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RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Tables) | 6 Months Ended
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Jun. 30, 2020
Accounting Changes and Error Corrections [Abstract] |
Schedule of Quantifying Prior Year Misstatements Corrected in Current Year Financial Statements | The following tables were previously presented in our 2019 Annual Report. See Note 19, Quarterly Financial Data (unaudited), to the consolidated financial statements in our 2019 Annual Report. Below, we have presented reconciliations from our prior periods as previously reported to the restated amounts for each of our condensed consolidated financial statements for the three and six months ended June 30, 2019. The amounts as previously reported were derived from our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 filed on July 30, 2019.
Baxter International Inc. |  |  |  |
Condensed Consolidated Statement of Income |  |  |  |
(in millions, except per share) |  |  |  |
| Three months ended June 30, 2019 |  |  |
| As previously reported | Restatement impacts | Restatement reference | As restated
Net sales | $ | 2,840 |  | $ | (6) |  | (e) | $ | 2,834 |
Cost of sales | 1,681 |  | — |  | (c)(e) | 1,681 |
Gross margin | 1,159 |  | (6) |  |  | 1,153 |
Selling, general and administrative expenses | 642 |  | (1) |  | (e) | 641 |
Research and development expenses | 166 |  | — |  |  | 166 |
Other operating income, net | (4) |  | — |  |  | (4) |
Operating income | 355 |  | (5) |  |  | 350 |
Interest expense, net | 20 |  | — |  |  | 20 |
Other (income) expense, net | (28) |  | 32 |  | (a)(b) | 4 |
Income before income taxes | 363 |  | (37) |  |  | 326 |
Income tax expense | 20 |  | (7) |  | (a)(c) | 13 |
Net income | $ | 343 |  | $ | (30) |  |  | $ | 313 |
Earnings per share |  |  |  |
Basic | $ | 0.67 |  | $ | (0.06) |  |  | $ | 0.61 |
Diluted | $ | 0.66 |  | $ | (0.06) |  |  | $ | 0.60 |
Weighted-average number of shares outstanding |  |  |  |
Basic | 510 |  | — |  |  | 510 |
Diluted | 519 |  | — |  |  | 519 |
(a) Foreign Currency Denominated Monetary Assets and Liabilities—The correction of these misstatements resulted in a decrease to other (income) expense, net of $26 million and a decrease to income tax expense of $5 million for the three months ended June 30, 2019. (b) Foreign Currency Derivative Contracts—The correction of these misstatements resulted in a decrease to other (income) expense, net of $6 million for the three months ended June 30, 2019. (c) Equipment Leased to Customers under Operating Leases—The correction of these misstatements resulted in an increase to cost of sales of $5 million and a decrease to income tax expense of $2 million for the three months ended June 30, 2019. (e) Translation of the Financial Position and Results of Operations of our Foreign Operations into U.S. Dollars—The correction of these misstatements resulted in decreases to net sales of $6 million, cost of sales of $5 million and selling, general and administrative (SG&A) expense of $1 million for the three months ended June 30, 2019.
Baxter International Inc. |  |  |
Condensed Consolidated Statement of Comprehensive Income |  |  |
(in millions) |  |  |
| Three months ended June 30, 2019 |  |
| As previously reported | Restatement impacts | As restated
Net income | $ | 343 |  | $ | (30) |  | $ | 313 |
Other comprehensive income (loss), net of tax: |  |  |
Currency translation adjustments | (78) |  | 80 |  | 2 |
Pension and other postretirement benefit plans | 13 |  | (7) |  | 6 |
Hedging activities | (12) |  | — |  | (12) |
Total other comprehensive loss, net of tax | (77) |  | 73 |  | (4) |
Comprehensive income | $ | 266 |  | $ | 43 |  | $ | 309 |
Baxter International Inc. |  |  |
Condensed Consolidated Statement of Comprehensive Income |  |  |
(in millions) |  |  |
| Six months ended June 30, 2019 |  |
| As previously reported | Restatement impacts | As restated
Net income | $ | 690 |  | $ | (35) |  | $ | 655 |
Other comprehensive income (loss), net of tax: |  |  |
Currency translation adjustments | (48) |  | (47) |  | (95) |
Pension and other postretirement benefit plans | 21 |  | (1) |  | 20 |
Hedging activities | (27) |  | — |  | (27) |
Total other comprehensive loss, net of tax | (54) |  | (48) |  | (102) |
Comprehensive income | $ | 636 |  | $ | (83) |  | $ | 553 |
Baxter International Inc. |  |  |  |  |  |  |  |  |  |
Condensed Consolidated Statement of Changes in Equity |  |  |  |  |  |  |  |  |  |
(in millions) |  |  |  |  |  |  |  |  |  |
| For the Three Months Ended June 30, 2019 |  |  |  |  |  |  |  |  |
| Baxter International Inc. stockholders' equity |  |  |  |  |  |  |  |  |
| Common stock shares | Common stock | Common stock shares in treasury | Common stock in treasury | Additional contributed capital | Retained earnings | Accumulated other comprehensive income (loss) | Total Baxter stockholders' equity | Noncontrolling interests | Total equity
As previously reported |  |  |  |  |  |  |  |  |  |
Balance as of April 1, 2019 | 683 |  | $ | 683 |  | 173 |  | $ | (10,284) |  | $ | 5,839 |  | $ | 15,970 |  | $ | (4,562) |  | $ | 7,646 |  | $ | 23 |  | $ | 7,669 |
Net income | — |  | — |  | — |  | — |  | — |  | 343 |  | — |  | 343 |  | — |  | 343 |
Other comprehensive income (loss) | — |  | — |  | — |  | — |  | — |  | — |  | (77) |  | (77) |  | — |  | (77) |
Purchases of treasury stock | — |  | — |  | 2 |  | (157) |  | 46 |  | — |  | — |  | (111) |  | — |  | (111) |
Stock issued under employee benefit plans and other | — |  | — |  | (2) |  | 119 |  | 21 |  | (17) |  | — |  | 123 |  | — |  | 123 |
Dividends declared on common stock | — |  | — |  | — |  | — |  | — |  | (112) |  | — |  | (112) |  | — |  | (112) |
Changes in noncontrolling interests | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |  | 1 |  | 1 |
Balance as of June 30, 2019 | 683 |  | $ | 683 |  | 173 |  | $ | (10,322) |  | $ | 5,906 |  | $ | 16,184 |  | $ | (4,639) |  | $ | 7,812 |  | $ | 24 |  | $ | 7,836 |
Restatement impacts |  |  |  |  |  |  |  |  |  |
Balance as of April 1, 2019 | — |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | (556) |  | $ | 480 |  | $ | (76) |  | $ | — |  | $ | (76) |
Net income | — |  | — |  | — |  | — |  | — |  | (30) |  | — |  | (30) |  | — |  | (30) |
Other comprehensive income (loss) | — |  | — |  | — |  | — |  | — |  | — |  | 73 |  | 73 |  | — |  | 73 |
Balance as of June 30, 2019 | — |  | $ | — |  | — |  | $ | — |  | $ | — |  | $ | (586) |  | $ | 553 |  | $ | (33) |  | $ | — |  | $ | (33) |
As restated |  |  |  |  |  |  |  |  |  |
Balance as of April 1, 2019 | 683 |  | $ | 683 |  | 173 |  | $ | (10,284) |  | $ | 5,839 |  | $ | 15,414 |  | $ | (4,082) |  | $ | 7,570 |  | $ | 23 |  | $ | 7,593 |
Net income | — |  | — |  | — |  | — |  | — | 313 |  | — |  | 313 |  | — |  | 313 |
Other comprehensive income (loss) | — |  | — |  | — |  | — |  | — |  | — |  | (4) |  | (4) |  | — |  | (4) |
Purchases of treasury stock | — |  | — |  | 2 |  | (157) |  | 46 |  | — |  | — |  | (111) |  | — |  | (111) |
Stock issued under employee benefit plans and other | — |  | — |  | (2) |  | 119 |  | 21 |  | (17) |  | — |  | 123 |  | — |  | 123 |
Dividends declared on common stock | — |  | — |  | — |  | — |  | — |  | (112) |  | — | (112) |  | — |  | (112) |
Changes in noncontrolling interests | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |  | 1 |  | 1 |
Balance as of June 30, 2019 | 683 |  | $ | 683 |  | 173 |  | $ | (10,322) |  | $ | 5,906 |  | $ | 15,598 |  | $ | (4,086) |  | $ | 7,779 |  | $ | 24 |  | $ | 7,803 |
See descriptions of the net income and other comprehensive income impacts in the condensed consolidated statement of income and condensed consolidated statement of comprehensive income for the three months ended June 30, 2019 sections above.
Baxter International Inc. |  |  |  |
Condensed Consolidated Statement of Cash Flows |  |  |  |
(in millions) |  |  |  |
| For the Six Months Ended June 30, 2019 |  |  |
| As previously reported | Restatement impacts | Restatement reference | As restated
Cash flows from operations |  |  |  |
Net income | $ | 690 |  | $ | (35) |  |  | $ | 655 |
Adjustments to reconcile net income to net cash from operating activities: |  |  |  |
Depreciation and amortization | 393 |  | (8) |  | (c)(f) | 385 |
Deferred income taxes | (55) |  | (8) |  | (c)(f) | (63) |
Stock compensation | 57 |  | — |  |  | 57 |
Net periodic pension benefit and other postretirement costs | 7 |  | — |  |  | 7 |
Intangible asset impairment | 31 |  | — |  |  | 31 |
Other | 34 |  | 10 |  | (d) | 44 |
Changes in balance sheet items: |  |  |  |
Accounts receivable, net | (60) |  | — |  |  | (60) |
Inventories | (91) |  | — |  |  | (91) |
Accounts payable and accrued liabilities | (303) |  | 4 |  | (b) | (299) |
Other | (86) |  | — |  | (e)(f) | (86) |
Cash flows from operations - continuing operations | 617 |  | (37) |  |  | 580 |
Cash flows from operations - discontinued operations | (6) |  | — |  |  | (6) |
Cash flows from operations | 611 |  | (37) |  |  | 574 |
Cash flows from investing activities |  |  |  |
Capital expenditures | (352) |  | 14 |  | (c) | (338) |
Acquisitions, net of cash acquired, and investments | (111) |  | — |  |  | (111) |
Other investing activities, net | 1 |  | — |  |  | 1 |
Cash flows from investing activities | (462) |  | 14 |  |  | (448) |
Cash flows from financing activities |  |  |  |
Issuances of debt | 1,661 |  | — |  |  | 1,661 |
Cash dividends on common stock | (198) |  | — |  |  | (198) |
Proceeds from stock issued under employee benefit plans | 262 |  | — |  |  | 262 |
Purchases of treasury stock | (720) |  | — |  |  | (720) |
Other financing activities, net | (37) |  | — |  |  | (37) |
Cash flows from financing activities | 968 |  | — |  |  | 968 |
Effect of foreign exchange rate changes on cash and cash equivalents | (24) |  | 26 |  | (a)(d)(e) | 2 |
Increase (decrease) in cash and cash equivalents | 1,093 |  | 3 |  |  | 1,096 |
Cash and cash equivalents at beginning of period | 1,832 |  | 6 |  | (e) | 1,838 |
Cash and cash equivalents at end of period | $ | 2,925 |  | $ | 9 |  | (e) | $ | 2,934 |
The $35 million decrease to net income was driven by the items described above in the condensed consolidated statement of income for the six months ended June 30, 2019 section. (a) Foreign Currency Denominated Monetary Assets and Liabilities—The correction of these misstatements resulted in an increase to the effect of foreign exchange rate changes on cash and cash equivalents of $33 million for the six months ended June 30, 2019. (b) Foreign Currency Derivative Contracts—The correction of these misstatements resulted in an increase to changes in accounts payable and accrued liabilities of $4 million for the six months ended June 30, 2019. (c) Equipment Leased to Customers under Operating Leases—The correction of these misstatements resulted in decreases to depreciation and amortization of $7 million, deferred income taxes of $2 million and capital expenditures of $14 million for the six months ended June 30, 2019. (d) Classification of Foreign Currency Gains and Losses in our Consolidated Statements of Cash Flows—The corrections of these misstatements resulted in a decrease to the effect of foreign exchange rate changes on cash and cash equivalents and an increase to other adjustments to reconcile net income to net cash from operating activities of $10 million for the six months ended June 30, 2019. (e) Translation of the Financial Position and Results of Operations of our Foreign Operations into U.S. Dollars—The corrections of these misstatements resulted in an increase in cash and cash equivalents at the beginning of the period of $6 million, at the end of the period of $9 million and the effect of foreign exchange rate changes on cash and cash equivalents of $3 million and a decrease to other changes in balance sheet items of $1 million for the six months ended June 30, 2019. (f) Other miscellaneous adjustments—The correction of these misstatements resulted in decreases to depreciation and amortization of $1 million and deferred income taxes of $6 million and an increase to other changes in balance sheet items of $1 million for the six months ended June 30, 2019.

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- Definition Tabular disclosure of the nature and amount of prior period errors that had previously been considered immaterial and which are being corrected in the current fiscal year. This disclosure would also generally include when and how each error being corrected arose and assert that the errors were immaterial to the prior amounts reported. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 1.N) -URI http://asc.fasb.org/extlink&oid=112272810&loc=d3e30840-122693 + Details
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