Baxter Reports Record Sales, Earnings and Cash Flow for Full-Year 2012

  Baxter Reports Record Sales, Earnings and Cash Flow for Full-Year 2012   Increased Investments in R&D and Business Development Set Strong Foundation                              for 2013 and Beyond                    Baxter Provides Financial Outlook For 2013  Business Wire  DEERFIELD, Ill. -- January 24, 2013  Baxter International Inc. (NYSE:BAX) today announced financial results for the fourth quarter of 2012, and provided its financial outlook for the first quarter and full-year 2013.  Baxter reported net income in the fourth quarter of $494 million, which compares to $463 million reported in the prior-year period. Earnings per diluted share of $0.89 compares to $0.82 per diluted share reported in the fourth quarter of 2011, reflecting an increase of 9 percent. The fourth quarter 2012 results included special after-tax items of $206 million (or $0.37 per diluted share) primarily related to costs associated with settlement of certain U.S. pension obligations and business optimization initiatives. After-tax special items in the fourth quarter of 2011 totaled approximately $200 million (or $0.35 per diluted share).  On an adjusted basis, excluding special items in both periods, Baxter’s net income of $700 million increased 6 percent in the fourth quarter from $662 million in the prior-year period. Adjusted earnings per diluted share of $1.26 advanced 8 percent from $1.17 per diluted share reported in the fourth quarter of 2011. These results were in line with the company’s previously issued earnings guidance of $1.24 to $1.27 per diluted share.  Worldwide revenues grew 4 percent in the fourth quarter to $3.8 billion compared to $3.6 billion in the fourth quarter of 2011. Excluding the impact of foreign currency, sales increased 5 percent. Sales within the United States of $1.6 billion advanced 7 percent, and international sales increased 2 percent to $2.2 billion (or 4 percent excluding the impact of foreign currency).  BioScience revenues totaled $1.7 billion and rose 7 percent (or 9 percent excluding the impact of foreign currency) from the same period last year. Driving this performance was robust growth in demand, particularly in the United States, for ADVATE [Antihemophilic Factor (Recombinant), Plasma/Albumin-Free Method], and GAMMAGARD LIQUID [Immune Globulin Intravenous (Human)], as well as other plasma-based therapeutics including FEIBA, an inhibitor bypass therapy, and albumin. In addition, the company benefited from milestone payments related to the company’s ongoing collaborations with governments on the development of influenza vaccines, and the acquisition of Synovis Life Technologies.  Medical Products sales totaled $2.1 billion and increased 2 percent over the prior-year period (or 3 percent excluding the impact of foreign currency), driven primarily by gains in peritoneal dialysis patients in the U.S., as well as growth in intravenous therapies (including the company’s parenteral nutrition products), certain injectable drugs including oncolytics and critical care products, and a benefit from the company’s acquisition of Baxa Corporation.  Full-Year 2012 Results  For the full year 2012, Baxter reported net income of $2.3 billion or $4.18 per diluted share, compared to net income of $2.2 billion or $3.88 per diluted share in 2011. On an adjusted basis, excluding special items in both years, Baxter’s net income was $2.5 billion in 2012, which represents an increase of 2 percent over the prior year, and earnings per diluted share of $4.53 rose 5 percent from earnings per diluted share of $4.31 reported in 2011.  Baxter’s worldwide sales totaled $14.2 billion for full-year 2012 and increased 2 percent versus the prior-year period (or 5 percent excluding the impact of foreign currency). Sales within the United States of $6.1 billion advanced 6 percent in 2012, and international sales declined 1 percent to $8.1 billion (but increased 4 percent excluding the impact of foreign currency). BioScience sales improved 3 percent (or 6 percent excluding the impact of foreign currency) to $6.2 billion, while Medical Products sales increased 1 percent to $8.0 billion (or 4 percent excluding the impact of foreign currency).  Baxter generated strong cash flows from operations in 2012 and returned significant value to shareholders in the form of dividends and share repurchases. Cash flows from operations rose 10 percent and totaled more than $3.1 billion in 2012, a record level. Baxter returned approximately $2.3 billion to shareholders during the year, through dividends totaling $800 million and share repurchases of approximately $1.5 billion (or approximately 25 million shares).  At the same time, Baxter increased its investments in research and development to $1.2 billion, reflecting an increase of 22 percent, as the company advanced a number of clinical programs in its pipeline, expanded its portfolio with several product launches and line extensions, and initiated several new programs and collaborations. In addition, Baxter announced investments to enhance future plasma production capacity with a new state-of-the-art manufacturing facility in Georgia and a collaboration with Stichting Sanquin Bloedvoorziening (Sanquin Blood Supply Foundation) in the Netherlands to support growth of its plasma-based treatments. The company also entered into a number of partnerships, such as a novel public-private partnership in Brazil to expand patient access to vital hemophilia therapies, and executed several business development initiatives to enhance future growth, including the proposed acquisition of Gambro AB, a global medical technology company focused on developing, manufacturing and supplying dialysis products and therapies for patients with acute or chronic kidney disease.  ''The progress we have made during 2012, together with our solid financial performance, sets a very strong foundation for 2013 and beyond. We remain very confident in the long-term growth prospects for our company,'' said Robert L. Parkinson, Jr., chairman and chief executive officer. ''Baxter’s core portfolio continues to benefit from our focus on life-saving therapies, and the increased level of R&D investment has transformed our new product pipeline into a robust portfolio of products and therapies directed at improving the quality of care while addressing key, high-potential areas of unmet medical need. We’ve also entered into a number of partnerships and executed business development initiatives that align with our core strengths, position Baxter for future success, and enhance shareholder value.''  Recent achievements reflecting these priorities include the following:    *Announcement of pivotal Phase III study results evaluating the efficacy     and safety of routine prophylaxis compared to on-demand treatment of FEIBA     NF [Anti-Inhibitor Coagulant Complex], Nanofiltered and Vapor Heated, in     patients with hemophilia A or B that develop inhibitors. Top-line results     from the study showed a reduced median annual bleed rate from 28.7 during     FEIBA NF on-demand treatment to 7.9 during FEIBA NF prophylactic treatment     (a 72.5 percent reduction). The Phase III study will form the basis of a     biologics license application to be filed with the U.S. Food and Drug     Administration (FDA) in the first quarter of 2013.   *Submission of an Investigational New Drug application for hemophilia A     treatment BAX 855 with the FDA, following positive results from a Phase I     trial. BAX 855 is a full-length longer-acting recombinant factor VIII     (rFVIII) that was developed to increase the half-life of ADVATE     [Antihemophilic Factor (Recombinant) Plasma/Albumin-Free Method] – the     most widely chosen rFVIII in the world. Baxter expects to start enrollment     of adult patients in its Phase II/III study in the first quarter of 2013.   *Execution of an exclusive 20-year partnership with Hemobrás (Empresa     Brasileira de Hemoderivados e Biotechnologia) to provide hemophilia     patients in Brazil greater access to recombinant factor VIII (rFVIII)     therapy for the treatment of hemophilia A.Hemophilia A is a genetic     condition in which the body does not produce enough clotting protein     factor VIII. It is estimated that more than 10,000 people in Brazil are     living with hemophilia A, and today the vast majority are treated with     plasma-derived FVIII therapy. Through this innovative partnership, Baxter     will be the exclusive provider of Brazil's recombinant FVIII treatment     over the next 10 years while the companies work together on a technology     transfer to support development of local manufacturing capacity by     Hemobrás.   *Completion of the first U.S. study of the company’s home hemodialysis     system and initiation of a nocturnal in-center trial in Canada. Data from     both trials will support the company’s submission for CE Mark in Europe in     2013.   *Conclusion of Baxter's first Phase III trial evaluating IG therapy in mild     to moderate Alzheimer's disease patients. Initial data from the trial are     expected to bereleased in the second quarter of 2013, and the company     continues enrollment in a second, confirmatory Phase III trial.  Outlook for First Quarter, Full-Year 2013  Baxter also announced today its outlook for the first quarter and full-year 2013. The company’s full-year guidance includes the impact of the Gambro AB acquisition, which is projected to close at the end of the second quarter and dilute full-year 2013 earnings by $0.10 to $0.15 per diluted share. Including Gambro, Baxter’s guidance reflects sales growth for the full-year 2013 of approximately 10 percent, before the impact of foreign exchange. Also, for the full year, Baxter expects earnings of $4.60 to $4.70 per diluted share, before any special items, and cash flows from operations of approximately $3.3 billion.  For the first quarter of 2013, the company expects sales growth of approximately 2 to 3 percent, excluding the impact of foreign currency. Baxter expects earnings of $1.03 to $1.05 per diluted share in the first quarter, before any special items.  A webcast of Baxter’s fourth quarter conference call for investors can be accessed live from a link on the company's website at www.baxter.com beginning at 7:30 a.m. CST on January 24, 2013. Please visit www.baxter.com for more information regarding this and future investor events and webcasts.  Baxter International Inc., through its subsidiaries, develops, manufactures and markets products that save and sustain the lives of people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. As a global, diversified healthcare company, Baxter applies a unique combination of expertise in medical devices, pharmaceuticals and biotechnology to create products that advance patient care worldwide.  This release includes forward-looking statements concerning the company’s financial results, business development activities, R&D pipeline and outlook for 2013. The statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those in the forward-looking statements: demand for and market acceptance risks for new and existing products, such as ADVATE, and other technologies; future actions of regulatory bodies and other governmental authorities that could delay, limit or suspend product development, manufacturing or sales or result in sanctions; product quality or patient safety concerns leading to product recalls, withdrawals, launch delays, litigation, or declining sales; the ability of the company to obtain required regulatory approvals, satisfy closing conditions and close the Gambro AB transaction in a timely manner; future actions of governmental authorities and other third parties as U.S. healthcare reform legislation and other austerity measures are implemented globally; additional legislation, regulation and other governmental pressures, which may affect pricing, taxation, reimbursement and rebate policies of government agencies and private payers or other elements of the company’s business; product development risks, including satisfactory clinical performance; the company's ability to realize the anticipated benefits from its business development and R&D activities; inventory reductions or fluctuations in buying patterns by wholesalers or distributors; the impact of geographic and product mix on the company's sales; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; the availability of acceptable raw materials and component supply; fluctuations in supply and demand and the pricing of plasma-based therapies; the ability to enforce company patents; patents of third parties preventing or restricting the company’s manufacture, sale or use of affected products or technology; the impact of global economic conditions on Baxter and its customers, including foreign governments in certain countries in which the company operates; foreign currency fluctuations and other risks identified in the company’s most recent filing on Form 10-K and other Securities and Exchange Commission filings, all of which are available on the company's website. The company does not undertake to update its forward-looking statements. Financial schedules are attached to this release and available on the company’s website.                                                BAXTER INTERNATIONAL INC. Consolidated Statements of Income Three Months Ended December 31, 2012 and 2011 (unaudited) (in millions, except per share and percentage data)                                                 Three Months Ended                                                December 31,                                                2012        2011      Change                                                                       NET SALES                                      $3,753      $3,594    4%                                                                       COST OF SALES                                  1,848       1,829     1%                                                                GROSS MARGIN                                  1,905      1,765    8% % of Net Sales                                 50.8%       49.1%     1.7 pts                                                                       MARKETING AND ADMINISTRATIVE EXPENSES          1,040       886       17% % of Net Sales                                 27.7%       24.7%     3.0 pts                                                                       RESEARCH AND DEVELOPMENT EXPENSES              291         254       15% % of Net Sales                                 7.8%        7.1%      0.7 pts                                                                       NET INTEREST EXPENSE                           22          15        47%                                                                       OTHER (INCOME) EXPENSE, NET                    (22)    ^A  71     ^A N/M                                                                PRE-TAX INCOME                                574        539      6%                                                                       INCOME TAX EXPENSE                            80         76       5% % of Pre-Tax Income                            13.9%       14.1%     (0.2 pts)                                                                       NET INCOME                                    $494       $463     7%                                                                       BASIC EPS                                     $0.90      $0.82    10% DILUTED EPS                                   $0.89      $0.82    9%                                                                       WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic                                          548         562 Diluted                                       555        566                                                                             ADJUSTED PRE-TAX INCOME (excluding special     $894    ^B  $834   ^B 7% items) ADJUSTED NET INCOME (excluding special         $700    ^B  $662   ^B 6% items) ADJUSTED DILUTED EPS (excluding special        $1.26   ^B  $1.17  ^B 8% items)           Other (income) expense, net includes the net results attributable to      noncontrolling interests, which had been reported separately in the prior      year. The prior period consolidated statement of income presented above, ^A   the reconciliation of GAAP (generally accepted accounting principles) to      non-GAAP measures presented on page 9, and the cash flows from operations      schedule presented on page 12 have been conformed to the current period      presentation.       ^B   Refer to page 9 for a description of the adjustments and a reconciliation      to GAAP measures.                                                                BAXTER INTERNATIONAL INC. Note to Consolidated Statements of Income Three Months Ended December 31, 2012 and 2011 Description of Adjustments and Reconciliation of GAAP to Non-GAAP Measures (unaudited) (in millions, except per share and percentage data)  The company's GAAP results for the three months ended December 31, 2012 and 2011 included special items which impacted the GAAP measures as follows:                                                                                                             Three Months Ended                                         December 31,                                         2012          2011         Change Gross Margin                            $1,905        $1,765       8% Business optimization items ^ 1         62           95           Adjusted Gross Margin                   $1,967       $1,860      6% % of Net Sales                          52.4%         51.8%        0.6 pts                                                                     Marketing and Administrative            $1,040        $886         17% Expenses Business optimization items ^1          (60)          (97) Pension settlement items ^ 2            (170)         - Asset impairment and other items ^      -            (41)         3 Adjusted Marketing and                  $810         $748        8% Administrative Expenses % of Net Sales                          21.6%         20.8%        0.8 pts                                                                     Research and Development Expenses       $291          $254         15% Business optimization items ^ 1         (28)         -            Adjusted Research and Development       $263         $254        4% Expenses % of Net Sales                          7.0%          7.1%         (0.1 pts)                                                                     Other (Income) Expense, Net             $(22)         $71          N/M Asset impairment and other items ^      -            (62)         3 Adjusted Other (Income) Expense,        $(22)        $9          N/M Net                                                                     Pre-Tax Income                          $574          $539         6% Impact of special items                 320          295          Adjusted Pre-Tax Income                 $894         $834        7%                                                                     Income Tax Expense                      $80           $76          5% Impact of special items                 114          96           Adjusted Income Tax Expense             $194         $172        13% % of Adjusted Pre-Tax Income            21.7%         20.6%        1.1 pts                                                                     Net Income                              $494          $463         7% Impact of special items                 206          199          Adjusted Net Income                     $700         $662        6%                                                                     Diluted EPS                             $0.89         $0.82        9% Impact of special items                 0.37         0.35         Adjusted Diluted EPS                    $1.26        $1.17       8%                                                                     WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Diluted                                555          566                    The company undertook business optimization initiatives resulting in ^1   charges totaling $150 million ($101 million, or $0.18 per diluted share,      on an after-tax basis) and $192 million ($128 million, or $0.22 per      diluted share, on an after-tax basis) in 2012 and 2011, respectively.            Marketing and administrative expenses in 2012 included a charge totaling ^2   $170 million ($105 million, or $0.19 per diluted share, on an after-tax      basis) primarily related to the settlement of certain pension obligations      in the United States.            Marketing and administrative expenses and other (income) expense, net in      2011 included charges totaling $103 million ($71 million, or $0.13 per ^3   diluted share, on an after-tax basis) primarily related to a contribution      to the Baxter International Foundation and the write-down of Greek      government bonds.       For more information on the company's use of non-GAAP financial measures in this press release, please see the company's Current Report on Form 8-K filed with the Securities and Exchange Commission on the date of this press release.                                               BAXTER INTERNATIONAL INC. Consolidated Statements of Income Twelve Months Ended December 31, 2012 and 2011 (unaudited) (in millions, except per share and percentage data)                                                                                                                      Twelve Months Ended                                               December 31,                                               2012        2011       Change                                                                       NET SALES                                     $14,190     $13,893    2%                                                                       COST OF SALES                                 6,889       6,847      1%                                                                GROSS MARGIN                                 7,301      7,046     4% % of Net Sales                                51.5%       50.7%      0.8 pts                                                                       MARKETING AND ADMINISTRATIVE EXPENSES         3,324       3,154      5% % of Net Sales                                23.4%       22.7%      0.7 pts                                                                       RESEARCH AND DEVELOPMENT EXPENSES             1,156       946        22% % of Net Sales                                8.1%        6.8%       1.3 pts                                                                       NET INTEREST EXPENSE                          87          54         61%                                                                       OTHER (INCOME) EXPENSE, NET                   (155)    ^A 115     ^A N/M                                                                PRE-TAX INCOME                               2,889      2,777     4%                                                                       INCOME TAX EXPENSE                           563        553       2% % of Pre-Tax Income                           19.5%       19.9%      (0.4 pts)                                                                       NET INCOME                                   $2,326     $2,224    5%                                                                       BASIC EPS                                    $4.22      $3.91     8% DILUTED EPS                                  $4.18      $3.88     8%                                                                       WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic                                         551         569 Diluted                                      556        573                                                                              ADJUSTED PRE-TAX INCOME (excluding special    $3,223   ^B $3,151  ^B 2% items) ADJUSTED NET INCOME (excluding special        $2,516   ^B $2,471  ^B 2% items) ADJUSTED DILUTED EPS (excluding special       $4.53    ^B $4.31   ^B 5% items)           Other (income) expense, net includes the net results attributable to      noncontrolling interests, which had been reported separately in the prior ^A   year. The prior period consolidated statement of income presented above,      the reconciliation of GAAP to non-GAAP measures presented on page 11, and      the cash flows from operations schedule presented on page 12 have been      conformed to the current period presentation.       ^B   Refer to page 11 for a description of the adjustments and a      reconciliation to GAAP measures.                                                                  BAXTER INTERNATIONAL INC. Note to Consolidated Statements of Income Twelve Months Ended December 31, 2012 and 2011 Description of Adjustments and Reconciliation of GAAP to Non-GAAP Measures (unaudited) (in millions, except per share and percentage data)  The company's GAAP results for the twelve months ended December 31, 2012 and 2011 included special items which impacted the GAAP measures as follows:                                                                                                            Twelve Months Ended                                          December 31,                                          2012           2011         Change Gross Margin                             $7,301         $7,046       4% Business optimization items ^ 1          62             95 Reserve adjustments ^2                   (23)           - Business development items ^ 3           6             -            Adjusted Gross Margin                    $7,346        $7,141      3% % of Net Sales                           51.8%          51.4%        0.4 pts                                                                       Marketing and Administrative             $3,324         $3,154       5% Expenses Business optimization items ^ 1          (60)           (97) Business development items ^ 3           (9)            - Pension settlement items ^ 4             (170)          - AWP litigation and historical rebate     -              (79) and discount items  ^5 Asset impairment and other items ^ 6     -             (41)         Adjusted Marketing and                   $3,085        $2,937      5% Administrative Expenses % of Net Sales                           21.7%          21.1%        0.6 pts                                                                       Research and Development Expenses        $1,156         $946         22% Business optimization items ^ 1          (28)           - Business development items ^ 3           (113)         -            Adjusted Research and Development        $1,015        $946        7% Expenses % of Net Sales                           7.2%           6.8%         0.4 pts                                                                       Other (Income) Expense, Net              $(155)         $115         N/M Reserve adjustments ^2                   91             - Asset impairment and other items ^ 6     -             (62)         Adjusted Other (Income) Expense, Net     $(64)         $53         N/M                                                                       Pre-Tax Income                           $2,889         $2,777       4% Impact of special items                  334           374          Adjusted Pre-Tax Income                  $3,223        $3,151      2%                                                                       Income Tax Expense                       $563           $553         2% Impact of special items                  144           127          Adjusted Income Tax Expense              $707          $680        4% % of Adjusted Pre-Tax Income             21.9%          21.6%        0.3 pts                                                                       Net Income                               $2,326         $2,224       5% Impact of special items                  190           247          Adjusted Net Income                      $2,516        $2,471      2%                                                                       Diluted EPS                              $4.18          $3.88        8% Impact of special items                  0.35          0.43         Adjusted Diluted EPS                     $4.53         $4.31       5%                                                                       WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Diluted                                 556           573                    The company undertook business optimization initiatives resulting in ^1   charges totaling $150 million ($101 million, or $0.18 per diluted share,      on an after-tax basis) and $192 million ($128 million, or $0.22 per      diluted share, on an after-tax basis) in 2012 and 2011, respectively.            Cost of sales included a net benefit of $23 million ($27 million, or      $0.05 per diluted share, on an after-tax basis) primarily related to an      adjustment to the COLLEAGUE infusion pump reserves when the company      substantially completed its recall activities in the United States in ^2   2012. Other (income) expense, net in 2012 included a benefit of $91      million, or $0.16 per diluted share, consisting of gains of $53 million      and $38 million for the reduction of certain contingent payment      liabilities related to the prior acquisitions of Prism Pharmaceuticals,      Inc. (Prism) and ApaTech Limited, respectively, for which there was no      tax expense recognized.            The company incurred business development charges in 2012 totaling $128      million ($102 million, or $0.19 per diluted share, on an after-tax basis)      which principally related to R&D charges of $33 million associated with ^3   the company’s global collaboration with Momenta Pharmaceuticals, Inc.      (Momenta), $30 million associated with the company's global collaboration      with Chatham Therapeutics, LLC (Chatham), and $50 million associated with      the company's licensing agreement with Onconova Therapeutics, Inc.      (Onconova).            Marketing and administrative expenses in 2012 included a charge totaling ^4   $170 million ($105 million, or $0.19 per diluted share, on an after-tax      basis) primarily related to the settlement of certain pension obligations      in the United States.            Marketing and administrative expenses in 2011 included a charge totaling      $79 million ($48 million, or $0.09 per diluted share, on an after-tax ^5   basis) related to the resolution of litigation pertaining to average      wholesale prices (AWP) and certain historical rebate and discount      adjustments.            Marketing and administrative expenses and other (income) expense, net in      2011 included charges totaling $103 million ($71 million, or $0.12 per ^6   diluted share, on an after-tax basis) primarily related to a contribution      to the Baxter International Foundation and the write-down of Greek      government bonds.       For more information on the company's use of non-GAAP financial measures in this press release, please see the company's Current Report on Form 8-K filed with the Securities and Exchange Commission on the date of this press release.                                   BAXTER INTERNATIONAL INC. Cash Flows from Operations and Changes in Net Debt (unaudited) ($ in millions)                                                                    Cash Flows from Operations                                           (Brackets denote cash outflows)   Three Months Ended    Twelve Months Ended                                  December 31,          December 31,                                   2012        2011      2012        2011                                                                              Net income                        $494        $463      $2,326      $2,224 Adjustments     Depreciation and              178         167       712         670     amortization     Deferred income taxes         (214)       (46)      (17)        172     Stock compensation            33          25        130         119     Realized excess tax     benefits from stock issued     under employee benefit        (10)        (4)       (24)        (21)     plans     Business optimization items   150         192       150         192     Asset impairment and other    -           103       -           182     items     Other                         5           17        (42)        64 Changes in balance sheet items     Accounts and other current    (113)       (127)     (41)        (229)     receivables, net     Inventories                   7           (43)      (129)       (315)     Accounts payable and          300         188       18          98     accrued liabilities     Infusion pump and business    (57)        (89)      (283)       (347)     optimization payments    Other                        172     ^A  46       306      ^A 8       ^A Cash flows from operations       $945       $892     $3,106     $2,817                                                                      Changes in Net Debt                                                  Increase (decrease)               Three Months Ended    Twelve Months Ended                                   December 31,          December 31,                                   2012        2011      2012        2011                                                                              Net debt, beginning of period     $2,756      $2,204    $2,290      $1,702                                                                              Cash flows from operations        (945)       (892)     (3,106)     (2,817) Capital expenditures              399         317       1,161       960 Dividends                         246         175       804         709 Proceeds from stock issued        (195)       (39)      (488)       (427) under employee benefit plans Purchases of treasury stock       415         170       1,480       1,583 Acquisitions and investments      20          361    ^B 605      ^B 590     ^B Divestiture and other investing   (21)        (17)      (107)       (123) activities Other, including the effect of   (15)       11       21         113      exchange rate changes (Decrease) increase in net debt  (96)       86       370        588                                                                                   Net debt, December 31            $2,660     $2,290   $2,660     $2,290                                                                      Key statistics, December 31: Days sales outstanding            53.3        53.5      53.3        53.5 Inventory turns                  2.5        2.7      2.5        2.7                Other changes in balance sheet items included the pension settlement      charge of $170 million primarily related to the settlement of certain ^A   pension obligations in the United States in 2012 and the discretionary      contribution of $150 million to the company's pension plan in the United      States in 2011.            Acquisitions and investments in 2012 and 2011 included $100 million for      the third quarter 2012 investment in Onconova preferred stock and      execution of a licensing agreement, $90 million for the second quarter      2012 exercise of the company's option to acquire the remaining equity      interest in Sigma International General Medical Apparatus, LLC, $30 ^B   million related to the second quarter 2012 collaboration with Chatham,      $304 million for the first quarter 2012 acquisition of Synovis Life      Technologies, Inc., $33 million for the first quarter 2012 payment to      execute the Momenta collaboration, $360 million for the fourth quarter      2011 acquisition of Baxa Corporation, and $170 million for the second      quarter 2011 acquisition of Prism.                                                                                   BAXTER INTERNATIONAL INC. Net Sales Periods Ending December 31, 2012 and 2011 (unaudited) ($ in millions)                                                                                                                %        % Growth                               %        % Growth                    Q4       Q4       Growth   @                  YTD       YTD       Growth   @                                       @                                               @                2012    2011    Actual  Constant      2012     2011     Actual  Constant                                       Rates    Rates                                  Rates    Rates                                                                          BioScience United States       $825     $735     12%      12%                $3,087    $2,805    10%      10% International    862     840     3%      6%            3,150    3,248    (3%)    2% Total            $1,687  $1,575  7%      9%            $6,237   $6,053   3%      6% BioScience                                                                          Medical Products United States       $747     $731     2%       2%                 $2,969    $2,904    2%       2% ^1 International    1,319   1,288   2%      3%            4,984    4,936    1%      4% ^1 Total Medical    $2,066  $2,019  2%      3%            $7,953   $7,840   1%      4% Products ^1                                                                          Baxter International Inc. United States       $1,572   $1,466   7%       7%                 $6,056    $5,709    6%       6% International    2,181   2,128   2%      4%            8,134    8,184    (1%)    4% Total Baxter     $3,753  $3,594  4%      5%            $14,190  $13,893  2%      5%           Includes revenues associated with manufacturing, distribution and other      services provided by the company to the buyer of the Transfusion ^1   Therapies (TT) business after the February 2007 divestiture, which had      previously been reported separately. The prior periods have been recast      to conform to the current period presentation.                                                                                  BAXTER INTERNATIONAL INC. Key Product Line Sales Periods Ending December 31, 2012 and 2011 (unaudited) ($ in millions)                                                                                                              %        % Growth                               %        % Growth                   Q4       Q4       Growth   @                  YTD       YTD       Growth   @                                      @                                               @               2012    2011    Actual  Constant      2012     2011     Actual  Constant                                      Rates    Rates                                  Rates    Rates                                                                         BioScience Recombinants       $581     $578     1%       3%                 $2,234    $2,212    1%       4% Antibody           425      406      5%       5%                 1,593     1,541     3%       5% Therapy Plasma             447      397      13%      13%                1,464     1,440     2%       4% Proteins Regenerative       180      150      20%      21%                673       580       16%      19% Medicine Other  ^1       54      44      23%     30%           273      280      (3%)    5% Total           $1,687  $1,575  7%      9%            $6,237   $6,053   3%      6% BioScience                                                                         Medical Products Renal              $675     $664     2%       2%                 $2,527    $2,530    0%       2% Global             522      487      7%       8%                 2,075     2,004     4%       5% Injectables IV Therapies       500      469      7%       8%                 1,930     1,802     7%       10% Infusion           210      235      (11%)    (11%)              813       901       (10%)    (9%) Systems Anesthesia         140      147      (5%)     (5%)               545       537       1%       3% Other ^2        19      17      12%     0%            63       66       (5%)    (9%) Total Medical         $2,066  $2,019  2%      3%            $7,953   $7,840   1%      4% Products ^2                                                                         Total Baxter    $3,753  $3,594  4%      5%            $14,190  $13,893  2%      5%      ^1   Principally includes vaccines and sales of plasma to third parties.            Includes revenues associated with manufacturing, distribution and other      services provided by the company to the buyer of the TT business after ^2   the February 2007 divestiture, which had previously been reported      separately. The prior periods have been recast to conform to the current      period presentation.                                                                                                              BAXTER INTERNATIONAL INC. Key Product Line Sales by U.S. and International Three-Month Periods Ending December 31, 2012 and 2011 (unaudited) ($ in millions)                                                                                                                      Q4 2012                              Q4 2011                              % Growth               U.S.    International  Total       U.S.    International  Total       U.S.   International  Total BioScience Recombinants       $268     $313            $581             $246     $332            $578             9%      (6%)            1% Antibody           317      108             425              290      116             406              9%      (7%)            5% Therapy Plasma             121      326             447              106      291             397              14%     12%             13% Proteins Regenerative       102      78              180              81       69              150              26%     13%             20% Medicine Other ^ 1       17      37             54          12      32             44          42%    16%            23% Total           $825    $862           $1,687      $735    $840           $1,575      12%    3%             7% BioScience                                                                                                    Medical Products Renal              $109     $566            $675             $96      $568            $664             14%     0%              2% Global             252      270             522              232      255             487              9%      6%              7% Injectables IV Therapies       182      318             500              166      303             469              10%     5%              7% Infusion           114      96              210              137      98              235              (17%)   (2%)            (11%) Systems Anesthesia         78       62              140              92       55              147              (15%)   13%             (5%) Other ^2        12      7              19          8       9              17          50%    (22%)          12% Total Medical         $747    $1,319         $2,066      $731    $1,288         $2,019      2%     2%             2% Products ^ 2                                                                                                    Total Baxter    $1,572  $2,181         $3,753      $1,466  $2,128         $3,594      7%     2%             4%      ^1   Principally includes vaccines and sales of plasma to third parties.            Includes revenues associated with manufacturing, distribution and other      services provided by the company to the buyer of the TT business after ^2   the February 2007 divestiture, which had previously been reported      separately. The prior period has been recast to conform to the current      period presentation.  Contact:  Baxter International Inc. Media Contact: Deborah Spak, (224) 948-2349 or Investor Contacts: Mary Kay Ladone, (224) 948-3371 Clare Trachtman, (224) 948-3085  
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