EX-99.1

EX-99.1 4 d96844dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Baxter International Inc.

Reconciliation of Unaudited Non-GAAP Financial Information to Baxter’s 2015 Historical Information Adjusted for Discontinued Operations

Six Months Ended June 30, 2015

(dollars and shares in millions except per share data)


										Special Items ^(C)
	Baxter Historical ^(A)			Baxalta Separation ^(B)			Baxter Continuing Operations			Gambro Integration Items			Business Optimization Items			Separation- Related Costs			Intangible Asset Amortization Expense			Reserve Items and Adjustments			Baxter Adjusted Continuing Operations ^(E)
Net sales		$ 7,657			$ (2,779	)		$ 4,878			$ —			$ —			$ —			$ —			$ —			$ 4,878
Cost of sales		3,936			(1,098	)		2,838			—			4			—			(80	)		—			2,762

Gross margin		3,721			(1,681	)		2,040			—			(4	)		—			80			—			2,116

Marketing and administrative expenses		2,112			(545	)		1,567			(38	)		(11	)		(28	)		—			—			1,490
Research and development expenses		688			(394	)		294			—			(3	)		—			—			—			291

Operating income		921			(742	)		179			38			10			28			80			—			335

Net interest expense		64			(4	)		60			—			—			—			—			—			60
Other (income) expense, net		(141	)		4			(137	)		—			—			—			—			52			(85	)

Income from continuing operations before taxes		998			(742	)		256			38			10			28			80			(52	)		360

Income tax expense		242			(194	)		48			11			3			6			17			(19	)		66

Income from continuing operations		$ 756			$ (548	)		$ 208			$ 27			$ 7			$ 22			$ 63			$ (33	)		$ 294

Income from continuing operations per common share
Basic		$ 1.39																								$ 0.54
Diluted		$ 1.38																								$ 0.54

Weighted-average number of common shares outstanding
Basic		544																								544
Diluted		548																								548

See accompanying notes to the unaudited non-GAAP financial information.

Baxter International Inc.

Reconciliation of Unaudited Non-GAAP Financial Information to Baxter’s 2015 Historical Information Adjusted for Discontinued Operations

Three Months Ended June 30, 2015

(dollars and shares in millions except per share data)


										Special Items ^(C)
	Baxter Historical ^(A)			Baxalta Separation ^(B)			Baxter Continuing Operations			Gambro Integration Items			Business Optimization Items			Separation- Related Costs			Intangible Asset Amortization Expense			Reserve Items and Adjustments			Baxter Adjusted Continuing Operations ^(E)
Net sales		$ 3,893			$ (1,418	)		$ 2,475			$ —			$ —			$ —			$ —			$ —			$ 2,475
Cost of sales		1,973			(519	)		1,454			—			(3	)		—			(40	)		—			1,411

Gross margin		1,920			(899	)		1,021			—			3			—			40			—			1,064

Marketing and administrative expenses		1,097			(314	)		783			(20	)		(5	)		(16	)		—			—			742
Research and development expenses		388			(237	)		151			—			(3	)		—			—			—			148

Operating income		435			(348	)		87			20			11			16			40			—			174

Net interest expense		34			(4	)		30			—			—			—			—			—			30
Other (income) expense, net		(67	)		16			(51	)		—			—			—			—			52			1

Income from continuing operations before taxes		468			(360	)		108			20			11			16			40			(52	)		143

Income tax expense		132			(98	)		34			5			4			3			9			(19	)		36

Income from continuing operations		$ 336			$ (262	)		$ 74			$ 15			$ 7			$ 13			$ 31			$ (33	)		$ 107

Income from continuing operations per common share
Basic		$ 0.62																								$ 0.20
Diluted		$ 0.61																								$ 0.19

Weighted-average number of common shares outstanding
Basic		544																								544
Diluted		549																								549

See accompanying notes to the unaudited non-GAAP financial information.

Baxter International Inc.

Reconciliation of Unaudited Non-GAAP Financial Information to Baxter’s 2015 Historical Information Adjusted for Discontinued Operations

Three Months Ended March 31, 2015

(dollars and shares in millions except per share data)


										Special Items ^(C)
	Baxter Historical ^(A)			Baxalta Separation ^(B)(D)			Baxter Continuing Operations			Gambro Acquisition and Integration Items			Business Optimization Items			Separation- Related Costs			Intangible Asset Amortization Expense			Baxter Adjusted Continuing Operations ^(E)
Net sales		$ 3,764			$ (1,361	)		$ 2,403			$ —			$ —			$ —			$ —			$ 2,403
Cost of sales		1,963			(579	)		1,384			—			7			—			(40	)		1,351

Gross margin		1,801			(782	)		1,019			—			(7	)		—			40			1,052

Marketing and administrative expenses		1,015			(231	)		784			(18	)		(6	)		(12	)		—			748
Research and development expenses		300			(157	)		143			—			—			—			—			143

Operating income		486			(394	)		92			18			(1	)		12			40			161

Net interest expense		30			—			30			—			—			—			—			30
Other (income) expense, net		(74	)		(12	)		(86	)		—			—			—			—			(86	)

Income from continuing operations before taxes		530			(382	)		148			18			(1	)		12			40			217

Income tax expense		110			(96	)		14			6			(1	)		3			8			30

Income from continuing operations		$ 420			$ (286)			$ 134			$ 12			$ —			$ 9			$ 32			$ 187

Income from continuing operations per common share
Basic		$ 0.77																					$ 0.35
Diluted		$ 0.76																					$ 0.34

Weighted-average number of common shares outstanding
Basic		543																					543
Diluted		548																					548

See accompanying notes to the unaudited non-GAAP financial information.

Baxter International Inc.

Reconciliation of Unaudited Non-GAAP Financial Information to Baxter’s 2014 Historical Information Adjusted for Discontinued Operations

Year Ended December 31, 2014

(dollars and shares in millions except per share data)


								Special Items ^(C)
	Baxter Historical ^(A)		Baxalta Separation ^(B)(D)			Baxter Continuing Operations		Gambro Acquisition and Integration Items			Business Optimization Items			Separation- Related Costs			Intangible Asset Amortization Expense			Branded Prescription Drug Fee			Reserve Items and Adjustments			Product- Related Items			Baxter Adjusted Continuing Operations ^(E)

Net sales		$ 16,671		$ (5,952	)		$ 10,719		$ —			$ —			$ —			$ —			$ —			$ —			$ —			$ 10,719
Cost of sales		8,514		(2,376	)		6,138		—			11			—			(168	)		—			—			(64	)		5,917

Gross margin		8,157		(3,576	)		4,581		—			(11	)		—			168			—			—			64			4,802

Marketing and administrative expenses		4,029		(714	)		3,315		(119	)		4			(11	)		—			(3	)		—			(4	)		3,182
Research and development expenses		1,421		(811	)		610		—			(2	)		—			—			—			—			—			608

Operating income		2,707		(2,051	)		656		119			(13	)		11			168			3			—			68			1,012

Net interest expense		145		—			145		—			—			—			—			—			—			—			145
Other (income) expense, net		123		(102	)		21		(25	)		—			—			—			—			(1	)		—			(5	)

Income from continuing operations before taxes		2,439		(1,949	)		490		144			(13	)		11			168			3			1			68			872

Income tax expense		493		(460	)		33		41			(7	)		8			35			—			25			35			170

Income from continuing operations		$ 1,946		$ (1,489	)		$ 457		$ 103			$ (6	)		$ 3			$ 133			$ 3			$ (24	)		$ 33			$ 702

Income from continuing operations per common share
Basic		$ 3.59																												$ 1.30
Diluted		$ 3.56																												$ 1.28

Weighted-average number of common shares outstanding
Basic		542																												542
Diluted		547																												547

See accompanying notes to the unaudited non-GAAP financial information.

Baxter International Inc.

Reconciliation of Unaudited Non-GAAP Financial Information to Baxter’s 2014 Historical Information Adjusted for Discontinued Operations

Three Months Ended December 31, 2014

(dollars and shares in millions except per share data)


								Special Items ^(C)
	Baxter Historical ^(A)		Baxalta Separation ^(B)			Baxter Continuing Operations		Gambro Acquisition and Integration Items		Business Optimization Items		Separation- Related Costs		Intangible Asset Amortization Expense		Reserve Items and Adjustments			Product- Related Items			Baxter Adjusted Continuing Operations ^(E)
Net sales		$ 4,472		$ (1,683	)		$ 2,789		$ —		$ —		$ —		$ —		$ —			$ —			$ 2,789
Cost of sales		2,248		(666)			1,582		—		(1)		—		(43)		—			25			1,563

Gross margin		2,224		(1,017)			1,207		—		1		—		43		—			(25)			1,226

Marketing and administrative expenses		1,091		(231)			860		(36)		(2)		(11)		—		—			—			811
Research and development expenses		335		(179)			156		—		(1)		—		—		—			—			155

Operating income		798		(607)			191		36		4		11		43		—			(25)			260

Net interest expense		29		—			29		—		—		—		—		—			—			29
Other (income) expense, net		171		(118)			53		(6)		—		—		—		(15)			—			32

Income from continuing operations before taxes		598		(489)			109		42		4		11		43		15			(25)			199

Income tax expense		74		(92)			(18)		14		1		8		9		30			—			44

Income from continuing operations		$ 524		$ (397	)		$ 127		$ 28		$ 3		$ 3		$ 34		$ (15	)		$ (25	)		$ 155

Income from continuing operations per common share
Basic		$ 0.97																					$ 0.29
Diluted		$ 0.96																					$ 0.28
Weighted-average number of common shares outstanding
Basic		542																					542
Diluted		547																					547

See accompanying notes to the unaudited non-GAAP financial information.

Baxter International Inc.

Reconciliation of Unaudited Non-GAAP Financial Information to Baxter’s 2014 Historical Information Adjusted for Discontinued Operations

Three Months Ended September 30, 2014

(dollars and shares in millions except per share data)


										Special Items ^(C)
	Baxter Historical ^(A)			Baxalta Separation ^(B)			Baxter Continuing Operations			Gambro Acquisition and Integration Items			Business Optimization Items			Intangible Asset Amortization Expense			Branded Prescription Drug Fee			Baxter Adjusted Continuing Operations ^(E)
Net sales		$ 4,197			$ (1,488	)		$ 2,709			$ —			$ —			$ —			$ —			$ 2,709
Cost of sales		2,124			(608	)		1,516			—			—			(42	)		—			1,474

Gross margin		2,073			(880	)		1,193			—			—			42			—			1,235

Marketing and administrative expenses		1,040			(213	)		827			(39	)		—			—			(3	)		785
Research and development expenses		455			(306	)		149			—			(1	)		—			—			148

Operating income		578			(361	)		217			39			1			42			3			302

Net interest expense		31			—			31			—			—			—			—			31
Other (income) expense, net		(39	)		23			(16	)		—			—			—			—			(16	)

Income from continuing operations before taxes		586			(384	)		202			39			1			42			3			287

Income tax expense		139			(112	)		27			11			—			8			—			46

Income from continuing operations		$ 447			$ (272	)		$ 175			$ 28			$ 1			$ 34			$ 3			$ 241

Income from continuing operations per common share
Basic		$ 0.83																					$ 0.44
Diluted		$ 0.82																					$ 0.44

Weighted-average number of common shares outstanding
Basic		542																					542
Diluted		547																					547

See accompanying notes to the unaudited non-GAAP financial information.

Baxter International Inc.

Reconciliation of Unaudited Non-GAAP Financial Information to Baxter’s 2014 Historical Information Adjusted for Discontinued Operations

Three Months Ended June 30, 2014

(dollars and shares in millions except per share data)


									Special Items ^(C)
	Baxter Historical ^(A)		Baxalta Separation ^(B)			Baxter Continuing Operations			Gambro Integration Items			Business Optimization Items			Intangible Asset Amortization Expense			Reserve Items and Adjustments			Product-Related Items			Baxter Adjusted Continuing Operations ^(E)
Net sales		$ 4,154		$ (1,451	)		$ 2,703			$ —			$ —			$ —			$ —			$ —			$ 2,703
Cost of sales		2,185		(575	)		1,610			—			14			(43	)		—			(89	)		1,492

Gross margin		1,969		(876	)		1,093			—			(14	)		43			—			89			1,211

Marketing and administrative expenses		988		(148	)		840			(27	)		16			—			—			(4	)		825
Research and development expenses		322		(165	)		157			—			—			—			—			—			157

Operating income		659		(563	)		96			27			(30	)		43			—			93			229

Net interest expense		42		—			42			—			—			—			—			—			42
Other (income) expense, net		15		(31	)		(16	)		(2	)		—			—			14			—			(4	)

Income from continuing operations before taxes		602		(532	)		70			29			(30	)		43			(14	)		93			191

Income tax expense		134		(125	)		9			8			(13	)		10			(6	)		35			43

Income from continuing operations		$ 468		$ (407	)		$ 61			$ 21			$ (17	)		$ 33			$ (8	)		$ 58			$ 148

Income from continuing operations per common share
Basic		$ 0.86																							$ 0.27
Diluted		$ 0.85																							$ 0.27

Weighted-average number of common shares outstanding
Basic		542																							542
Diluted		548																							548

See accompanying notes to the unaudited non-GAAP financial information.

Baxter International Inc.

Reconciliation of Unaudited Non-GAAP Financial Information to Baxter’s 2014 Historical Information Adjusted for Discontinued Operations

Three Months Ended March 31, 2014

(dollars and shares in millions except per share data)


									Special Items ^(C)
	Baxter Historical ^(A)			Baxalta Separation ^(B)			Baxter Continuing Operations		Gambro Acquisition and Integration Items			Business Optimization Items			Intangible Asset Amortization Expense			Baxter Adjusted Continuing Operations ^(E)
Net sales		$ 3,848			$ (1,330	)		$ 2,518		$ —			$ —			$ —			$ 2,518
Cost of sales		1,957			(527	)		1,430		—			(2	)		(40	)		1,388

Gross margin		1,891			(803	)		1,088		—			2			40			1,130

Marketing and administrative expenses		910			(122	)		788		(17	)		(10	)		—			761
Research and development expenses		309			(161	)		148		—			—			—			148

Operating income		672			(520	)		152		17			12			40			221

Net interest expense		43			—			43		—			—			—			43
Other (income) expense, net		(24	)		24			—		(17	)		—			—			(17	)

Income from continuing operations before taxes		653			(544	)		109		34			12			40			195

Income tax expense		146			(131	)		15		8			5			9			37

Income from continuing operations		$ 507			$ (413	)		$ 94		$ 26			$ 7			$ 31			$ 158

Income from continuing operations per common share
Basic		$ 0.93																	$ 0.29
Diluted		$ 0.92																	$ 0.29

Weighted-average number of common shares outstanding
Basic		542																	542
Diluted		548																	548

See accompanying notes to the unaudited non-GAAP financial information.

Baxter International Inc.

Notes to Unaudited Non-GAAP Financial Information

^(A)	Reflects Baxter’s historical financial statements prepared in accordance with GAAP and does not reflect any adjustments related to the Distribution.

^(B)	Reflects the discontinued operations of the Baxalta business. This represents the revenues and expenses directly associated with the results of operations of Baxalta.

^(C)

Reflects special items that were previously identified in Baxter’s quarterly earnings releases dated July 29, 2015, April 23, 2015, January 29, 2015, and October 16, 2014 and that do not relate to income/expense items included in the Baxalta Separation column. The related tax effects have been adjusted to reflect the effective tax rate of Baxter’s historical continuing operations.

^(D)

Compared to previously reported pro forma results, for the year ended December 31, 2014, the Baxter Continuing Operations column reflects an increase to cost of sales of $99 million and related decrease to income tax expense of $21 million. Additionally, for the three months ended March 31, 2015, the Baxter Continuing Operations column reflects a decrease to cost of sales of $5 million and related increase to income tax expense of $1 million.

^(E)

The information contained in this column is a non-GAAP financial measure, not calculated in accordance with GAAP. Management believes that non-GAAP earnings measures, when used in conjunction with the results presented in accordance with GAAP and the reconciliations to corresponding GAAP financial measures, may enhance an investor’s overall understanding of the Company’s past financial performance and prospects for the future.