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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
February 11, 1998
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Date of Report
BAXTER INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-4448 36-0781620
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(Commission file number) (IRS Employer Identification No.)
One Baxter Parkway, Deerfield, Illinois 60015
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(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code: (847) 948-2000
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(Page 1 of 9 pages)
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Item 5. Other Events.
On January 29, 1998, the attached press release was issued.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BAXTER INTERNATIONAL INC.
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(Registrant)
By: /s/ Jan S. Reed
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Jan S. Reed
Assistant Secretary
Date: February 11, 1998
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CORPORATE NEWS
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Baxter International Inc.
One Baxter Parkway
Deerfield, Illinois 60015 U.S.A.
Baxter
FOR IMMEDIATE RELEASE
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Media contact: Mary Thomas, (847) 948-2815
Investor contacts: Neville Jeharajah, (847) 948-2875
Mary Kay Ladone, (847) 948-3371
BAXTER'S FOURTH-QUARTER NET INCOME UP 15 PERCENT;
FOURTH-QUARTER EPS OF 65 CENTS INCREASES 12 PERCENT;
1997 CASH FLOW OF $432 MILLION EXCEEDS GOAL
DEERFIELD, Ill., January 29, 1998 - Baxter International Inc. (NYSE:BAX)
today reported fourth-quarter net income increased 15 percent to $182 million,
from $158 million in the year-earlier period. Basic earnings per share increased
12 percent to 65 cents per share, from 58 cents per share in the 1996 fourth
quarter and in line with analysts' consensus estimates. Diluted earnings per
share for the quarter rose 12 percent to 64 cents, from 57 cents in the 1996
period.
Sales for the period grew 9 percent to $1.63 billion, from $1.49 billion in
the prior year. Without the impact of a stronger U.S. dollar, fourth-quarter
sales rose 14 percent. Sales growth was fueled by strong growth of the company's
new Colleague/TM/ electronic infusion pump, peritoneal dialysis products used to
treat kidney disease, and tissue valves and repair products used in heart-valve
therapy.
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BAXTER FOURTH-QUARTER EARNINGS-PAGE 2
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For the full year, Baxter generated $432 million in operational cash flow,
exceeding its goal of $300 to $400 million. This was after investing $392
million in research and development and $496 million in capital expenditures.
Income from continuing operations for the year increased 13 percent to $652
million, from $575 million in 1996. This excludes a first-quarter charge of $352
million for in-process research and development pertaining to the company's
acquisitions of Immuno International AG and Research Medical, Inc.
Full-year basic earnings per share from continuing operations were $2.35,
up 11 percent from $2.11 in 1996. Diluted earnings per share from continuing
operations were up 12 percent to $2.31, from $2.07 in the prior year.
Sales for the full year were $6.1 billion, up 13 percent from $5.4 billion
in 1996. Sales rose 16 percent excluding the impact of a stronger U.S. dollar.
International sales, which comprise more than 50 percent of the company's
revenues, rose to $3.3 billion from $2.8 billion, an increase of 17 percent over
the prior year. Without the impact of a stronger U.S. dollar, 1997 international
sales were up 24 percent. Sales growth was particularly strong in Latin America,
which grew approximately 30 percent. Domestic sales grew 8 percent to $2.9
billion, from $2.7 billion in 1996.
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BAXTER FOURTH-QUARTER EARNINGS-PAGE 3
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FOURTH-QUARTER HIGHLIGHTS
During the fourth quarter, the Italian antitrust authorities approved
Baxter's acquisition of the dialysis, intravenous therapy, irrigation solutions
and nutrition businesses of Bieffe Medital. Baxter expects to finalize the
transaction during the first quarter. Baxter also received clearance from the
U.S. Food and Drug Administration to begin Phase II clinical trials for its
endovascular graft system, which is being tested for its use in minimally
invasive cardiac surgery to repair abdominal aortic aneurysms.
"Our fourth-quarter performance was solid," said Vernon R. Loucks Jr.,
Baxter chairman and chief executive officer. "Overall, 1997 was a year of
tremendous achievement. We completed several acquisitions that have greatly
expanded our global presence and technological superiority. We introduced new
products in each of our businesses. And, we made significant progress in our
key research-and-development initiatives."
"We expect this momentum to continue in 1998," added Harry Kraemer, Jr.,
Baxter president. "Specifically, we expect to: increase sales approximately 10
percent before the impact of foreign exchange; grow net income in the mid-teens
before foreign exchange, and in low double digits after foreign exchange; and
generate more than $500 million in cash flow."
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BAXTER FOURTH-QUARTER EARNINGS-PAGE 4
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Baxter International is a global medical-products and services company that
is a leader in technologies related to the blood and circulatory system. Through
its subsidiaries, Baxter has market-leading positions in four global business
segments: blood therapies, which develops therapies and products used in
transfusion medicine; cardiovascular medicine, which develops products and
provides services to treat late-stage cardiovascular disease; renal therapy,
which develops products and services to improve therapies for treating kidney
disease; and intravenous systems/medical products, which develops technologies
and systems to improve intravenous medication delivery, and distributes medical
products.
This news release includes 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, 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.
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BAXTER - PAGE 5
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<CAPTION>
BAXTER INTERNATIONAL INC.
Consolidated Statements of Income
(Unaudited)
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(in millions, except per share data) Three Months Ended Year Ended
December 31, December 31,
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1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Net Sales $1,632 $1,494 $6,138 $5,438
Cost and expenses
Cost of goods sold 878 827 3,340 3,009
Marketing and administrative expenses 361 312 1,356 1,142
Research and development expenses 110 90 392 340
Acquired research and development 0 0 352 0
Interest, net 39 27 163 103
Goodwill amortization 13 11 45 36
Other (income) expense (12) 9 (33) 15
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Total costs and expenses 1,389 1,276 5,615 4,645
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Income from continuing operations
before Income taxes 243 218 523 793
Income tax expense 61 60 223 218
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Income from continuing operations 182 158 300 575
Discontinued operations 0 0 0 94
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Net income $182 $158 $300 $669
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Basic earnings per common share (1)
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Continuing operations
Before acquired research and
development expense $0.65 $0.58 $2.35 $2.11
Acquired research and development
expense $0.00 $0.00 ($1.27) $0.00
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Total continuing operations $0.65 $0.58 $1.08 $2.11
Discontinued operations $0.00 $0.00 $0.00 $0.35
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Net income $0.65 $0.58 $1.08 $2.46
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Average number of common shares outstanding 280 273 278 272
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(1) Diluted earnings per common shares (EPS) for the quarter and year ended
December 31, 1997 was $0.64 and $1.06, respectively. Diluted EPS before the
acquired research and development expense for the year ended December 31, 1997
was $2.31. Diluted EPS for the quarter and year ended December 31, 1996 was
$0.57 and $2.41, respectively, and diluted EPS from continuing operations was
$0.57 and $2.07, respectively.
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BAXTER - PAGE 6
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BAXTER INTERNATIONAL INC.
Condensed Operational Cash Flow Information and Changes in Net Debt
(Unaudited)
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<CAPTION>
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Condensed Operational Cash Flow Information
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(in millions) (Brackets denote cash outflows) Year Ended
December 31,
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1997 1996
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<S> <C> <C>
Income from continuing operations $300 $575
Adjustments, primarily non-cash items 358 434
Acquired research and development 352 0
After-tax interest, net 97 62
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Operational cash inflow 1,107 1,071
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Changes in balance sheet items
Accounts receivable (56) (159)
Inventories (102) 59
Accounts payable and accrued liabilities (56) (12)
Restructuring program payments (19) (37)
Other (104) (34)
Capital expenditures (496) (398)
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Operational cash outflow (833) (581)
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Operational cash flow - continuing operations/1/ $274 $490
Operational cash flow - discontinued operations $0 $192
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Operational cash flow $274 $682
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/1/ Operational cash flow before net litigation payments was $432 million and
$587 million in 1997 and 1996, respectively.
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Changes in Net Debt
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(in millions) Increase(decrease) Year Ended
December 31,
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1997 1996
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Net debt, January 1 $1,280 $2,115
Operational cash flow (274) (682)
Dividends 316 320
Acquisitions, net of divestitures 645 352
Assumed debt from acquisitions 333 0
Reduction of debt due to spinoff 0 (1,151)
Effect of exchange rate changes (38) 14
Purchase of treasury stock 0 267
Other 51 45
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Increase (decrease) in net debt 1,033 (835)
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Net debt, December 31 $2,313 $1,280
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Operational cash flow is defined as cash flow provided by operations plus
after-tax interest-net plus the tax effect of divestitures gains (losses)
less capital expenditures.
