Name: Baxter International Inc. (NYSE:BAX) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

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Baxter International Inc., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
Net income	968)	2,497)	2,012)	2,326)	2,256)
Income from discontinued operations, net of tax	(575)	—)	—)	—)	—)
Depreciation and amortization	759)	1,005)	823)	712)	670)
Deferred income taxes	(50)	(78)	(224)	(17)	172)
Stock compensation	126)	159)	150)	130)	119)
Realized excess tax benefits from stock issued under employee benefit plans	(7)	(24)	(34)	(24)	(21)
Business optimization charges	130)	27)	282)	150)	192)
Asset impairment and other charges	—)	—)	—)	—)	182)
Net periodic pension benefit and OPEB costs	227)	275)	381)	477)	255)
Gain on sale of discontinued operations	—)	(466)	—)	—)	—)
Infusion pump and other product-related charges	(28)	93)	17)	—)	—)
(Gains) losses related to contingent payment liabilities	—)	122)	(17)	(108)	—)
Other, net	(105)	269)	54)	66)	32)
Accounts and other current receivables, net	(4)	(125)	(36)	(41)	(229)
Inventories	(118)	(439)	(311)	(129)	(315)
Accounts payable and accrued liabilities	236)	115)	329)	18)	98)
Business optimization and infusion pump payments	(112)	(161)	(125)	(283)	(347)
Other, net	(318)	(54)	(103)	(171)	(247)
Changes in balance sheet items	(316)	(664)	(246)	(606)	(1,040)
Adjustments to reconcile income from continuing operations to net cash from operating activities	161)	718)	1,186)	780)	561)
Cash flows from operations	1,129)	3,215)	3,198)	3,106)	2,817)
Capital expenditures	(911)	(1,898)	(1,525)	(1,161)	(960)
Acquisitions and investments, net of cash acquired	(34)	(409)	(3,851)	(515)	(590)
Divestitures and other investing activities	84)	765)	14)	107)	123)
Cash flows from investing activities	(861)	(1,542)	(5,362)	(1,569)	(1,427)
Issuances of debt	6,868)	41)	3,636)	1,037)	506)
Payments of obligations	(3,776)	(1,029)	(540)	(22)	(23)
Increase (decrease) in debt with original maturities of three months or less, net	(575)	875)	—)	(250)	250)
Transfer of cash and equivalents to Baxalta	(2,122)	—)	—)	—)	—)
Cash dividends on common stock	(910)	(1,095)	(1,023)	(804)	(709)
Proceeds and realized excess tax benefits from stock issued under employee benefit plans	200)	369)	508)	512)	448)
Purchases of treasury stock	—)	(550)	(913)	(1,480)	(1,583)
Other	(42)	(13)	(23)	(108)	(26)
Cash flows from financing activities	(357)	(1,402)	1,645)	(1,115)	(1,137)
Cash flows from operations, discontinued operations	518)	—)	—)	—)	—)
Cash flows from investing activities, discontinued operations	(946)	—)	—)	—)	—)
Cash flows from discontinued operations	(428)	—)	—)	—)	—)
Effect of foreign exchange rate changes on cash and equivalents	(195)	(79)	(18)	(57)	(33)
Increase (decrease) in cash and equivalents	(712)	192)	(537)	365)	220)
Cash and equivalents at beginning of year	2,925)	2,733)	3,270)	2,905)	2,685)
Cash and equivalents at end of year	2,213)	2,925)	2,733)	3,270)	2,905)

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

Between 2011 and 2015, the cash flow profile transitioned from a period of steady growth and shareholder return to a phase of significant corporate restructuring and volatility. From 2011 to 2014, the company maintained consistent operational cash generation and aggressive capital returns, while 2015 was characterized by a sharp decline in net income and a major reorganization involving the transfer of assets and cash to Baxalta.

Operating Cash Flow Trends: Cash flows from operations exhibited a positive upward trajectory from 2011 to 2014, increasing from 2,817 million USD to 3,215 million USD. This growth occurred despite fluctuations in net income. However, 2015 saw a precipitous decline in cash from operations to 1,129 million USD, correlating with a substantial drop in net income to 968 million USD and the impact of 575 million USD in losses from discontinued operations.
Investing Activities and Capital Allocation: Investing activities were dominated by capital expenditures and strategic acquisitions. Capital expenditures rose steadily from 960 million USD in 2011 to a peak of 1,898 million USD in 2014, before falling to 911 million USD in 2015. A significant liquidity event occurred in 2013, where cash flows from investing activities reached negative 5,362 million USD, driven primarily by 3,851 million USD in acquisitions and investments.
Financing and Debt Management: The financing strategy shifted from equity reduction to debt utilization. Between 2011 and 2014, the company focused on purchasing treasury stock, with expenditures ranging from 550 million USD to 1,583 million USD annually. By 2015, the focus shifted toward debt issuance, with 6,868 million USD in new debt raised, partially offset by 3,776 million USD in payments of obligations and a 2,122 million USD cash transfer to Baxalta.
Dividend Policy and Shareholder Returns: Cash dividends on common stock showed a consistent growth trend from 709 million USD in 2011 to a peak of 1,095 million USD in 2014. In 2015, dividend payments decreased slightly to 910 million USD, coinciding with the cessation of treasury stock purchases, suggesting a realignment of capital priorities during the corporate restructuring.
Liquidity and Cash Position: The ending cash and equivalents remained relatively stable between 2,733 million USD and 3,270 million USD from 2011 through 2014. The liquidity position weakened in 2015, ending the year at 2,213 million USD. This decrease was driven by the combined impact of reduced operating cash flows, the Baxalta cash transfer, and negative effects from foreign exchange rate changes totaling 195 million USD.

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