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Baxter International, Inc.$63.59$.12.19%

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 Baxter Announces Fourth Quarter Results and Provides 2016 Financial Outlook
   Tuesday, February 02, 2016 7:00:07 AM ET

--Sales and Earnings Per Share Exceed Guidance for the Quarter

Baxter International Inc. (BAX ) today reported results for the fourth quarter of 2015 that exceeded the company’s previously issued guidance.

Baxter reported income from continuing operations of $190 million, or $0.34 per diluted share, on a GAAP (Generally Accepted Accounting Principles) basis. These results included net after-tax special items totaling $46 million (or $0.09 per diluted share) primarily related to costs associated with the company’s July 1, 2015 spin-off of Baxalta Incorporated (Baxalta), business optimization initiatives, intangible asset amortization and Gambro AB integration efforts. These costs were partially offset by certain business development and product related items.



On an adjusted basis, excluding special items, Baxter’s fourth quarter income from continuing operations totaled $236 million, or $0.43 per diluted share, exceeding the company’s previous guidance of $0.30 to $0.32 per diluted share.

Worldwide sales totaled $2.6 billion, an increase of 2 percent on a constant currency basis as compared to the prior year period, and also exceeded the company’s previously issued guidance. On a reported basis, sales declined 7 points as foreign exchange negatively impacted sales by nine percentage points in the quarter. Sales within the United States increased 1 percent to $1.1 billion, while international sales totaled $1.5 billion, representing a 2 percent increase on a constant currency basis, and a 12 percent decline on a reported basis. Adjusting for the impact of foreign exchange and a generic market entrant in the United States for the company’s oncology injectable, cyclophosphamide, Baxter’s global sales rose 4 percent in the fourth quarter.

By business, Hospital Products sales of $1.6 billion increased 2 percent on a constant currency basis and declined 5 percent on a reported basis. Adjusting for the impact of foreign exchange and U.S. cyclophosphamide, Hospital Products sales advanced 5 percent from the prior year period. Hospital Products performance in the quarter benefited from strong sales of infusion systems and IV solutions in the United States, as well as increased demand for the company’s parenteral nutrition products and injectable drug compounding services.

Baxter’s Renal Products sales totaled $984 million, representing a 1 percent increase on a constant currency basis, and a 9 percent decline on a reported basis. Sales growth in the quarter benefited from increased demand for peritoneal dialysis products and continuous renal replacement therapies.

’’Our fourth quarter performance clearly reflects the positive impact of our initial post-spin margin expansion programs, and we continue to build upon the momentum that has been established across the organization,’’ said Jose E. Almeida, chairman and chief executive officer. ’’Going forward, I see continued opportunity to deliver improved performance through optimization of the portfolio, enhanced operational excellence and disciplined execution of our capital allocation initiatives, including the successful disposition of our retained Baxalta equity stake.’’

Summary of Full-Year 2015 Results

Baxter’s GAAP income from continuing operations totaled $400 million, or $0.73 per diluted share, in 2015. Excluding special items and discontinued operations, Baxter’s adjusted income from continuing operations totaled $755 million, and adjusted earnings per diluted share were $1.38.

Baxter’s worldwide revenues in 2015 totaled $10 billion and declined 7 percent. Adjusting for the impact of foreign exchange and U.S. cyclophosphamide sales, Baxter’s revenues increased 3 percent. Sales within the United States totaled $4 billion, while international sales totaled $6 billion.

By business, sales within Hospital Products totaled $6.2 billion, a decline of 6 percent on a reported basis. Adjusting for the impact of foreign exchange and U.S. cyclophosphamide, Hospital Products sales rose 5 percent from the prior year period. Baxter’s Renal Products sales totaled $3.8 billion, and increased 1 percent after adjusting sales for a 10 percentage point negative impact from foreign exchange.

Business Highlights

In addition to successfully completing the spin-off of Baxalta in 2015, Baxter achieved a number of significant pipeline and commercial milestones during the year, including:

-- The launch of Baxter’s next-generation SIGMA SPECTRUM infusion pump in the U.S., Puerto Rico and Canada. This latest generation pump includes a number of innovative features, including an enhanced Master Drug Library, which helps to reduce pump-related adverse drug events and improve patient safety.

-- Regulatory approval and launch of two new automated peritoneal dialysis (APD) systems, HOMECHOICE CLARIA with SHARESOURCE and AMIA with SHARESOURCE. SHARESOURCE is a two-way, web-based remote connectivity platform for home therapy that allows physicians to more readily access their home patients’ historical treatment data and deliver individual treatment settings remotely. These new APD systems incorporate advanced technology and additional patient and provider-centric improvements, enhancing Baxter’s PD leadership.

-- The launch of AK-98, Baxter’s new in-center hemodialysis system in several countries in Eastern and Central Europe, Middle East and Africa, Latin America and Asia Pacific. This new system provides dialysis clinics improved usability including user-friendly touchscreen monitor, reliability, and lower total cost of operation.

-- Completion of a limited controlled distribution in preparation for the market introduction of CE-marked PrismaLung in 2016. PrismaLung is a low-flow carbon dioxide removal device, used on patients undergoing mechanical ventilation in the intensive care unit in conjunction with Baxter’s market leading, Prismaflex monitor.

-- Launch of Nutryelt, a multi-trace element for parenteral nutrition, in seven European countries. Nutryelt is a nine- trace-mineral product, which allows patients on daily parenteral nutrition therapy to receive adequate trace mineral vitamin supplementation. Baxter has an exclusive global licensing and distribution agreement with the product’s manufacturer, Laboratoire Aguettant.

-- Expansion of Baxter’s ready-to-use, flexible premix intravenous drug portfolio with the launch of Cefazolin injection in GALAXY Container (2 g/100 mL) in the U.S., and U.S. Food and Drug Administration (FDA) approval for Vancomycin Injection, USP in 0.9% Sodium Chloride in 100 and 200 mL GALAXY Containers. These products leverage Baxter’s proprietary GALAXY container platform and provide healthcare providers with additional supply options for therapies on the FDA’s drug shortage list.

Financial Outlook

Baxter also provided its outlook for the full-year and first quarter of 2016. For the full-year 2016, Baxter expects sales to increase 2 to 3 percent excluding the impact of foreign exchange, and after adjusting for the impact of both foreign exchange and increased U.S. competition for cyclophosphamide, the company expects full-year sales growth of 3 to 4 percent. On a reported basis, including the impact of foreign exchange, Baxter expects sales to decline approximately 1 percent. The company expects earnings from continuing operations, before special items, of $1.46 to $1.54 per diluted share for the full-year.

For the first quarter, the company expects sales to grow 3 to 4 percent, on a constant currency basis. On a reported basis, including the impact of foreign exchange, the company expects sales to decline approximately 2 percent. Baxter expects earnings from continuing operations, before special items, of $0.28 to $0.30 per diluted share for the first quarter of 2016.

The earnings guidance for the first quarter of 2016 and full-year 2016 excludes approximately $3.47 and $8.19, respectively, per diluted share of realized gains related to the planned use of the Baxalta retained stake (based on the December 31, 2015 market value of the retained stake and excluding anticipated transaction costs), $0.06 and $0.23, respectively, per diluted share of intangible asset amortization expense and an estimated $0.04 to $0.05 and $0.22 to $0.27, respectively, per diluted share related to Gambro AB integration, business optimization and Baxalta separation-related expense activities. These estimates are based on information reasonably available at the time of this release and future events or new information may result in different actual results. Reconciling for the inclusion of these items results in GAAP earnings of $3.64 to $3.67 per share for the first quarter of 2016 and $9.15 to $9.28 per diluted share for full-year 2016.

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 February 2, 2016. Please visit Baxter’s website for more information regarding this and future investor events and webcasts.

Baxter provides a broad portfolio of essential renal and hospital products, including home, acute and in-center dialysis; sterile IV solutions; infusion systems and devices; parenteral nutrition; biosurgery products and anesthetics; and pharmacy automation, software and services. The company’s global footprint and the critical nature of its products and services play a key role in expanding access to healthcare in emerging and developed countries. Baxter’s employees worldwide are building upon the company’s rich heritage of medical breakthroughs to advance the next generation of healthcare innovations that enable patient care.

This release includes forward-looking statements concerning the company’s financial results, business development activities, capital structure, cost savings initiatives, R&D pipeline including results of clinical trials and planned product launches, and outlook for 2016. 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, and the impact of those products on quality or patient safety concerns; product development risks; product quality or patient safety concerns; future actions of regulatory bodies and other governmental authorities, including the FDA and foreign counterparts; failures with respect to compliance programs; future actions of third-parties, including payers; US healthcare reform and other global austerity measures; pricing, reimbursement, taxation and rebate policies of government agencies and private payers; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; global, trade and tax policies; accurate identification of and execution on business development and R&D opportunities and realization of anticipated benefits; fluctuations in supply and demand; the availability of acceptable raw materials and component supply; the inability to create timely production capacity or other manufacturing supply difficulties; the ability to achieve the intended results (including targeted margin improvements) associated with the recent separation of the biopharmaceutical and medical products businesses and the associated disposition of the company’s retained stake in Baxalta; the ability to enforce owned or in-licensed patents or the patents of third parties preventing or restricting manufacture, sale or use of affected products or technology; the impact of global economic conditions; fluctuations in foreign exchange and interest rates (including with respect to emerging market currencies); any change in law concerning the taxation of income, including income earned outside the United States; actions taken by tax authorities in connection with ongoing tax audits; breaches or failures of the company’s information technology systems; loss of key employees or inability to identify and recruit new employees; the outcome of pending or future litigation; the adequacy of the company’s cash flows from operations to meet its ongoing cash obligations and fund its investment program; and other risks identified in Baxter’s most recent filing on Form 10-K and other Securities and Exchange Commission filings, all of which are available on Baxter’s website. Baxter does not undertake to update its forward-looking statements.

 
                                                                                                      BAXTER INTERNATIONAL INC.
                                                                                                  Consolidated Statements of Income
                                                                                            Three Months Ended December 31, 2015 and 2014
                                                                                                             (unaudited)
                                                                                         (in millions, except per share and percentage data)
                                            
                                                                                                                                                                                                                
                                                                                                                                                 Three Months Ended
                                                                                                                                                    December 31,
                                                                                                                           ---------------------------------------------------------------
                                                                                                                                   2015                                      2014                                     Change
                                                                                                                           --------------------                      --------------------                      --------------------
                                                                                                                                                                                                                
NET SALES                                                                                                                                $2,603                                    $2,789                                      (7%)
                                                                                                                                                                                                                
COST OF SALES                                                                                                                             1,531                                     1,582                                      (3%)
                                     
----------------------------- ----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GROSS MARGIN                                                                     1,072                  1,207                  (11%)
-------------------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
% of Net Sales                                                                                                                            41.2%                                     43.3%                                 (2.1 pts)
                                                                                                                                                                                                                
MARKETING AND ADMINISTRATIVE EXPENSES                                                                                                       733                                       860                                     (15%)
% of Net Sales                                                                                                                            28.2%                                     30.8%                                 (2.6 pts)
                                                                                                                                                                                                                
RESEARCH AND DEVELOPMENT EXPENSES                                                                                                           161                                       156                                        3%
% of Net Sales                                                                                                                             6.2%                                      5.6%                                   0.6 pts
                                     
----------------------------- ----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
OPERATING INCOME                                                                   178                    191                   (7%)
-------------------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
% of Net Sales                                                                                                                             6.8%                                      6.8%                                     0 pts
                                                                                                                                                                                                                
NET INTEREST EXPENSE                                                                                                                         32                                        29                                       10%
                                                                                                                                                                                                                
OTHER (INCOME) EXPENSE, NET                                                                                                                (59)                                        53                                        NM
                                     
----------------------------- ----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                              205                    109                    88%
-------------------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                
INCOME TAX (BENEFIT) EXPENSE                                                        15                   (18)                     NM
-------------------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
% of (Loss) Income from Continuing Operations before Income                                                                                7.3%                                    -16.5%                                  23.8 pts
Taxes
                                                                                                                                                                                                                
INCOME FROM CONTINUING OPERATIONS                                                                                                           190                                       127                                       50%
                                                                                                                                                                                                                
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX A                                                                                            15                                       826                                     (98%)
                                                                                                                                                                                                                
NET INCOME                                                                        $205                   $953                  (78%)
================================================================================ ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                
INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE
    Basic                                                                        $0.34                  $0.23                    48%
================================================================================ ==================== ==================== ==================== ==================== ==================== ==================== ====================
    Diluted                                                                      $0.34                  $0.23                    48%
================================================================================ ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                
INCOME FROM DISCONTINUED OPERATIONS PER COMMON SHARE
    Basic                                                                        $0.03                  $1.53                  (98%)
================================================================================ ==================== ==================== ==================== ==================== ==================== ==================== ====================
    Diluted                                                                      $0.03                  $1.51                  (98%)
================================================================================ ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                
NET INCOME PER COMMON SHARE
    Basic                                                                        $0.37                  $1.76                  (79%)
================================================================================ ==================== ==================== ==================== ==================== ==================== ==================== ====================
    Diluted                                                                      $0.37                  $1.74                  (79%)
================================================================================ ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
    Basic                                                                                                                                   547                                       542
    Diluted                                                                        550                    547    
-------------------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                
ADJUSTED OPERATING INCOME (excluding special items)                                                                                        $279 B                                    $260 B                                      7%
ADJUSTED PRE-TAX INCOME FROM CONTINUING OPERATIONS (excluding                                                                              $283 B                                    $199 B                                     42%
special items)
ADJUSTED INCOME FROM CONTINUING OPERATIONS (excluding special                                                                              $236 B                                    $155 B                                     52%
items)
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding                                                                                $0.43 B                                   $0.28 B                                     54%
special items)
A        Operating results from Baxalta 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.
 
NM - Not Meaningful
 
                                                                                       BAXTER INTERNATIONAL INC.
                                                                               Note to Consolidated Statements of Income
                                                                             Three Months Ended December 31, 2015 and 2014
                                                                   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,
2015 and 2014 included special items which impacted the GAAP
measures as follows:
                                                                                                                                Three Months Ended
                                                                                                                                   December 31,
                                                                                                                       -------------------------------------
                                                                                                                         2015                         2014                              Change
                                                                                                                       -------                      -------                      --------------------
Gross Margin                                                                                                            $1,072                       $1,207                                     (11%)
   Intangible asset amortization expense(1)                                                                                 38                           43
   Business optimization items (2)                                                                                          10                            1
   Separation-related costs(4)                                                                                             (1)                            -
   Product-related items(5)                                                                                               (10)      (25)    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Gross Margin                                                                                                   $1,109    $1,226                  (10%)
                                                                                                                       ======= ==================== ======= ==================== ====================
% of Net Sales                                                                                                           42.6%                        44.0%                                 (1.4 pts)
                                                                                                                                                                                  
Marketing and Administrative Expenses                                                                                     $733                         $860                                     (15%)
   Gambro integration items (6)                                                                                           (23)                         (36)
   Business optimization items(2)                                                                                         (16)                          (2)
   Separation-related costs(4)                                                                                            (22)      (11)    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Marketing and Administrative Expenses                                                                            $672      $811                  (17%)
                                                                                                                       ======= ==================== ======= ==================== ====================
% of Net Sales                                                                                                           25.8%                        29.1%                                 (3.3 pts)
                                                                                                                                                                                  
Research and Development Expenses                                                                                         $161                         $156                                        3%
   Business optimization items (2)                                                                                         (2)                          (1)
   Separation-related costs(4)                                                                                             (1)         -    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Research and Development Expenses                                                                                $158      $155                     2%
                                                                                                                       ======= ==================== ======= ==================== ====================
% of Net Sales                                                                                                            6.1%                         5.6%                                   0.5 pts
                                                                                                                                                                                  
Operating Income                                                                                                          $178                         $191                                      (7%)
   Impact of special items                                                                                                 101        69    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Operating Income                                                                                                 $279      $260                     7%
                                                                                                                       ======= ==================== ======= ==================== ====================
% of Net Sales                                                                                                           10.7%                         9.3%                                   1.4 pts
                                                                                                                                                                                  
Other (Income) Expense, Net                                                                                              $(59)                          $53                                        NM
   Business optimization items (2)                                                                                           3                            -
   Business development items (3)                                                                                           20                            -
   Gambro integration items (6)                                                                                              -                          (6)
   Reserve items and adjustments (7)                                                                                         -      (15)    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Other (Income) Expense, Net                                                                                     $(36)       $32                     NM
                                                                                                                       ======= ==================== ======= ==================== ====================
                                                                                                                                                                                  
Pre-Tax Income from Continuing Operations                                                                                 $205                         $109                                       88%
   Impact of special items                                                                                                  78        90    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Pre-Tax Income from Continuing Operations                                                                        $283      $199                    42%
                                                                                                                       ======= ==================== ======= ==================== ====================
                                                                                                                                                                                  
Income Tax (Benefit) Expense                                                                                               $15                        $(18)                                        NM
   Impact of special items                                                                                                  32        62    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Income Tax Expense                                                                                                $47       $44                     7%
                                                                                                                       ======= ==================== ======= ==================== ====================
% of Adjusted Pre-Tax Income from Continuing Operations                                                                  16.6%                        22.1%                                 (5.5 pts)
                                                                                                                                                                                  
Income from Continuing Operations                                                                                         $190                         $127                                       50%
   Impact of special items                                                                                                  46        28    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Income from Continuing Operations                                                                                $236      $155                    52%
                                                                                                                       ======= ==================== ======= ==================== ====================
                                                                                                                                                                                  
Diluted EPS from Continuing Operations                                                                                   $0.34                        $0.23                                       48%
   Impact of special items                                                                                                0.09      0.05    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Diluted EPS from Continuing Operations                                                                          $0.43     $0.28                    54%
                                                                                                                       ======= ==================== ======= ==================== ====================
                                                                                                                                                                                  
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
    Diluted                                                       550       547    
------------------------------------------------------- -------------------- -------------------- -------------------- ------- -------------------- ------- -------------------- --------------------
(1)                        The company’s results in 2015 and 2014 included intangible asset
                                              amortization expense of $38 million ($29 million, or $0.06 per
                                              diluted share, on an after-tax basis) and $43 million ($34 million,
                                              or $0.06 per diluted share, on an after-tax basis), respectively.
                                               
(2)                                           The company’s results in 2015 included a net charge of $25 million
                                              ($18 million, or $0.03 per diluted share, on an after-tax basis)
                                              primarily related to business optimization charges. The company’s
                                              results in 2014 included business optimization charges of $4 million
                                              ($3 million, or $0.01 per diluted share, on an after-tax basis).
                                               
(3)                                           The company’s results in 2015 included a benefit of $20 million ($18
                                              million or $0.03 per diluted share on an after-tax basis) relating
                                              to the reversal of contingent consideration milestone liabilities.
                                               
(4)                                           The company’s results in 2015 included costs related to the Baxalta
                                              separation of $22 million ($16 million, or $0.03 per diluted share,
                                              on an after-tax basis). The company’s results in 2014 included costs
                                              related to the Baxalta separation of $11 million ($3 million, or
                                              $0.01 per diluted share, on an after-tax basis).
                                               
(5)                                           The company’s results in 2015 included a net benefit of $10 million
                                              ($15 million, or $0.03 per diluted share, on an after-tax basis)
                                              primarily related to adjustments to the SIGMA SPECTRUM infusion pump
                                              reserves. The company’s results in 2014 included a net charge of $25
                                              million or $0.05 per diluted share primarily related to adjustments
                                              to the COLLEAGUE infusion pump reserves.
                                               
(6)                                           The company’s results in 2015 and 2014 included total charges of $23
                                              million ($16 million, or $0.03 per diluted share, on an after-tax
                                              basis) and $42 million ($28 million, or $0.05 per diluted share, on
                                              an after-tax basis), respectively, primarily related to the
                                              integration of Gambro AB (Gambro).
                                               
(7)                                           The company’s results in 2014 included a benefit of $15 million or
                                              $0.03 per diluted share relating to the reversal of tax reserves in
                                              Turkey.
                                               
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, 2015 and 2014
                                                                                                            (unaudited)
                                                                                        (in millions, except per share and percentage data)
                                                              
                                                                                                                                                                                                               
                                                                                                                                                Twelve Months Ended
                                                                                                                                                   December 31,
                                                                                                                          ---------------------------------------------------------------
                                                                                                                                  2015                                      2014                                     Change
                                                                                                                          --------------------                      --------------------                      --------------------
                                                                                                                                                                                                               
NET SALES                                                                                                                               $9,968                                   $10,719                                      (7%)
                                                                                                                                                                                                               
COST OF SALES                                                                                                                            5,822                                     6,138                                      (5%)
                                                       
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GROSS MARGIN                                                                    4,146                  4,581                   (9%)
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
% of Net Sales                                                                                                                           41.6%                                     42.7%                                 (1.1 pts)
                                                                                                                                                                                                               
MARKETING AND ADMINISTRATIVE EXPENSES                                                                                                    3,094                                     3,315                                      (7%)
% of Net Sales                                                                                                                           31.0%                                     30.9%                                   0.1 pts
                                                                                                                                                                                                               
RESEARCH AND DEVELOPMENT EXPENSES                                                                                                          603                                       610                                      (1%)
% of Net Sales                                                                                                                            6.0%                                      5.7%                                   0.3 pts
                                                       
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
OPERATING INCOME                                                                  449                    656                  (32%)
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
% of Net Sales                                                                                                                            4.5%                                      6.1%                                 (1.6 pts)
                                                                                                                                                                                                               
NET INTEREST EXPENSE                                                                                                                       126                                       145                                     (13%)
                                                                                                                                                                                                               
OTHER (INCOME) EXPENSE, NET                                                                                                              (105)                                        21                                        NM
                                                       
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                             428                    490                  (13%)
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                               
INCOME TAX EXPENSE                                                                 28                     33                  (15%)
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
% of Income from Continuing Operations before Income Taxes                                                                                6.5%                                      6.7%                                 (0.2 pts)
                                                                                                                                                                                                               
INCOME FROM CONTINUING OPERATIONS                                                                                                          400                                       457                                     (12%)
                                                                                                                                                                                                               
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX A                                                                                          568                                     2,040                                     (72%)
                                                                                                                                                                                                               
NET INCOME                                                                       $968                 $2,497                  (61%)
========================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                               
INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE
    Basic                                                                       $0.74                  $0.84                  (12%)
========================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
    Diluted                                                                     $0.73                  $0.83                  (12%)
========================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                               
INCOME FROM DISCONTINUED OPERATIONS PER COMMON SHARE
    Basic                                                                       $1.04                  $3.77                  (72%)
========================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
    Diluted                                                                     $1.03                  $3.73                  (72%)
========================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                               
NET INCOME PER COMMON SHARE
    Basic                                                                       $1.78                  $4.61                  (61%)
========================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
    Diluted                                                                     $1.76                  $4.56                  (61%)
========================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                               
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
    Basic                                                                                                                                  545                                       542
    Diluted                                                                       549                    547    
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                               
ADJUSTED OPERATING INCOME (excluding special items)                                                                                       $893 B                                  $1,012 B                                   (12%)
ADJUSTED PRE-TAX INCOME FROM CONTINUING OPERATIONS (excluding                                                                             $927 B                                    $872 B                                      6%
special items)
ADJUSTED INCOME FROM CONTINUING OPERATIONS (excluding special                                                                             $755 B                                    $702 B                                      8%
items)
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding                                                                               $1.38 B                                   $1.28 B                                      8%
special items)
A        Operating results from Baxalta 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.
 
NM - Not Meaningful
                                                           
                                                                                       BAXTER INTERNATIONAL INC.
                                                                               Note to Consolidated Statements of Income
                                                                            Twelve Months Ended December 31, 2015 and 2014
                                                                   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, 2015 and 2014 included special items which impacted the GAAP
measures as follows:
                                                                                                                                                             
                                                                                                                                Twelve Months Ended
                                                                                                                                   December 31,
                                                                                                                       -------------------------------------
                                                                                                                         2015                         2014           Change
                                                                                                                       -------                      ------- -------------------- --------------------
Gross Margin                                                                                                            $4,146                       $4,581                                      (9%)
   Intangible asset amortization expense(1)                                                                                158                          168
   Business optimization items (2)                                                                                          38                         (11)
   Product-related items(4)                                                                                               (28)        64    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Gross Margin                                                                                                   $4,314    $4,802                  (10%)
                                                                                                                       ======= ==================== ======= ==================== ====================
% of Net Sales                                                                                                           43.3%                        44.8%                                 (1.5 pts)
                                                                                                                                                                                  
Marketing and Administrative Expenses                                                                                   $3,094                       $3,315                                      (7%)
   Gambro integration items (5)                                                                                           (73)                        (119)
   Branded Prescription Drug Fee (6)                                                                                         -                          (3)
   Business optimization items(2)                                                                                         (79)                            4
   Separation-related costs(3)                                                                                           (110)                         (11)
   Product-related items(4)                                                                                                  -       (4)    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Marketing and Administrative Expenses                                                                          $2,832    $3,182                  (11%)
                                                                                                                       ======= ==================== ======= ==================== ====================
% of Net Sales                                                                                                           28.4%                        29.7%                                 (1.3 pts)
                                                                                                                                                                                  
Research and Development Expenses                                                                                         $603                         $610                                      (1%)
   Separation-related costs(3)                                                                                             (1)                            -
   Business optimization items (2)                                                                                        (13)       (2)    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Research and Development Expenses                                                                                $589      $608                   (3%)
                                                                                                                       ======= ==================== ======= ==================== ====================
% of Net Sales                                                                                                            5.9%                         5.7%                                   0.2 pts
                                                                                                                                                                                  
Operating Income                                                                                                          $449                         $656                                     (32%)
   Impact of special items                                                                                                 444       356    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Operating Income                                                                                                 $893    $1,012                  (12%)
                                                                                                                       ======= ==================== ======= ==================== ====================
% of Net Sales                                                                                                            9.0%                         9.4%                                 (0.4 pts)
                                                                                                                                                                                  
Other (Income) Expense, Net                                                                                             $(105)                          $21                                        NM
   Reserve items and adjustments(7)                                                                                         52                          (1)
   Loss on debt extinguishment (8)                                                                                       (130)                            -
   Business optimization items (2)                                                                                           3                            -
   Business development items (9)                                                                                           20                            -
   Gambro integration items (5)                                                                                              -      (25)    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Other Income, Net                                                                                              $(160)      $(5)                     NM
                                                                                                                       ======= ==================== ======= ==================== ====================
                                                                                                                                                                                  
Pre-Tax Income from Continuing Operations                                                                                 $428                         $490                                     (13%)
   Impact of special items                                                                                                 499       382    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Pre-Tax Income from Continuing Operations                                                                        $927      $872                     6%
                                                                                                                       ======= ==================== ======= ==================== ====================
                                                                                                                                                                                  
Income Tax Expense                                                                                                         $28                          $33                                     (15%)
   Impact of special items                                                                                                 144       137    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Income Tax Expense                                                                                               $172      $170                     1%
                                                                                                                       ======= ==================== ======= ==================== ====================
% of Adjusted Pre-Tax Income from Continuing Operations                                                                  18.6%                        19.5%                                 (0.9 pts)
                                                                                                                                                                                  
Income from Continuing Operations                                                                                         $400                         $457                                     (12%)
   Impact of special items                                                                                                 355       245    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Income from Continuing Operations                                                                                $755      $702                     8%
                                                                                                                       ======= ==================== ======= ==================== ====================
                                                                                                                                                                                  
Diluted EPS from Continuing Operations                                                                                   $0.73                        $0.83                                     (12%)
   Impact of special items                                                                                                0.65      0.45    
                                                                                                                       ------- -------------------- ------- -------------------- --------------------
Adjusted Diluted EPS from Continuing Operations                                                                          $1.38     $1.28                     8%
                                                                                                                       ======= ==================== ======= ==================== ====================
                                                                                                                                                                                  
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
    Diluted                                                       549       547    
------------------------------------------------------- -------------------- -------------------- -------------------- ------- -------------------- ------- -------------------- --------------------
(1)                        The company’s results in 2015 and 2014 included intangible asset
                                              amortization expense of $158 million ($126 million, or $0.23 per
                                              diluted share, on an after-tax basis) and $168 million ($133
                                              million, or $0.24 per diluted share, on an after-tax basis),
                                              respectively.
                                               
(2)                                           The company’s results in 2015 included a net charge of $127 million
                                              ($89 million, or $0.16 per diluted share, on an after-tax basis)
                                              primarily related to business optimization charges. The company’s
                                              results in 2014 included a net benefit of $13 million ($6 million,
                                              or $0.01 per diluted share, on an after-tax basis) related to
                                              business optimization charges.
                                               
(3)                                           The company’s results in 2015 included costs related to the Baxalta
                                              separation of $111 million ($83 million, or $0.15 per diluted share,
                                              on an after-tax basis) and $11 million ($3 million or $0.01 per
                                              diluted share on an after tax basis) in 2014.
                                               
(4)                                           The company’s results 2015 included a net benefit of $28 million
                                              ($26 million, or $0.05 per diluted share, on an after-tax basis)
                                              primarily related to adjustments to the COLLEAGUE and SIGMA SPECTRUM
                                              infusion pump reserves. The company’s results in 2014 included net
                                              charges 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.
                                               
(5)                                           The company’s results in 2015 and 2014 included total charges of $73
                                              million ($52 million, or $0.10 per diluted share, on an after-tax
                                              basis) and $144 million ($103 million, or $0.19 per diluted share,
                                              on an after-tax basis), respectively, primarily related to the
                                              integration of Gambro.
                                               
(6)                                           The company’s results in 2014 included a charge of $3 million, or
                                              $0.01 per diluted share, to account for an additional year of the
                                              Branded Prescription Drug Fee in accordance with final regulations
                                              issued in the third quarter of 2014 by the Internal Revenue Service.
                                               
(7)                                           The company’s results in 2015 included income, net of expenses, of
                                              $52 million ($33 million, or $0.06 per diluted share, on an
                                              after-tax basis) related to a litigation settlement in which Baxter
                                              was the beneficiary. The company’s results in 2014 included a charge
                                              of $1 million ($24 million, or $0.04 per diluted share, on an
                                              after-tax basis) related to third-party recoveries and reversals of
                                              prior litigation reserves.
                                               
(8)                                           The company’s results in 2015 included a loss of $130 million ($82
                                              million, or $0.15 per diluted share, on an after-tax basis) related
                                              to the July 2015 debt tender offers for certain company indebtedness.
                                               
(9)                                           The company’s results in 2015 included a benefit of $20 million ($18
                                              million or $0.03 per diluted share on an after-tax basis) relating
                                              to the reversal of contingent consideration milestone liabilities.
                                               
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, 2015 and 2014
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                     ($ in millions)
                                                      
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                      Q4                     Q4             % Growth @             % Growth @                            YTD                    YTD             % Growth @             % Growth @
                                 2015                   2014           Actual Rates         Constant Rates                           2015                   2014           Actual Rates         Constant Rates
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                      
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Renal
United States                                                                                                                                      $207                                      $195                                        6%                                        6%                                                                                                                          $782                                      $750                                        4%                                        4%
International                                        777                    887                  (12%)                     0%                          3,007                  3,422                  (12%)                     1%
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Renal                                         $984                 $1,082                   (9%)                     1%                         $3,789                 $4,172                   (9%)                     1%
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                      
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Hospital Products
United States                                                                                                                                      $856                                      $853                                        0%                                        0%                                                                                                                        $3,219                                    $3,249                                      (1%)                                      (1%)
International                                        763                    854                  (11%)                     4%                          2,960                  3,298                  (10%)                     4%
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Hospital Products                           $1,619                 $1,707                   (5%)                     2%                         $6,179                 $6,547                   (6%)                     1%
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                      
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Baxter International Inc.
United States                                                                                                                                    $1,063                                    $1,048                                        1%                                        1%                                                                                                                        $4,001                                    $3,999                                        0%                                        0%
International                                      1,540                  1,741                  (12%)                     2%                          5,967                  6,720                  (11%)                     2%
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Baxter                                      $2,603                 $2,789                   (7%)                     2%                         $9,968                $10,719                   (7%)                     1%
========================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                    
                                                                                                                                                                                                                           BAXTER INTERNATIONAL INC.
                                                                                                                                                                                                                            Sales by Franchise (1)
                                                                                                                                                                                                                   Periods Ending December 31, 2015 and 2014
                                                                                                                                                                                                                                  (unaudited)
                                                                                                                                                                                                                                ($ in millions)
                                           
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                  Q4                                        Q4                                % Growth @                                % Growth @                                       YTD                                       YTD                                % Growth @                                % Growth @
                              2015                   2014           Actual Rates         Constant Rates                   2015                   2014           Actual Rates         Constant Rates
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                           
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Renal (2)                                                     $984                 $1,082                   (9%)                     1%                 $3,789                 $4,172                   (9%)                     1%
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                           
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Hospital Products
Fluid Systems (3)                                                                                                                                                  $569                                      $547                                        4%                                       12%                                    $2,106                                    $2,129                                      (1%)                                        6%
Integrated Pharmacy Solutions (4)                                                                                                                                   595                                       648                                      (8%)                                        0%                                     2,297                                     2,535                                      (9%)                                      (2%)
Surgical Care (5)                                                                                                                                                   346                                       366                                      (5%)                                        0%                                     1,323                                     1,373                                      (4%)                                        3%
Other (6)                                                            109                    146                  (25%)                  (22%)                    453                    510                  (11%)                   (5%)
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Hospital Products                                           $1,619                 $1,707                   (5%)                     2%                 $6,179                 $6,547                   (6%)                     1%
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                           
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Baxter                                                      $2,603                 $2,789                   (7%)                     2%                 $9,968                $10,719                   (7%)                     1%
============================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
(1)   Effective January 1, 2015, Baxter has transitioned to a new
                         commercial franchise structure for reporting net sales. Prior period
                         net sales have been recast to reflect the new commercial franchise
                         structure. See Notes 2 - 6 below for a description of each
                         commercial franchise.
                          
(2)                      Includes sales of the company’s peritoneal dialysis, hemodialysis
                         and continuous renal replacement therapies.
                          
(3)                      Includes sales of the company’s IV therapies, infusion pumps and
                         administration sets.
                          
(4)                      Includes sales of the company’s premixed and oncology drug
                         platforms, nutrition products and pharmacy compounding services.
                          
(5)                      Includes sales of the company’s inhaled anesthesia products as well
                         as biological products and medical devices used in surgical
                         procedures for hemostasis, tissue sealing and adhesion prevention.
                          
(6)                      Includes sales primarily from the company’s pharmaceutical
                         partnering business.
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                     BAXTER INTERNATIONAL INC.
                                                                                                                                                                                                                                     Franchise Sales by U.S. and International (1)
                                                                                                                                                                                                                                     Three-Month Periods Ending December 31, 2015 and 2014
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                     ($ in millions)
                                                                    
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                         Q4 2015                                                                                                            Q4 2014                                                                                                         % Growth
                                                                                                                                       ----------------------------------------------------------------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ----------------------------------------------------------------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------------------------------------------------
                                     U.S.    International                        Total                           U.S.    International                        Total                         U.S.    International                        Total
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                    
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Renal                                             $207                   $777                   $984                           $195                   $887                 $1,082                           6%                  (12%)                   (9%)
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                    
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Hospital Products
Fluid Systems                                                                                                                                          $296                                      $273                                      $569                                                                                                                          $233                                      $314                                      $547                                                                                                      27%                                     (13%)                                        4%
Integrated Pharmacy Solutions                                                                                                                           286                                       309                                       595                                                                                                                           312                                       336                                       648                                                                                                     (8%)                                      (8%)                                      (8%)
Surgical Care                                                                                                                                           202                                       144                                       346                                                                                                                           205                                       161                                       366                                                                                                     (1%)                                     (11%)                                      (5%)
Other                                                     72                     37                    109                            103                     43                    146                        (30%)                  (14%)                  (25%)
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Hospital Products                                 $856                   $763                 $1,619                           $853                   $854                 $1,707                           0%                  (11%)                   (5%)
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                    
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Baxter                                          $1,063                 $1,540                 $2,603                         $1,048                 $1,741                 $2,789                           1%                  (12%)                   (7%)
============================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
(1)   Effective January 1, 2015, Baxter has transitioned to a new
                         commercial franchise structure for reporting net sales. Prior period
                         net sales have been recast to reflect the new commercial franchise
                         structure. Refer to page 13 for additional details.
                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                     BAXTER INTERNATIONAL INC.
                                                                                                                                                                                                                                     Franchise Sales by U.S. and International (1)
                                                                                                                                                                                                                                     Periods Ending December 31, 2015 and 2014
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                     ($ in millions)
                                                                    
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                 YTD 2015                                                                     YTD 2014                                                    % Growth          
                                                                                                                  ----------------------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ----------------------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                   U.S.    International                        Total                           U.S.    International                        Total                           U.S.    International                        Total
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                    
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Renal                                           $782                 $3,007                 $3,789                           $750                 $3,422                 $4,172                             4%                  (12%)                   (9%)
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                    
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Hospital Products
Fluid Systems                                                                                                                   $1,041                                    $1,065                                    $2,106                                                                                                                          $906                                    $1,223                                    $2,129                                                                                                                           15%                                     (13%)                                      (1%)
Integrated Pharmacy Solutions                                                                                                    1,104                                     1,193                                     2,297                                                                                                                         1,225                                     1,310                                     2,535                                                                                                                         (10%)                                      (9%)                                      (9%)
Surgical Care                                                                                                                      771                                       552                                     1,323                                                                                                                           766                                       607                                     1,373                                                                                                                            1%                                      (9%)                                      (4%)
Other                                                  303                    150                    453                            352                    158                    510                          (14%)                   (5%)                  (11%)
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Hospital Products                             $3,219                 $2,960                 $6,179                         $3,249                 $3,298                 $6,547                           (1%)                  (10%)                   (6%)
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                    
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Baxter                                        $4,001                 $5,967                 $9,968                         $3,999                 $6,720                $10,719                             0%                  (11%)                   (7%)
============================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
(1)   Effective January 1, 2015, Baxter has transitioned to a new
                         commercial franchise structure for reporting net sales. Prior period
                         net sales have been recast to reflect the new commercial franchise
                         structure. Refer to page 13 for additional details.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20160202005393r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20160202005393/en/

SOURCE: Baxter International Inc.

Baxter International Inc. 
Media Contact: 
Deborah Spak, (224) 948-2349 
or 
Investor Contact: 
Clare Trachtman, (224) 948-3085


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