2015, with the value dropping sharply to 8,990 million USD. This significant decrease may indicate asset disposals, revaluations, or impairments.

Land

The value of land showed a gradual increase from 184 million USD in 2011 to 225 million USD in 2014, reflecting possible land acquisitions or revaluations. In 2015, however, the value fell markedly to 116 million USD, mirroring the overall reduction in total property, plant, and equipment.

Depreciation Expense

Depreciation expense increased consistently from 572 million USD in 2011 to a peak of 809 million USD in 2014, consistent with the increase in asset base during these years. In 2015, depreciation expense decreased to 597 million USD, aligning with the reduced asset values reported.

Estimated Total Useful Life

The estimated useful life of the assets showed a downward trend across the observed years, starting at 19 years in 2011, then increasing slightly to 20 years in 2012 and 2013, but subsequently declining to 18 years in 2014 and further to 15 years in 2015. This shortening of useful life estimates may indicate accelerated depreciation policies or recognition of asset aging.

Accumulated Depreciation

The accumulated depreciation values show an increasing trend from 2011 through 2014, rising from 5,448 million USD to 6,110 million USD. However, in 2015, there is a notable decrease to 4,604 million USD, breaking the previous upward trend observed over the preceding years.

Depreciation Expense

The depreciation expense consistently increased from 572 million USD in 2011 to a peak of 809 million USD in 2014. In 2015, this expense dropped significantly to 597 million USD, indicating a reduction in the depreciation charged during that year, which may be linked to changes in asset base or asset valuation approaches.

Time Elapsed Since Purchase

The average time elapsed since purchase of the property, plant, and equipment steadily decreased from 10 years in 2011 and 2012 to 8 years in 2014 and 2015. This suggests an addition of newer assets or replacement of older assets, contributing to a younger asset base over the period.

Overall Analysis

The data reveal a period of gradual asset aging and ongoing accumulation of depreciation from 2011 to 2014, consistent with steady use and aging of assets. The decline in accumulated depreciation and depreciation expense in 2015, combined with a younger average asset age, suggests asset disposals, write-downs, or revaluation adjustments that reduced the depreciated value. This shift may reflect a strategic move to refresh the asset portfolio or changes in accounting estimates affecting depreciation.

Property, Plant and Equipment (PP&E), Net

The net value of property, plant, and equipment exhibited a rising trend from 2011 to 2014, increasing from $5,525 million to $8,698 million. However, in 2015, there was a substantial decline to $4,386 million, nearly halving the previous year's figure. This sudden drop may indicate significant asset disposals, impairments, or revaluations during the final year.

Land

The value of land increased steadily at a modest rate from $184 million in 2011 to $225 million in 2014. Similar to the overall PP&E net figures, the land value sharply decreased in 2015 to $116 million, suggesting possible sales or write-downs related to land holdings that year.

Depreciation Expense

Depreciation expense demonstrated an upward trajectory from $572 million in 2011 to a peak of $809 million in 2014, consistent with the increasing net PP&E values during this period. In 2015, depreciation expense declined to $597 million, a significant reduction from the prior year, aligning with the decrease in net asset values.

Estimated Remaining Life

The estimated remaining life of the PP&E assets mostly remained stable around 9 to 11 years from 2011 through 2014. However, in 2015, this estimate dropped to 7 years, indicating that the asset base may have become newer on average, or considerable older assets were disposed of or fully depreciated, thus lowering the weighted remaining life.