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Baxter Reports Solid Second Quarter Financial Results



  Baxter Reports Solid Second Quarter Financial Results

   Q2 Earnings Exceed Guidance and Company Confirms Full-Year Expectations

Business Wire

DEERFIELD, Ill. -- July 18, 2013

Baxter International Inc. (NYSE:BAX) today announced solid financial results
for the second quarter, with earnings that exceeded the company’s previously
issued guidance, and confirmed its full-year 2013 financial outlook.

For the second quarter, Baxter reported net income of $590 million and
earnings per diluted share of $1.07, compared to net income of $661 million
and earnings per diluted share of $1.19 in the same period last year. Second
quarter 2013 results include after-tax special items totaling $49 million (or
$0.09 per diluted share) primarily for costs associated with Baxter’s planned
acquisition of Gambro AB. Second quarter 2012 results included a net after-tax
benefit from special items totaling $42 million of income (or $0.07 per
diluted share).

On an adjusted basis, excluding special items in both periods, Baxter’s second
quarter net income of $639 million increased 3 percent from $619 million
reported in 2012. Adjusted earnings per diluted share of $1.16 rose 4 percent
from $1.12 per diluted share last year, exceeding the company’s previously
issued earnings guidance of $1.12 to $1.14 per diluted share.

Worldwide sales totaled $3.7 billion and increased 3 percent from prior-year
levels. Excluding the impact of foreign currency, worldwide sales rose 4
percent. Sales within the United States advanced 3 percent to $1.5 billion,
and international sales of $2.1 billion also increased 3 percent. Excluding
foreign currency, international sales grew 4 percent.

BioScience revenues of $1.6 billion increased 5 percent from the prior-year
period. Excluding the impact of foreign currency, BioScience sales rose 6
percent driven primarily by improved demand for the company’s hemophilia
therapies, including ADVATE [Antihemophilic Factor (Recombinant),
Plasma/Albumin-Free Method] and FEIBA (an inhibitor therapy), as well as
accelerated growth of select specialty plasma-based therapeutics and vaccines.

Medical Products sales of $2.0 billion increased 1 percent from the prior-year
period, and excluding the impact of foreign currency, sales grew 2 percent.
This performance was driven primarily by gains in peritoneal dialysis
patients, as well as growth of certain injectable therapies and anesthesia
products.

Six-Month Results

For the first six months of 2013, Baxter reported net income of $1.1 billion,
or $2.07 per diluted share. Excluding special items, Baxter’s adjusted net
income for the six-month period increased 3 percent to $1.2 billion, and
earnings per diluted share of $2.22 grew 4 percent from $2.13 per diluted
share reported in the comparable prior-year period.

Baxter’s worldwide sales for the six-month period totaled $7.1 billion and
increased 2 percent, and excluding the impact of foreign currency, sales rose
3 percent. BioScience sales of $3.2 billion advanced 5 percent (and excluding
foreign currency sales also increased 5 percent), while Medical Products sales
of $3.9 billion were comparable to the prior-year period (and excluding
foreign currency sales increased 1 percent).

During the first half of 2013, Baxter generated cash flows from operations of
approximately $1.1 billion and returned significant value to shareholders. On
a year-to-date basis, Baxter has returned over $1.2 billion to shareholders
through share repurchases of $717 million (or approximately 10 million shares)
and dividends totaling $490 million, reflecting more than a 30 percent
increase in dividend payments versus the prior-year period.

''Baxter’s financial results reflect the benefits of our diversified
healthcare model,'' said Robert L. Parkinson, Jr., chairman and chief
executive officer. ''We continue to advance care across our key franchises in
both developed and emerging markets, while focusing on innovation and R&D
programs that will fuel future growth and enhance value for shareholders.''

Recent Highlights

Baxter continued to advance its new product pipeline, achieving several
milestones during the quarter, including:

  * Receipt of marketing authorization in all European Union (EU) Member
    States for the use of HyQvia (solution for subcutaneous use) as
    replacement therapy for adult patients with primary and secondary
    immunodeficiencies. Baxter will introduce HyQvia in select countries
    during 2013 and plans to expand the launch to other EU countries in 2014.
  * United States Food and Drug Administration (FDA) approval of RIXUBIS
    [Coagulation Factor IX (Recombinant)] for routine prophylactic treatment,
    control of bleeding episodes, and perioperative management in adults with
    hemophilia B. RIXUBIS is the first new recombinant factor IX (rFIX)
    approved for hemophilia B in more than 15 years and is the only rFIX
    indicated for both routine prophylaxis and control of bleeding episodes in
    the U.S. for adult patients living with this chronic condition. Hemophilia
    B is the second most common type of hemophilia and is the result of
    insufficient amounts of clotting factor IX, a naturally occurring protein
    in blood that controls bleeding.
  * Completion of enrollment in the pivotal Phase III study of rigosertib for
    patients with high-risk myelodysplastic syndrome (MDS), as part of an
    ongoing collaboration with Onconova Therapeutics. The primary endpoint for
    this study is overall survival, and top-line results from the study are
    expected during the first quarter of 2014.
  * Completion of the nocturnal in-center study of the company's home
    hemodialysis system VIVIA, in Canada. Data from the Canadian study and the
    previously completed U.S. study will support the company's submission for
    CE Mark in Europe later this year.

Outlook for Third Quarter and Full-Year 2013

Baxter also announced today its guidance for the third quarter and confirmed
its financial outlook for full-year 2013. As previously disclosed, the
company’s guidance includes the impact of the Gambro AB acquisition which is
anticipated to close during the third quarter.

For the third quarter of 2013, Baxter expects sales growth, excluding the
impact of foreign currency, of approximately 6 percent (or approximately 5
percent including the impact of foreign exchange). Including revenues
associated with the Gambro AB acquisition, Baxter expects sales growth,
excluding the impact of foreign currency, of 10 to 13 percent (or
approximately 9 to 12 percent including the impact of foreign currency). The
company projects earnings per diluted share in the third quarter, including
the impact of the Gambro AB acquisition, of $1.18 to $1.21, before any special
items.

For full-year 2013, Baxter expects sales growth, excluding the impact of
foreign exchange and the Gambro AB acquisition, of approximately 4 percent (or
approximately 3 percent including the impact of foreign currency). Including
revenues associated with the Gambro AB acquisition, Baxter now expects sales
growth, excluding the impact of foreign currency, of 8 to 9 percent (or 7 to 8
percent including the impact of foreign currency). In addition, the company
expects earnings, including the impact of the Gambro AB acquisition, of $4.62
to $4.70 per diluted share, before any special items, and cash flows from
operations of approximately $3.3 billion.

A webcast of Baxter's second 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. CDT on July 18, 2013. Please visit Baxter's website 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, including as impacted by the pending Gambro AB acquisition. 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 including
additional antitrust approvals and satisfy closing conditions with respect to
the Gambro AB transaction; the ability of the company to close the Gambro AB
acquisition during the third quarter of 2013 and generate the sales included
in the company’s outlook for 2013; 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 June 30, 2013 and 2012
(unaudited)
(in millions, except per share and percentage data)
                                              
                                                                      
                                               Three Months Ended
                                               June 30,
                                               2013        2012      Change
                                                                      
NET SALES                                      $3,669      $3,572    3%
                                                                      
COST OF SALES                                  1,730       1,700     2%
                                                                      
GROSS MARGIN                                   1,939       1,872     4%
% of Net Sales                                 52.8%       52.4%     0.4 pts
                                                                      
MARKETING AND ADMINISTRATIVE                   838         789       6%
EXPENSES
% of Net Sales                                 22.8%       22.1%     0.7 pts
                                                                      
RESEARCH AND DEVELOPMENT EXPENSES              273         306       (11%)
% of Net Sales                                 7.4%        8.6%      (1.2 pts)
                                                                      
NET INTEREST EXPENSE                           17          22        (23%)
                                                                      
OTHER EXPENSE (INCOME), NET                    68          (62)      N/M
                                                                      
PRE-TAX INCOME                                 743         817       (9%)
                                                                      
INCOME TAX EXPENSE                             153         156       (2%)
% of Pre-Tax Income                            20.6%       19.1%     1.5 pts
                                                                      
NET INCOME                                     $590        $661      (11%)
                                                                      
BASIC EPS                                      $1.09       $1.20     (9%)
DILUTED EPS                                    $1.07       $1.19     (10%)
                                                                      
WEIGHTED-AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic                                          543         550
Diluted                                        549         553        
                                                                      
ADJUSTED PRE-TAX INCOME (excluding             $819    ^A  $786   ^A 4%
special items)
ADJUSTED NET INCOME (excluding                 $639    ^A  $619   ^A 3%
special items)
ADJUSTED DILUTED EPS (excluding                $1.16   ^A  $1.12  ^A 4%
special items)
                                                                      

^A   Refer to page 8 for a description of the adjustments and a reconciliation
     to generally accepted accounting principles (GAAP) measures.
      
      
      

BAXTER INTERNATIONAL INC.
Note to Consolidated Statements of Income
Three Months Ended June 30, 2013 and 2012
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 June 30, 2013 and 2012
included special items which impacted the GAAP measures as follows:
 
                                         Three Months Ended June
                                         30,
                                         2013            2012        Change
Gross Margin                             $1,939          $1,872      4%
Business optimization items              (20)            -
^1
Reserve adjustments ^4                   -               (23)         
Adjusted Gross Margin                    $1,919          $1,849      4%
% of Net Sales                           52.3%           51.8%       0.5 pts
                                                                      
Marketing and Administrative             $838            $789        6%
Expenses
Business development items ^             (23)            -            
2
Adjusted Marketing and                   $815            $789        3%
Administrative Expenses
% of Net Sales                           22.2%           22.1%       0.1 pts
                                                                      
Research and Development                 $273            $306        (11%)
Expenses
Business optimization items              (18)            -
^ 1
Business development items ^             -               (30)         
5
Adjusted Research and                    $255            $276        (8%)
Development Expenses
% of Net Sales                           7.0%            7.7%        (0.7 pts)
                                                                      
Other Expense (Income), Net              $68             $(62)       N/M
Currency-related items ^3                (55)            -
Reserve adjustments ^6                   -               38           
Adjusted Other Expense                   $13             $(24)       N/M
(Income), Net
                                                                      
Pre-Tax Income                           $743            $817        (9%)
Impact of special items                  76              (31)         
Adjusted Pre-Tax Income                  $819            $786        4%
                                                                      
Income Tax Expense                       $153            $156        (2%)
Impact of special items                  27              11           
Adjusted Income Tax Expense              $180            $167        8%
% of Adjusted Pre-Tax Income             22.0%           21.2%       0.8 pts
                                                                      
Net Income                               $590            $661        (11%)
Impact of special items                  49              (42)         
Adjusted Net Income                      $639            $619        3%
                                                                      
Diluted EPS                              $1.07           $1.19       (10%)
Impact of special items                  0.09            (0.07)       
Adjusted Diluted EPS                     $1.16           $1.12       4%
                                                                      
WEIGHTED-AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Diluted                                  549             553          
                                                                      

     Cost of sales in 2013 included a benefit of $20 million ($14 million, or
     $0.03 per diluted share, on an after-tax basis) related to an adjustment
     to a previous business optimization reserve that is no longer probable of
^1   being utilized. Research and development (R&D) expenses in 2013 included
     charges of $18 million ($14 million, or $0.03 per diluted share, on an
     after-tax basis) primarily related to contract termination costs
     associated with the discontinuation of the company's Alzheimer's disease
     program.
     Marketing and administrative expenses in 2013 included business
^2   development charges of $23 million ($14 million, or $0.03 per diluted
     share, on an after-tax basis) primarily related to pre-acquisition costs
     for the planned acquisition of Gambro AB (Gambro).
     Other expense (income), net in 2013 included a loss of $55 million ($35
     million, or $0.06 per diluted share, on an after-tax basis) related to
^3   derivative instruments entered into during December 2012 and the first
     six months of 2013 to hedge the anticipated foreign currency cash
     outflows for the planned acquisition of Gambro.
     Cost of sales in 2012 included a net benefit of $23 million ($27 million,
^4   or $0.05 per diluted share, on an after-tax basis) primarily related to
     an adjustment to the COLLEAGUE infusion pump reserves as the company
     substantially completed its recall activities in the United States.
     R&D expenses in 2012 included an R&D charge of $30 million ($23 million,
^5   or $0.04 per diluted share, on an after-tax basis) related to the
     company's global collaboration with Chatham Therapeutics, LLC (Chatham).
     Other expense (income), net in 2012 included a gain of $38 million, or
     $0.06 per diluted share, related to the reduction of a contingent payment
^6   liability for milestones associated with the acquisition of ApaTech
     Limited (ApaTech) in the first quarter of 2010, for which there was no
     tax expense recognized.
      
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
Six Months Ended June 30, 2013 and 2012
(unaudited)
(in millions, except per share and percentage data)
                                                  
                                                                        
                                                   Six Months Ended
                                                   June 30,
                                                   2013      2012      Change
                                                                        
NET SALES                                          $7,117    $6,960    2%
                                                                        
COST OF SALES                                      3,422     3,374     1%
                                                                        
GROSS MARGIN                                       3,695     3,586     3%
% of Net Sales                                     51.9%     51.5%     0.4 pts
                                                                        
MARKETING AND ADMINISTRATIVE EXPENSES              1,633     1,541     6%
% of Net Sales                                     22.9%     22.1%     0.8 pts
                                                                        
RESEARCH AND DEVELOPMENT EXPENSES                  519       575       (10%)
% of Net Sales                                     7.3%      8.3%      (1 pts)
                                                                        
NET INTEREST EXPENSE                               42        40        5%
                                                                        
OTHER EXPENSE (INCOME), NET                        65        (119)     N/M
                                                                        
PRE-TAX INCOME                                     1,436     1,549     (7%)
                                                                        
INCOME TAX EXPENSE                                 294       300       (2%)
% of Pre-Tax Income                                20.5%     19.4%     1.1 pts
                                                                        
NET INCOME                                         $1,142    $1,249    (9%)
                                                                        
BASIC EPS                                          $2.10     $2.25     (7%)
DILUTED EPS                                        $2.07     $2.24     (8%)
                                                                        
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
Basic                                              543       554
Diluted                                            550       558        
                                                                        
ADJUSTED PRE-TAX INCOME (excluding                 $1,557 ^A $1,513 ^A 3%
special items)
ADJUSTED NET INCOME (excluding special             $1,220 ^A $1,188 ^A 3%
items)
ADJUSTED DILUTED EPS (excluding special            $2.22  ^A $2.13  ^A 4%
items)
                                                                        

^A   Refer to page 10 for a description of the adjustments and a
     reconciliation to GAAP measures.
      
      
      

BAXTER INTERNATIONAL INC.
Note to Consolidated Statements of Income
Six Months Ended June 30, 2013 and 2012
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 six months ended June 30, 2013 and 2012
included special items which impacted the GAAP measures as follows:
 
                                            Six Months Ended June
                                            30,
                                            2013          2012        Change
Gross Margin                                $3,695        $3,586      3%
Currency-related items ^ 1                  1             -
Business optimization items                 (20)          -
^2
Reserve adjustments  ^4                     -             (23)
Business development items                  -             6            
^ 5
Adjusted Gross Margin                       $3,676        $3,569      3%
% of Net Sales                              51.7%         51.3%       0.4 pts
                                                                       
Marketing and                               $1,633        $1,541      6%
Administrative Expenses
Business development items                  (40)          (9)          
^ 3, 5
Adjusted Marketing and                      $1,593        $1,532      4%
Administrative Expenses
% of Net Sales                              22.4%         22.0%       0.4 pts
                                                                       
Research and Development                    $519          $575        (10%)
Expenses
Business optimization items                 (18)          -
^2
Business development items                  -             (63)         
^ 5
Adjusted Research and                       $501          $512        (2%)
Development Expenses
% of Net Sales                              7.0%          7.4%        (0.4
                                                                      pts)
                                                                       
Other Expense (Income), Net                 $65           $(119)      N/M
Currency-related items ^ 1                  (82)          -
Reserve adjustments ^ 6                     -             91           
Adjusted Other Expense                      $(17)         $(28)       N/M
(Income), Net
                                                                       
Pre-Tax Income                              $1,436        $1,549      (7%)
Impact of special items                     121           (36)         
Adjusted Pre-Tax Income                     $1,557        $1,513      3%
                                                                       
Income Tax Expense                          $294          $300        (2%)
Impact of special items                     43            25           
Adjusted Income Tax Expense                 $337          $325        4%
% of Adjusted Pre-Tax                       21.6%         21.5%       0.1 pts
Income
                                                                       
Net Income                                  $1,142        $1,249      (9%)
Impact of special items                     78            (61)         
Adjusted Net Income                         $1,220        $1,188      3%
                                                                       
Diluted EPS                                 $2.07         $2.24       (8%)
Impact of special items                     0.15          (0.11)       
Adjusted Diluted EPS                        $2.22         $2.13       4%
                                                                       
WEIGHTED-AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Diluted                                     550           558          
                                                                       

     Cost of sales and other expense (income), net in 2013 included a charge
     of $11 million ($7 million, or $0.01 per diluted share, on an after-tax
     basis) related to the Venezuelan currency devaluation announced by the
     government of Venezuela in February 2013. Additionally, other expense
^1   (income), net in 2013 included a loss of $72 million ($46 million, or
     $0.09 per diluted share, on an after-tax basis) related to derivative
     instruments entered into in December 2012 and the first six months of
     2013 to hedge the anticipated foreign currency cash outflows associated
     with the planned acquisition of Gambro.
     Cost of sales in 2013 included a benefit of $20 million ($14 million, or
     $0.03 per diluted share, on an after-tax basis) related to an adjustment
     to a previous business optimization reserve that is no longer probable of
^2   being utilized. R&D expenses in 2013 included charges of $18 million ($14
     million, or $0.03 per diluted share, on an after-tax basis) primarily
     related to contract termination costs associated with the discontinuation
     of the company's Alzheimer's disease program.
     Marketing and administrative expenses in 2013 included business
^3   development charges of $40 million ($25 million, or $0.05 per diluted
     share, on an after-tax basis) primarily related to pre-acquisition costs
     for the planned acquisition of Gambro.
     Cost of sales in the second quarter of 2012 included a net benefit of $23
     million ($27 million, or $0.05 per diluted share, on an after-tax basis)
^4   primarily related to an adjustment to the COLLEAGUE infusion pump
     reserves as the company substantially completed its recall activities in
     the United States.
     Cost of sales, marketing and administrative expenses and R&D expenses in
     2012 included business development charges totaling $78 million ($57
     million, or $0.10 per diluted share, on an after-tax basis) which
^5   principally related to R&D charges of $33 million in the first quarter of
     2012 associated with the company’s global collaboration with Momenta
     Pharmaceuticals, Inc. (Momenta) and $30 million in the second quarter of
     2012 associated with the company's global collaboration with Chatham.
     Other expense (income), net in 2012 included a benefit of $91 million, or
     $0.16 per diluted share, consisting of gains of $53 million in the first
^6   quarter of 2012 and $38 million in the second quarter of 2012 for the
     reduction of certain contingent payment liabilities related to the prior
     acquisitions of Prism Pharmaceuticals, Inc. and ApaTech, respectively,
     for which there was no tax expense recognized.
      
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          Three Months Ended        Six Months Ended
outflows)
                               June 30,                  June 30,
                               2013       2012           2013       2012
                                                                             
Net income                     $590       $661           $1,142     $1,249
Adjustments
  Depreciation and             183        180            366        355
  amortization
  Deferred income              (101)      65             (63)       119
  taxes
  Stock compensation           40         35             72         63
  Realized excess tax
  benefits from stock
  issued under                 (7)        (1)            (19)       (8)
  employee benefit
  plans
  Other                        44         (59)           54         (84)
Changes in balance
sheet items
  Accounts and other
  current receivables,         (73)       90             12         114
  net
  Inventories                  (125)      (28)           (306)      (100)
  Accounts payable and         128        59             (171)      (229)
  accrued liabilities
  Business
  optimization and             (26)       (79)           (52)       (163)
  infusion pump
  payments
  Other                        110        45             114        98       
Cash flows from                $763       $968           $1,149     $1,414   
operations
                                                                             
Changes in Net Debt                                                          
Increase (decrease)            Three Months Ended        Six Months Ended
                               June 30,                  June 30,
                               2013       2012           2013       2012
                                                                             
Net debt, beginning of         $3,178     $2,937         $2,660     $2,290
period ^A
                                                                             
Cash flows from                (763)      (968)          (1,149)    (1,414)
operations
Capital expenditures           347        264            639        503
Dividends                      244        186            490        374
Proceeds from stock
issued under employee          (138)      (18)           (322)      (172)
benefit plans
Purchases of treasury          183        385            717        960
stock
Acquisitions and               20         132     ^B     87      ^B 469     ^B
investments
Sales of investments
and other investing            -          (31)           (10)       (74)
activities
Other, including the
effect of exchange             (25)       74             (66)       25       
rate changes
(Decrease) increase in         (132)      24             386        671      
net debt
                                                                             
Net debt, June 30 ^A           $3,046     $2,961         $3,046     $2,961   
                                                                             
Key statistics, June
30:
Days sales outstanding         53.5       52.1           53.5       52.1
Inventory turns                2.2        2.4            2.2        2.4      
                                                                             

^A   Net debt is a non-GAAP measure, refer to page 12 for a description of net
     debt and a reconciliation to GAAP measures.
     Acquisitions and investments in 2013 and 2012 included $51 million for
     the first quarter 2013 acquisition of the investigational hemophilia
     compound OBI-1 and related assets from Inspiration BioPharmaceuticals,
     Inc. and Ipsen Pharma S.A.S., $90 million for the second quarter 2012
^B   exercise of the company's option to acquire the remaining equity interest
     in Sigma International General Medical Apparatus, LLC, $25 million for
     the second quarter 2012 payment to execute the Chatham collaboration,
     $304 million for the first quarter 2012 acquisition of Synovis Life
     Technologies, Inc., and $33 million for the first quarter 2012 payment to
     execute the Momenta collaboration.
      
      
      

BAXTER INTERNATIONAL INC.
Total Debt to Net Debt Reconciliation
(unaudited)
($ in millions)
                                                                               
                                                                                 
Total Debt to
Net Debt                                                                         
Reconciliation
^A
                   June        March       December     June        March       December
                   30,         31,         31,          30,         31,         31,
                   2013        2013        2012         2012        2012        2011
Short-term         $33         $333        $27          $385        $313        $256
debt
Current
maturities of
long-term debt     378         377         323          497         485         190
and lease
obligations
Long-term debt
and lease          8,624       5,157       5,580        4,432       4,411       4,749
obligations
Total debt         9,035       5,867       5,930        5,314       5,209       5,195
Less: Cash and     (5,989)     (2,689)     (3,270)      (2,353)     (2,272)     (2,905)
equivalents
Total net debt     $3,046      $3,178      $2,660       $2,961      $2,937      $2,290
                                                                                 

     Net debt represents the difference between total debt (defined as
^A   short-term debt, current maturities of long-term debt and lease
     obligations, and long-term debt and lease obligations as presented on the
     company's consolidated balance sheets) and cash and equivalents.
      
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.
Net Sales
Periods Ending June 30, 2013 and 2012
(unaudited)
($ in millions)
                                                                                                            
                                                                                                              
                                              %          % Growth                                 %          % Growth
                        Q2         Q2         Growth     @                  YTD        YTD        Growth     @
                                              @                                                   @
                        2013       2012       Actual     Constant           2013       2012       Actual     Constant
                                              Rates      Rates                                    Rates      Rates
                                                                                                              
BioScience
United States           $782       $747       5%         5%                 $1,555     $1,472     6%         6%
International           856        819        5%         7%                 1,613      1,556      4%         5%
Total                   $1,638     $1,566     5%         6%                 $3,168     $3,028     5%         5%
BioScience
                                                                                                              
Medical
Products
United States           $764       $756       1%         1%                 $1,473     $1,499     (2%)       (2%)
International           1,267      1,250      1%         3%                 2,476      2,433      2%         2%
Total Medical           $2,031     $2,006     1%         2%                 $3,949     $3,932     0%         1%
Products
                                                                                                              
Baxter
International
Inc.
United States           $1,546     $1,503     3%         3%                 $3,028     $2,971     2%         2%
International           2,123      2,069      3%         4%                 4,089      3,989      3%         3%
Total Baxter            $3,669     $3,572     3%         4%                 $7,117     $6,960     2%         3%
                                                                                                              
                                                                                                              
                                                                                                              

BAXTER INTERNATIONAL INC.
Sales by Franchise ^1
Periods Ending June 30, 2013 and 2012
(unaudited)
($ in millions)
                                                                                                                
                                                %          % Growth                                 %          % Growth
                          Q2         Q2         Growth     @                  YTD        YTD        Growth     @
                                                @                                                   @
                          2013       2012       Actual     Constant           2013       2012       Actual     Constant
                                                Rates      Rates                                    Rates      Rates
                                                                                                                
BioScience
Hemophilia ^2             $849       $829       2%         4%                 $1,614     $1,572     3%         4%
BioTherapeutics           513        484        6%         6%                 1,022      982        4%         4%
^3
BioSurgery ^4             178        174        2%         2%                 350        328        7%         6%
Vaccines ^5               98         79         24%        30%                182        146        25%        29%
Total                     $1,638     $1,566     5%         6%                 $3,168     $3,028     5%         5%
BioScience
                                                                                                                
Medical
Products
Fluid Systems             $755       $740       2%         2%                 $1,495     $1,460     2%         2%
^6
Renal ^7                  654        635        3%         5%                 1,244      1,223      2%         3%
Specialty
Pharmaceuticals           366        364        1%         1%                 729        732        0%         0%
^8
BioPharma                 256        267        (4%)       (3%)               481        517        (7%)       (7%)
Solutions ^9
Total Medical             $2,031     $2,006     1%         2%                 $3,949     $3,932     0%         1%
Products
                                                                                                                
Total Baxter              $3,669     $3,572     3%         4%                 $7,117     $6,960     2%         3%
                                                                                                                

     Effective January 1, 2013, Baxter has transitioned to a commercial
^1   franchise structure for reporting net sales. Prior period net sales have
     been reclassified to reflect the new commercial franchise structure. See
     Notes 2 - 9 below for a description of each commercial franchise.
     Includes sales of recombinant FVIII products (ADVATE and RECOMBINATE) and
^2   plasma-derived hemophilia products (primarily FVII, FVIII and FEIBA).
     Recombinant and plasma-based products were previously reported
     separately.
     Includes sales of the company's liquid formulation of the
     antibody-replacement therapy immunoglobulin product (GAMMAGARD LIQUID)
^3   and other plasma-based therapies such as albumin and alpha-1 antitrypsin
     products. Antibody therapies and plasma-based products were previously
     reported separately.
     Consists of biological products and delivery devices used for hemostasis,
^4   tissue sealing, adhesion reduction and hard tissue regeneration, as well
     as soft tissue repair and microsurgery products.
^5   Consists of vaccines for seasonal and pandemic influenza, as well as
     meningitis C and tick-borne encephalitis.
     Principally includes IV therapies, infusion pumps, administration sets
^6   and premixed drugs platforms. IV therapies were previously reported with
     nutrition products in IV Therapies, and Infusion Systems and Global
     Injectables were previously reported separately.
^7   Consists of PD and HD therapies.
     Principally includes nutrition and anesthesia products. Nutrition
^8   products were previously reported with IV therapies in IV Therapies and
     anesthesia products were previously reported separately.
     Principally includes sales from the pharmaceutical partnering business
     and pharmacy compounding services, which were previously reported with
^9   Global Injectables. Also includes revenues associated with manufacturing,
     distribution and other services provided by the company to the buyer of
     the Transfusion Therapies business after the February 2007 divestiture.
      
      
      

BAXTER INTERNATIONAL INC.
Franchise Sales by U.S. and International ^ 1
Three-Month Periods Ending June 30, 2013 and 2012
(unaudited)
($ in millions)
                                                                                                                                                
                                                                                                                                                  
                          Q2 2013                                       Q2 2012                                       % Growth
                          U.S.       International     Total            U.S.       International     Total            U.S.     International     Total
BioScience
Hemophilia                $346       $503              $849             $328       $501              $829             5%       0%                2%
BioTherapeutics           335        178               513              318        166               484              5%       7%                6%
BioSurgery                101        77                178              101        73                174              0%       5%                2%
Vaccines                  0          98                98               0          79                79               0%       24%               24%
Total                     $782       $856              $1,638           $747       $819              $1,566           5%       5%                5%
BioScience
                                                                                                                                                  
Medical
Products
Fluid Systems             $390       $365              $755             $380       $360              $740             3%       1%                2%
Renal                     101        553               654              98         537               635              3%       3%                3%
Specialty                 163        203               366              161        203               364              1%       0%                1%
Pharmaceuticals
BioPharma                 110        146               256              117        150               267              (6%)     (3%)              (4%)
Solutions
Total Medical             $764       $1,267            $2,031           $756       $1,250            $2,006           1%       1%                1%
Products
                                                                                                                                                  
Total Baxter              $1,546     $2,123            $3,669           $1,503     $2,069            $3,572           3%       3%                3%

     Effective January 1, 2013, Baxter has transitioned to a commercial
^1   franchise structure for reporting net sales. Prior period net sales have
     been reclassified to reflect the new commercial franchise structure.
     Refer to page 14 for additional details.

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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