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Baxter International, Inc.$65.31$.53.82%

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 Baxter’s Fourth Quarter Financial Results Exceed Expectations
   Thursday, January 29, 2015 7:00:55 AM ET

--Performance Sets Solid Foundation for Planned Separation in Mid-2015

Baxter International Inc. (BAX ) today announced fourth quarter 2014 financial results that exceeded expectations and reported on its progress toward its planned separation into two independent, leading healthcare companies in mid-2015.

For fourth quarter 2014, Baxter reported net income of $953 million and earnings per diluted share of $1.74, compared to net income of $326 million and earnings per diluted share of $0.59 in the same period last year. These results reflect both earnings and an after-tax gain from its recently divested vaccines franchise of $429 million (or $0.78 per diluted share), as well as after-tax special items totaling $209 million (or $0.38 per diluted share) for intangible amortization, costs associated with business development and contingent milestone payments, integration of the company’s acquisition of Gambro AB, and Baxter’s planned separation. Fourth quarter 2013 results included a loss from discontinued operations and after-tax special items, totaling $401 million (or $0.74 per diluted share).



On an adjusted basis, excluding special items and discontinued operations, Baxter’s fourth quarter income from continuing operations totaled $733 million, or $1.34 per diluted share. These results reflect strong revenue growth across several key franchises, and continued investments in commercial and manufacturing operations, as well as research and development.

Worldwide revenues totaled $4.5 billion and increased 3 percent from prior-year levels (or 7 percent excluding the impact of foreign currency). Sales within the United States totaled $1.9 billion and advanced 6 percent, and international sales of $2.6 billion increased 2 percent (or 7 percent excluding the impact of foreign currency). BioScience revenues of $1.9 billion rose 9 percent from the prior-year period (or 12 percent excluding the impact of foreign currency). Performance was driven by double-digit growth across the company’s broad Hemophilia and BioTherapeutics franchises. Medical Products sales of $2.6 billion were comparable to the prior-year period (or up 3 percent excluding the impact of foreign currency) resulting from strong U.S. performance across intravenous therapies, specialty pharmaceuticals, and products to treat end-stage renal disease.

Full-Year Results

Baxter’s net income totaled $2.5 billion, or $4.56 per diluted share, in 2014. Compared to the prior year, excluding special items and discontinued operations, Baxter’s adjusted income from continuing operations increased 4 percent to $2.7 billion, and earnings per diluted share of $4.90 advanced 4 percent, exceeding the company’s previously issued guidance for the year.

Baxter’s worldwide revenues in 2014 totaled $16.7 billion and rose 11 percent (or 13 percent excluding the impact of foreign currency). After adjusting both periods for the contribution of Gambro, Baxter’s worldwide sales rose 4 percent (or 5 percent excluding the impact of foreign currency).

Compared to the prior-year period, BioScience sales of $6.7 billion grew 7 percent (or 8 percent excluding the impact of foreign currency), while Medical Products sales of $10 billion advanced 15 percent (or 16 percent excluding the impact from foreign currency). After adjusting both periods for the contribution of Gambro, Medical Products sales increased 2 percent (or 4 percent excluding the impact of foreign currency) on a full-year basis.

During 2014, Baxter generated cash flows from operations of approximately $3.2 billion and invested record levels in research and development and capital improvements. The company’s investments in research and development grew 22 percent to more than $1.4 billion, while capital expenditures increased 24 percent to $1.9 billion, reflecting investments in manufacturing capacity to support future demand and growth opportunities across the company’s global portfolio.

’’Throughout 2014, we executed on our financial and strategic priorities while positioning both companies for sustained success with investments to enhance our commercial, operational and scientific capabilities,’’ said Robert L. Parkinson, Jr., chairman and chief executive officer. ’’As we chart distinct and unique paths forward as separate global healthcare leaders, we look forward to unlocking value for our shareholders, partners, employees, and the patients and healthcare providers we serve.’’

2014 Highlights

In 2014, Baxter reached a significant milestone in the company’s history with the announcement of plans to create two separate, independent global healthcare companies - one focused on developing and marketing innovative biopharmaceuticals and the other on life-saving medical products. This decision supports Baxter’s evolution and underscores its commitment to ensuring long-term strategic priorities remain aligned with shareholders’ best interests, while creating value for patients, healthcare providers, and other key stakeholders.

Baxter has not only progressed toward the establishment of these new healthcare companies, it is building on a solid foundation with a number of significant achievements, including:

-- Naming of the executive management teams for both companies, unveiling of ’’Baxalta Incorporated’’ as the identity for the new biopharmaceutical company, and filing of a preliminary Form 10 with the U.S. Securities and Exchange Commission for Baxalta.

-- Forming a new global innovation and research and development (R&D) center in Cambridge, Mass., for the biopharmaceuticals business, which positions the new company to accelerate innovation by building on its robust pipeline in core areas of expertise, establish and strengthen R&D collaborations with partners in new and emerging biotech areas, and optimize R&D productivity while enhancing patient care globally.

-- Successfully integrating Gambro, which combined with Baxter’s own global leadership in home-based peritoneal dialysis therapy, provides a comprehensive renal portfolio and global array of cross-therapeutic options.

-- Enhancing manufacturing capabilities in Medical Products to support growth in demand for peritoneal dialysis solutions and dialyzers.

-- Advancing innovation through achievement of key clinical and regulatory milestones including U.S. Food and Drug Administration (FDA) approval for:

-- HYQVIA [Immune Globulin Infusion 10% (Human) with Recombinant Human Hyaluronidase]

-- RIXUBIS [Coagulation Factor IX (Recombinant)] for routine prophylactic treatment, control and prevention of bleeding episodes, and perioperative management in children with hemophilia B

-- OBIZUR [Antihemophilic Factor (Recombinant), Porcine Sequence] for the treatment of bleeding episodes in adults with acquired hemophilia A, a very rare and potentially life-threatening acute bleeding disorder

-- 510(k) clearance for the next-generation SIGMA Spectrum Infusion Pump with Master Drug Library

-- Submitting biologics license applications to the FDA for the approval of BAX 855, an investigational, extended half-life recombinant factor VIII (rFVIII) treatment for hemophilia A based on ADVATE [Antihemophilic Factor (Recombinant)], and BAX111, the first highly purified recombinant von Willebrand Factor (rVWF), as a treatment for patients with von Willebrand disease, the most common type of inherited bleeding disorder.

-- Augmenting capabilities in key therapeutic areas through new partnerships, collaborations and acquisitions, including new relationships with Rockwell Medical and Merrimack Pharmaceuticals, and the acquisitions of AesRx, Chatham Therapeutics and ICNet.

-- Delivering significant value to shareholders through increased dividends and continued share repurchases. Baxter raised its dividend for the eighth consecutive year in 2014 and returned more than $1.6 billion to shareholders.

Outlook for First Quarter 2015

Baxter also announced today its outlook for the first quarter 2015. For the first quarter of 2015, the company expects sales growth of approximately 2 to 3 percent, excluding the impact of foreign currency. Including the impact of foreign currency, the company expects sales to decline approximately 3 to 4 percent. Baxter also expects earnings from continuing operations, before special items, of $0.85 to $0.90 per diluted share, which reflects traditional seasonality, the impact of foreign currency, increased generic competition, and additional manufacturing and operational costs which are expected to be most pronounced in the first quarter of 2015. The first quarter 2015 earnings guidance excludes approximately $0.09 per diluted share of projected intangible amortization expense. Reconciling for the inclusion of intangible asset amortization results in GAAP (Generally Accepted Accounting Principles) earnings of $0.76 to $0.81 per diluted share, before other special items, for the quarter.

With the separation of the two companies anticipated to occur mid-2015, company executives will be providing investors an in-depth overview of both companies’ long-term, strategic outlook and financial guidance, on May 18, 2015 for Baxter International Inc., and on May 19, 2015 for Baxalta Incorporated. A webcast of Baxter’s fourth 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. CST on January 29, 2015. Please visit www.baxter.com for more information regarding these upcoming investor events and webcasts.

Baxter International Inc., through its subsidiaries, develops, manufactures and markets products that save and sustain the lives of people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. As a global, diversified healthcare company, Baxter applies a unique combination of expertise in medical devices, pharmaceuticals and biotechnology to create products that advance patient care worldwide.

This release includes forward-looking statements concerning the company’s financial results, business development activities, R&D pipeline, outlook for first quarter 2015, and the planned separation of Baxter’s biopharmaceutical and medical products businesses. 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 of risks for new and existing products; future actions of regulatory bodies and other governmental authorities, including the FDA and foreign counterparts; product quality or patient safety concerns leading to product recalls, withdrawals, launch delays, litigation, or declining sales; U.S. healthcare reform and other global austerity measures; reimbursement and rebate policies of government agencies and private payers; product development risks; the ability to successfully separate the biopharmaceutical and medical products businesses on the terms or timeline currently contemplated, if at all, and achieve the intended results; accurate identification of business development and R&D opportunities and realization of anticipated benefits; timely submission and approval of regulatory filings; inventory reductions or fluctuations in buying patterns; 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; the availability of acceptable raw materials and component supply; fluctuations in supply and demand and the pricing of plasma-based therapies; 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; the impact of global economic conditions on Baxter and its customers, including foreign governments; foreign currency fluctuations and other risks identified in the company’s most recent filing on Form 10-K and other Securities and Exchange Commission 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 December 31, 2014 and 2013
                                                                                                              (unaudited)
                                                                                          (in millions, except per share and percentage data)
 
                                                                                                                                                       
                                                                                                                    Three Months Ended
                                                                                                                       December 31,
                                                                                   ------------------------------------------------------------------------------------
                                                                                                   2014                                                           2013                                                         Change
                                                                                   --------------------                                           --------------------                                           --------------------
                                                                                                                                                                                                                  
NET SALES                                                                                        $4,472                                                         $4,322                                                             3%
                                                                                                                                                                                                                  
COST OF SALES                                                                                     2,248                                                          2,326                                                           (3%)
                                                          
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GROSS MARGIN                                                                   2,224                    1,996                      11%
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
% of Net Sales                                                                                    49.7%                                                          46.2%                                                        3.5 pts
                                                                                                                                                                                                                  
MARKETING AND ADMINISTRATIVE EXPENSES                                                             1,091                                                          1,054                                                             4%
% of Net Sales                                                                                    24.4%                                                          24.4%                                                          0 pts
                                                                                                                                                                                                                  
RESEARCH AND DEVELOPMENT EXPENSES                                                                   335                                                            396                                                          (15%)
% of Net Sales                                                                                     7.5%                                                           9.2%                                                      (1.7 pts)
                                                                                                                                                                                                                  
NET INTEREST EXPENSE                                                                                 29                                                             41                                                          (29%)
                                                                                                                                                                                                                  
OTHER EXPENSE (INCOME), NET                                                                         171                                                           (19)                                                            N/M
                                                          
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                            598                      524                      14%
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                  
INCOME TAX EXPENSE                                                                74                      115                    (36%)
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
% of Income from Continuing Operations before Income Taxes                                        12.4%                                                          21.9%                                                      (9.5 pts)
                                                                                                                                                                                                                  
INCOME FROM CONTINUING OPERATIONS                                                                   524                                                            409                                                            28%
                                                                                                                                                                                                                  
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX A                                                   429                                                           (83)                                                            N/M
                                                                                                                                                                                                                  
NET INCOME                                                                      $953                     $326                     192%
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                  
INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE
   Basic                                                                       $0.97                    $0.75                      29%
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
   Diluted                                                                     $0.96                    $0.74                      30%
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                  
INCOME FROM DISCONTINUED OPERATIONS PER COMMON SHARE
   Basic                                                                       $0.79                  ($0.15)                      N/M
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
   Diluted                                                                     $0.78                  ($0.15)                      N/M
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                  
NET INCOME PER COMMON SHARE
   Basic                                                                       $1.76                    $0.60                     193%
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
   Diluted                                                                     $1.74                    $0.59                     195%
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                  
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
   Basic                                                                                            542                                                            543
   Diluted                                                                       547                      548      
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                  
ADJUSTED PRE-TAX INCOME FROM CONTINUING OPERATIONS (excluding                                      $922 B                                                         $941 B                                                         (2%)
special items)
ADJUSTED INCOME FROM CONTINUING OPERATIONS (excluding special                                      $733 B                                                         $720 B                                                           2%
items)
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding                                        $1.34 B                                                        $1.31 B                                                           2%
special items)
A    Operating results from the company’s vaccines franchise are
                        classified as discontinued operations for all periods presented.
B                       Refer to page 9 for a description of the adjustments and a
                        reconciliation to generally accepted accounting principles (GAAP)
                        measures.
                                                                    BAXTER INTERNATIONAL INC.
                                                            Note to Consolidated Statements of Income
                                                          Three Months Ended December 31, 2014 and 2013
                                                Description of Adjustments and Reconciliation of GAAP to Non-GAAP
                                                                            Measures
                                                                           (unaudited)
                                                       (in millions, except per share and percentage data)
 
The company’s GAAP results for the three months ended December 31,
2014 and 2013 included special items which impacted the GAAP
measures as follows:
                                                                                                   
                                                                              Three Months Ended                        
                                                                                 December 31,
                                                        ------------------------------------------------------------
                                                                        2014                   2013                             Change
                                                        --------------------                      --------------------                      --------------------
Gross Margin                                                          $2,224                                    $1,996                                       11%
    Intangible asset amortization expense(1)                              49                                        46
    Gambro acquisition and integration items (2)                           -                                        47
    Business optimization items (3)                                        2                                        72
    Product-related items (4)                                           (25)                                        17
    Separation-related costs(5)                                            1                      -    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Gross Margin                                                 $2,251                 $2,178                     3%
                                                        ==================== ==================== ==================== ==================== ====================
% of Net Sales                                                         50.3%                                     50.4%                                 (0.1 pts)
                                                                                                                                             
Marketing and Administrative Expenses                                 $1,091                                    $1,054                                        4%
   Gambro acquisition and integration items (2)                         (36)                                      (42)
   Business optimization items(3)                                        (5)                                      (81)
   Separation-related costs(5)                                          (80)                      -    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Marketing and Administrative Expenses                          $970                   $931                     4%
                                                        ==================== ==================== ==================== ==================== ====================
% of Net Sales                                                         21.7%                                     21.5%                                   0.2 pts
                                                                                                                                             
Research and Development Expenses                                       $335                                      $396                                     (15%)
    Business development items(6)                                       (19)                                      (78)
    Business optimization items (3)                                        4                                      (29)
    Separation-related costs(5)                                         (15)                      -    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Research and Development Expenses                              $305                   $289                     6%
                                                        ==================== ==================== ==================== ==================== ====================
% of Net Sales                                                          6.8%                                      6.7%                                   0.1 pts
                                                                                                                                             
Other Expense (Income), Net                                             $171                                     $(19)                                       N/M
    Reserve items and adjustments (7)                                   (95)                                         -
    Gambro acquisition and integration items (2)                         (6)                                       (5)
    Business development items (6)                                      (45)                      -    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Other Expense (Income), Net                                     $25                  $(24)                    N/M
                                                        ==================== ==================== ==================== ==================== ====================
                                                                                                                                             
Pre-Tax Income from Continuing Operations                               $598                                      $524                                       14%
    Impact of special items                                              324                    417    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Pre-Tax Income from Continuing Operations                      $922                   $941                   (2%)
                                                        ==================== ==================== ==================== ==================== ====================
                                                                                                                                             
Income Tax Expense                                                       $74                                      $115                                     (36%)
    Impact of special items                                              115                    106    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Income Tax Expense                                             $189                   $221                  (14%)
                                                        ==================== ==================== ==================== ==================== ====================
% of Adjusted Pre-Tax Income from Continuing Operations                20.5%                                     23.5%                                   (3 pts)
                                                                                                                                             
Income from Continuing Operations                                       $524                                      $409                                       28%
    Impact of special items                                              209                    311    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Income from Continuing Operations                              $733                   $720                     2%
                                                        ==================== ==================== ==================== ==================== ====================
                                                                                                                                             
Adjusted Income from Discontinued Operations (8)                          12                                         7
                                                                 
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Net Income                                                     $745                   $727                     2%
                                                        ==================== ==================== ==================== ==================== ====================
                                                                                                                                             
Diluted EPS from Continuing Operations                                 $0.96                                     $0.74                                       30%
    Impact of special items                                             0.38                   0.57    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Diluted EPS from Continuing Operations                        $1.34                  $1.31                     2%
                                                        ==================== ==================== ==================== ==================== ====================
                                                                                                                                             
Adjusted Diluted EPS from Discontinued Operations                       0.02                                      0.02
                                                                 
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Diluted EPS                                                   $1.36                  $1.33                     2%
                                                        ==================== ==================== ==================== ==================== ====================
                                                                                                                                             
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
  Diluted                                                                547                    548    
------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                    
(1)                                  Effective January 1, 2014, Baxter has updated its non-GAAP measures
                                     above to exclude intangible asset amortization expense. Prior period
                                     non-GAAP measures have been revised to reflect the updated measures.
                                     Intangible asset amortization expense totaled $49 million ($39
                                     million, or $0.08 per diluted share, on an after-tax basis) and $46
                                     million ($35 million, or $0.07 per diluted share, on an after-tax
                                     basis) in 2014 and 2013, respectively.
(2)                                  The company’s results in 2014 included total charges of $42 million
                                     ($28 million, or $0.05 per diluted share, on an after-tax basis)
                                     primarily related to the integration of Gambro AB (Gambro). The
                                     company’s results in 2013 included total charges of $94 million ($79
                                     million, or $0.14 per diluted share, on an after-tax basis)
                                     primarily related to the acquisition and integration of Gambro.
(3)                                  The company’s results in 2014 included a net charge of $3 million
                                     ($2 million, or $0.00 per diluted share, on an after-tax basis)
                                     primarily related to business optimization charges of $30 million,
                                     partially offset by an adjustment of $27 million to a previous
                                     business optimization reserve that is no longer probable of being
                                     utilized. The company’s results in 2013 included business
                                     optimization charges of $182 million ($122 million, or $0.22 per
                                     diluted share, on an after-tax basis).
(4)                                  The company’s results in 2014 included a benefit of $25 million ($25
                                     million, or $0.05 per diluted share, on an after-tax basis) for an
                                     adjustment to the COLLEAGUE infusion pump reserves. The company’s
                                     results in 2013 included total charges of $17 million ($10 million,
                                     or $0.02 per diluted share, on an after-tax basis) primarily related
                                     to remediation efforts associated with modifications to the SIGMA
                                     Spectrum Infusion Pump in conjunction with re-filing for 510(k)
                                     clearance.
(5)                                  The company’s results in 2014 included separation-related costs of
                                     $96 million ($67 million, or $0.12 per diluted share, on an
                                     after-tax basis) for the planned separation of Baxter’s
                                     biopharmaceutical and medical products businesses.
(6)                                  The company’s results in 2014 included total charges of $64 million
                                     ($54 million, or $0.10 per diluted share, on an after-tax basis)
                                     resulting from $19 million in milestone payments associated with the
                                     company’s collaboration arrangements as well as a $45 million
                                     other-than-temporary impairment loss related to Baxter’s holdings in
                                     the common stock of one of its collaboration partners. The company’s
                                     results in 2013 included total charges of $78 million ($65 million,
                                     or $0.12 per diluted share, on an after-tax basis) primarily related
                                     to upfront and milestone payments associated with the company’s
                                     collaboration arrangements.
(7)                                  The company’s results in 2014 included total charges of $95 million
                                     ($44 million, or $0.08 per diluted share, on an after-tax basis)
                                     resulting from an $80 million increase in the estimated fair value
                                     of acquisition-related contingent payment liabilities as well as $15
                                     million related to tax reserves in Turkey.
(8)                                  The company’s results in 2014 included an after-tax gain of $417
                                     million ($0.76 per diluted share) on the sale of the commercial
                                     vaccines business. The company’s results in 2013 included after-tax
                                     business optimization charges of $90 million ($0.17 per diluted
                                     share).
                                    
For more information on the company’s use of non-GAAP financial
measures in this press release, please see the company’s Current
Report on Form 8-K filed with the Securities and Exchange Commission
on the date of this press release.
                                                                                                       BAXTER INTERNATIONAL INC.
                                                                                                   Consolidated Statements of Income
                                                                                            Twelve Months Ended December 31, 2014 and 2013
                                                                                                              (unaudited)
                                                                                          (in millions, except per share and percentage data)
                                                                                                                                                       
                                                                                                                    Twelve Months Ended
                                                                                                                       December 31,
                                                                                   ------------------------------------------------------------------------------------
                                                                                                   2014                                                           2013                                                         Change
                                                                                   --------------------                                           --------------------                                           --------------------
                                                                                                                                                                                                                  
NET SALES                                                                                       $16,671                                                        $14,967                                                            11%
                                                                                                                                                                                                                  
COST OF SALES                                                                                     8,514                                                          7,495                                                            14%
                                                          
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GROSS MARGIN                                                                   8,157                    7,472                       9%
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
% of Net Sales                                                                                    48.9%                                                          49.9%                                                        (1 pts)
                                                                                                                                                                                                                  
MARKETING AND ADMINISTRATIVE EXPENSES                                                             4,029                                                          3,642                                                            11%
% of Net Sales                                                                                    24.2%                                                          24.3%                                                      (0.1 pts)
                                                                                                                                                                                                                  
RESEARCH AND DEVELOPMENT EXPENSES                                                                 1,421                                                          1,165                                                            22%
% of Net Sales                                                                                     8.5%                                                           7.8%                                                        0.7 pts
                                                                                                                                                                                                                  
NET INTEREST EXPENSE                                                                                145                                                            128                                                            13%
                                                                                                                                                                                                                  
OTHER EXPENSE (INCOME), NET                                                                         123                                                            (9)                                                            N/M
                                                          
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                          2,439                    2,546                     (4%)
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                  
INCOME TAX EXPENSE                                                               493                      534                     (8%)
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
% of Income from Continuing Operations before Income Taxes                                        20.2%                                                          21.0%                                                      (0.8 pts)
                                                                                                                                                                                                                  
INCOME FROM CONTINUING OPERATIONS                                                                 1,946                                                          2,012                                                           (3%)
                                                                                                                                                                                                                  
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX A                                                   551                                                              0                                                            N/M
                                                                                                                                                                                                                  
NET INCOME                                                                    $2,497                   $2,012                      24%
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                  
INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE
   Basic                                                                       $3.59                    $3.70                     (3%)
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
   Diluted                                                                     $3.56                    $3.66                     (3%)
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                  
INCOME FROM DISCONTINUED OPERATIONS PER COMMON SHARE
   Basic                                                                       $1.02                    $0.00                      N/M
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
   Diluted                                                                     $1.00                    $0.00                      N/M
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                  
NET INCOME PER COMMON SHARE
   Basic                                                                       $4.61                    $3.70                      25%
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
   Diluted                                                                     $4.56                    $3.66                      25%
============================================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                  
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
   Basic                                                                                            542                                                            543
   Diluted                                                                       547                      549      
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                  
ADJUSTED PRE-TAX INCOME FROM CONTINUING OPERATIONS (excluding                                    $3,427 B                                                       $3,319 B                                                           3%
special items)
ADJUSTED INCOME FROM CONTINUING OPERATIONS (excluding special                                    $2,683 B                                                       $2,577 B                                                           4%
items)
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding                                        $4.90 B                                                        $4.69 B                                                           4%
special items)
A    Operating results from the company’s vaccines franchise are
                        classified as discontinued operations for all periods presented.
B                       Refer to page 11 for a description of the adjustments and a
                        reconciliation to GAAP measures.
                                                                    BAXTER INTERNATIONAL INC.
                                                            Note to Consolidated Statements of Income
                                                         Twelve Months Ended December 31, 2014 and 2013
                                                Description of Adjustments and Reconciliation of GAAP to Non-GAAP
                                                                            Measures
                                                                           (unaudited)
                                                       (in millions, except per share and percentage data)
 
The company’s GAAP results for the twelve months ended December 31,
2014 and 2013 included special items which impacted the GAAP
measures as follows:
                                                                                                   
                                                                              Twelve Months Ended                       
                                                                                 December 31,
                                                        ------------------------------------------------------------
                                                                        2014                   2013                             Change
                                                        --------------------                      --------------------                      --------------------
Gross Margin                                                          $8,157                                    $7,472                                        9%
    Intangible asset amortization expense(1)                             184                                       129
    Business optimization items (2)                                      (8)                                        52
    Product-related items (3)                                             64                                        17
    Gambro acquisition and integration items (4)                           -                                        63
    Separation-related costs(5)                                            2                      -    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Gross Margin                                                 $8,399                 $7,733                     9%
                                                        ==================== ==================== ==================== ==================== ====================
% of Net Sales                                                         50.4%                                     51.7%                                 (1.3 pts)
                                                                                                                                             
Marketing and Administrative Expenses                                 $4,029                                    $3,642                                       11%
    Reserve items and adjustments (6)                                     10                                     (124)
    Branded Prescription Drug Fee (7)                                   (29)                                         -
    Business optimization items(2)                                       (2)                                      (81)
    Product-related items (3)                                            (4)                                         -
    Gambro acquisition and integration items(4)                        (119)                                     (115)
    Separation-related costs(5)                                        (150)                      -    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Marketing and Administrative Expenses                        $3,735                 $3,322                    12%
                                                        ==================== ==================== ==================== ==================== ====================
% of Net Sales                                                         22.4%                                     22.2%                                   0.2 pts
                                                                                                                                             
Research and Development Expenses                                     $1,421                                    $1,165                                       22%
    Business development items(8)                                      (217)                                     (103)
    Business optimization items (2)                                     (25)                                      (47)
    Separation-related costs(5)                                         (15)                      -    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Research and Development Expenses                            $1,164                 $1,015                    15%
                                                        ==================== ==================== ==================== ==================== ====================
% of Net Sales                                                          7.0%                                      6.8%                                   0.2 pts
                                                                                                                                             
Other Expense (Income), Net                                             $123                                      $(9)                                       N/M
    Gambro acquisition and integration items (4)                        (25)                                      (77)
    Reserve items and adjustments (6)                                  (125)                                        35
    Business development items(8)                                       (45)                      -    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Other Income, Net                                             $(72)                  $(51)                    N/M
                                                        ==================== ==================== ==================== ==================== ====================
                                                                                                                                             
Pre-Tax Income from Continuing Operations                             $2,439                                    $2,546                                      (4%)
    Impact of special items                                              988                    773    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Pre-Tax Income from Continuing Operations                    $3,427                 $3,319                     3%
                                                        ==================== ==================== ==================== ==================== ====================
                                                                                                                                             
Income Tax Expense                                                      $493                                      $534                                      (8%)
    Impact of special items                                              251                    208    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Income Tax Expense                                             $744                   $742                     0%
                                                        ==================== ==================== ==================== ==================== ====================
% of Adjusted Pre-Tax Income from Continuing Operations                21.7%                                     22.4%                                 (0.7 pts)
                                                                                                                                             
Income from Continuing Operations                                     $1,946                                    $2,012                                      (3%)
    Impact of special items                                              737                    565    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Income from Continuing Operations                            $2,683                 $2,577                     4%
                                                        ==================== ==================== ==================== ==================== ====================
                                                                                                                                             
Adjusted Income from Discontinued Operations (9)                         147                                        91
                                                                 
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Net Income                                                   $2,830                 $2,668                     6%
                                                        ==================== ==================== ==================== ==================== ====================
                                                                                                                                             
Diluted EPS from Continuing Operations                                 $3.56                                     $3.66                                      (3%)
    Impact of special items                                             1.34                   1.03    
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Diluted EPS from Continuing Operations                        $4.90                  $4.69                     4%
                                                        ==================== ==================== ==================== ==================== ====================
                                                                                                                                             
Adjusted Diluted EPS from Discontinued Operations                       0.27                                      0.17
                                                                 
                                                        -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Diluted EPS                                                   $5.17                  $4.86                     6%
                                                        ==================== ==================== ==================== ==================== ====================
                                                                                                                                             
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
  Diluted                                                                547                    549    
------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                    
(1)                                  Effective January 1, 2014, Baxter has updated its non-GAAP measures
                                     above to exclude intangible asset amortization expense. Prior period
                                     non-GAAP measures have been revised to reflect the updated measures.
                                     Intangible asset amortization expense totaled $184 million ($144
                                     million, or $0.26 per diluted share, on an after-tax basis) and $129
                                     million ($100 million, or $0.19 per diluted share, on an after-tax
                                     basis) in 2014 and 2013, respectively.
(2)                                  The company’s results in 2014 included a net charge of $19 million
                                     ($19 million, or $0.03 per diluted share, on an after-tax basis)
                                     primarily related to business optimization charges of $83 million,
                                     partially offset by adjustments of $64 million to previous business
                                     optimization reserves that are no longer probable of being utilized.
                                     The company’s results in 2013 included a net charge of $180 million
                                     ($122 million, or $0.22 per diluted share, on an after-tax basis)
                                     primarily related to business optimization charges of $200 million,
                                     partially offset by an adjustment of $20 million to a previous
                                     business optimization reserve that is no longer probable of being
                                     utilized.
(3)                                  The company’s results in 2014 included a net charge of $68 million
                                     ($33 million, or $0.06 per diluted share, on an after-tax basis)
                                     resulting from total charges of $93 million for SIGMA Spectrum
                                     Infusion Pump product remediation efforts, partially offset by a
                                     benefit of $25 million for an adjustment to the COLLEAGUE infusion
                                     pump reserves. The company’s results in 2013 included total charges
                                     of $17 million ($10 million, or $0.02 per diluted share, on an
                                     after-tax basis) primarily related to remediation efforts associated
                                     with modifications to the SIGMA Spectrum Infusion Pump in
                                     conjunction with re-filing for 510(k) clearance.
(4)                                  The company’s results in 2014 included total charges of $144 million
                                     ($103 million, or $0.19 per diluted share, on an after-tax basis)
                                     primarily related to the integration of Gambro. The company’s
                                     results in 2013 included total charges of $255 million ($197
                                     million, or $0.35 per diluted share, on an after-tax basis)
                                     primarily related to the acquisition and integration of Gambro and
                                     losses from the derivative instruments used to hedge the anticipated
                                     foreign currency cash outflows for the planned acquisition of Gambro.
(5)                                  The company’s results in 2014 included separation-related costs of
                                     $167 million ($134 million, or $0.25 per diluted share, on an
                                     after-tax basis) for the planned separation of Baxter’s
                                     biopharmaceutical and medical products businesses.
(6)                                  The company’s results in 2014 included a net expense of $115 million
                                     ($61 million, or $0.11 per diluted share, on an after-tax basis)
                                     primarily related to a $124 million increase in the estimated fair
                                     value of acquisition-related contingent payment liabilities,
                                     partially offset by $9 million in third-party recoveries and
                                     reversals of prior tax and legal reserves. The company’s results in
                                     2013 included a net expense of $89 million ($54 million, or $0.10
                                     per diluted share, on an after-tax basis) related to tax and legal
                                     reserves associated with VAT matters in Turkey and existing
                                     class-action and other related litigation.
(7)                                  The company’s results in 2014 included a charge of $29 million ($29
                                     million, or $0.05 per diluted share, on an after-tax basis) to
                                     account for an additional year of the Branded Prescription Drug Fee
                                     in accordance with final regulations issued in the third quarter by
                                     the Internal Revenue Service.
(8)                                  The company’s results in 2014 included total charges of $262 million
                                     ($214 million, or $0.39 per diluted share, on an after-tax basis)
                                     resulting from $217 million in upfront and milestone payments
                                     associated with the company’s collaboration arrangements as well as
                                     a $45 million other-than-temporary impairment loss related to
                                     Baxter’s holdings in the common stock of one of its collaboration
                                     partners. The company’s results in 2013 included total charges of
                                     $103 million ($82 million, or $0.15 per diluted share, on an
                                     after-tax basis) primarily related to upfront and milestone payments
                                     associated with the company’s collaboration arrangements.
(9)                                  The company’s results in 2014 included an after-tax gain of $417
                                     million ($0.76 per diluted share) on the sale of the commercial
                                     vaccines business as well as total after-tax charges of $13 million
                                     ($0.02 per diluted share) for business optimization,
                                     transaction-related costs and intangible asset amortization expense.
                                     The company’s results in 2013 included total after-tax charges of
                                     $91 million ($0.17 per diluted share) for business optimization and
                                     intangible asset amortization expense.
                                    
For more information on the company’s use of non-GAAP financial
measures in this press release, please see the company’s Current
Report on Form 8-K filed with the Securities and Exchange Commission
on the date of this press release.
                                                                                                                                                BAXTER INTERNATIONAL INC.
                                                                                                                                   Cash Flows from Operations and Changes in Net Debt
                                                                                                                                                       (unaudited)
                                                                                                                                                     ($ in millions)
                                                                 
------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Cash Flows from Operations A                                                        
------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
(Brackets denote cash outflows)                                                                 Three Months Ended                                                                                         Twelve Months Ended
                                                                                                                      December 31,                                                                                                                  December 31,
                                                                                  ------------------------------------------------------------------------------------                                          ------------------------------------------------------------------------------------
                                                                                                  2014                                        2013                                                           2014                                        2013
                                                                                  --------------------                                           --------------------                                           --------------------                                           --------------------
                                                                                                                                                                                                                                                                                                     
Net income                                                                                        $953                                                           $326                                                         $2,497                                                         $2,012
Adjustments
    Depreciation and amortization                                                                  258                                                            250                                                          1,005                                                            823
    Deferred income taxes                                                                        (113)                                                          (309)                                                           (78)                                                          (224)
    Stock compensation                                                                              44                                                             39                                                            159                                                            150
    Realized excess tax benefits from stock issued                                                 (3)                                                            (2)                                                           (24)                                                           (34)
    under employee benefit plans
    Business optimization charges                                                                    3                                                            282                                                             27                                                            282
    Net periodic pension benefit and OPEB costs                                                     64                                                             99                                                            275                                                            381
    Infusion pump and other product-related charges                                                  -                                                             17                                                             93                                                             17
    Losses (gains) related to contingent payment liabilities                                        80                                                            (8)                                                            122                                                           (17)
    Gain on sale of discontinued operations                                                      (466)                                                              -                                                          (466)                                                              -
    Other                                                                                           94                                                             43                                                            269                                                             54
Changes in balance sheet items
    Accounts and other current receivables, net                                                   (90)                                                          (106)                                                          (125)                                                           (36)
    Inventories                                                                                     29                                                            101                                                          (439)                                                          (311)
    Accounts payable and accrued liabilities                                                       342                                                            385                                                            188                                                            329
    Business optimization and infusion pump payments                                              (43)                                                           (44)                                                          (161)                                                          (125)
    Other                                                                       (9)                       10                    (127)                    (103)  
------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Cash flows from operations A                                                 $1,143                   $1,083                   $3,215                   $3,198  
============================================================ ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                 
------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Changes in Net Debt                                                                 
------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Increase (decrease)                                                                                                Three Months Ended                                                                                                            Twelve Months Ended
                                                                                                                      December 31,                                                                                                                  December 31,
                                                                                  ------------------------------------------------------------------------------------                                          ------------------------------------------------------------------------------------
                                                                                                  2014                                                           2013                                                           2014                                                           2013
                                                                                  --------------------                                           --------------------                                           --------------------                                           --------------------
                                                                                                                                                                                                                                                                                                     
Net debt, beginning of period B                                                                 $7,190                                                         $6,690                                                         $6,433                                                         $2,660
                                                                                                                                                                                                                                                                                                     
Cash flows from operations                                                                     (1,143)                                                        (1,083)                                                        (3,215)                                                        (3,198)
Capital expenditures                                                                               573                                                            488                                                          1,898                                                          1,525
Dividends                                                                                          282                                                            266                                                          1,095                                                          1,023
Proceeds from stock issued under employee benefit plans                                           (46)                                                           (38)                                                          (345)                                                          (474)
Purchases of treasury stock                                                                         50                                                             50                                                            550                                                            913
Acquisitions and investments                                                                        86                                                             79                                                            409                                                          3,851 C
Divestitures and other investing activities                                                      (662)                                                              -                                                          (765)                                                           (14)
Payment of assumed Gambro debt                                                                       -                                                              -                                                              -                                                            221
Finance lease obligation                                                                             -                                                              -                                                            263                                                              -
Other, including the effect of exchange rate changes                             50                     (19)                       57                     (74)  
------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
(Decrease) increase in net debt                                               (810)                    (257)                     (53)                    3,773  
------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                     
Net debt, December 31 B                                                      $6,380                   $6,433                   $6,380                   $6,433  
============================================================ ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                 
------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Key statistics, December 31:
Days sales outstanding                                                                            52.0 D                                                         55.9 D                                                         52.0 D                                                         55.9 D
Inventory turns                                                                 2.4                      2.7                      2.4                      2.7  
------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
A    The company’s cash flows from operations include both continuing and
                        discontinued operations.
B                       Net debt is a non-GAAP measure, refer to page 13 for a description
                        of net debt and a reconciliation to GAAP measures.
C                       Acquisitions and investments in 2013 includes $3.6 billion for the
                        third quarter 2013 acquisition of Gambro (net of cash acquired).
D                       Includes the impact from the acquisition of Gambro. Excluding
                        Gambro, the company’s days sales outstanding was 50.1 and 52.5 days
                        as of December 31, 2014 and 2013, respectively.
                                                                                                                          BAXTER INTERNATIONAL INC.
                                                                                                                    Total Debt to Net Debt Reconciliation
                                                                                                                                 (unaudited)
                                                                                                                               ($ in millions)
                                                           
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Debt to Net Debt Reconciliation A                                       
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                     December 31,          September 30,           December 31,          September 30,           December 31,
                                                                                                2014                                      2014                                      2013                                      2013                                      2012
                                                                                --------------------                      --------------------                      --------------------                      --------------------                      --------------------
Short-term debt                                                                                 $913                                      $392                                      $181                                       $42                                       $27
Current maturities of long-term debt and lease obligations                                       786                                     1,123                                       859                                       372                                       323
Long-term debt and lease obligations                                        7,606                  7,753                  8,126                  8,652                  5,580
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total debt                                                                  9,305                  9,268                  9,166                  9,066                  5,930
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Less: Cash and equivalents                                                (2,925)                (2,078)                (2,733)                (2,376)                (3,270)
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total net debt                                                             $6,380                 $7,190                 $6,433                 $6,690                 $2,660
========================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                        
A                                              Net debt represents the difference between total debt (defined as
                                               short-term debt, current maturities of long-term debt and lease
                                               obligations, and long-term debt and lease obligations as presented
                                               on the company’s consolidated balance sheets) and cash and
                                               equivalents.
For more information on the company’s use of non-GAAP financial
measures in this press release, please see the company’s Current
Report on Form 8-K filed with the Securities and Exchange Commission
on the date of this press release.
                                                                                                                                                                                                                                     BAXTER INTERNATIONAL INC.
                                                                                                                                                                                                                                     Net Sales
                                                                                                                                                                                                                                     Periods Ending December 31, 2014 and 2013
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                     ($ in millions)
                                                                      
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                 Q4                     Q4             % Growth @             % Growth @                              YTD                    YTD             % Growth @             % Growth @
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                               2014                   2013           Actual Rates         Constant Rates                             2014                   2013           Actual Rates         Constant Rates
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                      
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
BioScience                                                                                                                                                                                                                  
United States                                                                                                                                                    $951                                      $891                                        7%                                        7%                                                                                                                                             $3,435                                    $3,270                                        5%                                        5%
International                                                      929                    839                    11%                    18%                            3,264                  3,002                     9%                    11%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total BioScience                                                $1,880                 $1,730                     9%                    12%                           $6,699                 $6,272                     7%                     8%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Vaccines                                                            34                     46                  (26%)                  (22%)                              301                    292                     3%                     2%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total BioScience including Vaccines (1)                         $1,914                 $1,776                     8%                    11%                           $7,000                 $6,564                     7%                     8%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                      
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Medical Products
United States                                                                                                                                                    $936                                      $890                                        5%                                        5%                                                                                                                                             $3,580                                    $3,174                                       13%                                       13%
International                                                    1,656                  1,702                   (3%)                     2%                            6,392                  5,521                    16%                    18%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Medical Products (2)                                      $2,592                 $2,592                     0%                     3%                           $9,972                 $8,695                    15%                    16%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                      
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Baxter International Inc.
United States                                                                                                                                                  $1,887                                    $1,781                                        6%                                        6%                                                                                                                                             $7,015                                    $6,444                                        9%                                        9%
International                                                    2,585                  2,541                     2%                     7%                            9,656                  8,523                    13%                    16%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Baxter (2)                                                $4,472                 $4,322                     3%                     7%                          $16,671                $14,967                    11%                    13%
======================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
Total Baxter including Vaccines (1)                             $4,506                 $4,368                     3%                     6%                          $16,972                $15,259                    11%                    12%
======================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
     
(1)   Net sales from the company’s vaccines franchise are classified as
      discontinued operations for all periods presented.
(2)   Includes Gambro net sales of $1.6 billion for the year ended
      December 31, 2014 compared to $513 million for the year ended
      December 31, 2013 since the acquisition in September 2013. Medical
      Products net sales excluding Gambro grew 2% at actual rates and 4%
      constant rates during the year ended December 31, 2014. Total Baxter
      net sales excluding Gambro grew 4% at actual rates and 5% at
      constant rates during the year ended December 31, 2014.
                                                                                                                                                                                                                                     BAXTER INTERNATIONAL INC.
                                                                                                                                                                                                                                     Sales by Franchise
                                                                                                                                                                                                                                     Periods Ending December 31, 2014 and 2013
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                     ($ in millions)
                                                                      
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                    Q4                     Q4             % Growth @             % Growth @                              YTD                    YTD             % Growth @             % Growth @
                                               2014                   2013           Actual Rates         Constant Rates                             2014                   2013           Actual Rates         Constant Rates
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                      
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
BioScience
Hemophilia                                                                                                                                                     $1,055                                      $972                                        9%                                       13%                                                                                                                                             $3,728                                    $3,437                                        8%                                       10%
BioTherapeutics                                                                                                                                                   628                                       564                                       11%                                       14%                                                                                                                                              2,224                                     2,118                                        5%                                        6%
BioSurgery                                                         197                    194                     2%                     4%                              747                    717                     4%                     4%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total BioScience                                                $1,880                 $1,730                     9%                    12%                           $6,699                 $6,272                     7%                     8%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Vaccines                                                            34                     46                  (26%)                  (22%)                              301                    292                     3%                     2%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total BioScience including Vaccines (1)                         $1,914                 $1,776                     8%                    11%                           $7,000                 $6,564                     7%                     8%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                      
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Medical Products
Fluid Systems                                                                                                                                                    $822                                      $819                                        0%                                        2%                                                                                                                                             $3,222                                    $3,106                                        4%                                        4%
Renal (2)                                                                                                                                                       1,082                                     1,099                                      (2%)                                        3%                                                                                                                                              4,172                                     3,089                                       35%                                       38%
Specialty Pharmaceuticals                                                                                                                                         417                                       407                                        2%                                        6%                                                                                                                                              1,574                                     1,508                                        4%                                        5%
BioPharma Solutions                                                271                    267                     1%                     4%                            1,004                    992                     1%                     2%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Medical Products                                          $2,592                 $2,592                     0%                     3%                           $9,972                 $8,695                    15%                    16%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                      
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Baxter                                                    $4,472                 $4,322                     3%                     7%                          $16,671                $14,967                    11%                    13%
======================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
Total Baxter including Vaccines (1)                             $4,506                 $4,368                     3%                     6%                          $16,972                $15,259                    11%                    12%
======================================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
     
(1)   Net sales from the company’s vaccines franchise are classified as
      discontinued operations for all periods presented.
(2)   Consists of PD and HD therapies, and includes Gambro net sales of
      $1.6 billion for the year ended December 31, 2014 compared to $513
      million for the year ended December 31, 2013 since the acquisition
      in September 2013. Renal sales excluding Gambro remained flat at
      actual rates and grew 2% at constant rates during the year ended
      December 31, 2014.
                                                                                                                                                                                                                                     BAXTER INTERNATIONAL INC.
                                                                                                                                                                                                                                     Franchise Sales by U.S. and International
                                                                                                                                                                                                                                     Three-Month Periods Ending December 31, 2014 and 2013
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                     ($ in millions)
                                                                                
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                   Q4 2014                                                                                                            Q4 2013                                                                                                           % Growth
                                                                                                                                                 ----------------------------------------------------------------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ----------------------------------------------------------------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------------------------------------------------
                                       U.S.               International              Total                          U.S.               International              Total                          U.S.               International              Total
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
BioScience                                                                                                                                                                                                                                                                                                                                              
Hemophilia                                                                                                                                                       $411                                      $644                                    $1,055                                                                                                                          $382                                      $590                                      $972                                                                                                                            8%                                        9%                                        9%
BioTherapeutics                                                                                                                                                   428                                       200                                       628                                                                                                                           400                                       164                                       564                                                                                                                            7%                                       22%                                       11%
BioSurgery                                                         112                     85                    197                            109                     85                    194                             3%                     0%                     2%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total BioScience                                                  $951                   $929                 $1,880                           $891                   $839                 $1,730                             7%                    11%                     9%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Vaccines                                                             -                     34                     34                              -                     46                     46                            N/M                  (26%)                  (26%)
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total BioScience including Vaccines (1)                           $951                   $963                 $1,914                           $891                   $885                 $1,776                             7%                     9%                     8%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Medical Products
Fluid Systems                                                                                                                                                    $445                                      $377                                      $822                                                                                                                          $435                                      $384                                      $819                                                                                                                            2%                                      (2%)                                        0%
Renal                                                                                                                                                             195                                       887                                     1,082                                                                                                                           178                                       921                                     1,099                                                                                                                           10%                                      (4%)                                      (2%)
Specialty Pharmaceuticals                                                                                                                                         185                                       232                                       417                                                                                                                           176                                       231                                       407                                                                                                                            5%                                        0%                                        2%
BioPharma Solutions                                                111                    160                    271                            101                    166                    267                            10%                   (4%)                     1%
--------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Medical Products                                            $936                 $1,656                 $2,592                           $890                 $1,702                 $2,592                             5%                   (3%)                     0%
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Total Baxter                                                    $1,887                 $2,585                 $4,472                         $1,781                 $2,541                 $4,322                             6%                     2%                     3%
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Total Baxter including Vaccines (1)                             $1,887                 $2,619                 $4,506                         $1,781                 $2,587                 $4,368                             6%                     1%                     3%
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(1)   Net sales from the company’s vaccines franchise are classified as
      discontinued operations for all periods presented.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20150129005202r1&sid=cmtx6&distro=nx&lang=en

SOURCE: Baxter International Inc.

Baxter International Inc. 
Media Contact: 
Deborah Spak, (224) 948-2349 
Investor Contacts: 
Mary Kay Ladone, (224) 948-3371 
Clare Trachtman, (224) 948-3085


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