Exhibit 99
CORPORATE NEWS
Baxter International Inc.
One Baxter Parkway
Deerfield, IL 60015
[LOGO OF BAXTER]
FOR IMMEDIATE RELEASE
---------------------
MEDIA CONTACTS:
Deborah Spak, (847) 948-2349
Tom Kline, (847) 948-2251
INVESTOR CONTACTS:
Mary Kay Ladone, (847) 948-3371
Clare Sullivan, (847) 948-3085
BAXTER REPORTS FIRST QUARTER EARNINGS PER DILUTED SHARE
OF $0.43, AN INCREASE OF 19 PERCENT
COMPANY NARROWS FULL-YEAR EARNINGS GUIDANCE RANGE
DEERFIELD, Ill., April 20, 2006 - Baxter International Inc. (NYSE:BAX)
today reported stronger than expected growth in earnings and organic sales for
the first quarter.
First quarter net income of $282 million increased 26 percent compared to
$224 million in the first quarter of 2005. Earnings per diluted share of $0.43
increased 19 percent over last year. Contributing to the growth in earnings were
improved margins, lower interest expense and a lower tax rate. Excluding the
impact of stock-option expense of $0.02 per diluted share under SFAS No. 123-R,
earnings per diluted share totaled $0.45, which compares favorably with the
guidance that Baxter previously provided for the quarter of $0.41 to $0.43
(which also excluded the impact of stock-option expense).
-more-
BAXTER REPORTS FIRST QUARTER RESULTS/PAGE 2
- -------------------------------------------
Baxter's sales totaled $2.4 billion in the first quarter, an increase of 4
percent on an organic basis, which excludes the impact of foreign exchange.
Organic sales growth exceeded Baxter's guidance of 2 to 3 percent due to strong
growth in the company's BioScience business. Including the negative impact of
foreign exchange, reported sales grew 1 percent in the quarter. Sales within the
United States totaled $1.1 billion, an increase of 1 percent over the same
period last year, and sales outside of the United States also grew 1 percent (or
6 percent excluding the impact of foreign exchange) to $1.3 billion in the
quarter. Strong sales in the company's BioScience business, which totaled $1.0
billion and grew 11 percent, offset the impact of foreign exchange and the
impact of the COLLEAGUE(R) Infusion Pump hold, generic competition and the exit
of lower-margin businesses.
"We are extremely pleased with our first quarter financial results," said
John J. Greisch, Baxter's chief financial officer. "Our strong financial
performance reflects the value of our diversified portfolio and our ability to
meet or exceed our commitments while improving the financial profile of the
company."
Baxter's cash flow also improved in the quarter. The company generated $305
million in cash flow from operations during the quarter compared to $272 million
in the same period last year.
"We've made great progress over the last several quarters improving our
financial position and operational execution, expanding our global market
positions, and focusing our efforts on enhancing product innovation and R&D
productivity," said Robert L. Parkinson, Jr., chairman and chief executive
officer. "Our strong first quarter financial performance allows us to accelerate
R&D and strategic investments throughout the rest of the year that position the
company to deliver value to our patients, customers and shareholders over the
long term."
-more-
BAXTER REPORTS FIRST QUARTER RESULTS/PAGE 3
- -------------------------------------------
RECENT HIGHLIGHTS
Baxter recently announced several initiatives that leverage the company's
unique technology platforms and further expand its global presence. These
initiatives include:
o A $60 million investment to expand production capacity at its four
manufacturing facilities in China to accommodate anticipated growth
in demand for the company's intravenous solutions (IV) and
peritoneal dialysis (PD) products.
o The launch of generic sevoflurane, a widely used inhalation
anesthetic, in Japan, the United Kingdom and the United States.
o The launch in Europe of KIOVIG (TM) [Immune Globulin Intravenous
(Human)], Baxter's ready-to-use liquid 10% Intravenous
Immunoglobulin (IVIG), and the U.S. launch of FLEXBUMIN(TM), the
first preparation of human albumin to be packaged in a flexible
container.
o Initiation of the first human Phase II adult stem-cell therapy trial
in the United States to investigate the efficacy, tolerability and
safety of blood-derived, selected CD34+ stem cells to reduce
symptoms and improve clinical outcomes in patients with chronic
myocardial ischemia.
-more-
BAXTER REPORTS FIRST QUARTER RESULTS/PAGE 4
- -------------------------------------------
SECOND QUARTER AND FULL-YEAR 2006 OUTLOOK
Given the strong financial performance of the company in the first quarter,
Baxter is narrowing its earnings guidance range for the full-year 2006. The
company now expects to achieve organic sales growth of 4 to 5 percent, and
earnings per diluted share of $2.10 to $2.16, before special items and excluding
the impact of stock-option expense of $0.08 to $0.10 per diluted share. This
compares favorably to the company's original guidance of $2.08 to $2.16, which
also excluded special items and stock-option expense. Baxter continues to expect
cash flow from operations for full-year 2006 to total approximately $1.9
billion, with free cash flow of approximately $1.4 billion (after approximately
$550 million of anticipated capital expenditures).
For the second quarter of 2006, the company expects organic sales
(excluding the impact of foreign exchange) to grow 2 to 3 percent, and earnings
per diluted share of $0.54 to $0.56, before special items and excluding the
impact of stock-option expense of approximately $0.03 per diluted share.
A webcast of Baxter's first 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 April 20, 2006. Please visit Baxter's website for more
information regarding this and future events and webcasts, including investor
presentations and the company's Annual Meeting for shareholders in Chicago on
May 9.
-more-
BAXTER REPORTS FIRST QUARTER RESULTS/PAGE 5
- -------------------------------------------
Baxter International Inc., through its subsidiaries, assists healthcare
professionals and their patients with the treatment of complex medical
conditions, including hemophilia, immune disorders, cancer, infectious diseases,
kidney disease, trauma and other conditions. The company applies its expertise
in medical devices, pharmaceuticals and biotechnology to make a meaningful
difference in patients' lives.
This release includes forward-looking statements concerning the company's
financial results. 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: future actions of
regulatory bodies and other governmental authorities, including the Food and
Drug Administration and foreign counterparts that could delay, limit or suspend
product development, manufacturing or sales or result in seizures, injunctions
and monetary sanctions, including with respect to the COLLEAGUE Infusion Pump;
product quality or patient safety concerns leading to product recalls,
withdrawals, launch delays, litigation, or declining sales; product development
risks; demand for and market acceptance risks for new and existing products,
such as ADVATE, and other technologies; 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;
inventory reductions or fluctuations in buying patterns by wholesalers or
distributors; the availability of acceptable raw materials and component supply;
global regulatory, trade and tax policies; the ability to enforce patents;
patents of third parties preventing or restricting the company's manufacture,
sale or use of affected products or technology; reimbursement policies of
government agencies and private payers; timely realization of the anticipated
benefits of the company's restructuring initiatives; foreign currency
fluctuations; changes in credit agency ratings; and other risks identified in
the company's most recent filing on Form 10-K and other SEC 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--PAGE 6
BAXTER INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(unaudited)
(in millions, except per share and percentage data)
THREE MONTHS ENDED
MARCH 31,
--------------------
2006 2005 Change
-------- -------- --------
CONTINUING OPERATIONS:
- ----------------------
NET SALES $ 2,409 $ 2,383 1%
GROSS PROFIT 1,052 969 9%
% of Sales 43.7% 40.7% 3.0 pts
MARKETING AND ADMINISTRATIVE EXPENSES 526 483 9%
% of Sales 21.8% 20.3% 1.5 pts
RESEARCH AND DEVELOPMENT EXPENSES 138 133 4%
- ---------------------------------------------------------------------------------------
OPERATING INCOME 388 353 10%
- ---------------------------------------------------------------------------------------
% of Sales 16.1% 14.8% 1.3 pts
INTEREST, NET 18 31 (42)%
OTHER EXPENSE, NET 16 24 (33)%
- ---------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 354 298 19%
INCOME TAX EXPENSE 72 74 (3)%
- ---------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS $ 282 $ 224 26%
=======================================================================================
BASIC EPS FROM CONTINUING OPERATIONS $ 0.44 $ 0.36 22%
=======================================================================================
DILUTED EPS FROM CONTINUING OPERATIONS $ 0.43 $ 0.36 19%
=======================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic 641 619
Diluted 648 623
- ---------------------------------------------------------------------------------------
Note: Effective January 1, 2006, the company adopted SFAS No. 123-R using the
modified prospective method. After-tax stock-option expense for the first
quarter of 2006 was $10 million, or $0.02 per diluted share. In accordance with
the modified prospective adoption method, the company did not adjust its
historical consolidated financial statements to reflect the impact of
stock-option expense. Based on the pro forma application of SFAS No. 123 for the
calculation of stock-option expense prior to January 1, 2006 (as previously
disclosed in the company's consolidated financial statements), pro forma
after-tax stock-option expense in the first quarter of 2005 was $12 million, or
$0.02 per diluted share.
BAXTER--PAGE 7
BAXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
($ in millions)
MARCH 31, DECEMBER 31,
2006 2005
----------- ------------
ASSETS
- ------
Cash and equivalents $ 881 $ 841
Receivables 1,750 1,766
Inventories 2,006 1,925
Other current assets 594 584
--------------------------
Total current assets 5,231 5,116
--------------------------
Property, plant and equipment, net 4,122 4,144
Other long-term assets 3,427 3,467
- -----------------------------------------------------------------------------------------
Total assets $ 12,780 $ 12,727
=========================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Short-term debt $ 129 $ 924
Other current liabilities 2,796 3,241
Long-term debt 2,276 2,414
Other long-term liabilities 1,832 1,849
Shareholders' equity 5,747 4,299
- -----------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 12,780 $ 12,727
=========================================================================================
BAXTER--PAGE 8
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
MARCH 31,
--------------------------
2006 2005
----------- ------------
Net income $ 282 $ 226
Adjustments
Depreciation and amortization 139 147
Deferred income taxes 2 23
Stock compensation 18 1
Other 18 17
Changes in balance sheet items
Receivables 38 59
Inventories (63) 19
Accounts payable and accrued liabilities (105) (259)
Restructuring payments (19) (43)
Other (5) 82
- -----------------------------------------------------------------------------------------
Cash flows from operations $ 305 $ 272
=========================================================================================
CHANGES IN NET DEBT
Increase (decrease)
THREE MONTHS ENDED
MARCH 31,
--------------------------
2006 2005
----------- ------------
Net debt, January 1 $ 2,497 $ 3,185
Cash flows from operations (305) (272)
Capital expenditures 76 65
Dividends 363 359
Issuances of common stock (1,249) -
Purchases of treasury stock 171 -
Other, including the effect of exchange rate changes (29) 156
- -----------------------------------------------------------------------------------------
Increase (decrease) in net debt (973) 308
- -----------------------------------------------------------------------------------------
Net debt, March 31 $ 1,524 $ 3,493
=========================================================================================
KEY STATISTICS, MARCH 31:
Days sales outstanding 54.8 59.2
Inventory turns 2.6 2.6
Net-debt-to-capital ratio (A) 21.0% 34.9%
(A) The decrease in the debt-to-capital ratio from March 31, 2005 to March
31, 2006 primarily related to the settlement of the company's equity units.
In February 2006, the purchase contracts included in the company's equity
units matured, and the company issued approximately 35 million common
shares in exchange for $1.25 billion. Management used a portion of the cash
proceeds to pay down maturing debt. The net-debt-to-capital ratio at March
31, 2005 was calculated in accordance with the company's primary credit
agreements, which gave 70% equity credit to the company's $1.25 billion
equity units debt outstanding on that date (the majority of which was
repurchased and retired in the fourth quarter of 2005). Refer to the
company's Form 10-K for the year ended December 31, 2005 for additional
information regarding the equity units.
BAXTER--PAGE 9
BAXTER INTERNATIONAL INC.
NET SALES FROM CONTINUING OPERATIONS
PERIOD ENDING MARCH 31, 2006
(unaudited)
Q1 Q1 % GROWTH @ % GROWTH @
($ in millions) 2006 2005 ACTUAL RATES CONSTANT RATES
- ------------------------------------------------------------------------------------------------------
BIOSCIENCE
United States $ 474 $ 398 19% 19%
International 526 504 4% 11%
Total $ 1,000 $ 902 11% 15%
- ------------------------------------------------------------------------------------------------------
MEDICATION DELIVERY
United States $ 491 $ 552 (11)% (11)%
International 425 426 -% 4%
Total $ 916 $ 978 (6)% (4)%
- ------------------------------------------------------------------------------------------------------
RENAL
United States $ 94 $ 94 -% -%
International 399 409 (2)% 1%
Total $ 493 $ 503 (2)% 1%
- ------------------------------------------------------------------------------------------------------
BAXTER INTERNATIONAL INC.
United States $ 1,059 $ 1,044 1% 1%
International 1,350 1,339 1% 6%
Total $ 2,409 $ 2,383 1% 4%
- ------------------------------------------------------------------------------------------------------
BAXTER--PAGE 10
BAXTER INTERNATIONAL INC.
KEY PRODUCT LINE SALES
PERIOD ENDING MARCH 31, 2006
(unaudited)
Q1 Q1 % GROWTH @ % GROWTH @
($ in millions) 2006 2005 ACTUAL RATES CONSTANT RATES
- ------------------------------------------------------------------------------------------------------
BIOSCIENCE
Recombinants $ 374 $ 344 9% 14%
Plasma Proteins (1) 192 170 13% 15%
Antibody Therapy 183 89 106% 110%
BioSurgery (2) 69 66 5% 8%
Transfusion Therapies 124 133 (7)% (4)%
Other (3) 58 100 (42)% (39)%
- ------------------------------------------------------------------------------------------------------
Total BioScience $ 1,000 $ 902 11% 15%
- ------------------------------------------------------------------------------------------------------
MEDICATION DELIVERY
IV Therapies (4) $ 304 $ 296 3% 5%
Drug Delivery 195 204 (4)% (3)%
Infusion Systems 195 230 (15)% (14)%
Anesthesia 212 231 (8)% (6)%
Other (5) 10 17 (41)% (35)%
- ------------------------------------------------------------------------------------------------------
Total Medication Delivery $ 916 $ 978 (6)% (4)%
- ------------------------------------------------------------------------------------------------------
RENAL
PD Therapy $ 388 $ 377 3% 6%
HD Therapy 105 126 (17)% (16)%
- ------------------------------------------------------------------------------------------------------
Total Renal (6) $ 493 $ 503 (2)% 1%
- ------------------------------------------------------------------------------------------------------
TOTAL BAXTER $ 2,409 $ 2,383 1% 4%
======================================================================================================
(1) Includes plasma-derived hemophilia (FVII, FVIII, FIX and FEIBA), albumin,
and certain other plasma-based products. Sales of Tisseel, sales of plasma
to third parties, and contract manufacturing revenues were previously
reported in Plasma Proteins, and are now reported in other product lines,
as detailed below.*
(2) Includes sales of Tisseel and FloSeal/CoSeal, which were previously
reported in Plasma Proteins and Other, respectively.*
(3) Principally includes vaccines and sales of plasma to third parties. The
sales of plasma to third parties were previously reported in Plasma
Proteins. The prior year sales include contract manufacturing revenues.*
(4) Principally includes intravenous solutions and nutritional products.
(5) Principally includes other hospital-distributed products.
(6) Sales of pharmaceutical and certain other products, which were previously
reported in Other, are now reported in PD Therapy.*
* Prior year sales data has been reclassified to reflect the
above-mentioned changes.
BAXTER--PAGE 11
BAXTER INTERNATIONAL INC.
KEY PRODUCT LINE SALES -- US/INTERNATIONAL
PERIOD ENDING MARCH 31, 2006
(unaudited)
Q1 2006 Q1 2005 % GROWTH
-------------------------------- -------------------------------- ---------------------------------
($ in millions) US INTERNATIONAL TOTAL US INTERNATIONAL TOTAL US INTERNATIONAL TOTAL
- ----------------------------------------------------------------------------------------------------------------------------------
BIOSCIENCE
Recombinants $ 161 $ 213 $ 374 $ 145 $ 199 $ 344 11% 7% 9%
Plasma Proteins (1) 67 125 192 48 122 170 40% 2% 13%
Antibody Therapy 139 44 183 48 41 89 190% 7% 106%
BioSurgery (2) 39 30 69 35 31 66 11% (3)% 5%
Transfusion Therapies 56 68 124 65 68 133 (14)% -% (7)%
Other (3) 12 46 58 57 43 100 (79)% 7% (42)%
- ----------------------------------------------------------------------------------------------------------------------------------
Total BioScience $ 474 $ 526 $ 1,000 $ 398 $ 504 $ 902 19% 4% 11%
- ----------------------------------------------------------------------------------------------------------------------------------
MEDICATION DELIVERY
IV Therapies (4) $ 104 $ 200 $ 304 $ 94 $ 202 $ 296 11% (1)% 3%
Drug Delivery 125 70 195 139 65 204 (10)% 8% (4)%
Infusion Systems 124 71 195 155 75 230 (20)% (5)% (15)%
Anesthesia 133 79 212 158 73 231 (16)% 8% (8)%
Other (5) 5 5 10 6 11 17 (17)% (55)% (41)%
- ----------------------------------------------------------------------------------------------------------------------------------
Total Medication Delivery $ 491 $ 425 $ 916 $ 552 $ 426 $ 978 (11)% -% (6)%
- ----------------------------------------------------------------------------------------------------------------------------------
RENAL
PD Therapy $ 66 $ 322 $ 388 $ 62 $ 315 $ 377 6% 2% 3%
HD Therapy 28 77 105 32 94 126 (13)% (18)% (17)%
- ----------------------------------------------------------------------------------------------------------------------------------
Total Renal (6) $ 94 $ 399 $ 493 $ 94 $ 409 $ 503 -% (2)% (2)%
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL BAXTER $ 1,059 $ 1,350 $ 2,409 $ 1,044 $ 1,339 $ 2,383 1% 1% 1%
==================================================================================================================================
(1) Includes plasma-derived hemophilia (FVII, FVIII, FIX and FEIBA), albumin,
and certain other plasma-based products. Sales of Tisseel, sales of plasma
to third parties, and contract manufacturing revenues were previously
reported in Plasma Proteins, and are now reported in other product lines,
as detailed below.*
(2) Includes sales of Tisseel and FloSeal/CoSeal, which were previously
reported in Plasma Proteins and Other, respectively.*
(3) Principally includes vaccines and sales of plasma to third parties. The
sales of plasma to third parties were previously reported in Plasma
Proteins. The prior year sales include contract manufacturing revenues.*
(4) Principally includes intravenous solutions and nutritional products.
(5) Principally includes other hospital-distributed products.
(6) Sales of pharmaceutical and certain other products, which were previously
reported in Other, are now reported in PD Therapy.*
* Prior year sales data has been reclassified to reflect the
above-mentioned changes.