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.

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).

Net Income and Related Items: Net income remained relatively stable from 2011 through 2014, ranging between 2012 million and 2497 million US dollars. However, there was a significant decline in 2015 to 968 million US dollars, influenced by a notable loss from discontinued operations amounting to -575 million US dollars. The gain on sale of discontinued operations in 2014 offset some prior-year losses, yet did not prevent the sharp net income drop in 2015.
Depreciation and Amortization: This expense showed an increasing trend from 670 million US dollars in 2011 to a peak of 1005 million US dollars in 2014, before falling to 759 million US dollars in 2015. The reduction in 2015 may reflect asset disposals or completion of amortization schedules linked to prior years.
Tax and Pension-related Adjustments: Deferred income taxes fluctuated from a positive balance of 172 million in 2011 to negative values in subsequent years, reaching -50 million US dollars in 2015. Stock compensation expenses rose steadily from 119 million in 2011 to 159 million in 2014, then slightly declined in 2015. The realized excess tax benefits associated with stock issuance decreased consistently over the period. Net periodic pension and other post-employment benefit costs decreased from a high of 477 million in 2012 to 227 million in 2015, indicating reductions in pension-related expenses.
Operating Charges and Adjustments: Business optimization charges experienced volatility, reaching the highest point in 2013 at 282 million, sharply declining in 2014, and partially rebounding in 2015. Asset impairment charges were reported only in 2011 (182 million) and were absent thereafter, suggesting completion of major write-downs. Product-related charges began appearing in 2013 and varied, with a negative charge in 2015 indicating a possible reversal or recovery. Gains and losses linked to contingent payment liabilities fluctuated through the years without a clear trend. Other miscellaneous net items demonstrated irregular patterns, including a large positive impact in 2014 and a sharp negative swing in 2015.
Working Capital Changes: Accounts and other current receivables exhibited negative changes throughout the period, indicating an increase in receivables. Inventory fluctuations were inconsistent but generally negative, implying increased inventory levels, except for a smaller change in 2015. Accounts payable and accrued liabilities' changes showed variation without a clear directional trend. Business optimization and infusion pump-related payments were negative in all years, declining over time. Other net working capital items and total changes in balance sheet items were predominantly negative, reflecting working capital use, with the largest net outflows occurring in 2011 and 2014.
Cash Flow From Operations: Cash flows from operations increased from 2817 million US dollars in 2011 to a peak of 3215 million in 2014, then sharply declined to 1129 million in 2015. Adjustments to reconcile income to operating cash flow were highest in 2013 (1186 million) but decreased significantly in 2015 (161 million), indicating lesser non-cash adjustments or working capital contributions.
Investing Activities: Capital expenditures steadily increased from 960 million in 2011 to a high of 1898 million in 2014, before decreasing substantially in 2015 to 911 million. Acquisitions and investments showed notable volatility, peaking tremendously in 2013 with outflows of 3851 million, and drastically decreasing to 34 million in 2015. Divestitures and other investing inflows spiked in 2014 (765 million) and remained lower in other years. Overall, cash flows from investing activities were strongly negative in 2013 due to large acquisitions, with reduced negative outflows in 2014 and 2015, suggesting scaling back of investing activities.
Financing Activities: Issuances of debt varied significantly, with a notable spike in 2015 of 6868 million US dollars, contrasting with more moderate issuances in earlier years. Payments of obligations escalated in 2015 to 3776 million from lower amounts previously. Short-term debt changes were variable and included net increases and decreases. Cash dividends on common stock increased steadily until 2014, then declined in 2015. Purchases of treasury stock decreased sharply from a high of 1583 million in 2011 to no purchases reported in 2015. Financing cash flows were negative in most years, except for a positive inflow in 2013 due to financing activities, but substantially negative in 2015 due largely to large debt repayments and dividend payments. A significant transfer of cash to Baxalta in 2015 (-2122 million) further affected financing outflows.
Discontinued Operations Impact: Discontinued operations contributed no cash flows until 2015, when both operating and investing activities related to these operations generated substantial inflows and outflows (518 and -946 million, respectively), resulting in a net outflow of -428 million. These discontinuations clearly influenced the 2015 financial performance and cash flow dynamics.
Liquidity and Cash Position: Cash and equivalents followed a rising trend from 2685 million at the end of 2010 to a peak of 3270 million at the end of 2012. Subsequently, cash balances decreased considerably, ending at 2213 million in 2015. The changes in cash and equivalents mirrored net cash flow volatility and were adversely impacted in 2015 by significant financing outflows and discontinued operations, resulting in the lowest ending cash balance within the period analyzed.
Summary of Key Patterns: The company exhibited generally stable earnings and operating performance from 2011 to 2014 but encountered a sharp downturn in net income and operating cash flows in 2015, driven by discontinued operations and asset-related charges. Investing activity was heavily influenced by a large acquisition in 2013, after which investment levels moderated. Financing activities showed aggressive debt issuance and repayments in 2015, alongside a significant cash transfer related to a corporate separation. Working capital usage was consistently negative, reflecting investments in receivables and inventory. Overall liquidity weakened in 2015, reflecting both operating challenges and strategic transactions.

Download chart

Baxter International Inc. (NYSE:BAX)

Cash Flow Statement