2007 Sustainability Report - Baxter Sustainability Report

Economic ImpactsMore online:sustainability.baxter.com/economic_impactsBaxter’s direct and indirect economic impacts on its stakeholders arean important aspect of the company’s sustainability performance.Direct impacts can be described by financial transactions, such asrevenue received from customers and wages and benefits providedto employees. Indirect impacts include increased productivity andmoney saved by customers through their use of Baxter's products,and job creation outside of Baxter due to the company's spending.Baxter’s Financial PerformanceBaxter’s broader economic impacts depend on its ongoing strong financial performance.The company achieved record sales and earnings in 2007. Worldwide sales increased9 percent to $11.3 billion. Sales within the United States totaled over $4.8 billion, an increaseof 5 percent over the prior year, and international sales totaled over $6.4 billion, increasing11 percent as compared to the prior year. Net income totaled $1.7 billion, an increase of22 percent over the prior year. Baxter’s strengthening financial position enabled it to increaseresearch and development spending by 24 percent during the year, reaching $760 million,a record level for the company. Over the last three years, total shareholder return increased75 percent. For a detailed description of the company’s financial performance, see Baxter’s2007 Annual Report.Direct ImpactsBaxter’s direct impacts are described by payments Baxter makes to and receives fromstakeholder groups during the course of business. For example:› Customers buy Baxter’s products;› Baxter pays suppliers for raw materials and other goods and services;› Employees receive wages and benefits in exchange for their contributions;› Investors provide Baxter capital in exchange for dividends and possible gainsin share value (see graph); and› Communities may receive tax payments, as well as cash and product donations andvolunteerism efforts of local employees (in some locations).Baxter Share Performance 1(Normalized to $100)$250$200BaxterS&P 500S&P 500Health Care$150$1002002 2003 2004 2005 2006 20071This graph compares the change in Baxter’s cumulative total shareholder return on its common stock with the Standard& Poor’s 500 Composite Index and the Standard & Poor’s 500 Health Care Index as of December 31 of each year.36 BAXTER 2007 sustainability report | economic impacts