Baxter Continues Growth Momentum in First Quarter With 11 Percent Increase In Sales, 12 Percent Growth in Earnings And 9 Percent EPS Growth

Company Boosts R&D Spending 24 percent in the Quarter



Apr 19, 2001, 01:00 ET from Baxter International, Inc.

    DEERFIELD, ILL., April 19 /PRNewswire/ -- Baxter International Inc.
 (NYSE:   BAX) continued its sales and earnings growth momentum in the first
 quarter.  Net earnings for the quarter grew 12 percent to $214 million, while
 earnings per diluted share grew 9 percent to $0.71.  This compares to the
 $191 million, or $0.65 per diluted share, that Baxter reported for the same
 period last year.  Net earnings for the first quarter of 2001 exclude the
 one-time, non-cash impact of adopting new accounting rules(A).
     Baxter reported a 16 percent increase in sales before the impact of
 foreign exchange, or 11 percent after the impact of foreign exchange.  Sales
 totaled $1.76 billion, up from the $1.58 billion reported in the first quarter
 last year.  Domestic sales increased 18 percent in the quarter, while
 international sales rose 15 percent (or 5 percent after 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.  Baxter's BioScience business
 grew 16 percent to $631 million, driven by continued strong demand for
 therapies used in the treatment of hemophilia and immune disorders.  Sales for
 the company's Medication Delivery business increased 8 percent in the quarter
 to $669 million, with anesthesia products and electronic infusion pumps strong
 contributors to that growth.  Primary growth drivers for the Renal business
 were hemodialysis products and service businesses, contributing to a 9 percent
 increase in sales of $457 million.
     "We continued our very strong sales and earnings momentum with first
 quarter performance consistent with our expectations," said Harry M. Jansen
 Kraemer, Jr., chairman and chief executive officer.
     "I expect Baxter to continue to accelerate our sales and earnings growth
 through enhancements to our product pipeline, increased production capacity,
 continued improvements in operational efficiency, and global expansion,"
 Kraemer continued.
     For 2001, Baxter expects to accelerate annual sales growth to the low
 double digits, to achieve earnings growth in the mid-teens, and to generate
 more than $500 million in operational cash flow after investing more than
 $1 billion in research and development and capital expenditures.
 Specifically, Baxter expects to grow earnings in the high single digits in the
 first half of 2001, and in the mid- to high-teens in the second half of the
 year.
     At its annual growth conference conducted for investors last month, Baxter
 executives highlighted numerous growth initiatives underway in each of its
 businesses, including an enhanced pipeline of biopharmaceutical, vaccine and
 transfusion therapy products, development of new drug delivery platforms, and
 a new approach for integrating care of patients with chronic renal
 insufficiency and end-stage kidney disease.
     Reflecting this commitment to expand its product pipeline, Baxter boosted
 its spending on research and development in the first quarter to $103 million,
 an increase of 24 percent.
 
     Recent Highlights
     During the first quarter, Baxter announced several initiatives designed to
 further align employee interests with those of its shareholders, including
 changes to its long-term compensation program for managers, and the granting
 of stock options to more than 41,000 Baxter team members worldwide.  The
 company also announced a two-for-one common stock split, subject to approval
 by shareholders of an increase in the number of common shares the company is
 authorized to issue.
     In BioScience, during the first quarter the company announced plans to
 construct a new facility for production of recombinant and cell-culture
 derived vaccines.  Baxter also completed its acquisition of Sera-Tec
 Biologicals, which owns and operates 80 plasma collection centers in 28
 states, providing Baxter with a stable supply of source plasma for processing
 into lifesaving plasma-based therapies.  The company also began a Phase I
 clinical study for recombinant human C1 inhibitor in patients with hereditary
 angioedema, as part of Baxter's collaboration with Pharming Group N.V.  With
 its partner Cerus Corporation, Baxter submitted a CE mark application for
 approval to market the Intercept Platelet system in Europe, and announced
 completion of enrollment in a Phase III clinical trial of the Intercept
 Platelet System in the United States.  The Intercept Platelet System is
 designed to inactivate viruses, bacteria, other pathogens and white blood
 cells in donated platelets prior to transfusion.
     Baxter's Medication Delivery business announced agreements with U.S.
 Pharmacopeia and Welch Allyn Protocol Inc. during the quarter, in initiatives
 to improve patient safety.  Baxter will promote and market U.S. Pharmacopeia's
 MedMARx database that allows hospitals to report, track, document and analyze
 medication errors.  Under the agreement with Welch Allyn Protocol, the
 companies will jointly develop the Acuity Pump System which will seamlessly
 network Welch Allyn's monitoring systems with Baxter's Colleague infusion
 pumps.
     Also during the first quarter, Baxter's Renal business announced that its
 New Drug Application for Extraneal (icodextrin 7.5%) had been accepted for
 filing by the U.S. Food and Drug Administration.
     Baxter International Inc. is a global medical products and services
 company that 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 first 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 April 19, 2001.  The company will be making investor
 presentations on the following dates during the second quarter of 2001: May 8
 and June 26.   Please visit Baxter's web site for additional information
 regarding web casts of these events, as well as Baxter's May 1 Annual Meeting
 of Stockholders.
     (Baxter, Colleague, Extraneal 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.
                         Consolidated Statements of Income
                             from Continuing Operations
                                  (Unaudited) (A)
 
     (in millions, except per share data)           Three Months Ended
                                                         March 31,
                                              2001         2000      % Growth
 
     Net sales                              $1,757       $1,583           11%
 
     Costs and expenses
      Cost of goods sold                       986          896           10%
      Marketing and administrative expenses    343          315            9%
      Research and development expenses        103           83           24%
      Goodwill amortization                     12            5          140%
 
     Operating income                          313          284           10%
 
     Interest, net                              19           15           27%
     Other expense                               7           12          (42%)
 
     Income before income taxes                287          257           12%
 
     Income tax expense                         73           66           11%
 
     Net income                               $214         $191           12%
 
 
 
 
     Earnings per basic common share         $0.73        $0.66           11%
 
     Earnings per diluted common share       $0.71        $0.65            9%
 
 
     Weighted average number of common
      shares outstanding
         Basic                                 295          290
         Diluted                               303          296
 
 
 
                                              2001         2000        Change
     RATIOS
       Gross margin                          43.9%        43.4%   0.5 points
       Marketing and administrative
        expenses                             19.5%        19.9%  (0.4) points
       Operating income                      17.8%        17.9%  (0.1) points
 
 
     (A) These statements of income exclude the first quarter 2001 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."  The net-of-tax charge
         was $52 million, or $0.18 per basic share and $0.17 per diluted share.
 
 
                           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)        Three Months Ended
                                                              March 31,
                                                         2001           2000
 
     Income from continuing operations before
      Q1, 2001 change in accounting principle            $214           $191
     Other adjustments, primarily non-cash items          203            153
     After-tax interest, net                               11              9
 
     Operational cash inflow                              428            353
 
     Changes in balance sheet items
      Accounts receivable                                 (11)            55
      Inventories                                        (100)          (131)
      Accounts payable and accrued liabilities           (256)          (284)
      Other                                               (41)           (37)
     Capital expenditures                                (131)          (115)
 
     Operational cash outflow                            (539)          (512)
 
     Operational cash flow from continuing operations   ($111)         ($159)
 
 
     Changes in Net Debt
     (in millions)Increase (decrease)                     Three Months Ended
                                                              March 31,
                                                         2001           2000
 
     Net debt, January 1                               $1,781         $2,250
 
     Operational cash flow from continuing operations     111            159
     Reduction of debt due to spin-off of
      Edwards Lifesciences                                 --           (502)
     Dividends                                            340             84
     Acquisitions, including assumed debt                  90            172
     Purchases of treasury stock                           --             49
     Other, including the effect of exchange
      rate changes                                       (195)          (167)
 
     Increase (decrease) in net debt                      346           (205)
 
     Net debt, March 31                                $2,127         $2,045
 
 
     Key statistics, March 31:
     Days sales outstanding                              60.0           68.8
     Inventory turns                                      2.9            2.7
     Net-debt-to-capital ratio                          39.2%          43.3%
 
     Operational cash flow is defined as cash flow provided by operations plus
     after-tax interest, plus the tax effect of divestiture gains (losses) less
     capital expenditures.
 
 

SOURCE Baxter International, Inc.
    DEERFIELD, ILL., April 19 /PRNewswire/ -- Baxter International Inc.
 (NYSE:   BAX) continued its sales and earnings growth momentum in the first
 quarter.  Net earnings for the quarter grew 12 percent to $214 million, while
 earnings per diluted share grew 9 percent to $0.71.  This compares to the
 $191 million, or $0.65 per diluted share, that Baxter reported for the same
 period last year.  Net earnings for the first quarter of 2001 exclude the
 one-time, non-cash impact of adopting new accounting rules(A).
     Baxter reported a 16 percent increase in sales before the impact of
 foreign exchange, or 11 percent after the impact of foreign exchange.  Sales
 totaled $1.76 billion, up from the $1.58 billion reported in the first quarter
 last year.  Domestic sales increased 18 percent in the quarter, while
 international sales rose 15 percent (or 5 percent after 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.  Baxter's BioScience business
 grew 16 percent to $631 million, driven by continued strong demand for
 therapies used in the treatment of hemophilia and immune disorders.  Sales for
 the company's Medication Delivery business increased 8 percent in the quarter
 to $669 million, with anesthesia products and electronic infusion pumps strong
 contributors to that growth.  Primary growth drivers for the Renal business
 were hemodialysis products and service businesses, contributing to a 9 percent
 increase in sales of $457 million.
     "We continued our very strong sales and earnings momentum with first
 quarter performance consistent with our expectations," said Harry M. Jansen
 Kraemer, Jr., chairman and chief executive officer.
     "I expect Baxter to continue to accelerate our sales and earnings growth
 through enhancements to our product pipeline, increased production capacity,
 continued improvements in operational efficiency, and global expansion,"
 Kraemer continued.
     For 2001, Baxter expects to accelerate annual sales growth to the low
 double digits, to achieve earnings growth in the mid-teens, and to generate
 more than $500 million in operational cash flow after investing more than
 $1 billion in research and development and capital expenditures.
 Specifically, Baxter expects to grow earnings in the high single digits in the
 first half of 2001, and in the mid- to high-teens in the second half of the
 year.
     At its annual growth conference conducted for investors last month, Baxter
 executives highlighted numerous growth initiatives underway in each of its
 businesses, including an enhanced pipeline of biopharmaceutical, vaccine and
 transfusion therapy products, development of new drug delivery platforms, and
 a new approach for integrating care of patients with chronic renal
 insufficiency and end-stage kidney disease.
     Reflecting this commitment to expand its product pipeline, Baxter boosted
 its spending on research and development in the first quarter to $103 million,
 an increase of 24 percent.
 
     Recent Highlights
     During the first quarter, Baxter announced several initiatives designed to
 further align employee interests with those of its shareholders, including
 changes to its long-term compensation program for managers, and the granting
 of stock options to more than 41,000 Baxter team members worldwide.  The
 company also announced a two-for-one common stock split, subject to approval
 by shareholders of an increase in the number of common shares the company is
 authorized to issue.
     In BioScience, during the first quarter the company announced plans to
 construct a new facility for production of recombinant and cell-culture
 derived vaccines.  Baxter also completed its acquisition of Sera-Tec
 Biologicals, which owns and operates 80 plasma collection centers in 28
 states, providing Baxter with a stable supply of source plasma for processing
 into lifesaving plasma-based therapies.  The company also began a Phase I
 clinical study for recombinant human C1 inhibitor in patients with hereditary
 angioedema, as part of Baxter's collaboration with Pharming Group N.V.  With
 its partner Cerus Corporation, Baxter submitted a CE mark application for
 approval to market the Intercept Platelet system in Europe, and announced
 completion of enrollment in a Phase III clinical trial of the Intercept
 Platelet System in the United States.  The Intercept Platelet System is
 designed to inactivate viruses, bacteria, other pathogens and white blood
 cells in donated platelets prior to transfusion.
     Baxter's Medication Delivery business announced agreements with U.S.
 Pharmacopeia and Welch Allyn Protocol Inc. during the quarter, in initiatives
 to improve patient safety.  Baxter will promote and market U.S. Pharmacopeia's
 MedMARx database that allows hospitals to report, track, document and analyze
 medication errors.  Under the agreement with Welch Allyn Protocol, the
 companies will jointly develop the Acuity Pump System which will seamlessly
 network Welch Allyn's monitoring systems with Baxter's Colleague infusion
 pumps.
     Also during the first quarter, Baxter's Renal business announced that its
 New Drug Application for Extraneal (icodextrin 7.5%) had been accepted for
 filing by the U.S. Food and Drug Administration.
     Baxter International Inc. is a global medical products and services
 company that 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 first 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 April 19, 2001.  The company will be making investor
 presentations on the following dates during the second quarter of 2001: May 8
 and June 26.   Please visit Baxter's web site for additional information
 regarding web casts of these events, as well as Baxter's May 1 Annual Meeting
 of Stockholders.
     (Baxter, Colleague, Extraneal 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.
                         Consolidated Statements of Income
                             from Continuing Operations
                                  (Unaudited) (A)
 
     (in millions, except per share data)           Three Months Ended
                                                         March 31,
                                              2001         2000      % Growth
 
     Net sales                              $1,757       $1,583           11%
 
     Costs and expenses
      Cost of goods sold                       986          896           10%
      Marketing and administrative expenses    343          315            9%
      Research and development expenses        103           83           24%
      Goodwill amortization                     12            5          140%
 
     Operating income                          313          284           10%
 
     Interest, net                              19           15           27%
     Other expense                               7           12          (42%)
 
     Income before income taxes                287          257           12%
 
     Income tax expense                         73           66           11%
 
     Net income                               $214         $191           12%
 
 
 
 
     Earnings per basic common share         $0.73        $0.66           11%
 
     Earnings per diluted common share       $0.71        $0.65            9%
 
 
     Weighted average number of common
      shares outstanding
         Basic                                 295          290
         Diluted                               303          296
 
 
 
                                              2001         2000        Change
     RATIOS
       Gross margin                          43.9%        43.4%   0.5 points
       Marketing and administrative
        expenses                             19.5%        19.9%  (0.4) points
       Operating income                      17.8%        17.9%  (0.1) points
 
 
     (A) These statements of income exclude the first quarter 2001 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."  The net-of-tax charge
         was $52 million, or $0.18 per basic share and $0.17 per diluted share.
 
 
                           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)        Three Months Ended
                                                              March 31,
                                                         2001           2000
 
     Income from continuing operations before
      Q1, 2001 change in accounting principle            $214           $191
     Other adjustments, primarily non-cash items          203            153
     After-tax interest, net                               11              9
 
     Operational cash inflow                              428            353
 
     Changes in balance sheet items
      Accounts receivable                                 (11)            55
      Inventories                                        (100)          (131)
      Accounts payable and accrued liabilities           (256)          (284)
      Other                                               (41)           (37)
     Capital expenditures                                (131)          (115)
 
     Operational cash outflow                            (539)          (512)
 
     Operational cash flow from continuing operations   ($111)         ($159)
 
 
     Changes in Net Debt
     (in millions)Increase (decrease)                     Three Months Ended
                                                              March 31,
                                                         2001           2000
 
     Net debt, January 1                               $1,781         $2,250
 
     Operational cash flow from continuing operations     111            159
     Reduction of debt due to spin-off of
      Edwards Lifesciences                                 --           (502)
     Dividends                                            340             84
     Acquisitions, including assumed debt                  90            172
     Purchases of treasury stock                           --             49
     Other, including the effect of exchange
      rate changes                                       (195)          (167)
 
     Increase (decrease) in net debt                      346           (205)
 
     Net debt, March 31                                $2,127         $2,045
 
 
     Key statistics, March 31:
     Days sales outstanding                              60.0           68.8
     Inventory turns                                      2.9            2.7
     Net-debt-to-capital ratio                          39.2%          43.3%
 
     Operational cash flow is defined as cash flow provided by operations plus
     after-tax interest, plus the tax effect of divestiture gains (losses) less
     capital expenditures.
 
 SOURCE  Baxter International, Inc.