|
BAXTER'S
SALES GROW 10 PERCENT, EARNINGS PER SHARE ADVANCE 11 PERCENT IN SECOND
QUARTER
First-Half
Performance Positions Baxter to Meet 2001 Commitments
Baxter Announces Fourth Share-Repurchase
Program
DEERFIELD, ILL., July 19, 2001
- Baxter International Inc. (NYSE:BAX) once again posted healthy gains
in sales and earnings for the second quarter.
Baxter reported a 15 percent increase in sales before the impact of foreign
exchange, or 10 percent after the impact of foreign exchange. Sales totaled
$1.87 billion in the second quarter, which compares to the $1.69 billion
reported last year. Domestic sales grew 23 percent in the quarter, while
international sales were flat (or up 9 percent before the impact of foreign
exchange).
Even with the impact of foreign exchange, each of Baxter's businesses
contributed to the sales growth in the quarter. BioScience contributed
strong growth in the quarter, with sales totaling $686 million, an increase
of 19 percent over the same period last year. The sales growth reflects
the capacity increases that occurred at Baxter's Thousand Oaks, Calif.
facility in the second half of 2000 for production of Recombinate Antihemophilic
Factor (rAHF) as well as continued growth in demand for plasma-derived
clotting factors used in the treatment of hemophilia and immune globulins
used for the treatment of certain immune disorders. Medication Delivery
sales grew 6 percent to $708 million, and Renal sales increased 5 percent
in the quarter to $476 million.
Earnings grew 13 percent in the quarter to $253 million, up from the $223
million reported for the same period last year. Earnings per diluted share
increased 11 percent to $0.42. This compares to the $0.38 per diluted
share reported in the second quarter last year. The 2000 results exclude
a charge for in-process research and development and acquisition-related
costs.
"We continued our strong momentum in the second quarter, delivering
excellent sales and earnings growth," said Harry M. Jansen Kraemer,
Jr., chairman and chief executive officer. "Baxter BioScience experienced
exceptional growth in the quarter. The investments we are making to expand
our bioscience manufacturing capacity are enabling us to provide more
products to patients who rely on these vital therapies."
Six-Month Results
For the first half of 2001, Baxter's sales grew 11 percent after the impact
of foreign exchange (or 16 percent before the impact of foreign exchange)
to $3.6 billion. This compares to the $3.3 billion reported for the first
half of last year. Domestic sales rose 21 percent for the first six months
of 2001, while international sales advanced 2 percent (or 12 percent excluding
the impact of foreign exchange). Sales from the company's BioScience business
grew 18 percent in the first half of the year to $1.32 billion. Baxter's
Medication Delivery business sales totaled $1.38 billion for the same
period, an increase of 7 percent from the prior year. Renal sales grew
7 percent in the first half of 2001, to $933 million.
Earnings for the period grew 13 percent to $467 million, up from the $414
million reported last year. Earnings per diluted share advanced 10 percent
to $0.77, from the $0.70 reported last year. Earnings for the first half
of 2001 exclude the one-time, non-cash impact of adoption of new accounting
rules, as detailed in the company's first quarter results, and the 2000
results exclude a charge for in-process research and development and acquisition-related
costs.
Full-Year 2001 Financial Commitments
For the full year 2001, Baxter expects to accelerate annual sales growth
to the low double digits, from the 8 percent growth rate reported for
2000. Additionally, Baxter expects to achieve earnings growth in the mid-teens
and generate more than $500 million in operational cash flow after investing
more than $1 billion in research and development and capital expenditures.
"Given the great progress we have made this year, we continue to
expect to grow earnings in the mid- to high-teens in the second half of
the year and deliver to our mid-teens earnings growth and double-digit
sales growth commitments for the full year," continued Kraemer. "And,
with the investments we are making in research and development, in production
capacity, in our product pipeline and in expanding our global presence,
we expect to further accelerate our sales and earnings growth over the
next several years."
Share Repurchase Program
Baxter is nearing completion of its $500 million stock repurchase program
which was announced in November 1999, having purchased approximately $430
million in Baxter common stock to date under that program. Given the success
of that repurchase program, Baxter announced today that its board of directors
has authorized the company to repurchase an additional $500 million of
Baxter common stock. This is the fourth share repurchase program the company
has initiated since 1993 to continue to optimally manage its capital structure.
Recent Highlights
- Earlier this week, Baxter announced
that the European Medicines Evaluation Agency granted licensure for
the company's Ceprotin, protein C concentrate, for use as a replacement
therapy for people suffering from life-threatening blood clotting complications
related to severe congenital protein C deficiency. Protein C is a component
in human plasma that regulates the coagulation system and prevents abnormal
clot formation (thrombosis).
- Last week Baxter announced
that it is investing an additional $70 million to further expand and
upgrade its BioScience facilities in California, Michigan, Italy, Belgium
and Austria. The expansions will provide greater flexibility in manufacturing
and will increase production capacity for the company's plasma-derived
therapeutic proteins.
- Last month, Baxter announced
the findings of the largest randomized, prospective, controlled study
completed of dialysis patients, which suggested that peritoneal dialysis
might have broader applicability than current practice patterns suggest.
The data, presented last month at the IX Congress of the International
Society for Peritoneal Dialysis, allows for a better understanding of
peritoneal dialysis therapy, particularly the relationship between the
amount of clearance (the rate at which a given substance is removed
from a solution, e.g. the clearance of urea from the blood by the natural
or artificial kidney) achieved in therapy and patient survival. After
following 965 patients over a minimum of two years, researchers found
that the more aggressive urea and creatinine clearance targets currently
recommended by many clinical treatment guidelines do not improve survival
in patients with advanced kidney disease over those who were treated
within ranges of clearance more easily achieved in everyday clinical
practice. This suggests that more patients could potentially benefit
from home-based, peritoneal dialysis treatment.
- Baxter progressed in its efforts
to expand into new global markets with its new peritoneal dialysis solution,
icodextrin 7.5%, with the filing of its regulatory submission in Japan
in the second quarter. Icodextrin is approved for marketing as Extraneal
in 29 countries. In those countries outside of the U.S. where the solution
is currently marketed, it is recommended as a once daily replacement
for a single glucose exchange as part of continuous ambulatory peritoneal
dialysis or automated peritoneal dialysis for the treatment of end-stage
renal disease (ESRD), particularly for patients who may have decreased
ultrafiltration on conventional solutions.
- In June, Baxter announced that
it would acquire the assets of Cook Pharmaceutical Solutions, a unit
of Cook Group Incorporated. Cook Pharmaceutical Solutions provides a
complete line of pharmaceutical contract manufacturing services that
includes a number of sterile product dosage forms such as solutions,
suspensions and freeze-dried (lyophilized) powders in a variety of delivery
systems including vials and pre-filled syringes. This will broaden the
range of delivery options Baxter is able to offer its pharmaceutical
partners and enhance Baxter's position as a full-line drug delivery
service provider. Subject to regulatory approval, Baxter and Cook expect
to close the transaction by September 2001.
- Baxter launched its Advoy e-care
platform, which provides clinicians with timely patient therapy information
via a secure Internet site and allows for improved disease management
and patient care.
- On May 30, Baxter completed
a two-for-one split of the company's common stock.
- In early May, Baxter announced
plans to build a fourth manufacturing suite at its Thousand Oaks, Calif.
BioScience facility to further expand the company's manufacturing capacity
for recombinant clotting factor.
- Baxter and Cerus Corporation
continue to make progress on their collaboration to develop pathogen
inactivation systems for blood components. The INTERCEPT Blood Systems
are designed to inactivate viruses, bacteria, other pathogens and white
blood cells from donated platelets, red blood cells and plasma prior
to transfusion. The companies have completed enrollment in their Phase
III US studies of the INTERCEPT Platelet System, continue to enroll
patients in their Phase III US study of the INTERCEPT Plasma System
and anticipate starting a Phase III US study for the INTERCEPT Red Blood
Cell System later this year.
Baxter International Inc. is a
global medical products and services company that, through its subsidiaries,
provides critical therapies for people with life-threatening conditions.
Baxter's products and services in the areas of bioscience (including biopharmaceuticals,
vaccines, biosurgery products and transfusion therapies), medication delivery
and renal therapy are used by health-care providers and their patients
in more than 100 countries.
A web cast of Baxter's second quarter conference call for investors can
be accessed live from a link on Baxter's web site at www.baxter.com
beginning at 10:00 a.m. CDT on July 19, 2001. In addition, the company
will be making investor presentations on the following dates during the
third quarter of 2001: September 12, September 13 and September 26. Please
visit Baxter's web site for additional information regarding web casts
of these events.
(Baxter, Recombinate, Extraneal, Advoy and Intercept are trademarks of
Baxter International Inc. and its affiliates.)
This news release contains forward-looking statements that involve
risks and uncertainties, including technological advances in the medical
field, product demand and market acceptance, the effect of economic conditions,
actions of regulatory bodies, the impact of competitive products and pricing,
foreign currency exchange rates and other risks detailed in the company's
filings with the Securities and Exchange Commission. These forward-looking
statements are based on estimates and assumptions made by management of
the company and are believed to be reasonable, though are inherently uncertain
and difficult to predict. Actual results or experience could differ materially
from the forward-looking statements.
|
BAXTER
INTERNATIONAL INC.
SUPPLEMENTAL SCHEDULE
(UNAUDITED)
(in millions, except per share data)
These
consolidated statements of income from continuing operations exclude
a $52 million net-of-tax charge in the first quarter of 2001 for
the cumulative effect of a change in accounting principle relating
to the adoption of Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities"
and a $177 million net-of-tax charge in the second quarter of 2000
for in-process research and development and acquisition-related
costs. Per-share information has been restated for a two-for-one
stock split, which was effective May 30, 2001 for all shareholders
of record on May 9, 2001.
|
| |
June
30
Three-month Results
|
|
2001
|
|
2000
|
|
CHANGE
|
| NET
SALES |
$1,870
|
|
$1,694
|
|
10%
|
| GROSS
PROFIT |
826
|
|
747
|
|
11%
|
% to Sales
|
44.2% |
|
44.1% |
|
0.1
points |
| MARKETING
AND ADMINISTRATIVE EXPENSES |
361
|
|
336
|
|
7%
|
% to Sales
|
19.3% |
|
19.8% |
|
(0.5
points) |
RESEARCH
AND
DEVELOPMENT EXPENSES |
104
|
|
93
|
|
12%
|
| GOODWILL
AMORTIZATION |
11
|
|
6
|
|
83%
|
|
| OPERATING
INCOME |
350
|
|
312
|
|
12%
|
|
% to Sales
|
18.7% |
|
18.4% |
|
0.3
points
|
| INTEREST,
NET |
17
|
|
19
|
|
(11%)
|
| OTHER
INCOME |
(9) |
|
(6) |
|
50%
|
|
| INCOME
BEFORE INCOME TAXES |
342
|
|
299
|
|
14%
|
| INCOME
TAX EXPENSE |
89
|
|
76
|
|
17%
|
|
| NET
INCOME |
$253
|
|
$223
|
|
13%
|
|
| EPS
- BASIC |
$0.43
|
|
$0.38
|
|
13%
|
|
| EPS
- DILUTED |
$0.42
|
|
$0.38
|
|
11%
|
|
|
June
30
Six-month Results |
|
2001
|
|
2000
|
|
CHANGE
|
| NET
SALES |
$3,627
|
|
$3,277
|
|
11%
|
| GROSS
PROFIT |
1,597
|
|
1,434
|
|
11%
|
% to Sales
|
44.0% |
|
43.8% |
|
0.2
points |
| MARKETING
AND ADMINISTRATIVE EXPENSES |
704
|
|
651
|
|
8%
|
% to Sales
|
19.4% |
|
19.9% |
|
(0.5
points) |
| RESEARCH
AND DEVELOPMENT EXPENSES |
207
|
|
176
|
|
18%
|
| GOODWILL
AMORTIZATION |
23
|
|
11
|
|
109%
|
|
| OPERATING
INCOME |
663
|
|
596
|
|
11%
|
|
% to Sales
|
18.3% |
|
18.2% |
|
0.1
points |
| INTEREST,
NET |
36
|
|
34
|
|
6%
|
| OTHER
EXPENSE (INCOME) |
(2) |
|
6
|
|
(133%) |
| INCOME
BEFORE INCOME TAXES |
629
|
|
556
|
|
13%
|
| INCOME
TAX EXPENSE |
162
|
|
142
|
|
14%
|
|
| NET
INCOME |
$467
|
|
$414
|
|
13%
|
|
| EPS
- BASIC |
$0.79
|
|
$0.71
|
|
11%
|
|
| EPS
- DILUTED |
$0.77
|
|
$0.70
|
|
10%
|
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Full
Year
2000
|
| 2000
Diluted EPS restated for the stock split |
$0.32
|
$0.38
|
$0.38
|
$0.45
|
$1.53
|
|
|
|
|
|
|
BAXTER
INTERNATIONAL INC.
Consolidated Statements of Income
(Unaudited) (A) |
|
| (in
millions, except per share data) |
Three
Months Ended
June 30, |
Six
Months Ended
June 30, |
|
|
2001
|
2000
|
2001
|
2000
|
| Net
sales |
$1,870
|
$1,694
|
$3,627
|
$3,277
|
| Costs
and expenses |
|
|
|
|
|
Cost
of goods sold |
1,044
|
947
|
2,030
|
1,843
|
|
Marketing
and administrative expenses |
361
|
336
|
704
|
651
|
|
Research
and development expenses |
104
|
93
|
207
|
176
|
|
IPR&D
and acquisition-related charges |
-
- |
286
|
-
- |
286
|
|
Goodwill
amortization |
11
|
6
|
23
|
11
|
|
Interest,
net |
17
|
19
|
36
|
34
|
|
Other
expense (income) |
(9) |
(6) |
(2) |
6
|
|
|
Total
costs and expenses |
1,528
|
1,681
|
2,998
|
3,007
|
|
| Income
from continuing operations before income taxes and cumulative effect
of accounting change |
342
|
13
|
629
|
270
|
|
Income
tax expense |
89
|
(33) |
162
|
33
|
|
| Income
from continuing operations before cumulative effect of accounting
change |
253
|
46
|
467
|
237
|
| |
Discontinued
operation |
-
- |
2
|
-
- |
2
|
|
| Income
before cumulative effect of accounting change |
253
|
48
|
467
|
239
|
| |
Cumulative
effect of accounting change |
-
- |
-
- |
(52) |
-
- |
|
| Net
income |
$253
|
$48
|
$415
|
$239
|
|
| Earnings
per basic common share: |
|
Continuing
operations, before cumulative effect of accounting change |
$0.43
|
$0.08
|
$0.79
|
$0.41
|
|
Discontinued
operation |
-
-
|
-
-
|
-
-
|
-
-
|
|
Cumulative
effect of accounting change |
-
-
|
-
-
|
(0.09)
|
-
-
|
|
|
Total |
$0.43
|
$0.08
|
$0.70
|
$0.41
|
|
| Earnings
per diluted common share: |
|
Continuing
operations, before cumulative effect of accounting change |
$0.42
|
$0.08
|
$0.77
|
$0.40
|
|
Discontinued
operation |
-
-
|
-
-
|
-
-
|
-
-
|
|
Cumulative
effect of accounting change |
-
-
|
-
-
|
(0.09)
|
-
-
|
|
|
Total |
$0.42
|
$0.08
|
$0.68
|
$0.40
|
|
| Weighted
average number of common shares outstanding |
|
Basic |
590
|
583
|
589
|
582
|
|
Diluted |
608
|
594
|
607
|
592
|
|
| (A) |
All share and per-share information
has been restated for a two-for-one stock split, which was effective
May 30, 2001 for all shareholders of record on May 9, 2001. |
BAXTER
INTERNATIONAL INC.
Condensed Operational Cash Flow Information
and Changes in Net Debt
(Unaudited) |
Condensed Operational
Cash Flow Information
|
| (in
millions) (Brackets denote cash outflows) |
Six
Months Ended
June 30,
|
|
2001
|
2000
|
| Income
from continuing operations before Q1, 2001 change in accounting principle |
$467
|
$237
|
| Other adjustments, primarily
non-cash items |
333
|
389
|
| After-tax
interest, net |
21
|
21
|
|
| Operational
cash inflow |
821
|
647
|
|
| Changes
in balance sheet items |
|
|
Accounts receivable
|
(204) |
12
|
Inventories
|
(227) |
(175) |
Accounts payable
and accrued liabilities
|
(237) |
(268) |
Other
|
(126) |
(52) |
|
Capital expenditures
|
(306) |
(256) |
|
| Operational
cash outflow |
(1,100) |
(739) |
|
| Operational
cash flow from continuing operations |
($279) |
($92) |
| |
Changes
in Net Debt
|
| (in
millions) Increase (decrease) |
Six
Months Ended
June 30,
|
|
2001
|
2000
|
| Net
debt, January 1 |
$1,781
|
$2,250
|
| Operational
cash flow from continuing operations |
279
|
92
|
| Reduction
of debt due to spin-off of Edwards Lifesciences |
--
|
(502) |
| Dividends |
340
|
84
|
| Acquisitions,
including assumed debt |
128
|
430
|
| Purchases
of treasury stock |
144
|
141
|
| Other,
including the effect of exchange rate changes |
(351) |
(438) |
|
|
|
| Increase
(decrease) in net debt |
540
|
(193) |
|
| Net
debt, June 30 |
$2,321
|
$2,057
|
|
| Key
statistics, June 30: |
|
|
| Days
sales outstanding |
62.6
|
67.1
|
| Inventory
turns |
2.7
|
2.8
|
| Net-debt-to-capital
ratio |
40.5% |
41.7% |
|
|
Operation
cash flow is defined as cash flow provided by operationas plus
after-tax interest, plus the tax effect of divestiture gains (losses)
less
capital expenditures.
|
Baxter International
Inc.
Period Ending June 30, 2001
(Unaudited)
|
|
|
%
growth
at constant
rates
|
|
%
growth
at constant
rates
|
| ($
in Millions) |
Q2
2001
|
Q2
2000
|
%
growth
|
YTD
2001
|
YTD
2000
|
%
growth
|
|
| Renal |
| Domestic |
127
|
109
|
17%
|
17%
|
252
|
211
|
20%
|
20%
|
| International |
349
|
343
|
1%
|
11%
|
681
|
662
|
3%
|
12%
|
| Total |
476
|
452
|
5%
|
13%
|
933
|
873
|
7%
|
14%
|
|
| Medication
Delivery |
| Domestic |
450
|
410
|
10%
|
10%
|
871
|
782
|
11%
|
11%
|
| International |
258
|
257
|
0%
|
7%
|
506
|
505
|
0%
|
8%
|
| Total |
708
|
667
|
6%
|
9%
|
1,377
|
1,287
|
7%
|
10%
|
|
| BioScience |
| Domestic |
361
|
245
|
48%
|
48%
|
670
|
495
|
35%
|
35%
|
| International |
325
|
330
|
(2%) |
8%
|
647
|
622
|
4%
|
14%
|
| Total |
686
|
575
|
19%
|
25%
|
1,317
|
1,117
|
18%
|
24%
|
|
| Baxter
International Inc. |
| Domestic |
938
|
764
|
23%
|
23%
|
1,793
|
1,488
|
21%
|
21%
|
| International |
932
|
930
|
0%
|
9%
|
1,834
|
1,789
|
2%
|
12%
|
| Total |
1,870
|
1,694
|
10%
|
15%
|
3,627
|
3,277
|
11%
|
16%
|
|
FOR ADDITIONAL INFORMATION:
 |
- Media Contact:
- Deborah
Spak, (847) 948-2349
- Investors Contacts:
- Neville
Jeharajah, (847) 948-2875
Mary Kay Ladone, (847) 948-3371
-
|
| |
|
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