Baxter International Inc. (NYSE:BAX)

The reported debt data reveals several notable trends over the five-year period from December 31, 2011, to December 31, 2015.

Short-term debt

The short-term debt exhibited significant fluctuations. Beginning at $256 million in 2011, it markedly decreased to $27 million in 2012. Subsequently, it sharply increased to $181 million in 2013, continued rising substantially to $913 million in 2014, and peaked at $1,775 million in 2015. This indicates a trend toward increased reliance on short-term borrowing in the later years.

Current maturities of long-term debt and lease obligations

This category showed an upward trend from 2011 through 2013. It grew from $190 million in 2011 to $323 million in 2012 and then more than doubled to $859 million in 2013. Afterwards, there was a slight decrease in 2014 to $786 million, followed by a small rise to $810 million in 2015. The growth across the period suggests higher near-term debt repayment obligations.

Long-term debt and lease obligations, excluding current maturities

The long-term debt, excluding current maturities, increased substantially in the earlier part of the period, rising from $4,749 million in 2011 to $8,126 million in 2013. This was followed by a decrease, with the amount dropping to $7,606 million in 2014 and then significantly falling further to $3,935 million in 2015. This indicates a reduction in longer-term debt exposure in the later years.

Total debt and lease obligations (carrying amount)

Total debt rose consistently from $5,195 million in 2011 to a peak of $9,305 million in 2014. However, in 2015, there was a notable decline to $6,520 million. This pattern reflects an overall increase in indebtedness until 2014, followed by a notable deleveraging or repayment phase in the last year reported.

In summary, the data illustrates a strategic shift in debt composition over the period. Early years showed growth in long-term borrowings, which then declined sharply in 2015, while short-term debt and current maturities rose significantly, particularly in the final years. The peak in total debt in 2014 followed by a reduction in 2015 suggests active debt management, possibly aimed at reducing financial leverage or refocusing on liquidity and short-term commitments.

Interest Expense

The annual interest expense demonstrates an overall increasing trend from 2011 through 2014, rising from 92 million US dollars in 2011 to a peak of 167 million US dollars in 2014. However, in 2015, this figure decreases to 146 million US dollars, indicating a reduction in interest paid or accrued during that final observed year.

Interest Costs Capitalized

This component follows a generally upward trajectory from 2011 to 2014, increasing from 40 million US dollars to 70 million US dollars, where it stabilizes for two consecutive years before declining to 51 million US dollars in 2015. This suggests that capitalized interest was maintained at a high level before experiencing a notable reduction in the last year measured.

Total Interest Costs

The total interest costs, which combine interest expense with capitalized interest, reflect a consistent increase from 132 million US dollars in 2011 to a high of 237 million US dollars in 2014. This is followed by a decline to 197 million US dollars in 2015. The overall pattern indicates growth in total interest obligations until 2014, after which there is a marked decrease.

General Insights

The data reveal that both interest expense and capitalized interest contributed to rising total interest costs until 2014. The subsequent reduction in 2015 across all categories may reflect changes in financing strategy, debt structure, or interest rates. The stabilization of capitalized interest at a high level during 2013 and 2014 before declining could imply shifting investment or capital expenditure activities impacting the amount of interest eligible for capitalization.

Interest coverage ratio (without capitalized interest)

The interest coverage ratio demonstrates a clear downward trend over the five-year period. Starting from a high of 31.53 in 2011, the ratio consistently declines each year, reaching 3.93 by 2015. This indicates a significant decrease in the company’s ability to cover interest expenses with its earnings before interest and taxes, suggesting increasing financial leverage or reduced operational profitability.

Adjusted interest coverage ratio (with capitalized interest)

Similarly, the adjusted interest coverage ratio, which accounts for capitalized interest, follows a comparable downward pattern. The ratio decreases from 21.98 in 2011 to 2.91 in 2015. The consistent reduction reflects a diminished capacity to meet interest obligations when including capitalized interest, pointing to potentially higher financing costs or lower earnings relative to interest burden over time.

Overall trend and implications

Both ratios illustrate a marked decline in the company’s interest coverage over the examined years. This trend could indicate growing financial risk, as the ability to cover interest expenses weakens substantially. The sharper drop observed in the adjusted ratio suggests that capitalized interest has an increasing impact on the company’s financial obligations. Monitoring these ratios going forward is crucial, as continued declines may affect creditworthiness and financial stability.