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Baxter Reports Strong First Quarter Financial Results and Boosts Full-Year Outlook

First Quarter Sales Increased 11 Percent; EPS of $0.61 Increased 42 Percent

DEERFIELD, Ill., April 19, 2007 /PRNewswire-FirstCall/ -- Baxter International Inc. today reported sales and earnings above expectations for the first quarter of 2007, and raised its outlook for the full-year.

First quarter net income increased 43 percent to $403 million compared to $282 million in the first quarter of 2006. Earnings per diluted share of $0.61 increased 42 percent over the $0.43 per diluted share reported last year. Strong sales, improved margins, and lower interest expense drove the company's financial performance, which compared favorably to the guidance previously provided for the first quarter of $0.54 to $0.56 per diluted share.

Baxter's worldwide sales totaled $2.7 billion in the first quarter, an increase of 11 percent. Sales within the United States totaled $1.1 billion, an increase of 8 percent over the same period last year, while sales outside of the United States grew 14 percent (or 8 percent excluding the impact of foreign exchange) to $1.5 billion. Excluding the impact of foreign exchange, Baxter's sales growth of 8 percent exceeded its guidance range of 5 to 6 percent.

During the quarter, momentum continued in Baxter's BioScience business, with revenues totaling $1.1 billion, an increase of 22 percent. This increase was driven by strength across all product lines, including recombinant products used in the treatment of hemophilia A, antibody therapy products for the treatment of primary immunodeficiencies, and other specialty plasma therapeutics and biosurgery products. The company also posted strong vaccine sales in the quarter as a result of shipments of its candidate H5N1 vaccine for government stockpiles around the world, and strong demand in Europe for its vaccines that prevent tick-borne encephalitis and group C meningococcal meningitis. BioScience results exclude the Transfusion Therapies business, which was divested in the quarter.

Medication Delivery revenues increased 8 percent to $990 million as a result of strong international performance and sales of anesthesia products. Renal revenues increased 6 percent to $525 million as the company continued to post strong gains in peritoneal dialysis patients, primarily in developing countries.

"Our strong first quarter financial results reflect the building momentum in our business and our disciplined focus on driving margin improvements," said Robert L. Parkinson, Jr., chairman and chief executive officer. "This performance continues to reflect the value inherent in optimizing our current business portfolio and allowed us to continue to accelerate our investment in research and development, which grew 15% in the quarter."

Second Quarter and Full-Year 2007 Outlook

Given strong first quarter financial results, Baxter is raising its sales and earnings outlook for full-year 2007. The company now expects to achieve sales growth of 4 to 5 percent, excluding the impact of foreign exchange, and earnings per diluted share of $2.60 to $2.65, before any special items. In addition, Baxter continues to expect cash flow from operations for full-year 2007 to total approximately $2.3 billion. For the second quarter of 2007, Baxter expects sales growth of 3 to 4 percent, excluding the impact of foreign exchange, and earnings per diluted share, before any special items, of $0.66 to $0.68.

The financial outlook for the second quarter and full-year 2007 reflects the divestiture of the Transfusion Therapies business and excludes sales of the company's COLLEAGUE infusion pump in the United States, which may resume before the end of 2007.

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 19, 2007. Please visit Baxter's website for more information regarding this and future investor events and webcasts, including investor presentations, and the company's Annual Meeting for shareholders to be held in Chicago on May 1.

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: 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, including the FDA and foreign counterparts, that could 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; product development risks; 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; reimbursement policies of government agencies and private payers; the availability of acceptable raw materials and component supply; 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; 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 INTERNATIONAL INC.

                        Consolidated Statements of Income

                    Three Months Ended March 31, 2007 and 2006

                                   (unaudited)

               (in millions, except per share and percentage data)



                                               Three Months Ended

                                                     March 31,

                                             ----------------------

                                               2007           2006     Change

                                              ------         ------    ------


    NET SALES                                $2,675         $2,409        11%

    COST OF GOODS SOLD                        1,409          1,357         4%


    --------------------------------------------------------------------------

    GROSS PROFIT                              1,266          1,052        20%

    --------------------------------------------------------------------------

    % of Sales                                47.3%          43.7%    3.6 pts


    MARKETING AND ADMINISTRATIVE EXPENSES       583            526        11%

    % of Sales                                21.8%          21.8%      0 pts


    RESEARCH AND DEVELOPMENT EXPENSES           159            138        15%

    % of Sales                                 5.9%           5.7%    0.2 pts


    NET INTEREST EXPENSE                          5             18       (72%)


    OTHER (INCOME) EXPENSE, NET (A)             (10)            16      (163%)


    --------------------------------------------------------------------------

    PRE-TAX INCOME                              529            354        49%

    --------------------------------------------------------------------------


    INCOME TAX EXPENSE                          126             72        75%

    --------------------------------------------------------------------------


    NET INCOME                                 $403           $282        43%

    ==========================================================================



    BASIC EPS                                 $0.62          $0.44        41%

    ==========================================================================

    DILUTED EPS                               $0.61          $0.43        42%

    ==========================================================================


    WEIGHTED AVERAGE NUMBER OF COMMON

     SHARES OUTSTANDING

       Basic                                    650            641

       Diluted                                  659            648

    --------------------------------------------------------------------------



    (A) Other (Income) Expense, Net in 2007 includes income of $23 million,

        reflecting a gain on the sale of the Transfusion Therapies business of

        $58 million less related charges of $35 million.  The after-tax impact

        of these items was $6 million of income, or $0.01 per diluted share.




                            Baxter International Inc.

                      Condensed Consolidated Balance Sheets

                                   (unaudited)

                                 ($ in millions)



                                                     March 31,    December 31,

                                                         2007            2006

                                                 -------------   -------------


    ASSETS

    Cash and equivalents                                $2,384        $2,485

    Receivables                                          1,899         1,838

    Inventories                                          2,119         2,066

    Other current assets                                   572           581

                                                 -----------------------------

      Total current assets                               6,974         6,970

                                                 -----------------------------

    Property, plant and equipment, net                   4,047         4,229

    Other long-term assets                               3,462         3,487

    --------------------------------------------------------------------------

       Total assets                                    $14,483       $14,686

    ==========================================================================


    LIABILITIES AND SHAREHOLDERS' EQUITY

    Short-term debt                                       $596          $234

    Other current liabilities                            3,028         3,376

    Long-term debt                                       2,124         2,567

    Other long-term liabilities                          2,131         2,237

    Shareholders' equity                                 6,604         6,272

    --------------------------------------------------------------------------

       Total liabilities and shareholders' equity      $14,483       $14,686

    ==========================================================================




                            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,

                                                    --------------------------

                                                     2007                2006

                                                    ------              ------


    Net income                                       $403                $282

    Adjustments

       Depreciation and amortization                  140                 139

       Deferred income taxes                          (13)                  2

       Stock compensation                              27                  18

       Other                                            4                  18

    Changes in balance sheet items

       Receivables                                    (98)                 38

       Inventories                                   (128)                (63)

       Accounts payable and accrued liabilities      (158)               (105)

       Restructuring payments                          (3)                (19)

       Other                                           41                  (5)

    --------------------------------------------------------------------------

    Cash flows from operations                       $215                $305

    ==========================================================================


    --------------------------------------------------------------------------

    Changes in Net Debt

    --------------------------------------------------------------------------

    Increase (decrease)                                 Three Months Ended

                                                             March 31,

                                                    --------------------------

                                                     2007                2006

                                                    ------              ------


    Net debt, beginning of period                    $316              $2,497


    Cash flows from operations                       (215)               (305)

    Capital expenditures                               93                  76

    Dividends                                         380                 363

    Proceeds from sale of Transfusion

     Therapies business                              (421)                 --

    Issuances of common stock                          --              (1,249)

    Proceeds from stock issued under

     employee benefit plans                          (201)                (44)

    Purchases of treasury stock                       270                 171

    Other, including the effect of

     exchange rate changes                            114                  15

    --------------------------------------------------------------------------

    Increase (decrease) in net debt                    20                (973)

    --------------------------------------------------------------------------


    Net debt, March 31                               $336              $1,524

    ==========================================================================



    --------------------------------------------------------------------------

    Key statistics, March 31:

    Days sales outstanding                           55.3                54.8

    Inventory turns                                   2.6                 2.6

    --------------------------------------------------------------------------




                            Baxter International Inc.

                                    Net Sales

                     Periods Ending March 31, 2007 and 2006

                                   (unaudited)

                                 ($ in millions)



                                                          % Growth  % Growth

                                                                 @         @

                                           Q1        Q1     Actual  Constant

                                          2007     2006(1)   Rates     Rates

    --------------------------------------------------------------------------


      BioScience (2)

      United States                       $484       $418      16%       16%

      International                        588        458      28%       20%

      Total                             $1,072       $876      22%       18%

    --------------------------------------------------------------------------


      Medication Delivery

      United States                       $515       $491       5%        5%

      International                        475        425      12%        6%

      Total                               $990       $916       8%        6%

    --------------------------------------------------------------------------


      Renal

      United States                        $97        $94       3%        3%

      International                        428        399       7%        5%

      Total                               $525       $493       6%        4%

    --------------------------------------------------------------------------


    Baxter excluding Transfusion

     Therapies

    United States                       $1,096     $1,003       9%        9%

    International                        1,491      1,282      16%       11%

    Total                               $2,587     $2,285      13%       10%

    --------------------------------------------------------------------------


      Transfusion Therapies (2)

      United States                        $43        $56     (23%)     (23%)

      International                         45         68     (34%)     (38%)

      Total                                $88       $124     (29%)     (31%)

    --------------------------------------------------------------------------


    Baxter International Inc.

    United States                       $1,139     $1,059       8%        8%

    International                        1,536      1,350      14%        8%

    Total                               $2,675     $2,409      11%        8%

    --------------------------------------------------------------------------



    (1) Prior year sales data has been reclassified to reflect the change that

        is described in note 2 below.

    (2) Sales of Transfusion Therapies (TT) products were previously reported

        in BioScience.  Due to Baxter's expected significant continuing cash

        flows associated with this business, Baxter continued to include the

        results of operations of TT in the company's results of operations

        through the February 28, 2007 sale date.  The amounts reported in

        Transfusion Therapies reflect sales of TT products until the

        completion of the sale of the TT business, as well as revenues

        associated with manufacturing, distribution and other services

        provided by the company to the buyer post-divestiture.




                            Baxter International Inc.

                             Key Product Line Sales

                     Periods Ending March 31, 2007 and 2006

                                   (unaudited)

                                 ($ in millions)


                                                          % Growth  % Growth

                                                                 @         @

                                           Q1        Q1     Actual  Constant

                                          2007     2006(1)   Rates     Rates

    --------------------------------------------------------------------------

    BioScience

    Recombinants (2)                      $388      $335      16%        11%

    Plasma Proteins (3)                    225       192      17%        15%

    Antibody Therapy                       222       183      21%        18%

    Regenerative Medicine (4)               82        69      19%        14%

    Other (5)                              155        97      60%        48%

    --------------------------------------------------------------------------

    Total BioScience (6)                $1,072      $876      22%        18%

    --------------------------------------------------------------------------


    Medication Delivery

    IV Therapies (7)                      $320      $304       5%         2%

    Global Injectables (8)                 361       353       2%         0%

    Infusion Systems                       209       195       7%         6%

    Anesthesia (9)                          89        54      65%        63%

    Other (10)                              11        10      10%         0%

    --------------------------------------------------------------------------

    Total Medication Delivery             $990      $916       8%         6%

    --------------------------------------------------------------------------


    Renal

    PD Therapy                            $419      $388       8%         6%

    HD Therapy                             106       105       1%        (1%)

    --------------------------------------------------------------------------

    Total Renal                           $525      $493       6%         4%

    --------------------------------------------------------------------------


    --------------------------------------------------------------------------

    Baxter excluding Transfusion

     Therapies                          $2,587    $2,285      13%        10%

    --------------------------------------------------------------------------


    --------------------------------------------------------------------------

    Transfusion Therapies (11)             $88      $124     (29%)      (31%)

    --------------------------------------------------------------------------


    --------------------------------------------------------------------------

    TOTAL BAXTER                        $2,675    $2,409      11%         8%

    --------------------------------------------------------------------------



    (1)  Prior year sales data has been reclassified to reflect the changes

         that are described in notes 2, 5, 6, 8, 9 and 11 below.

    (2)  Includes sales of recombinant FVIII products (ADVATE and

         RECOMBINATE). Sales of recombinant FIX (BeneFIX) were previously

         reported in Recombinants and are now reported in Other, as detailed

         below.

    (3)  Includes plasma-derived hemophilia (FVII, FVIII, FIX and FEIBA),

         albumin, and certain other plasma-based products.

    (4)  Previously referred to as BioSurgery.

    (5)  Principally includes vaccines, sales of plasma to third parties, and

         recombinant FIX (BeneFIX). Sales of recombinant FIX were previously

         reported in Recombinants.

    (6)  BioScience sales have been reclassified to reflect the change

         described in Note 11.

    (7)  Principally includes intravenous solutions and nutritional products.

    (8)  Principally includes sales related to the pharma partnering business,

         enhanced packaging, premix drugs and generic injectables. Generic

         injectables were previously reported in Anesthesia.

    (9)  Principally includes proprietary inhaled anesthetics and other

         anesthesia products. Sales of generic injectables were previously

         reported in Anesthesia and are now reported in Global Injectables.

    (10) Principally includes other hospital-distributed products.

    (11) Sales of Transfusion Therapies (TT) products were previously reported

         in BioScience. Due to Baxter's expected significant continuing cash

         flows associated with this business, Baxter continued to include the

         results of operations of TT in the company's results of operations

         through the February 28, 2007 sale date. The amounts reported above

         reflect sales of TT products until the completion of the sale of the

         TT business, as well as revenues associated with manufacturing,

         distribution and other services provided by the company to the buyer

         post-divestiture.




                            Baxter International Inc.

                    Key Product Line Sales -- US/International

                      Periods Ending March 31, 2007 and 2006

                                   (unaudited)

                                 ($ in millions)


                                        Q1 2007                Q1 2006(1)

                                ----------------------------------------------

                                         Inter-                  Inter-

                                  US   national  Total    US   national  Total

                                ----------------------------------------------

    BioScience

    Recombinants (2)             $179    $209    $388    $161    $174    $335

    Plasma Proteins (3)            88     137     225      67     125     192

    Antibody Therapy              159      63     222     139      44     183

    Regenerative Medicine (4)      43      39      82      39      30      69

    Other (5)                      15     140     155      12      85      97

                                ----------------------------------------------

    Total BioScience (6)         $484    $588  $1,072    $418    $458    $876

                                ----------------------------------------------


    Medication Delivery

    IV Therapies (7)             $101    $219    $320    $104    $200    $304

    Global Injectables (8)        227     134     361     225     128     353

    Infusion Systems              122      87     209     124      71     195

    Anesthesia (9)                 60      29      89      33      21      54

    Other (10)                      5       6      11       5       5      10

                                ----------------------------------------------

    Total Medication Delivery    $515    $475    $990    $491    $425    $916

                                ----------------------------------------------


    Renal

    PD Therapy                    $69    $350    $419     $66    $322    $388

    HD Therapy                     28      78     106      28      77     105

                                ----------------------------------------------

    Total Renal                   $97    $428    $525     $94    $399    $493

                                ----------------------------------------------


                                ----------------------------------------------

    Baxter excluding

     Transfusion Therapies     $1,096  $1,491  $2,587  $1,003  $1,282  $2,285

                                ----------------------------------------------


                                ----------------------------------------------

    Transfusion Therapies (11)    $43     $45     $88     $56     $68    $124

                                ----------------------------------------------


                                ----------------------------------------------

    TOTAL BAXTER               $1,139  $1,536  $2,675  $1,059  $1,350  $2,409

                                ==============================================




                                                          % Growth

                                                ------------------------------

                                                  US    International   Total

                                                ------------------------------

    BioScience

    Recombinants (2)                             11%         20%         16%

    Plasma Proteins (3)                          31%         10%         17%

    Antibody Therapy                             14%         43%         21%

    Regenerative Medicine (4)                    10%         30%         19%

    Other (5)                                    25%         65%         60%

                                                ------------------------------

    Total BioScience (6)                         16%         28%         22%

                                                ------------------------------


    Medication Delivery

    IV Therapies (7)                             (3%)        10%          5%

    Global Injectables (8)                        1%          5%          2%

    Infusion Systems                             (2%)        23%          7%

    Anesthesia (9)                               82%         38%         65%

    Other (10)                                    0%         20%         10%

                                                ------------------------------

    Total Medication Delivery                     5%         12%          8%

                                                ------------------------------


    Renal

    PD Therapy                                    5%          9%          8%

    HD Therapy                                    0%          1%          1%

                                                ------------------------------

    Total Renal                                   3%          7%          6%

                                                ------------------------------


                                                ------------------------------

    Baxter excluding Transfusion

     Therapies                                    9%         16%         13%

                                                ------------------------------


                                                ------------------------------

    Transfusion Therapies (11)                  (23%)       (34%)       (29%)

                                                ------------------------------


                                                ------------------------------

    TOTAL BAXTER                                  8%         14%         11%

                                                ==============================


    (1)  Prior year sales data has been reclassified to reflect the changes

         that are described in notes 2, 5, 6, 8, 9 and 11 below.

    (2)  Includes sales of recombinant FVIII products (ADVATE and

         RECOMBINATE).  Sales of recombinant FIX (BeneFIX) were previously

         reported in Recombinants and are now reported in Other, as detailed

         below.

    (3)  Includes plasma-derived hemophilia (FVII, FVIII, FIX and FEIBA),

         albumin, and certain other plasma-based products.

    (4)  Previously referred to as BioSurgery.

    (5)  Principally includes vaccines and sales of plasma to third parties,

         and recombinant FIX (BeneFIX). Sales of recombinant FIX (BeneFIX)

         were previously reported in Recombinants.

    (6)  BioScience sales have been reclassified to reflect the change

         described in Note 11.

    (7)  Principally includes intravenous solutions and nutritional products.

    (8)  Principally includes sales related to pharma partnering business,

         enhanced packaging, premix drugs and generic injectables. Generic

         injectables were previously reported in Anesthesia.

    (9)  Principally includes proprietary inhaled anesthetics and other

         anesthesia products. Sales of generic injectables were previously

         reported in Anesthesia and are now reported in Global Injectables.

    (10) Principally includes other hospital-distributed products.

    (11) Sales of Transfusion Therapies (TT) products were previously reported

         in BioScience. Due to Baxter's expected significant continuing cash

         flows associated with this business, Baxter continued to include the

         results of operations of TT in the company's results of operations

         through the February 28, 2007 sale date. The amounts reported above

         reflect sales of TT products until the completion of the sale of the

         TT business, as well as revenues associated with manufacturing,

         distribution and other services provided by the company to the buyer

         post-divestiture.

CONTACT: Media, Deborah Spak, +1-847-948-2349, or Tom Kline,+1-847-948-2251; or Investors, Mary Kay Ladone, +1-847-948-3371, or ClareTrachtman, +1-847-948-3085, all of Baxter International Inc.

Web site: http://www.baxter.com/

Ticker Symbol: (NYSE:BAX)

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Copyright © 2007 PR Newswire Association LLC. All rights reserved.
A United Business Media Company

Posted: April 2007


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