[February 01, 2018] |
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Baxter Reports 2017 Fourth-Quarter and Full-Year Results
Baxter International Inc. (NYSE:BAX) today reported results for the
fourth quarter and full-year ended December 31, 2017, and provided its
financial guidance for 2018.
"Baxter's solid performance in 2017 reflects the ongoing impact of
strategic, disciplined execution," said José (Joe) E. Almeida, chairman
and chief executive officer. "We are combining an unwavering focus on
operational excellence with an increased emphasis on innovation and
portfolio expansion to deliver positive results for patients and
investors. Looking ahead, our continued transformation will help support
our aspiration of delivering industry-leading performance for our
investors and other stakeholders in 2018 and beyond."
Fourth-Quarter Financial Results
In the fourth quarter, worldwide sales totaled approximately $2.8
billion, an increase of 5 percent on a reported basis, 3 percent on a
constant currency basis and 2 percent on an operational basis as
compared to the prior-year period. Operational sales adjust for the
impact of foreign exchange, generic competition for U.S.
cyclophosphamide, the Claris Injectables (Claris) acquisition and the
previously communicated select strategic product exits the company is
undertaking. In line with the financial outlook shared on October 25,
2017, fourth quarter revenues were negatively impacted by approximately
$70 million as a result of temporary manufacturing disruptions in Puerto
Rico due to the impact of Hurricane Maria.
Sales in the U.S. were $1.1 billion, increasing 1 percent. International
sales totaled more than $1.6 billion, representing an 8 percent increase
on a reported basis and a 4 percent increase on a constant currency
basis.
Global sales for Hospital Products totaled $1.7 billion in the fourth
quarter, advancing 5 percent on a reported basis, 3 percent on a
constant currency basis and 1 percent operationally as compared to the
prior-year period. Performance in the quarter benefited from continued
strength in our U.S. fluid systems business as well as favorable demand
for injectable pharmaceuticals, which includes the contribution of
approximately $30 million of sales from the acquisition of Claris. Sales
in the quarter also benefited from increased demand for the company's
advanced surgery products as well as cytotoxic contract manufacturing
services. Hospital Products fourth quarter sales were negatively
impacted by approximately $70 million as a result of the Hurricane Maria
related manufacturing disruptions.
Baxter's fourth quarter Renal sales were approximately $1.1 billion,
representing an increase of 5 percent on a reported basis, 3 percent on
a constant currency basis and 4 percent operationally. Sales growth in
Renal was driven by solid performance globally across both chronic and
acute renal therapies.
Baxter reported a net loss from continuing operations of $61 million, or
$0.11 per diluted share, on a GAAP (Generally Accepted Accounting
Principles) basis for the fourth quarter. These results included special
items totaling $137 million net ($415 million net after-tax, which
includes a net tax charge of $322 million related to the estimated
impact of U.S. tax reform). Other special charges in the quarter
primarily included business optimization and intangible asset
amortization.
On an adjusted basis, excluding special items, Baxter's fourth quarter
income from continuing operations totaled $354 million, or $0.64 per
diluted share, exceeding the company's previously issued guidance of
$0.56 to $0.59 per diluted share.
Summary of Full-Year 2017 Results
Baxter's worldwide sales totaled approximately $10.6 billion in 2017, an
increase of 4 percent on both a reported and constant currency basis,
and 5 percent on an operational basis as compared to the prior-year
period. Sales within the United States totaled $4.5 billion, improving 6
percent on both a reported and operational basis over the prior year.
International sales totaled approximately $6.1 billion, representing a 2
percent increase on a reported and constant currency basis and 4 percent
operationally. Full-year sales for Hospital Products totaled $6.6
billion, reflecting growth of 5 percent on a reported, constant currency
and operational basis. Baxter's Renal sales totaled more than $3.9
billion, increasing 2 percent on both a reported and constant currency
basis and 4 percent operationally.
For full-year 2017, Baxter reported income from continuing operations of
$724 million, or $1.30 per diluted share, on a GAAP basis. These results
include special items of $461 million net ($652 million net after-tax,
including the estimated net impact of U.S. tax reform) primarily related
to business optimization initiatives, intangible asset amortization,
Claris integration expenses and deconsolidation of the company's
Venezuelan operations.
On an adjusted basis, excluding special items, Baxter's full-year income
from continuing operations totaled approximately $1.4 billion, or $2.48
per diluted share.
In 2017, Baxter generated $1.85 billion in operating cash flow, an
increase of $229 million driven by improved operational performance and
the continuing impact of programs focused on improving the company's
working capital. In addition, through disciplined management of
expenditures, Baxter reduced capital spending by $85 million to $634
million. As a result, the company generated an increase of $314 million
in free cash flow to $1.22 billion (operating cash flow less capital
expenditures).
"Over the last two years, Baxter has demonstrated significant progress
in improving our cash generation. This improvement allows the company
flexibility to reinvest in the business and return value to shareholders
through increased dividends and share repurchases," said Jay Saccaro,
Baxter's chief financial officer. "During the year, we increased the
annual dividend rate by 23 percent as well as repurchased $564 million
worth of shares, while also pursuing internal and external initiatives
to augment future growth."
2017 Business Highlights
Baxter advanced its mission to save and sustain lives through
patient-focused and customer-inspired innovation while generating
profitable growth. Among the year's highlights, the company:
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Completed
its acquisition of Claris Injectables Limited, significantly
broadening Baxter's presence in the global generic injectable
pharmaceuticals marketplace.
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Initiated high-potential research and development collaborations
across a range of therapeutic opportunities with partners such as Mayo
Clinic, Ramot
at Tel Aviv University/Tel Aviv Sourasky Medical Center and ScinoPharm.
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Received
U.S. Food and Drug Administration (FDA) guidance clarifying the
regulatory pathway for a new home-based peritoneal dialysis (PD)
solution generation system; and initiated
U.S. clinical trials of HDx therapy enabled by THERANOVA, a Baxter
technology currently available in other global markets that is
designed to closely mimic the natural kidney through clearance of
small to large middle molecules during dialysis.
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Introduced Baxter's leading-edge PrisMAX acute care technology through
a limited launch in select international markets; and also launched,
in select markets in Europe, Middle East and Africa, a
new indication for the oXIRIS set, the first 3-in-1 set for use in
continuous renal replacement therapy (CRRT) and sepsis management
protocols.
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Launched enhancements and upgrades for a range of Baxter products to
promote safety and increase ease of use, including the AK
98 hemodialysis system, FLOSEAL
Hemostatic Matrix, TISSEEL [Fibrin Sealant] and the SIGMA
SPECTRUM infusion system.
As 2018 begins, Baxter remains focused on accelerating growth and
innovation through both business development and its internal R&D
pipeline. Among developments since the start of the year, the company:
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Announced
entry into an agreement to acquire two surgical hemostat and
sealant products from Mallinckrodt plc: RECOTHROM Thrombin topical
(Recombinant), the first and only stand-alone recombinant thrombin,
and PREVELEAK Surgical Sealant, which is used in vascular
reconstruction, subject to the satisfaction of standard closing
conditions.
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Received
U.S. FDA approval of Bivalirudin in 0.9 percent Sodium Chloride
Injection using Baxter's proprietary frozen GALAXY container
technology, making it the first and only presentation of Bivalirudin
available in a convenient frozen premixed solution.
Puerto Rico Update
As noted in earlier press releases, regarding the impact of Hurricane
Maria, Baxter experienced production disruptions at its three Puerto
Rico facilities following challenges to the island's power and
infrastructure, which affected the manufacture of several products for
the U.S. market. Baxter is committed to helping ensure patients have
continued access to the products and therapies they need, and the
company has been working diligently to restore its operations to full
capacity following the storm.
All of Baxter's Puerto Rico facilities are now back on the electrical
grid and have been ramping up production to pre-hurricane levels. In
addition, Baxter has been working closely with FDA, which granted
regulatory discretion for temporary special importation of certain
products from Baxter facilities in Ireland, Australia, Canada, Mexico,
England, Italy and Brazil to help support product supply for the U.S.
market. While the company expects to return to more normal supply levels
for products manufactured in Puerto Rico over the coming weeks, sales in
the first quarter will be negatively impacted by approximately $25
million.
"I am incredibly proud of and grateful to our employees around the
world, who are inspired by our mission to save and sustain lives and
have contributed in remarkable ways to our recovery efforts in Puerto
Rico," said Almeida. "I also want to thank our customers for their
extraordinary patience and support as we work together through these
unprecedented supply challenges, and to acknowledge the FDA's valued
assistance and partnership, which has been vital to the island's
continued recovery."
2018 Financial Outlook
Baxter is providing its outlook for the full-year and first quarter of
2018:
-
For full-year 2018, Baxter expects sales growth of 6 to 7 percent on a
reported basis and approximately 4 percent on both a constant currency
and operational basis. Operational sales adjust for the impact of
foreign exchange, generic competition for cyclophosphamide and the
benefit of the Claris acquisition. The company expects earnings from
continuing operations, before special items, of $2.72 to $2.80 per
diluted share.
-
For the first quarter, the company expects sales growth of
approximately 5 to 6 percent on a reported basis, or 1 to 2 percent on
a constant currency basis. Operational sales are expected to be flat
to up 1 percent as compared to the prior-year period. The company
expects earnings from continuing operations, before special items, of
$0.60 to $0.62 per diluted share.
The reconciliations between the projected 2018 adjusted diluted earnings
per share and projected GAAP diluted earnings per share follows:
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2018 Earnings per Share Guidance
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Q1 2018
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FY 2018
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Diluted Earnings per Share - Adjusted
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$0.60 - $0.62
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$2.72 - $2.80
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Estimated intangible asset amortization
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$0.06
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$0.23
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Estimated business optimization charges
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$0.07 - $0.09
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$0.19 - $0.24
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Diluted Earnings per Share - GAAP
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$0.45 - $0.49
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$2.25 - $2.38
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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.
A webcast of Baxter's fourth quarter 2017 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 1, 2018. Please see www.baxter.com
for more information regarding this and future investor events and
webcasts.
Segment Reporting Change
Beginning with the filing of the company's Annual Report on Form 10-K,
Baxter will report operating results based on three reportable
geographic segments: Americas (North and South America), EMEA (Europe,
Middle East and Africa) and APAC (Asia Pacific). Net sales will be
reported based on these reportable segments, as well as the company's
new Global Business Units (GBUs). For comparative purposes, historical
GBU information is currently available on our website.
About Baxter
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; surgery
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 2018
(including estimates regarding the timing of the company's recovery from
Hurricane Maria). 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; product development risks; product quality or patient
safety concerns; continuity, availability and pricing of acceptable raw
materials and component supply; inability to create additional
production capacity in a timely manner or the occurrence of other
manufacturing or supply difficulties (including as a result of a natural
disaster or otherwise); breaches or failures of the company's
information technology systems, including by cyber attack; future
actions of regulatory bodies and other governmental authorities,
including FDA, the Department of Justice, the New York Attorney General
and foreign regulatory agencies; failures with respect to compliance
programs; future actions of third parties, including payers; U.S.
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 (including the proposed acquisition
of two surgical products from Mallinckrodt plc); the ability to
achieve the intended results associated with the separation of the
biopharmaceutical and medical products businesses; 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; any change in law concerning the
taxation of income (including current or future tax reform), including
income earned outside the United States; actions taken by tax
authorities in connection with ongoing tax audits; 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.
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Consolidated Statements of Income
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Three Months Ended December 31, 2017 and 2016
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(unaudited)
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(in millions, except per share and percentage data)
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Three Months Ended
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December 31,
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2017
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2016
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Change
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NET SALES
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$2,774
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$2,645
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5%
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COST OF SALES
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1,612
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1,543
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4%
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GROSS MARGIN
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1,162
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1,102
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5%
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% of Net Sales
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41.9%
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41.7%
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0.2 pts
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MARKETING AND ADMINISTRATIVE EXPENSES
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697
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663
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5%
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% of Net Sales
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25.1%
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25.1%
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0 pts
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RESEARCH AND DEVELOPMENT EXPENSES
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182
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157
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16%
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% of Net Sales
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6.6%
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5.9%
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0.7 pts
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OPERATING INCOME
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283
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282
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0%
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% of Net Sales
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10.2%
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10.7%
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(0.5 pts)
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NET INTEREST EXPENSE
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14
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13
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8%
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OTHER INCOME, NET
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(24)
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(10)
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140%
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INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
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293
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279
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5%
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INCOME TAX EXPENSE
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354
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39
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NM
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% of Income from Continuing Operations before Income Taxes
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120.8%
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14.0%
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106.8 pts
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(LOSS) INCOME FROM CONTINUING OPERATIONS
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(61)
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240
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NM
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(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX
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(10)
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3
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NM
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NET (LOSS) INCOME
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($71)
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$243
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NM
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(LOSS) INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE
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Basic
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($0.11)
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$0.44
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NM
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Diluted
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($0.11)
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$0.44
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NM
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(LOSS) INCOME FROM DISCONTINUED OPERATIONS PER COMMON SHARE
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Basic
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($0.02)
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$0.01
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NM
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Diluted
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($0.02)
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$0.00
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NM
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NET (LOSS) INCOME PER COMMON SHARE
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Basic
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($0.13)
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$0.45
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NM
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Diluted
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($0.13)
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$0.44
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NM
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WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
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Basic
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543
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542
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Diluted
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556
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549
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ADJUSTED OPERATING INCOME (excluding special items)
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$420
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A
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$407
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A
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3%
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ADJUSTED PRE-TAX INCOME FROM CONTINUING OPERATIONS (excluding
special items)
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$430
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A
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$413
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A
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4%
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ADJUSTED INCOME FROM CONTINUING OPERATIONS (excluding special
items)
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$354
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A
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$312
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A
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14%
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ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding
special items)
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$0.64
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A
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$0.57
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A
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12%
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A
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Refer to page 12 for a description of the adjustments and a
reconciliation to GAAP measures.
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NM -
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Not Meaningful
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BAXTER INTERNATIONAL INC.
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Note to Consolidated Statements of Income
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Three Months Ended December 31, 2017 and 2016
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Description of Adjustments and Reconciliation of GAAP to Non-GAAP
Measures
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(unaudited)
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(in millions, except per share and percentage data)
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The company's GAAP results for the three months ended December 31,
2017 and 2016 included special items which impacted the
GAAP measures as follows:
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Three Months Ended
December 31,
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2017
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2016
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Change
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Gross Margin
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$1,162
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$1,102
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5%
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Intangible asset amortization expense 1
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42
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39
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Business optimization items 2
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11
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43
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Hurricane Maria costs 3
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11
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-
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Product-related items 4
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-
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(6)
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Claris acquisition and integration expenses 5
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4
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-
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Adjusted Gross Margin
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$1,230
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$1,178
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4%
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% of Net Sales
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44.3%
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44.5%
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(0.2 pts)
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Marketing and Administrative Expenses
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$697
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$663
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5%
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Business optimization items 2
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(42)
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(36)
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Baxalta separation-related costs 6
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(2)
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(8)
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Claris acquisition and integration expenses 5
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(4)
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-
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Litigation and contractual disputes 7
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(21)
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-
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Adjusted Marketing and Administrative Expenses
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$628
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$619
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2%
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% of Net Sales
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22.6%
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23.4%
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(0.8 pts)
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Research and Development Expenses
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$182
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$157
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16%
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Business optimization items 2
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-
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(5)
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Adjusted Research and Development Expenses
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$182
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$152
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20%
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% of Net Sales
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6.6%
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5.7%
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0.9 pts
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Operating Income
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$283
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$282
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0%
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Impact of special items
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137
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125
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Adjusted Operating Income
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$420
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$407
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3%
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% of Net Sales
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15.1%
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15.4%
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(0.3 pts)
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|
|
Other Income, Net
|
|
$(24)
|
|
$(10)
|
|
140%
|
Tax matter 8
|
|
-
|
|
(9)
|
|
|
Adjusted Other Income, Net
|
|
$(24)
|
|
$(19)
|
|
26%
|
|
|
|
|
|
|
|
Pre-Tax Income from Continuing Operations
|
|
$293
|
|
$279
|
|
5%
|
Impact of special items
|
|
137
|
|
134
|
|
|
Adjusted Pre-Tax Income from Continuing Operations
|
|
$430
|
|
$413
|
|
4%
|
|
|
|
|
|
|
|
Income Tax Expense
|
|
$354
|
|
$39
|
|
NM
|
Impact of special items 9
|
|
(278)
|
|
62
|
|
|
Adjusted Income Tax Expense
|
|
$76
|
|
$101
|
|
(25%)
|
% of Adjusted Pre-Tax Income from Continuing Operations
|
|
17.7%
|
|
24.5%
|
|
(6.8 pts)
|
|
|
|
|
|
|
|
Loss (Income) from Continuing Operations
|
|
$(61)
|
|
$240
|
|
NM
|
Impact of special items
|
|
415
|
|
72
|
|
|
Adjusted Income from Continuing Operations
|
|
$354
|
|
$312
|
|
14%
|
|
|
|
|
|
|
|
Diluted EPS from Continuing Operations
|
|
$(0.11)
|
|
$0.44
|
|
NM
|
Impact of special items
|
|
0.75
|
|
0.13
|
|
|
Adjusted Diluted EPS from Continuing Operations
|
|
$0.64
|
|
$0.57
|
|
12%
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
Diluted
|
|
556
|
|
549
|
|
|
1
|
|
The company's results in 2017 and 2016 included intangible asset
amortization expense of $42 million ($27 million, or $0.05 per
diluted share, on an after-tax basis) and $39 million ($25 million,
or $0.05 per diluted share, on an after-tax basis), respectively.
|
2
|
|
The company's results in 2017 included a charge of $53 million ($35
million, or $0.06 per diluted share, on an after-tax basis) related
to business optimization initiatives. This included a net charge of
$20 million related to restructuring activities, $31 million of
costs to implement business optimization programs which primarily
included external consulting and project employee costs, and $2
million of accelerated depreciation associated with facilities to be
closed. The $20 million of net restructuring charges included $19
million of employee termination costs and $1 million of asset
impairment charges primarily related to facility closures.
|
|
|
The company's results in 2016 included a net charge of $84 million
($48 million, or $0.08 per diluted share, on an after-tax basis)
related to business optimization initiatives. This included a charge
of $48 million related to restructuring activities, $21 million of
costs to implement business optimization programs which primarily
included external consulting and project employee costs, $8 million
of accelerated depreciation associated with facilities to be closed
and $7 million of Gambro integration costs. The $48 million of
restructuring charges included $36 million of employee termination
costs, $10 million of asset impairment charges primarily related to
a facility closure and $2 million of other exit costs.
|
3
|
|
The company's results in 2017 included charges of $11 million ($11
million, or $0.02 per diluted share, on an after-tax basis) related
to the impact of Hurricane Maria on the company's operations in
Puerto Rico. The costs primarily include idle facility costs.
|
4
|
|
The company's results in 2016 included a net benefit of $6 million
($4 million, or $0.01 per diluted share, on an after-tax basis)
related to the SIGMA SPECTRUM infusion pump reserves.
|
5
|
|
The company's results in 2017 included acquisition and integration
costs of $8 million ($6 million, or $0.01 per diluted share, on an
after-tax basis) related to the company's acquisition of Claris
Injectables Limited.
|
6
|
|
The company's results in 2017 and 2016 included costs incurred
related to the Baxalta separation totaling $2 million ($1 million,
or $0.00 per diluted share, on an after-tax basis) and $8 million
($3 million, or $0.01 per diluted share, on an after-tax basis),
respectively.
|
7
|
|
The company's results in 2017 included charges of $21 million ($13
million, or $0.03 per diluted share, on an after-tax basis) related
to litigation and contractual disputes for businesses or
arrangements in which the company is no longer engaged or a party
thereto.
|
8
|
|
The company's results in 2016 included a net benefit to income tax
of $9 million offset by $9 million recorded in other income due to
the settlement of an income tax matter related to the company's
non-controlling interest in a joint venture in Turkey.
|
9
|
|
The company's results in 2017 included a net tax expense of $322
million, or $0.58 per diluted share, related to the estimated impact
of tax reform on the company's tax related assets and 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.
|
NM - Not Meaningful
|
BAXTER INTERNATIONAL INC.
|
Consolidated Statements of Income
|
Twelve Months Ended December 31, 2017 and 2016
|
(unaudited)
|
(in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
|
|
|
|
|
|
NET SALES
|
|
$10,561
|
|
$10,163
|
|
4%
|
|
|
|
|
|
|
|
COST OF SALES
|
|
6,099
|
|
6,053
|
|
1%
|
|
|
|
|
|
|
|
GROSS MARGIN
|
|
4,462
|
|
4,110
|
|
9%
|
% of Net Sales
|
|
42.2%
|
|
40.4%
|
|
1.8 pts
|
|
|
|
|
|
|
|
MARKETING AND ADMINISTRATIVE EXPENSES
|
|
2,587
|
|
2,739
|
|
(6%)
|
% of Net Sales
|
|
24.5%
|
|
27.0%
|
|
(2.5 pts)
|
|
|
|
|
|
|
|
RESEARCH AND DEVELOPMENT EXPENSES
|
|
617
|
|
647
|
|
(5%)
|
% of Net Sales
|
|
5.8%
|
|
6.4%
|
|
(0.6 pts)
|
|
|
|
|
|
|
|
OPERATING INCOME
|
|
1,258
|
|
724
|
|
74%
|
% of Net Sales
|
|
11.9%
|
|
7.1%
|
|
4.8 pts
|
|
|
|
|
|
|
|
NET INTEREST EXPENSE
|
|
55
|
|
66
|
|
(17%)
|
|
|
|
|
|
|
|
OTHER INCOME, NET A
|
|
(14)
|
|
(4,296)
|
|
(100%)
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
|
1,217
|
|
4,954
|
|
(75%)
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE (BENEFIT)
|
|
493
|
|
(12)
|
|
NM
|
% of Income from Continuing Operations before Income Taxes
|
|
40.5%
|
|
(0.2%)
|
|
40.7 pts
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS
|
|
724
|
|
4,966
|
|
(85%)
|
|
|
|
|
|
|
|
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX
|
|
(7)
|
|
(1)
|
|
NM
|
|
|
|
|
|
|
|
NET INCOME
|
|
$717
|
|
$4,965
|
|
(86%)
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE
|
|
|
|
|
|
|
Basic
|
|
$1.33
|
|
$9.10
|
|
(85%)
|
Diluted
|
|
$1.30
|
|
$9.01
|
|
(86%)
|
|
|
|
|
|
|
|
LOSS FROM DISCONTINUED OPERATIONS PER COMMON SHARE
|
|
|
|
|
|
|
Basic
|
|
($0.01)
|
|
($0.01)
|
|
NM
|
Diluted
|
|
($0.01)
|
|
$0.00
|
|
NM
|
|
|
|
|
|
|
|
NET INCOME PER COMMON SHARE
|
|
|
|
|
|
|
Basic
|
|
$1.32
|
|
$9.09
|
|
(85%)
|
Diluted
|
|
$1.29
|
|
$9.01
|
|
(86%)
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
|
|
|
|
|
|
Basic
|
|
543
|
|
546
|
|
|
Diluted
|
|
555
|
|
551
|
|
|
|
|
|
|
|
|
|
ADJUSTED OPERATING INCOME (excluding special items)
|
|
$1,686
|
B
|
$1,383
|
B
|
22%
|
ADJUSTED PRE-TAX INCOME FROM CONTINUING OPERATIONS (excluding
special items)
|
|
$1,678
|
B
|
$1,380
|
B
|
22%
|
ADJUSTED INCOME FROM CONTINUING OPERATIONS (excluding special
items)
|
|
$1,376
|
B
|
$1,078
|
B
|
28%
|
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding
special items)
|
|
$2.48
|
B
|
$1.96
|
B
|
27%
|
A
|
|
Other Income, net for the period ended December 31, 2016
includes $4.4 billion net realized gains on the Baxalta retained
shares transactions and a $149 million net debt extinguishment loss.
|
B
|
|
Refer to page 14 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, 2017 and 2016
|
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, 2017 and 2016 included special items which impacted
the GAAP measures as follows:
|
|
|
|
|
|
|
Twelve Months Ended
December 31,
|
|
|
|
|
2017
|
|
2016
|
|
Change
|
Gross Margin
|
|
$4,462
|
|
$4,110
|
|
9%
|
Intangible asset amortization expense 1
|
|
154
|
|
163
|
|
|
Business optimization items 2
|
|
53
|
|
156
|
|
|
Intangible asset impairment 3
|
|
-
|
|
51
|
|
|
Baxalta separation-related costs 4
|
|
1
|
|
1
|
|
|
Product-related items 5
|
|
17
|
|
(18)
|
|
|
Claris acquisition and integration expenses 6
|
|
8
|
|
-
|
|
|
Hurricane Maria costs 7
|
|
32
|
|
-
|
|
|
Adjusted Gross Margin
|
|
$4,727
|
|
$4,463
|
|
6%
|
% of Net Sales
|
|
44.8%
|
|
43.9%
|
|
0.9 pts
|
|
|
|
|
|
|
|
Marketing and Administrative Expenses
|
|
$2,587
|
|
$2,739
|
|
(6%)
|
Business optimization items 2
|
|
(116)
|
|
(173)
|
|
|
Baxalta separation-related costs 4
|
|
(18)
|
|
(53)
|
|
|
Historical rebate and discount adjustments 8
|
|
12
|
|
-
|
|
|
Claris acquisition and integration expenses 6
|
|
(20)
|
|
-
|
|
|
Litigation and contractual disputes 9
|
|
(21)
|
|
-
|
|
|
Adjusted Marketing and Administrative Expenses
|
|
$2,424
|
|
$2,513
|
|
(4%)
|
% of Net Sales
|
|
23.0%
|
|
24.7%
|
|
(1.7 pts)
|
|
|
|
|
|
|
|
Research and Development Expenses
|
|
$617
|
|
$647
|
|
(5%)
|
Business optimization items 2
|
|
-
|
|
(80)
|
|
|
Adjusted Research and Development Expenses
|
|
$617
|
|
$567
|
|
9%
|
% of Net Sales
|
|
5.8%
|
|
5.6%
|
|
0.2 pts
|
|
|
|
|
|
|
|
Operating Income
|
|
$1,258
|
|
$724
|
|
74%
|
Impact of special items
|
|
428
|
|
659
|
|
|
Adjusted Operating Income
|
|
$1,686
|
|
$1,383
|
|
22%
|
% of Net Sales
|
|
16.0%
|
|
13.6%
|
|
2.4 pts
|
|
|
|
|
|
|
|
Other Income, Net
|
|
$(14)
|
|
$(4,296)
|
|
(100%)
|
Net realized gains on Baxalta Retained Shares transactions 10
|
|
-
|
|
4,391
|
|
|
Loss on debt extinguishment 11
|
|
-
|
|
(149)
|
|
|
Venezuelan deconsolidation 12
|
|
(33)
|
|
-
|
|
|
Tax matter 13
|
|
-
|
|
(9)
|
|
|
Adjusted Other Income, Net
|
|
$(47)
|
|
$(63)
|
|
(25%)
|
|
|
|
|
|
|
|
Pre-Tax Income from Continuing Operations
|
|
$1,217
|
|
$4,954
|
|
(75%)
|
Impact of special items
|
|
461
|
|
(3,574)
|
|
|
Adjusted Pre-Tax Income from Continuing Operations
|
|
$1,678
|
|
$1,380
|
|
22%
|
|
|
|
|
|
|
|
Income Tax (Benefit) Expense
|
|
$493
|
|
$(12)
|
|
NM
|
Impact of special items 14
|
|
(191)
|
|
314
|
|
|
Adjusted Income Tax Expense
|
|
$302
|
|
$302
|
|
0%
|
% of Adjusted Pre-Tax Income from Continuing Operations
|
|
18.0%
|
|
21.9%
|
|
(3.9 pts)
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
$724
|
|
$4,966
|
|
(85%)
|
Impact of special items
|
|
652
|
|
(3,888)
|
|
|
Adjusted Income from Continuing Operations
|
|
$1,376
|
|
$1,078
|
|
28%
|
|
|
|
|
|
|
|
Diluted EPS from Continuing Operations
|
|
$1.30
|
|
$9.01
|
|
(86%)
|
Impact of special items
|
|
1.18
|
|
(7.05)
|
|
|
Adjusted Diluted EPS from Continuing Operations
|
|
$2.48
|
|
$1.96
|
|
27%
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
|
|
|
Diluted
|
|
555
|
|
551
|
|
|
1
|
|
The company's results in 2017 and 2016 included intangible asset
amortization expense of $154 million ($108 million, or $0.19 per
diluted share, on an after-tax basis) and $163 million ($116
million, or $0.21 per diluted share, on an after-tax basis),
respectively.
|
2
|
|
The company's results in 2017 included a net charge of $169 million
($119 million, or $0.21 per diluted share, on an after-tax basis)
related to business optimization initiatives. This included a net
charge of $70 million related to restructuring activities, $89
million of costs to implement business optimization programs which
primarily included external consulting and project employee costs,
and $10 million of accelerated depreciation associated with
facilities to be closed. The $70 million of net restructuring
charges included $59 million of employee termination costs, $5
million of contract termination costs, and $6 million of asset
impairment charges primarily related to facility closures.
|
|
|
The company's results in 2016 included a net charge of $409 million
($290 million, or $0.53 per diluted share, on an after-tax basis)
related to business optimization initiatives. This included a net
charge of $285 million related to restructuring activities, $65
million of costs to implement business optimization programs which
primarily included external consulting and project employee costs,
$33 million of accelerated depreciation associated with facilities
to be closed, and $26 million of Gambro integration costs. The $285
million of net restructuring charges included net $180 million of
employee termination costs, $54 million of costs related to the
discontinuance of the VIVIA home hemodialysis development program,
$47 million of asset impairment charges related to acquired
in-process R&D and facility closure costs, and net $4 million of
other exit costs.
|
3
|
|
The company's results in 2016 included a $51 million ($37 million,
or $0.07 per diluted share, on an after-tax basis) impairment
primarily related to developed technology.
|
4
|
|
The company's results in 2017 and 2016 included costs incurred
related to the Baxalta separation totaling $19 million ($13 million,
or $0.02 per diluted share, on an after-tax basis) and $54 million
($37 million, or $0.07 per diluted share, on an after-tax basis),
respectively.
|
5
|
|
The company's results in 2017 included a net charge of $17 million
($11 million, or $0.02 per diluted share, on an after-tax basis)
related to SIGMA SPECTRUM infusion pump inspection and remediation
activities, partially offset by a benefit related to an adjustment
to historical product reserves.
|
|
|
The company's results in 2016 included a benefit of $18 million ($13
million, or $0.02 per diluted share, on an after-tax basis) related
to an adjustment to the SIGMA SPECTRUM infusion pump reserves.
|
6
|
|
The company's results in 2017 included acquisition and integration
costs of $28 million ($20 million, or $0.04 per diluted share, on an
after-tax basis) related to the company's acquisition of Claris
Injectables Limited.
|
7
|
|
The company's results in 2017 included charges of $32 million ($31
million, or $0.06 per diluted share, on an after-tax basis) related
to the impact of Hurricane Maria on the company's operations in
Puerto Rico. The costs primarily include inventory and fixed asset
impairments as well as idle facility costs.
|
8
|
|
The company's results in 2017 include a benefit of $12 million ($9
million, or $0.02 per diluted share, on an after-tax basis) related
to an adjustment to the company's historical rebates and discount
reserves.
|
9
|
|
The company's results in 2017 included charges of $21 million ($13
million, or $0.03 per diluted share, on an after-tax basis) related
to litigation and contractual disputes for businesses or
arrangements in which the company is no longer engaged or a party
thereto.
|
10
|
|
The company's results in 2016 included net realized gains of $4.4
billion ($4.4 billion, or $8.07 per diluted share, on an after-tax
basis), related to the debt-for-equity exchanges of the company's
retained shares in Baxalta for certain company indebtedness, the
exchange of retained shares in Baxalta for Baxter shares and the
contribution of retained shares in Baxalta to Baxter's U.S. pension
fund. A tax benefit of $54 million was recognized as a result of
these transactions.
|
11
|
|
The company's results in 2016 included a net debt extinguishment
loss totaling $149 million ($100 million, or $0.18 per diluted
share, on an after-tax basis) related to the March 2016
debt-for-equity exchange for certain company indebtedness and
certain debt redemptions.
|
12
|
|
The company's results in 2017 included a charge of $33 million ($24
million, or $0.04 per diluted share, on an after-tax basis) related
to the deconsolidation of its Venezuelan operations.
|
13
|
|
The company's results in 2016 included a net after-tax benefit of
$10 million, or $0.02 per diluted share, related to the settlement
of an income tax matter in the company's non-wholly owned joint
venture in Turkey. This amount was comprised of $19 million included
in income tax expense offset by $9 million in non-controlling
interest recorded in other income.
|
14
|
|
The company's results in 2017 included a net tax expense of $322
million, or $0.58 per diluted share, related to the estimated impact
of tax reform on the company's tax related assets and liabilities.
|
|
|
|
|
|
|
For more information on the company's use of non-GAAP financial
measures in this press release, please see the company's Current
Report on Form 8-K filed with the Securities and Exchange Commission
on the date of this press release.
|
NM -
|
|
Not Meaningful
|
BAXTER INTERNATIONAL INC.
|
|
Net Sales
|
|
Periods Ending December 31, 2017 and 2016
|
|
(unaudited)
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
|
|
Q4
|
|
% Growth @
|
|
% Growth @
|
|
|
|
|
|
|
YTD
|
|
YTD
|
|
% Growth @
|
|
% Growth @
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
Actual Rates
|
|
Constant Rates
|
|
|
|
|
|
|
2017
|
|
2016
|
|
Actual Rates
|
|
Constant Rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
|
|
$232
|
|
$222
|
|
5%
|
|
5%
|
|
|
|
|
|
|
$902
|
|
$846
|
|
7%
|
|
7%
|
|
International
|
|
|
|
|
|
837
|
|
793
|
|
6%
|
|
2%
|
|
|
|
|
|
|
3,041
|
|
3,009
|
|
1%
|
|
1%
|
|
Total Renal
|
|
|
|
|
|
$1,069
|
|
$1,015
|
|
5%
|
|
3%
|
|
|
|
|
|
|
$3,943
|
|
$3,855
|
|
2%
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hospital Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
|
|
$896
|
|
$895
|
|
0%
|
|
0%
|
|
|
|
|
|
|
$3,608
|
|
$3,413
|
|
6%
|
|
6%
|
|
International
|
|
|
|
|
|
809
|
|
735
|
|
10%
|
|
5%
|
|
|
|
|
|
|
3,010
|
|
2,895
|
|
4%
|
|
4%
|
|
Total Hospital Products
|
|
|
|
|
|
$1,705
|
|
$1,630
|
|
5%
|
|
3%
|
|
|
|
|
|
|
$6,618
|
|
$6,308
|
|
5%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Baxter International Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
|
|
$1,128
|
|
$1,117
|
|
1%
|
|
1%
|
|
|
|
|
|
|
$4,510
|
|
$4,259
|
|
6%
|
|
6%
|
|
International
|
|
|
|
|
|
1,646
|
|
1,528
|
|
8%
|
|
4%
|
|
|
|
|
|
|
6,051
|
|
5,904
|
|
2%
|
|
2%
|
|
Total Baxter
|
|
|
|
|
|
$2,774
|
|
$2,645
|
|
5%
|
|
3%
|
|
|
|
|
|
|
$10,561
|
|
$10,163
|
|
4%
|
|
4%
|
|
BAXTER INTERNATIONAL INC.
|
|
Sales by Franchise
|
|
Periods Ending December 31, 2017 and 2016
|
|
(unaudited)
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
|
|
Q4
|
|
% Growth @
|
|
% Growth @
|
|
YTD
|
|
YTD
|
|
% Growth @
|
|
% Growth @
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
Actual Rates
|
|
Constant Rates
|
|
2017
|
|
2016
|
|
Actual Rates
|
|
Constant Rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Renal 1
|
|
|
|
|
|
$1,069
|
|
$1,015
|
|
5%
|
|
3%
|
|
$3,943
|
|
$3,855
|
|
2%
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hospital Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fluid Systems 2
|
|
|
|
|
|
$632
|
|
$614
|
|
3%
|
|
1%
|
|
$2,434
|
|
$2,300
|
|
6%
|
|
6%
|
|
Integrated Pharmacy Solutions 3
|
|
|
|
|
|
602
|
|
563
|
|
7%
|
|
4%
|
|
2,349
|
|
2,245
|
|
5%
|
|
4%
|
|
Surgical Care 4
|
|
|
|
|
|
363
|
|
349
|
|
4%
|
|
3%
|
|
1,387
|
|
1,321
|
|
5%
|
|
5%
|
|
Other 5
|
|
|
|
|
|
108
|
|
104
|
|
4%
|
|
1%
|
|
448
|
|
442
|
|
1%
|
|
1%
|
|
Total Hospital Products
|
|
|
|
|
|
$1,705
|
|
$1,630
|
|
5%
|
|
3%
|
|
$6,618
|
|
$6,308
|
|
5%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Baxter
|
|
|
|
|
|
$2,774
|
|
$2,645
|
|
5%
|
|
3%
|
|
$10,561
|
|
$10,163
|
|
4%
|
|
4%
|
|
1
|
|
Includes sales of the company's peritoneal dialysis, hemodialysis
and continuous renal replacement therapies.
|
2
|
|
Includes sales of the company's IV therapies, infusion pumps and
administration sets.
|
3
|
|
Includes sales of the company's premixed and oncology drug
platforms, nutrition products and pharmacy compounding services.
|
4
|
|
Includes sales of the company's inhaled anesthesia products as well
as biological products and medical devices used in surgical
procedures for hemostasis, tissue sealing and adhesion prevention.
|
5
|
|
Includes sales primarily from the company's pharmaceutical
partnering business.
|
BAXTER INTERNATIONAL INC.
|
Franchise Sales by U.S. and International
|
Three-Month Periods Ending December 31, 2017 and 2016
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2017
|
|
|
|
|
|
Q4 2016
|
|
|
|
|
|
% Growth
|
|
|
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Renal
|
|
|
|
|
|
$232
|
|
$837
|
|
$1,069
|
|
|
|
|
|
$222
|
|
$793
|
|
$1,015
|
|
|
|
|
|
5%
|
|
6%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hospital Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fluid Systems
|
|
|
|
|
|
$379
|
|
$253
|
|
$632
|
|
|
|
|
|
$353
|
|
$261
|
|
$614
|
|
|
|
|
|
7%
|
|
(3%)
|
|
3%
|
Integrated Pharmacy Solutions
|
|
|
|
|
|
250
|
|
352
|
|
602
|
|
|
|
|
|
264
|
|
299
|
|
563
|
|
|
|
|
|
(5%)
|
|
18%
|
|
7%
|
Surgical Care
|
|
|
|
|
|
209
|
|
154
|
|
363
|
|
|
|
|
|
206
|
|
143
|
|
349
|
|
|
|
|
|
1%
|
|
8%
|
|
4%
|
Other
|
|
|
|
|
|
58
|
|
50
|
|
108
|
|
|
|
|
|
72
|
|
32
|
|
104
|
|
|
|
|
|
(19%)
|
|
56%
|
|
4%
|
Total Hospital Products
|
|
|
|
|
|
$896
|
|
$809
|
|
$1,705
|
|
|
|
|
|
$895
|
|
$735
|
|
$1,630
|
|
|
|
|
|
0%
|
|
10%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Baxter
|
|
|
|
|
|
$1,128
|
|
$1,646
|
|
$2,774
|
|
|
|
|
|
$1,117
|
|
$1,528
|
|
$2,645
|
|
|
|
|
|
1%
|
|
8%
|
|
5%
|
BAXTER INTERNATIONAL INC.
|
Franchise Sales by U.S. and International
|
Periods Ending December 31, 2017 and 2016
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2017
|
|
|
|
|
|
YTD 2016
|
|
|
|
|
|
% Growth
|
|
|
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Renal
|
|
|
|
|
|
$902
|
|
$3,041
|
|
$3,943
|
|
|
|
|
|
$846
|
|
$3,009
|
|
$3,855
|
|
|
|
|
|
7%
|
|
1%
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hospital Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fluid Systems
|
|
|
|
|
|
$1,472
|
|
$962
|
|
$2,434
|
|
|
|
|
|
$1,307
|
|
$993
|
|
$2,300
|
|
|
|
|
|
13%
|
|
(3%)
|
|
6%
|
Integrated Pharmacy Solutions
|
|
|
|
|
|
1,074
|
|
1,275
|
|
2,349
|
|
|
|
|
|
1,048
|
|
1,197
|
|
2,245
|
|
|
|
|
|
2%
|
|
7%
|
|
5%
|
Surgical Care
|
|
|
|
|
|
806
|
|
581
|
|
1,387
|
|
|
|
|
|
775
|
|
546
|
|
1,321
|
|
|
|
|
|
4%
|
|
6%
|
|
5%
|
Other
|
|
|
|
|
|
256
|
|
192
|
|
448
|
|
|
|
|
|
283
|
|
159
|
|
442
|
|
|
|
|
|
(10%)
|
|
21%
|
|
1%
|
Total Hospital Products
|
|
|
|
|
|
$3,608
|
|
$3,010
|
|
$6,618
|
|
|
|
|
|
$3,413
|
|
$2,895
|
|
$6,308
|
|
|
|
|
|
6%
|
|
4%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Baxter
|
|
|
|
|
|
$4,510
|
|
$6,051
|
|
$10,561
|
|
|
|
|
|
$4,259
|
|
$5,904
|
|
$10,163
|
|
|
|
|
|
6%
|
|
2%
|
|
4%
|
BAXTER INTERNATIONAL INC.
|
Free Cash Flow Reconciliation
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2017
|
|
2016
|
Cash flows from operations - continuing operations
|
|
|
|
|
|
$1,853
|
|
$1,624
|
Capital expenditures
|
|
|
|
|
|
(634)
|
|
(719)
|
Free cash flow - continuing operations
|
|
|
|
|
|
$1,219
|
|
$905
|
BAXTER INTERNATIONAL INC.
|
|
Reconciliation of Non-GAAP Financial Measure
|
|
Change in Net Sales As Reported to Operational Sales
|
|
From The Three and Twelve Months Ended December 31, 2016 to The
Three and Twelve Months Ended December 31, 2017
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2017*
|
|
|
|
|
|
|
|
|
Net sales
|
|
US
|
|
|
|
Product
|
|
|
|
Operational
|
|
|
|
|
|
|
|
|
As Reported
|
|
Cyclophosphamide
|
|
Claris
|
|
Exits
|
|
FX
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Renal
|
|
|
|
|
|
|
5%
|
|
0%
|
|
0%
|
|
1%
|
|
(2%)
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hospital Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fluid Systems
|
|
|
|
|
|
|
3%
|
|
0%
|
|
0%
|
|
1%
|
|
(2%)
|
|
2%
|
|
Integrated Pharmacy Solutions
|
|
|
|
|
|
|
7%
|
|
1%
|
|
(5%)
|
|
0%
|
|
(3%)
|
|
0%
|
|
Surgical Care
|
|
|
|
|
|
|
4%
|
|
0%
|
|
0%
|
|
0%
|
|
(1%)
|
|
3%
|
|
Other
|
|
|
|
|
|
|
4%
|
|
0%
|
|
0%
|
|
0%
|
|
(3%)
|
|
1%
|
|
Total Hospital Products
|
|
|
|
|
|
|
5%
|
|
0%
|
|
(2%)
|
|
0%
|
|
(2%)
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Baxter International Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
|
|
|
1%
|
|
1%
|
|
(2%)
|
|
0%
|
|
0%
|
|
0%
|
|
International
|
|
|
|
|
|
|
8%
|
|
0%
|
|
(1%)
|
|
1%
|
|
(4%)
|
|
4%
|
|
Total Baxter
|
|
|
|
|
|
|
5%
|
|
0%
|
|
(1%)
|
|
1%
|
|
(2%)
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2017*
|
|
|
|
|
|
|
|
|
Net sales
|
|
US
|
|
|
|
Product
|
|
|
|
Operational
|
|
|
|
|
|
|
|
|
As Reported
|
|
Cyclophosphamide
|
|
Claris
|
|
Exits
|
|
FX
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Renal
|
|
|
|
|
|
|
2%
|
|
0%
|
|
0%
|
|
1%
|
|
0%
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hospital Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fluid Systems
|
|
|
|
|
|
|
6%
|
|
0%
|
|
0%
|
|
1%
|
|
0%
|
|
7%
|
|
Integrated Pharmacy Solutions
|
|
|
|
|
|
|
5%
|
|
2%
|
|
(3%)
|
|
0%
|
|
(1%)
|
|
4%
|
|
Surgical Care
|
|
|
|
|
|
|
5%
|
|
0%
|
|
0%
|
|
1%
|
|
0%
|
|
5%
|
|
Other
|
|
|
|
|
|
|
1%
|
|
0%
|
|
0%
|
|
0%
|
|
0%
|
|
1%
|
|
Total Hospital Products
|
|
|
|
|
|
|
5%
|
|
1%
|
|
(1%)
|
|
1%
|
|
0%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Baxter International Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
|
|
|
6%
|
|
1%
|
|
(1%)
|
|
0%
|
|
0%
|
|
6%
|
|
International
|
|
|
|
|
|
|
2%
|
|
0%
|
|
0%
|
|
2%
|
|
0%
|
|
4%
|
|
Total Baxter
|
|
|
|
|
|
|
4%
|
|
0%
|
|
(1%)
|
|
1%
|
|
0%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Totals may not foot due to rounding
|
|
BAXTER INTERNATIONAL INC.
|
Reconciliation of Non-GAAP Financial Measures
|
Projected 2018 Adjusted Earnings Per Share and Projected GAAP
Earnings Per Share, and
|
Projected 2018 Adjusted Sales Growth and Projected GAAP Sales
Growth
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Earnings Per Share Guidance
|
|
|
|
|
|
Q1 2018
|
|
|
|
|
|
FY 2018
|
Earnings per Diluted Share - Adjusted
|
|
|
|
|
|
$0.60 - $0.62
|
|
|
|
|
|
$2.72 - $2.80
|
Estimated intangible asset amortization
|
|
|
|
|
|
$0.06
|
|
|
|
|
|
$0.23
|
Estimated business optimization charges
|
|
|
|
|
|
$0.07 - $0.09
|
|
|
|
|
|
$0.19 - $0.24
|
Earnings per Diluted Share - GAAP
|
|
|
|
|
|
$0.45 - $0.49
|
|
|
|
|
|
$2.25 - $2.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Sales Growth Guidance
|
|
|
|
|
|
Q1 2018
|
|
|
|
|
|
FY 2018
|
Sales Growth - Operational
|
|
|
|
|
|
0% - 1%
|
|
|
|
|
|
4%
|
U.S. cyclophosphamide
|
|
|
|
|
|
0%
|
|
|
|
|
|
-1%
|
Claris acquisition
|
|
|
|
|
|
1%
|
|
|
|
|
|
1%
|
Foreign exchange
|
|
|
|
|
|
4%
|
|
|
|
|
|
2% - 3%
|
Sales Growth - GAAP
|
|
|
|
|
|
5% - 6%
|
|
|
|
|
|
6% - 7%
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180201005611/en/
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