Baxter International Inc. (NYSE:BAX)

The financial data reveals several notable trends over the five-year period ending December 31, 2015. Net sales demonstrated consistent growth from 2011 through 2014, increasing from $13,893 million to $16,671 million, followed by a sharp decline in 2015 to $9,968 million. This drop in the final year represents a significant contraction in revenue.

Cost of sales followed a generally increasing trajectory parallel to net sales from 2011 to 2014, rising from $6,847 million to $8,514 million. In 2015, cost of sales also decreased sharply to $5,822 million, aligning with the lower net sales figure that year.

Gross margin improved steadily from 2011 to 2014, increasing from $7,046 million to $8,157 million. However, it more than halved in 2015, dropping to $4,146 million, reflecting the substantial decline in net sales and a less favorable sales mix or cost structure.

Marketing and administrative expenses consistently increased over the first four years, from $3,154 million to $4,029 million, before decreasing notably to $3,094 million in 2015. Similarly, research and development expenses rose annually through 2014, from $946 million to $1,421 million, then sharply dropped to $603 million in 2015. These expense reductions in 2015 suggest cost-cutting measures possibly in response to decreased revenues.

Operating income experienced a decline from $2,946 million in 2011 to $2,668 million in 2013, stabilized around $2,700 million in 2014, but then saw a drastic reduction to $449 million in 2015. This sharp decline corresponds with the pronounced decrease in gross margin and reduced expenses.

Net interest expense increased gradually from $54 million in 2011 to $145 million in 2014, then slightly decreased to $126 million in 2015. The dynamics of both interest expense and income follow similar patterns, suggesting relatively stable financing costs with minor fluctuations.

Other income (expense), net, exhibited volatility over the years, moving from a loss of $83 million in 2011 to a gain of $155 million in 2012, followed by smaller fluctuations and concluding with a positive $105 million in 2015. The 2015 data also includes specific gains and losses such as foreign exchange gains ($113 million), a loss on debt extinguishment ($130 million), gain on litigation settlement ($52 million), and gain on sale of investments and other assets ($38 million), which contributed to the net other income.

Income from continuing operations before income taxes showed modest fluctuations from $2,809 million in 2011 to $2,439 million in 2014, with a steep fall to $428 million in 2015, reflecting operating challenges and the combined effects of other income and expenses. Concurrently, income tax expense consistently decreased, from $553 million in 2011 to $35 million in 2015, in line with the lower pre-tax income.

Income from continuing operations resulted in a downward trend from $2,256 million in 2011 to $1,946 million in 2014, followed by a sharp decline to $393 million in 2015. Notably, income from discontinued operations was reported only in 2014 and 2015, amounting to $551 million and $575 million respectively, partially offsetting the drop in continuing operations earnings in those years.

Net income mirrored these patterns, with a steady level around $2,200 million to $2,500 million from 2011 through 2014, peaking at $2,497 million in 2014 due to contributions from discontinued operations, then dropping significantly to $968 million in 2015. The net income attributable to the company followed the same trend.

In summary, the data indicates positive growth and margin improvements through 2014, followed by a sharp downturn in revenue, profitability, and operating income in 2015. This downturn was accompanied by expense reductions and one-time income items, which mitigated but did not prevent a significant decline in net income. The presence of discontinued operations income in the last two years suggests notable business segment changes during this period.

Sales and Margins

Consistent growth through 2014, sharp decline in 2015; gross margin followed similar pattern.

Expenses

Increased steadily until 2014, then substantially reduced in 2015.

Operating Income

Declined mildly through 2013, stable in 2014, then sharply decreased in 2015.

Interest

Gradual increase in net interest expense to 2014, slight decrease in 2015.

Other Income/Expense

Highly variable with positive contributions in 2015 from foreign exchange gains and settlements.

Income Taxes

Declined over time in line with falling pre-tax income.

Discontinued Operations

Reported only in 2014 and 2015, contributing positively to net income.

Net Income

Stable at high levels through 2014, then declined substantially in 2015.