Mail Stop 6010
December 20, 2005
VIA U.S. MAIL AND FACSIMILE
John J. Greisch
Baxter International, Inc.
Chief Financial Officer
One Baxter Parkway
Deerfield, Illinois 60015
Re: Baxter International, Inc.
Form 10-K for the year ended December 31, 2004
Filed March 16, 2005
Form 8-K dated October 20, 2005
File No. 001-04448
Dear Mr. Greisch:
We have reviewed your filing and have the following
comments.
We have limited our review of your filing to those issues we have
addressed in our comments. Where indicated, we think you should
revise your future filings in response to these comments. If you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure. After reviewing this information, we may raise
additional comments.
Form 10-K for the year ended December 31, 2004
Consolidated Financial Statements
Consolidated Statements of Cash Flows, page 44
1. We note that you present your cash flows from operating
activities
by adjusting "income from continuing operations before cumulative
effect of accounting changes" to net cash flow from operating
activities. Under paragraph 28 of SFAS 95, those who choose to
use
the indirect method of presenting operating cash flows should
adjust
net income to reconcile it to net cash flow from operating
activities. Please revise in future filings.
2. As a related matter, we see that you present cash flows from
discontinued operations as a cash flow from operations. Under
SFAS
95, you should not aggregate operating, investing, and financing
cash
flows from discontinued operations into a single line item. Note
that there is no requirement in SFAS 95 to present discontinued
operations separately on your statement of cash flows. However,
if
you choose to do so, please present cash flows from discontinued
operations consistently within each category. Please revise in
future
filings.
Note 4. Special Charges, page 53
3. We note your disclosures related to the asset impairment
charges
recognized during the year ended December 31, 2004. In your
response
and in future filings, please clarify how you determined the fair
value of the impaired assets, as required by paragraph 26(c) of
SFAS
144. Your disclosure that the impairment losses were based on
"market data for these assets" should include more specific
details.
Form 8-K dated October 20, 2005
4. We see that you present your non-GAAP measures in the form of
adjusted statements of income. That format may be confusing to
investors as it also reflects several non-GAAP measures, including
adjusted gross profit, adjusted marketing and administrative
expenses, adjusted special charges, adjusted operating income,
adjusted income before income taxes, adjusted income tax expense,
adjusted income from continuing operations, and adjusted basic and
diluted EPS from continuing operations, which have not been
identified or described to investors. In fact, it appears that
management does not use all of these non-GAAP measures but they
are
shown here as a result of the presentation format. Please note
that
Instruction 2 to Item 2.02 of Form 8-K requires that when
furnishing
information under this item you must provide all the disclosures
required by paragraph (e)(1)(i) of Item 10 of Regulation S-K and
FAQ
8 Regarding the Use of Non-GAAP Financial Measures dated June 13,
2003 for each non-GAAP measure presented. In addition, you should
explain why you believe each measure provides useful information
to
investors.
* To eliminate investor confusion, please remove the non-GAAP
statements of operations format from future filings and only
disclose
those non-GAAP measures used by management with the appropriate
reconciliations.
* Otherwise, confirm that you will revise your Forms 8-K in future
periods to provide all the disclosures required by Item
10(e)(1)(i)
of Regulation S-K and FAQ 8 for each non-GAAP measure presented in
the statement, and provide us with a sample of your proposed
disclosure. We may have further comment.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your response that keys your
responses to our comments and provides any requested information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed decision. Since the company and
its management are in possession of all facts relating to a
company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Kristin Lochhead at (202) 551-3664 or me at
(202) 551-3676 if you have questions. In this regard, please do
not
hesitate to contact Martin James, Senior Assistant Chief
Accountant,
at (202) 551-3671 with any other questions.
Sincerely,
Brian Cascio
Accounting Branch Chief
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Mr. Greisch
Baxter International, Inc.
December 20, 2005
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