Baxter reports second-quarter operating income up 21% at $373 million

By Lisa Kerner

Charlotte, N.C., July 20 - Baxter International Inc. said its second-quarter income from continuing operations, excluding special items, increased 21% to $373 million from $309 million in the second-quarter 2005.

Adjusted earnings per diluted share from continuing operations were up 16% to $0.57 per diluted share, compared with $0.49 in the prior-year period.

GAAP earnings per diluted share from continuing operations of $0.47 compares with $0.51 per diluted share reported in the second quarter last year.

Baxter's worldwide sales for the second quarter totaled $2.6 billion, a 3% increase (4% excluding the impact of foreign exchange).

U.S. sales also increased 3% from the same period last year to $1.2 billion, the company said.

Baxter credits the BioScience business with driving the sales growth, with record quarterly sales of $1.1 billion, or a 13% increase.

For the first six months of 2006, Baxter's adjusted income from continuing operations was $655 million, or $1.00 per diluted share.

On a GAAP basis, income from continuing operations for the same period totaled $591 million, or $0.90 per diluted share.

For the first half of 2006, Baxter's worldwide sales grew 2% to $5.1 billion, up from $5.0 billion in the same period last year. Excluding the impact of foreign exchange, organic sales growth was 4%.

Both domestic sales of $2.2 billion and international sales of $2.8 billion were up 2% for the first six months of 2006.

Cash flow from operations totaled $848 million for the first six months of 2006, up from the $778 million reported in the same period in 2005.

For the third quarter, the company expects organic sales, excluding the impact of foreign exchange, to grow 6% to 7% and earnings per diluted share of $0.55 to $0.57, before any special items.

Baxter raised its full-year 2006 guidance, expecting organic sales growth of about 6% and earnings per diluted share of $2.13 to $2.17 (or $2.03 to $2.07 on a GAAP basis). Adjusted earnings per diluted share of $2.21 to $2.25 compares favorably to the company's recent full-year earnings guidance of $2.10 to $2.16.

"With our financial results exceeding our first-half objectives, we now have additional flexibility to not only deliver growth in the near term, but to accelerate our investments in R&D and select marketing activities to drive future value for our shareholders," chairman and chief executive officer Robert L. Parkinson Jr. said in a company news release.

Located in Deerfield, Ill., Baxter develops medical devices, pharmaceuticals and biotechnology products.

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