Baxter Raises 2007 Earnings Guidance Following Strong Second Quarter Financial Results

DEERFIELD, Ill., July 19, 2007 /PRNewswire-FirstCall/ -- Baxter International Inc. today reported stronger-than-expected financial results for the second quarter of 2007 and raised its full-year 2007 earnings guidance.

Baxter reported second quarter net income of $431 million, an increase of 39 percent over the $309 million reported in the second quarter of 2006. Net earnings per diluted share increased 38 percent to $0.65. These results include an after-tax charge of $46 million ($0.07 per diluted share) primarily for costs and asset impairments associated with the consolidation of certain commercial and manufacturing operations outside the United States. On an adjusted basis, excluding special items in the current and prior-year periods, Baxter reported net income of $477 million or $0.72 per diluted share, an increase of 28 percent and 26 percent respectively. These results compare favorably to the earnings guidance previously provided for the quarter of $0.66 to $0.68 per diluted share, and were the result of solid revenue gains, strong operational performance led by margin expansion, as well as lower interest and income tax expense.

Baxter's worldwide sales totaled $2.8 billion in the second quarter, an increase of 7 percent (or 3 percent excluding the impact of foreign exchange). Sales within the United States totaled $1.2 billion, an increase of 1 percent over the same period last year, while sales outside of the United States grew 12 percent (or 5 percent excluding the impact of foreign exchange) to $1.6 billion. As previously announced, the company completed the divestiture of its Transfusion Therapies business during the first quarter of 2007. Excluding Transfusion Therapies revenues from both years, Baxter's worldwide sales increased 10 percent (or 7 percent excluding the impact of foreign exchange) to $2.8 billion from $2.5 billion recorded in the prior year.

Baxter's BioScience business generated a 20 percent increase in revenues, with sales totaling $1.2 billion. This performance was a result of robust growth across multiple products, including ADVATE(R) [Antihemophilic Factor (Recombinant), Plasma/Albumin-Free Method], a therapy used in the treatment of hemophilia A, antibody therapy products for the treatment of primary immunodeficiencies, and other specialty plasma therapeutics such as FEIBA (an inhibitor therapy indicated for the control of spontaneous bleeding episodes in patients with hemophilia A and hemophilia B) and ARALAST (a human alpha-1 proteinase inhibitor (A1PI) for patients with hereditary emphysema). This business also posted record vaccine sales in the quarter driven by continued demand in Europe for its vaccines that prevent tick-borne encephalitis and group C meningococcal meningitis.

In the second quarter, Medication Delivery revenues increased 3 percent as a result of strong international performance of anesthesia and parenteral nutrition products, and Renal revenues increased 7 percent to $553 million as the company continued to realize solid gains in the number of peritoneal dialysis patients, primarily in developing countries.

"We continue to meet or exceed our short-term financial objectives while investing to create long-term value for our shareholders," said Robert L. Parkinson, Jr., chairman and chief executive officer. "Our strong financial results in the first half of this year not only validate the strength of our diversified healthcare model, but also reinforce our confidence in achieving our longer-term objectives."

Baxter's investment in research and development increased 21 percent in the quarter, and the company achieved a number of commercial, clinical and regulatory milestones during the period, including:

    -- Expansion of R&D capabilities through the acquisition of MAAS Medical,

       LLC, a design firm specializing in infusion systems technology.  The

       acquisition of talent and certain assets from this private company

       based in Irvine, Calif. brings expertise in technology integration that

       will create value across a number of Baxter's infusion systems

       platforms.

    -- Initiation of clinical trials comparing the safety, tolerability and

       pharmacokinetics of various injectable therapeutic agents administered

       subcutaneously with and without HYLENEX recombinant, and intravenously.

       HYLENEX is approved by the U.S. Food and Drug Administration (FDA) for

       use as a spreading agent to increase the absorption and dispersion of

       other injected drugs and for subcutaneous fluid administration.

    -- Receipt of FDA approval for the self-manufacturing of ARALAST by

       Baxter. ARALAST is a human alpha-1 proteinase inhibitor (A1PI)

       indicated for chronic augmentation therapy in patients with hereditary

       emphysema, a genetic condition caused by a deficiency of A1PI in the

       lungs.

    -- Launch of ADVATE in Argentina and receipt of FDA approval for a new

       3000 IU dosage strength.  ADVATE is used for the prevention and control

       of bleeding episodes in people with hemophilia A and is the only factor

       VIII therapy free of blood-based additives.


Six-Month Results

For the first six months of 2007, Baxter's net income totaled $834 million and increased 41 percent, with earnings per diluted share increasing 40 percent to $1.26. On an adjusted basis, excluding special items, Baxter's net income of $880 million increased 34 percent from $655 million last year. Adjusted earnings per diluted share for the six-month period of $1.33 increased 33 percent, from $1.00 per diluted share in the prior year period.

Baxter's worldwide sales grew 9 percent in the first half of the year to $5.5 billion, up from $5.1 billion last year. Excluding the impact of foreign exchange, organic sales growth for the first six months of the year was 5 percent. Sales within the United States totaled $2.3 billion, an increase of 4 percent over the same period last year, and international sales grew 13 percent (or 7 percent excluding the impact of foreign exchange) to $3.2 billion. Excluding revenues related to the Transfusion Therapies business, Baxter's worldwide sales increased 12 percent (or 8 percent excluding the impact of foreign exchange) to $5.4 billion from $4.8 billion recorded in the prior year.

Cash flow from operations totaled $946 million for the six-month period, compared to $848 million in the same period in 2006. Free cash flow (cash flow from operations, less capital expenditures of $258 million for the first six months of 2007) was $688 million, reflecting an improvement of $38 million from the same period last year.

Third Quarter and Full-Year 2007 Outlook

Given its strong financial results for the first half of the year, Baxter is raising its earnings outlook for full-year 2007. The company now expects to achieve earnings per diluted share of $2.65 to $2.70, compared to its previous range of $2.60 to $2.65, both excluding special items. Baxter continues to expect sales growth of 4 to 5 percent for the year, excluding the impact of foreign exchange. In addition, Baxter continues to expect cash flow from operations for full-year 2007 to total approximately $2.3 billion.

For the third quarter of 2007, Baxter expects sales growth of 3 to 4 percent, excluding the impact of foreign exchange, and earnings per diluted share, before any special items, of $0.64 to $0.66.

The financial outlook for the third quarter and full-year 2007 reflects the divestiture of the Transfusion Therapies business and excludes recommercialization of the company's COLLEAGUE infusion pump in the United States, which may occur before the end of 2007.

A webcast of Baxter's second 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. CDT on July 19, 2007. Please visit Baxter's website for more information regarding this and future investor events and webcasts, including investor presentations.

Baxter International Inc., through its subsidiaries, assists healthcare professionals and their patients with the treatment of complex medical conditions, including hemophilia, immune disorders, cancer, infectious diseases, kidney disease, trauma and other conditions. The company applies its expertise in medical devices, pharmaceuticals and biotechnology to make a meaningful difference in patients' lives.

This release includes forward-looking statements concerning the company's financial results. 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 risks for new and existing products, such as ADVATE, and other technologies; future actions of regulatory bodies and other governmental authorities, including the FDA and foreign counterparts, that could limit or suspend product development, manufacturing or sales or result in sanctions; product quality or patient safety concerns leading to product recalls, withdrawals, launch delays, litigation, or declining sales; product development risks; inventory reductions or fluctuations in buying patterns by wholesalers or distributors; the impact of geographic and product mix on the company's sales; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; reimbursement policies of government agencies and private payers; the availability of acceptable raw materials and component supply; the ability to enforce company patents; patents of third parties preventing or restricting the company's manufacture, sale or use of affected products or technology; and other risks identified in the company's most recent filing on Form 10-Q and other SEC filings, all of which are available on the company's website. The company does not undertake to update its forward-looking statements. Financial schedules are attached to this release and available on the company's website.




                          BAXTER INTERNATIONAL INC.

                      Consolidated Statements of Income

                  Three Months Ended June 30, 2007 and 2006

                                 (unaudited)

             (in millions, except per share and percentage data)



                                            Three Months Ended

                                                 June 30,

                                           ------------------------

                                               2007           2006     Change

                                           --------       ---------   --------


    NET SALES                                $2,829         $2,649         7%

    COST OF GOODS SOLD (1)                    1,437          1,494        (4%)

    --------------------------------------------------------------------------

    GROSS PROFIT                              1,392          1,155        21%

    --------------------------------------------------------------------------

    % of Sales                                49.2%          43.6%     5.6 pts


    MARKETING AND ADMINISTRATIVE EXPENSES       621            582         7%

    % of Sales                                22.0%          22.0%       0 pts


    RESEARCH AND DEVELOPMENT EXPENSES (2)       177            146        21%

    % of Sales                                 6.3%           5.5%     0.8 pts


    RESTRUCTURING CHARGES (3)                    70              -       100%


    NET INTEREST (INCOME) EXPENSE                (1)            10      (110%)


    OTHER EXPENSE, NET                           17             19       (11%)

    --------------------------------------------------------------------------

    PRE-TAX INCOME                              508            398        28%

    --------------------------------------------------------------------------

    INCOME TAX EXPENSE (4)                       77             89       (13%)

    --------------------------------------------------------------------------

    NET INCOME                                 $431           $309        39%

    ==========================================================================


    BASIC EPS                                 $0.66          $0.47        40%

    ==========================================================================

    DILUTED EPS                               $0.65          $0.47        38%

    ==========================================================================


    WEIGHTED AVERAGE NUMBER OF COMMON

     SHARES OUTSTANDING

       Basic                                    650            654

       Diluted                                  661            659

    --------------------------------------------------------------------------


    ADJUSTED NET INCOME (excluding certain

     items) (5)                                $477           $373        28%

    ADJUSTED DILUTED EPS (excluding certain

     items) (5)                               $0.72          $0.57        26%


    (1)  Cost of goods sold in 2006 includes a $76 million pre-tax charge

         related to COLLEAGUE infusion pumps.

    (2)  Research and development (R&D) expenses in 2007 include an $11

         million in-process R&D (IPR&D) charge related to the acquisition of

         MAAS Medical, LLC.

    (3)  Restructuring charges in 2007 are primarily for costs and asset

         impairments associated with the consolidation of certain commercial

         and manufacturing operations outside of the United States.

    (4)  Income tax expense in 2007 includes a $15 million benefit related to

         an audit settlement and the extension of tax incentives in

         jurisdictions outside the United States.  The effective income tax

         rate in 2007 was also favorably impacted by the restructuring charges

         described in Note 3 above.

    (5)  Adjusted net income and adjusted diluted EPS exclude the charges

         described in Notes 1 and 3 above. See page 8 for description of

         adjustments and reconciliation to GAAP (generally accepted accounting

         principles) measures.


    Non-GAAP Financial Measures:  The non-GAAP financial measures contained in

    this press release (earnings and per-share earnings, excluding certain

    items) adjust for factors that are unusual or nonrecurring.  Unusual or

    nonrecurring items can be highly variable, difficult to predict, and of a

    size that may substantially impact the company's reported operations for a

    period.  Management believes that non-GAAP financial measures can

    facilitate a fuller analysis of the company's results of operations,

    particularly in evaluating performance period over period.  Management

    uses these non-GAAP financial measures internally in financial planning,

    to monitor business unit performance, and in evaluating management

    performance. Refer to the company's filing on Form 8-K of today's date for

    additional information.




                          BAXTER INTERNATIONAL INC.

                      Consolidated Statements of Income

                  Three Months Ended June 30, 2007 and 2006

      Description of Adjustments and Reconciliation of GAAP to Non-GAAP

                                 (unaudited)

             (in millions, except per share and percentage data)



      2007 description of adjustment and reconciliation of GAAP to Non-GAAP

      ---------------------------------------------------------------------


      The company's GAAP results for the three months ended June 30, 2007

      included restructuring charges, primarily for costs and asset

      impairments associated with the consolidation of certain commercial

      and manufacturing operations outside of the United States, which

      impacted the GAAP results as follows:



                                                Income

                                     Pre-tax       Tax      Net

                                      Income   Expense   Income   Diluted EPS

                                    ------------------------------------------

        GAAP                            $508       $77     $431         $0.65

        Restructuring charges             70        24       46          0.07

                                    ------------------------------------------

        Excluding specified items       $578      $101     $477         $0.72

                                    ==========================================



        2006 description of adjustment and reconciliation of GAAP to Non-GAAP

        ---------------------------------------------------------------------


        The company's GAAP results for the three months ended June 30, 2006

        included a charge related to COLLEAGUE infusion pumps, which impacted

        the GAAP results as follows:



                                                Income

                                     Pre-tax       Tax      Net

                                      Income   Expense   Income   Diluted EPS

                                    ------------------------------------------

        GAAP                            $398       $89     $309         $0.47

        COLLEAGUE infusion pump

         charge (A)                       76        12       64          0.10

                                    ------------------------------------------

         Excluding specified items      $474      $101     $373         $0.57

                                    ==========================================



    (A)  Included in the Gross Profit line in the accompanying consolidated

         statement of income.  Excluding this item, adjusted gross profit is

         $1,231 million and the adjusted gross profit percentage is 46.5%.




                          BAXTER INTERNATIONAL INC.

                      Consolidated Statements of Income

                   Six Months Ended June 30, 2007 and 2006

                                 (unaudited)

             (in millions, except per share and percentage data)



                                              Six Months Ended

                                                  June 30,

                                           ------------------------

                                               2007           2006     Change

                                           --------       ---------   --------


    NET SALES                                 $5,504         $5,058        9%

    COST OF GOODS SOLD (1)                     2,846          2,851        0%


    --------------------------------------------------------------------------

    GROSS PROFIT                               2,658          2,207       20%

    --------------------------------------------------------------------------

    % of Sales                                 48.3%          43.6%    4.7 pts



    MARKETING AND ADMINISTRATIVE EXPENSES      1,204          1,108        9%

    % of Sales                                 21.9%          21.9%      0 pts


    RESEARCH AND DEVELOPMENT EXPENSES (2)        336            284       18%

    % of Sales                                  6.1%           5.6%    0.5 pts


    RESTRUCTURING CHARGES (3)                     70              -      100%


    NET INTEREST EXPENSE                           4             28      (86%)


    OTHER EXPENSE, NET (4)                         7             35      (80%)


    --------------------------------------------------------------------------

    PRE-TAX INCOME                             1,037            752       38%

    --------------------------------------------------------------------------


    INCOME TAX EXPENSE (5)                       203            161       26%

    --------------------------------------------------------------------------


    NET INCOME                                  $834           $591       41%

    ==========================================================================



    BASIC EPS                                  $1.28          $0.91       41%

    ==========================================================================

    DILUTED EPS                                $1.26          $0.90       40%

    ==========================================================================


    WEIGHTED AVERAGE NUMBER OF COMMON

     SHARES OUTSTANDING

        Basic                                    650            648

        Diluted                                  660            654

    --------------------------------------------------------------------------


    ADJUSTED NET INCOME (excluding certain

     items) (6)                                 $880           $655       34%

    ADJUSTED DILUTED EPS (excluding certain

     items) (6)                                $1.33          $1.00       33%


    (1)  Cost of goods sold in 2006 includes a $76 million pre-tax charge

         related to COLLEAGUE infusion pumps.

    (2)  R&D expenses in 2007 include an $11 million IPR&D charge related to

         the acquisition of MAAS Medical, LLC.

    (3)  Restructuring charges in 2007 are primarily for costs and asset

         impairments associated with the consolidation of certain commercial

         and manufacturing operations outside of the United States.

    (4)  Other expense, net in 2007 includes income of $23 million, reflecting

         a gain on the sale of the Transfusion Therapies business of $58

         million less related charges of $35 million.  The after-tax impact of

         these items was $6 million of income, or $0.01 per diluted share.

    (5)  Income tax expense in 2007 includes a $15 million benefit related to

         an audit settlement and the extension of tax incentives in

         jurisdictions outside the United States.  The effective income tax

         rate in 2007 was also favorably impacted by the restructuring charges

         described in Note 3 above.

    (6)  Adjusted net income and adjusted diluted EPS exclude the charges

         described in Notes 1 and 3 above. See page 10 for description of

         adjustments and reconciliation to GAAP measures.


    Non-GAAP Financial Measures:  The non-GAAP financial measures contained in

    this press release (earnings and per-share earnings, excluding certain

    items) adjust for factors that are unusual or nonrecurring.  Unusual or

    nonrecurring items can be highly variable, difficult to predict, and of a

    size that may substantially impact the company's reported operations for a

    period.  Management believes that non-GAAP financial measures can

    facilitate a fuller analysis of the company's results of operations,

    particularly in evaluating performance period over period.  Management

    uses these non-GAAP financial measures internally in financial planning,

    to monitor business unit performance, and in evaluating management

    performance. Refer to the company's filing on Form 8-K of today's date for

    additional information.




                          BAXTER INTERNATIONAL INC.

                      Consolidated Statements of Income

                   Six Months Ended June 30, 2007 and 2006

      Description of Adjustments and Reconciliation of GAAP to Non-GAAP

                                 (unaudited)

             (in millions, except per share and percentage data)



      2007 description of adjustment and reconciliation of GAAP to Non-GAAP

      ---------------------------------------------------------------------


      The company's GAAP results for the six months ended June 30, 2007

      included restructuring charges, primarily for costs and asset

      impairments associated with the consolidation of certain commercial and

      manufacturing operations outside of the United States, which impacted

      the GAAP results as follows:



                                                Income

                                     Pre-tax       Tax      Net

                                      Income   Expense   Income   Diluted EPS

                                    ------------------------------------------

        GAAP                          $1,037      $203     $834         $1.26

        Restructuring charges             70        24       46          0.07

                                    ------------------------------------------

        Excluding specified items     $1,107      $227     $880         $1.33

                                    ==========================================



      2006 description of adjustment and reconciliation of GAAP to Non-GAAP

      ---------------------------------------------------------------------


      The company's GAAP results for the six months ended June 30, 2006

      included a charge related to COLLEAGUE infusion pumps, which impacted

      the GAAP results as follows:



                                                Income

                                     Pre-tax       Tax      Net

                                      Income   Expense   Income   Diluted EPS

                                    ------------------------------------------

        GAAP                            $752      $161     $591         $0.90

        COLLEAGUE infusion pump

         charge (A)                       76        12       64          0.10

                                    ------------------------------------------

        Excluding specified items       $828      $173     $655         $1.00

                                    ==========================================



    (A)  Included in the Gross Profit line in the accompanying consolidated

         statement of income.  Excluding this item, adjusted gross profit is

         $2,283 million and the adjusted gross profit percentage is 45.1%.




                          BAXTER INTERNATIONAL INC.

                    Condensed Consolidated Balance Sheets

                                 (unaudited)

                               ($ in millions)



                                        June 30, 2007      December 31, 2006

                                   -------------------    ------------------


    Assets

    ------

    Cash and equivalents                       $2,486                $2,485

    Receivables                                 1,993                 1,838

    Inventories                                 2,186                 2,066

    Other current assets                          520                   581

                                   -------------------    ------------------

      Total current assets                      7,185                 6,970

                                   -------------------    ------------------

    Property, plant and equipment, net          4,110                 4,229

    Other long-term assets                      3,364                 3,487

    ------------------------------------------------------------------------

      Total assets                            $14,659               $14,686

    ========================================================================


    Liabilities and Shareholders' Equity

    ------------------------------------

    Short-term debt                              $666                  $234

    Other current liabilities                   3,126                 3,376

    Long-term debt                              2,051                 2,567

    Other long-term liabilities                 2,127                 2,237

    Shareholders' equity                        6,689                 6,272

    ------------------------------------------------------------------------

      Total liabilities and

         shareholders' equity                 $14,659               $14,686

    ========================================================================




                          BAXTER INTERNATIONAL INC.

              Cash Flows from Operations and Changes in Net Debt

                                 (unaudited)

                               ($ in millions)


    ------------------------------------------------------------------------

    Cash Flows from Operations

    ------------------------------------------------------------------------

    (Brackets denote cash outflows)    Three Months Ended   Six Months Ended

                                            June 30,            June 30,

                                      -------------------  ------------------

                                          2007      2006      2007      2006

                                      --------   --------  --------   -------


    Net income                            $431      $309      $834      $591

    Adjustments

       Depreciation and amortization       147       146       287       285

       Deferred income taxes                31        16        18        18

       Stock compensation                   36        20        63        38

       Restructuring and infusion pump

        charges                             70        76        70        76

       Other                                33         4        37        22

    Changes in balance sheet items

       Receivables                         (56)      (23)     (154)       15

       Inventories                         (42)       13      (170)      (50)

       Accounts payable and accrued

        liabilities                         67       (32)      (91)     (137)

       Restructuring payments               (3)       (6)       (6)      (25)

       Other                                17        20        58        15

    ------------------------------------------------------------------------

    Cash flows from operations            $731      $543      $946      $848

    ========================================================================


    ------------------------------------------------------------------------

    Changes in Net Debt

    ------------------------------------------------------------------------

    Increase (decrease)                Three Months Ended   Six Months Ended

                                            June 30,            June 30,

                                      -------------------  ------------------

                                          2007      2006      2007      2006

                                      --------   --------  --------   -------


    Net debt, beginning of period         $336     1,524      $316    $2,497


    Cash flows from operations            (731)     (543)     (946)     (848)

    Capital expenditures                   165       122       258       198

    Dividends                              109         -       489       363

    Proceeds from sale of Transfusion

     Therapies business                      -         -      (421)        -

    Issuances of common stock                -         -         -    (1,249)

    Proceeds from stock issued under

     employee benefit plans               (227)      (31)     (428)      (75)

    Purchases of treasury stock            544       221       814       392

    Other, including the effect of

     exchange rate changes                  35         5       149        20

    ------------------------------------------------------------------------

    Decrease in net debt                  (105)     (226)      (85)   (1,199)

    ------------------------------------------------------------------------


    Net debt, June 30                     $231    $1,298      $231    $1,298

    ========================================================================



    ------------------------------------------------------------------------

    Key statistics, June 30:

    Days sales outstanding                56.0      52.1      56.0      52.1

    Inventory turns                        2.6       2.7       2.6       2.7

    ------------------------------------------------------------------------




                          Baxter International Inc.

                                  Net Sales

                    Periods Ending June 30, 2007 and 2006

                                 (unaudited)

                               ($ in millions)



                                                       % Growth   % Growth

                                                              @          @

                                        Q2        Q2     Actual   Constant

                                      2007      2006(1)   Rates      Rates

    ----------------------------------------------------------------------

      BioScience (2)

      United States                   $532      $479        11%        11%

      International                    658       516        28%        20%

      Total                         $1,190      $995        20%        15%

    ----------------------------------------------------------------------


      Medication Delivery

      United States                   $535      $552        (3%)       (3%)

      International                    504       460        10%         3%

      Total                         $1,039    $1,012         3%         0%

    ----------------------------------------------------------------------


      Renal

      United States                    $95       $97        (2%)       (2%)

      International                    458       419         9%         5%

      Total                           $553      $516         7%         3%

    ----------------------------------------------------------------------


    Baxter excluding Transfusion

     Therapies

    United States                   $1,162    $1,128         3%         3%

    International                    1,620     1,395        16%         9%

    Total                           $2,782    $2,523        10%         7%

    ----------------------------------------------------------------------


      Transfusion Therapies (2)

      United States                    $34       $59       (42%)      (42%)

      International                     13        67       (81%)      (81%)

      Total                            $47      $126       (63%)      (63%)

    ----------------------------------------------------------------------


    Baxter International Inc.

    United States                   $1,196    $1,187         1%         1%

    International                    1,633     1,462        12%         5%

    Total                           $2,829    $2,649         7%         3%

    ----------------------------------------------------------------------



                                                       % Growth   % Growth

                                                              @          @

                                        YTD      YTD     Actual   Constant

                                       2007     2006(1)   Rates      Rates

    ----------------------------------------------------------------------

      BioScience (2)

      United States                   $1,016    $897        13%        13%

      International                    1,246     974        28%        20%

      Total                           $2,262  $1,871        21%        17%

    ----------------------------------------------------------------------


      Medication Delivery

      United States                   $1,050  $1,043         1%         1%

      International                      979     885        11%         4%

      Total                           $2,029  $1,928         5%         2%

    ----------------------------------------------------------------------


      Renal

      United States                     $192    $191         1%         1%

      International                      886     818         8%         5%

      Total                           $1,078  $1,009         7%         4%

    ----------------------------------------------------------------------


    Baxter excluding Transfusion

     Therapies

    United States                     $2,258  $2,131         6%         6%

    International                      3,111   2,677        16%        10%

    Total                             $5,369  $4,808        12%         8%

    ----------------------------------------------------------------------


      Transfusion Therapies (2)

      United States                      $77    $115       (33%)      (33%)

      International                       58     135       (57%)      (59%)

      Total                             $135    $250       (46%)      (47%)

    ----------------------------------------------------------------------


    Baxter International Inc.

    United States                     $2,335  $2,246         4%         4%

    International                      3,169   2,812        13%         7%

    Total                             $5,504  $5,058         9%         5%

    ----------------------------------------------------------------------



    (1)  Prior year sales data has been reclassified to reflect the change

         that is described in Note 2 below.

    (2)  Sales of Transfusion Therapies (TT) products were previously reported

         in BioScience.  Due to Baxter's expected significant continuing cash

         flows associated with this business, Baxter continued to include the

         results of operations of TT in the company's results of operations

         through the February 28, 2007 sale date.  The amounts reported in TT

         reflect sales of TT products until the completion of the sale of the

         TT business, as well as revenues associated with manufacturing,

         distribution and other services provided by the company to the buyer

         post-divestiture.




                          Baxter International Inc.

     Key Product Line Sales at Actual and Constant Foreign Exchange Rates

                    Periods Ending June 30, 2007 and 2006

                                 (unaudited)

                               ($ in millions)



                                                       % Growth   % Growth

                                                              @          @

                                         Q2       Q2     Actual   Constant

                                       2007     2006(1)   Rates      Rates

    ----------------------------------------------------------------------

    BioScience

    Recombinants (2)                   $431     $394         9%         6%

    Plasma Proteins (3)                 243      213        14%        10%

    Antibody Therapy                    238      199        20%        19%

    Regenerative Medicine (4)            87       79        10%         6%

    Other (5)                           191      110        74%        63%

    ----------------------------------------------------------------------

    Total BioScience (6)             $1,190     $995        20%        15%

    ----------------------------------------------------------------------


    Medication Delivery

    IV Therapies (7)                   $346     $323         7%         2%

    Global Injectables (8)              381      376         1%        (1%)

    Infusion Systems                    208      204         2%         0%

    Anesthesia (9)                       96       95         1%        (1%)

    Other (10)                            8       14       (43%)      (36%)

    ----------------------------------------------------------------------

    Total Medication Delivery        $1,039   $1,012         3%         0%

    ----------------------------------------------------------------------


    Renal

    PD Therapy                         $443     $408         9%         5%

    HD Therapy                          110      108         2%        (4%)

    ----------------------------------------------------------------------

    Total Renal                        $553     $516         7%         3%

    ----------------------------------------------------------------------


    ----------------------------------------------------------------------

    Baxter excluding

     Transfusion Therapies           $2,782   $2,523        10%         7%

    ----------------------------------------------------------------------


    ----------------------------------------------------------------------

    Transfusion

     Therapies (11)                     $47     $126       (63%)      (63%)

    ----------------------------------------------------------------------


    ----------------------------------------------------------------------

    TOTAL BAXTER                     $2,829   $2,649         7%         3%

    ======================================================================




                                                       % Growth   % Growth

                                                              @          @

                                        YTD      YTD     Actual   Constant

                                       2007     2006(1)   Rates      Rates

    ----------------------------------------------------------------------

    BioScience

    Recombinants (2)                   $819     $729        12%         8%

    Plasma Proteins (3)                 468      405        16%        12%

    Antibody Therapy                    460      382        20%        18%

    Regenerative Medicine (4)           169      148        14%        10%

    Other (5)                           346      207        67%        56%

    ----------------------------------------------------------------------

    Total BioScience (6)             $2,262   $1,871        21%        17%

    ----------------------------------------------------------------------


    Medication Delivery

    IV Therapies (7)                   $666     $627         6%         2%

    Global Injectables (8)              742      729         2%        (1%)

    Infusion Systems                    417      399         5%         3%

    Anesthesia (9)                      185      149        24%        22%

    Other (10)                           19       24       (21%)      (21%)

    ----------------------------------------------------------------------

    Total Medication Delivery        $2,029   $1,928         5%         2%

    ----------------------------------------------------------------------


    Renal

    PD Therapy                         $862     $796         8%         6%

    HD Therapy                          216      213         1%        (2%)

    ----------------------------------------------------------------------

    Total Renal                      $1,078   $1,009         7%         4%

    ----------------------------------------------------------------------


    ----------------------------------------------------------------------

    Baxter excluding

     Transfusion Therapies           $5,369   $4,808        12%         8%

    ----------------------------------------------------------------------


    ----------------------------------------------------------------------

    Transfusion

     Therapies (11)                    $135     $250       (46%)      (47%)

    ----------------------------------------------------------------------


    ----------------------------------------------------------------------

    TOTAL BAXTER                     $5,504   $5,058         9%         5%

    ======================================================================



    (1)  Prior year sales data has been reclassified to reflect the changes

         that are described in Notes 2, 5, 6, 8, 9 and 11 below.

    (2)  Includes sales of recombinant FVIII products (ADVATE and

         RECOMBINATE).  Sales of recombinant FIX (BeneFIX) were previously

         reported in Recombinants and are now reported in Other, as detailed

         below.

    (3)  Includes plasma-derived hemophilia (FVII, FVIII, FIX and FEIBA),

         albumin, and certain other plasma-based products.

    (4)  Previously referred to as BioSurgery.

    (5)  Principally includes vaccines, sales of plasma to third parties, and

         recombinant FIX (BeneFIX).  Sales of recombinant FIX were previously

         reported in Recombinants.

    (6)  BioScience sales have been reclassified to reflect the change

         described in Note 11.

    (7)  Principally includes intravenous solutions and nutritional products.

    (8)  Principally includes sales related to the pharma partnering business,

         enhanced packaging, premix drugs and generic injectables.  Generic

         injectables were previously reported in Anesthesia.

    (9)  Principally includes proprietary inhaled anesthetics and other

         anesthesia products.  Sales of generic injectables were previously

         reported in Anesthesia and are now reported in Global Injectables.

    (10) Principally includes other hospital-distributed products.

    (11) Sales of TT products were previously reported in BioScience.  Due to

         Baxter's expected significant continuing cash flows associated with

         this business, Baxter continued to include the results of operations

         of TT in the company's results of operations through the February 28,

         2007 sale date.  The amounts reported above reflect sales of TT

         products until the completion of the sale of the TT business, as well

         as revenues associated with manufacturing, distribution and other

         services provided by the company to the buyer post-divestiture.




                          Baxter International Inc.

                Key Product Line Sales by US and International

                    Periods Ending June 30, 2007 and 2006

                                 (unaudited)

                               ($ in millions)


                                     Q2 2007                  Q2 2006 (1)

                         -----------------------------------------------------

                                       Inter-                   Inter-

                                  US  national  Total      US  national  Total

                         -----------------------------------------------------


    BioScience

    Recombinants (2)             $198    $233    $431     $194    $200    $394

    Plasma Proteins (3)            96     147     243       87     126     213

    Antibody Therapy              176      62     238      148      51     199

    Regenerative Medicine (4)      46      41      87       44      35      79

    Other (5)                      16     175     191        6     104     110

                         -----------------------------------------------------

    Total BioScience (6)         $532    $658  $1,190     $479    $516    $995

                         -----------------------------------------------------


    Medication Delivery

    IV Therapies (7)             $107    $239    $346     $108    $215    $323

    Global Injectables (8)        237     144     381      244     132     376

    Infusion Systems              127      81     208      123      81     204

    Anesthesia (9)                 62      34      96       69      26      95

    Other (10)                      2       6       8        8       6      14

                         -----------------------------------------------------

    Total Medication Delivery    $535    $504  $1,039     $552    $460  $1,012

                         -----------------------------------------------------


    Renal

    PD Therapy                    $68    $375    $443      $68    $340    $408

    HD Therapy                     27      83     110       29      79     108

                         -----------------------------------------------------

    Total Renal                   $95    $458    $553      $97    $419    $516

                         -----------------------------------------------------


                         -----------------------------------------------------

    Baxter excluding

     Transfusion Therapies     $1,162  $1,620  $2,782   $1,128  $1,395  $2,523

                         -----------------------------------------------------


                         -----------------------------------------------------

    Transfusion

     Therapies (11)               $34     $13     $47      $59     $67    $126

                         -----------------------------------------------------


                         -----------------------------------------------------

    TOTAL BAXTER               $1,196  $1,633  $2,829   $1,187  $1,462  $2,649

                         =====================================================




                                                  % Growth

                                        --------------------------------

                                          US    International    Total

                                        --------------------------------


    BioScience

    Recombinants (2)                      2%         17%           9%

    Plasma Proteins (3)                  10%         17%          14%

    Antibody Therapy                     19%         22%          20%

    Regenerative Medicine (4)             5%         17%          10%

    Other (5)                           167%         68%          74%

                         -----------------------------------------------------

    Total BioScience (6)                 11%         28%          20%

                         -----------------------------------------------------


    Medication Delivery

    IV Therapies (7)                     (1%)        11%           7%

    Global Injectables (8)               (3%)         9%           1%

    Infusion Systems                      3%          0%           2%

    Anesthesia (9)                      (10%)        31%           1%

    Other (10)                          (75%)         0%         (43%)

                         -----------------------------------------------------

    Total Medication Delivery            (3%)        10%           3%

                         -----------------------------------------------------


    Renal

    PD Therapy                            0%         10%           9%

    HD Therapy                           (7%)         5%           2%

                         -----------------------------------------------------

    Total Renal                          (2%)         9%           7%

                         -----------------------------------------------------


                         -----------------------------------------------------

    Baxter excluding

     Transfusion Therapies                3%         16%          10%

                         -----------------------------------------------------


                         -----------------------------------------------------

    Transfusion

     Therapies (11)                     (42%)       (81%)        (63%)

                         -----------------------------------------------------


                         -----------------------------------------------------

    TOTAL BAXTER                          1%         12%           7%

                         =====================================================


    (1)  Prior year sales data has been reclassified to reflect the changes

         that are described in Notes 2, 5, 6, 8, 9 and 11 below.

    (2)  Includes sales of recombinant FVIII products (ADVATE and

         RECOMBINATE).  Sales of recombinant FIX (BeneFIX) were previously

         reported in Recombinants and are now reported in Other, as detailed

         below.

    (3)  Includes plasma-derived hemophilia (FVII, FVIII, FIX and FEIBA),

         albumin, and certain other plasma-based products.

    (4)  Previously referred to as BioSurgery.

    (5)  Principally includes vaccines, sales of plasma to third parties, and

         recombinant FIX (BeneFIX).  Sales of recombinant FIX were previously

         reported in Recombinants.

    (6)  BioScience sales have been reclassified to reflect the change

         described in Note 11.

    (7)  Principally includes intravenous solutions and nutritional products.

    (8)  Principally includes sales related to the pharma partnering business,

         enhanced packaging, premix drugs and generic injectables.  Generic

         injectables were previously reported in Anesthesia.

    (9)  Principally includes proprietary inhaled anesthetics and other

         anesthesia products.  Sales of generic injectables were previously

         reported in Anesthesia and are now reported in Global Injectables.

    (10) Principally includes other hospital-distributed products.

    (11) Sales of TT products were previously reported in BioScience.  Due to

         Baxter's expected significant continuing cash flows associated with

         this business, Baxter continued to include the results of operations

         of TT in the company's results of operations through the February 28,

         2007 sale date.  The amounts reported above reflect sales of TT

         products until the completion of the sale of the TT business, as well

         as revenues associated with manufacturing, distribution and other

         services provided by the company to the buyer post-divestiture.


CONTACT: Media, Deborah Spak, +1-847-948-2349, or Investors, Mary KayLadone, +1-847-948-3371, or Clare Trachtman, +1-847-948-3085, all of BaxterInternational Inc.

Web site: http://www.baxter.com//

Ticker Symbol: (NYSE:BAX)

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Copyright © 2007 PR Newswire Association LLC. All rights reserved.
A United Business Media Company

Posted: July 2007


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