Baxter International Inc. (NYSE:BAX)

The financial data reveals several notable trends related to intangible assets over the five-year period ending December 31, 2015.

Developed Technology, Including Patents

This category experienced a steady increase from 2011 to 2014, rising from 1,100 million US dollars in 2011 to a peak of 2,278 million US dollars in 2014. However, in 2015, the value declined significantly to 1,742 million US dollars, representing a material reduction from the prior year.

Other Amortized Intangible Assets

Values for other amortized intangible assets showed a gradual increase from 276 million US dollars in 2011 to 494 million US dollars in 2013. After 2013, this figure decreased progressively to 393 million US dollars by 2015.

Indefinite-Lived Intangible Assets

Initially relatively small at 35 million US dollars in 2011, this asset category exhibited a sharp rise in 2013 to 465 million US dollars, followed by a decline to 86 million US dollars by the end of 2015. The fluctuation indicates some reclassification or impairment events during this period.

Gross Other Intangible Assets

The aggregate gross other intangible assets display a significant growth trend from 1,411 million US dollars in 2011 to a high of 3,103 million in 2013, then a slight reduction to 2,993 million in 2014, and a more substantial decrease to 2,221 million in 2015. This pattern aligns with movements observed in component asset categories.

Accumulated Amortization

Accumulated amortization consistently increased in absolute value (noting the negative sign) over time, moving from -585 million US dollars in 2011 to -914 million in 2014, then slightly decreasing to -872 million in 2015. The slight reduction in 2015 may suggest adjustments to amortization estimates or asset impairments.

Other Intangible Assets, Net

Net other intangible assets remained nearly stable between 2011 and 2012 but surged sharply in 2013 to 2,294 million US dollars before declining steadily to 1,349 million by 2015. The net values reflect the influences of both gross asset additions and accumulated amortization over time.

Goodwill

Goodwill exhibited a rising trend from 2,317 million US dollars in 2011 to a peak of 4,205 million in 2013. Subsequent to this peak, goodwill declined to 2,687 million US dollars by 2015, suggesting disposals, impairments, or other adjustments affecting goodwill assets.

Goodwill and Other Intangible Assets, Net

The combined net value of goodwill and other intangible assets escalated steadily from 3,143 million US dollars in 2011 to a peak of 6,499 million in 2013. After this peak, a declining trend emerged, with the figure dropping to 4,036 million in 2015. This overall pattern indicates substantial asset acquisitions initially, followed by sales, amortizations, or impairments reducing net asset bases.

Overall, the data depict a considerable expansion of intangible assets between 2011 and 2013, encompassing goodwill and various intangible asset classes. From 2013 onwards, a contraction phase is observed with reductions in asset values, partially counterbalanced by ongoing amortization. These trends may reflect acquisition activities followed by subsequent restructuring, impairment recognition, or asset disposals over the analyzed period.

The financial data reveals distinct trends in assets and shareholders' equity over the five-year period ending in 2015. Both reported and adjusted values are provided, allowing for a comparison that highlights the impact of goodwill adjustments.

Total Assets

The reported total assets increased from $19,073 million in 2011 to a peak of $25,869 million in 2013, followed by relative stability around $25,917 million in 2014. However, there is a notable decline in 2015, where reported assets fell to $20,975 million. The adjusted total assets display a similar pattern, rising from $16,756 million in 2011 to $21,664 million in 2013 and $22,043 million in 2014, before decreasing to $18,288 million in 2015. The adjusted figures consistently remain lower than the reported assets, reflecting the exclusion of goodwill from the adjusted calculation.

Shareholders’ Equity

Reported total shareholders’ equity shows an upward trend from $6,585 million in 2011 to $8,463 million in 2013, slightly decreasing to $8,120 million in 2014, then increasing again to $8,846 million in 2015. In contrast, the adjusted shareholders’ equity exhibits a different trend. It rose marginally from $4,268 million in 2011 to $4,436 million in 2012 but then declined to $4,258 million in 2013 and further to $4,246 million in 2014. A significant increase occurs in 2015, where adjusted equity jumps to $6,159 million. The adjusted equity values are substantially lower than the reported numbers across all years, underscoring the material effect of goodwill on reported equity figures.

Overall, the data suggest that while reported total assets and equity increased generally from 2011 to 2014, both metrics experienced notable decreases or fluctuations in 2015. The adjustments for goodwill systematically reduce the apparent size of assets and shareholders’ equity, with the most pronounced disparity observed in the early years. The substantial rise in adjusted shareholders’ equity in 2015 may indicate impairment reversals or changes in accounting estimates relating to goodwill or other intangible assets.

The analysis of the financial performance metrics from 2011 to 2015 reveals several notable trends in asset turnover, financial leverage, return on equity (ROE), and return on assets (ROA), both reported and goodwill adjusted.

Total Asset Turnover

The reported total asset turnover ratio exhibited a declining trend over the period, decreasing from 0.73 in 2011 to 0.48 in 2015. This indicates that the company’s efficiency in using its assets to generate sales diminished over these years. The adjusted total asset turnover, which accounts for the exclusion of goodwill, also followed a similar downward pattern, although at higher levels than the reported figures. It decreased from 0.83 in 2011 to 0.55 in 2015. This consistent decline in both metrics suggests challenges in asset utilization irrespective of goodwill adjustments.

Financial Leverage

Reported financial leverage increased moderately from 2.9 in 2011, peaking at 3.19 in 2014, before dropping to 2.37 in 2015. In contrast, the adjusted financial leverage (excluding goodwill) showed a more pronounced increase from 3.93 in 2011 to a peak of 5.19 in 2014, followed by a sharp reduction to 2.97 in 2015. This pattern indicates a rise in reliance on debt or equity financing relative to assets through 2014, with significant deleveraging occurring in 2015, particularly when goodwill is excluded.

Return on Equity (ROE)

The reported ROE saw substantial fluctuations, starting at 33.77% in 2011, maintaining a similar level in 2012, experiencing a decline to 23.77% in 2013, recovering to 30.75% in 2014, and then sharply dropping to 10.94% in 2015. The adjusted ROE, which excludes goodwill effects, consistently remained higher than the reported ROE but followed a similar trajectory. It decreased from 52.11% in 2011 to 15.72% in 2015, with a peak at 58.81% in 2014. The overall downward trend in both ROE measures highlights declining profitability for shareholders, with a marked deterioration in 2015.

Return on Assets (ROA)

Both reported and adjusted ROA metrics showed decreasing trends over the period. The reported ROA dropped from 11.66% in 2011 to 4.62% in 2015, with the lowest point occurring at 7.78% in 2013 before modest recovery in 2014. The adjusted ROA, consistently higher than the reported, behaved similarly by decreasing from 13.27% in 2011 to 5.29% in 2015. The declining ROA values indicate a reduction in the company’s ability to generate earnings from its asset base over the five-year span.

In summary, both reported and goodwill-adjusted analyses suggest decreasing operational efficiency and profitability over the period under review. Asset turnover ratios declined, signaling less effective use of assets, while leverage increased until 2014 before significant reduction in 2015. Profitability indicators, ROE and ROA, mirrored these trends, displaying lower returns, particularly notable in the sharp declines observed in 2015. These patterns collectively point to challenges in sustaining financial performance during this timeframe.

Total Assets

The reported total assets experienced an initial upward trend, increasing from 19,073 million US dollars in 2011 to a peak of 25,869 million in 2013 and remaining relatively stable in 2014 at 25,917 million before declining significantly to 20,975 million in 2015. The adjusted total assets, which account for goodwill, followed a similar pattern, rising from 16,756 million in 2011 to 21,664 million in 2013, with a slight increase in 2014 to 22,043 million, and subsequently decreasing to 18,288 million in 2015.

Total Asset Turnover

The reported total asset turnover ratio showed a declining trend over the period, dropping from 0.73 in 2011 to 0.48 in 2015. This indicates a decrease in the efficiency with which the company utilized its reported assets to generate sales. Similarly, the adjusted total asset turnover ratio, which excludes goodwill, declined from 0.83 in 2011 to 0.55 in 2015, mirroring the reported figures but consistently registering higher values. This suggests that when goodwill is excluded, the company's asset utilization appears more efficient, although the trend remains downward across the years analyzed.

Overall Analysis

Between 2011 and 2013, the company expanded its asset base significantly, but this was followed by a downturn in total assets in 2015. Concurrently, asset turnover ratios decreased steadily, implying reduced operational efficiency in generating revenue from assets over time. The adjusted figures, which provide a clearer view by excluding goodwill, confirm these trends both in asset magnitude and turnover, highlighting challenges in asset utilization efficiency during the later years.

The financial data reveals distinct trends in both the reported and goodwill adjusted metrics over the five-year period ending in 2015.

Total Assets

Reported total assets increased from US$19,073 million in 2011 to a peak of US$25,869 million in 2013 and 2014, before declining to US$20,975 million in 2015. Adjusted total assets followed a similar pattern, rising from US$16,756 million in 2011 to US$21,664 million in 2013 and US$22,043 million in 2014, then decreasing to US$18,288 million in 2015. The adjusted values remain consistently lower than the reported, reflecting the exclusion of goodwill.

Shareholders’ Equity

Reported total shareholders’ equity showed a steady upward trend, increasing from US$6,585 million in 2011 to US$8,846 million in 2015, with a slight dip in 2014. In contrast, adjusted shareholders’ equity remained relatively stable and lower than reported values from 2011 through 2014, ranging between approximately US$4,246 million and US$4,436 million, before rising substantially to US$6,159 million in 2015. This suggests a significant change in the adjustment approach or impairment recognition impacting equity in that year.

Financial Leverage

Reported financial leverage gradually increased from 2.9 in 2011 to a peak of 3.19 in 2014, then decreased markedly to 2.37 in 2015. Adjusted financial leverage, which uses adjusted equity, was consistently higher than the reported ratios, climbing from 3.93 in 2011 to 5.19 in 2014, indicating a higher reliance on debt when goodwill is excluded. It then dropped sharply to 2.97 in 2015, mirroring the reduction seen in reported leverage but remaining above the reported figure.

Overall, the data indicates growth in asset base and equity until 2014 with a subsequent decline or adjustment in 2015. The disparity between reported and adjusted figures highlights the material impact of goodwill on the company's financial position and leverage metrics. The notable changes in adjusted shareholders’ equity and leverage in 2015 could signify a reassessment or impairment of goodwill, affecting financial risk assessments based on equity and leverage.

The data reveals distinct trends in both reported and goodwill-adjusted financial metrics over the analyzed five-year period.

Shareholders’ Equity

The reported total shareholders’ equity demonstrates a general upward trajectory from 6,585 million US dollars at the end of 2011 to 8,846 million US dollars by the end of 2015. Despite a minor decrease during the 2013 to 2014 period, the overall increase is notable, reflecting either capital retention, profit accumulation, or other equity enhancements.

In contrast, the adjusted total shareholders’ equity, which accounts for goodwill adjustments, shows relatively stable figures within the 4,258 to 4,436 million US dollars range from 2011 through 2014, followed by a pronounced increase to 6,159 million US dollars in 2015. This sudden rise in 2015 may reflect substantial changes in asset valuation or adjustments in goodwill impairments.

Return on Equity (ROE)

The reported ROE exhibits a declining trend, starting from a high of approximately 33.77% in 2011 and peaking slightly lower at 33.53% in 2012 before decreasing more significantly to 10.94% in 2015. The downward movement suggests reduced profitability relative to shareholders’ equity when including goodwill.

The adjusted ROE, excluding goodwill effects, maintains notably higher levels, consistently above 47% from 2011 through 2014, reaching a peak of 58.81% in 2014. However, it sharply declines to 15.72% in 2015, indicating a considerable drop in earnings performance on an adjusted equity base during that year.

Overall, the divergence between reported and adjusted equity figures suggests that goodwill and related accounting treatments significantly influence the reported financial position. While equity values broadly increase, the adjusted data points to a more cautious interpretation of equity strength until the marked increase in 2015. The ROE patterns indicate strong profitability through most of the period when goodwill is excluded, but with notable deterioration in the final year, which raises potential concerns about earnings sustainability or asset impairments impacting returns.

Total Assets

The reported total assets increased from 19,073 million US dollars in 2011 to a peak of 25,869 million in 2013, followed by a slight increase to 25,917 million in 2014, before declining significantly to 20,975 million in 2015. A similar pattern is observed in the adjusted total assets, which rose from 16,756 million in 2011 to 21,664 million in 2013 and 22,043 million in 2014, then decreased to 18,288 million in 2015. This suggests growth in asset base up to 2014 with a notable contraction in 2015.

Return on Assets (ROA)

The reported ROA showed a declining trend over the five-year period, starting at 11.66% in 2011 and gradually decreasing to 4.62% by 2015, with a low point in 2013 at 7.78%. The adjusted ROA, which excludes goodwill effects, followed a similar downward trajectory, although the values were consistently higher than the reported ROA. It started at 13.27% in 2011, declined to 9.29% in 2013, then slightly improved to 11.33% in 2014 before dropping sharply to 5.29% in 2015.

Insights

The asset base experienced growth for the first four years, indicating expansion or acquisition activity, but the reduction in 2015 points toward asset divestitures or write-downs. The decreasing ROA values over time imply diminishing profitability or efficiency in generating earnings from assets. The adjusted figures consistently show higher asset efficiency, indicating the impact of goodwill on reported returns. The sharp decline in both assets and ROA in 2015 suggests a period of financial challenges or restructuring.