Baxter Raises Full-Year 2008 Outlook Following Strong Second-Quarter Financial Results

Company Posts Second Quarter EPS of $0.85 Per Diluted Share, An Increase of 31 Percent

DEERFIELD, Ill., July 17, 2008 /PRNewswire-FirstCall/ -- Baxter International Inc. today posted strong financial results for the second quarter of 2008 and raised its full-year financial outlook.

For the second quarter, Baxter reported net income of $544 million and earnings per diluted share of $0.85, which compared favorably to the company's earnings guidance of $0.81 to $0.83 per diluted share. Net income increased 26 percent compared to $431 million reported in the second quarter of 2007, and earnings per diluted share increased 31 percent from $0.65 per diluted share reported last year. 2007 results include an after-tax restructuring charge of $46 million or $0.07 per diluted share. On an adjusted basis, net income and earnings per diluted share increased 14 percent and 18 percent, respectively, compared to the prior year period.

The company's strong financial performance can be attributed to continued gross margin expansion as a result of enhanced business, product and geographic mix, favorable pricing across multiple businesses and manufacturing efficiencies.

"Our positive financial performance in the first half of 2008 continues to reflect the strength of our diversified business model, and positions us well in this uncertain global economy," said Robert L. Parkinson, Jr., chairman and chief executive officer.

Baxter's worldwide sales totaled $3.2 billion in the second quarter, an increase of 13 percent (or 5 percent excluding the impact of foreign exchange). Positive momentum continued in Baxter's BioScience business in the second quarter, with revenues totaling approximately $1.4 billion, an increase of 16 percent. Double-digit growth across the portfolio was the result of robust sales of plasma-based therapies, products used for the treatment of hemophilia and immune disorders, biosurgery products and strong demand for the company's encephalitis vaccine.

Medication Delivery sales grew 12 percent in the quarter to approximately $1.2 billion, driven by strong international sales of IV therapy products and injectable drugs, as well as anesthesia products globally. Renal sales increased 8 percent to approximately $600 million as a result of an increase in peritoneal dialysis patients in many markets around the world.

The company continues to advance its product pipeline across its business portfolio. Investments in research and development in the quarter totaled $222 million, reflecting an increase of 25 percent over the prior-year period.

Six-Month Results

For the first six months of 2008, Baxter's net income totaled $973 million and increased 17 percent, with earnings per diluted share increasing 21 percent to $1.52. On an adjusted basis, Baxter's net income of $1.0 billion increased 16 percent from $880 million last year. Adjusted earnings per diluted share for the six-month period of $1.59 increased 20 percent, from $1.33 per diluted share in the prior year period.

Baxter's worldwide sales grew 10 percent in the first half of the year to $6.1 billion, an increase from $5.5 billion last year. Excluding the impact of foreign exchange, sales growth for the first six months of the year was 3 percent. Sales within the United States totaled $2.4 billion, an increase of 4 percent over the same period last year, and international sales grew 15 percent (or 3 percent excluding the impact of foreign exchange) to $3.6 billion.

Third Quarter and Full-Year 2008 Outlook

As a result of the strong performance in the first half of the year, Baxter is raising its financial outlook for full-year 2008. The company expects sales growth for the year, excluding the impact of foreign exchange, of 5 to 6 percent, with earnings per diluted share of $3.28 to $3.32, before any special items. This compares to the company's previous earnings guidance of $3.18 to $3.24. In addition, the company expects cash flow from operations of at least $2.6 billion.

For the third quarter of 2008, Baxter expects sales growth of 6 to 8 percent, excluding the impact of foreign exchange, and earnings per diluted share, before any special items, of $0.81 to $0.83.

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 17, 2008. Please visit Baxter's website for more information regarding this and future investor events and webcasts, including investor presentations.

Baxter International Inc. develops, manufactures and markets products that save and sustain the lives of people with hemophilia, immune disorders, cancer, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. As a global, diversified healthcare company, Baxter applies a unique combination of expertise in medical devices, pharmaceuticals and biotechnology to create products that advance patient care worldwide.

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 delay, 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; foreign currency fluctuations and other risks identified in the company's most recent filing on Form 10-K and other Securities and Exchange Commission 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, 2008 and 2007

                                   (unaudited)

               (in millions, except per share and percentage data)



                                               Three Months Ended

                                                     June 30,

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

                                               2008        2007        Change

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


    NET SALES                                 $3,189      $2,829          13%


    COST OF GOODS SOLD                         1,562       1,437           9%


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

    GROSS PROFIT                               1,627       1,392          17%

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

    % of Sales                                 51.0%       49.2%       1.8 pts


    MARKETING AND ADMINISTRATIVE EXPENSES        703         621          13%

    % of Sales                                 22.0%       22.0%         0 pts


    RESEARCH AND DEVELOPMENT EXPENSES            222         177          25%

    % of Sales                                  7.0%        6.3%       0.7 pts


    RESTRUCTURING CHARGE                           -          70 (1)    (100%)


    NET INTEREST EXPENSE (INCOME)                 25          (1)          N/M


    OTHER EXPENSE, NET                             5          17         (71%)


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

    PRE-TAX INCOME                               672         508          32%

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


    INCOME TAX EXPENSE                           128          77 (2)      66%

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

    % of Pre-Tax Income                        19.0%       15.2%       3.8 pts


    NET INCOME                                  $544        $431          26%

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


    BASIC EPS                                  $0.87       $0.66          32%

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

    DILUTED EPS                                $0.85       $0.65          31%

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


    WEIGHTED AVERAGE NUMBER OF COMMON

     SHARES OUTSTANDING

        Basic                                    626         650

        Diluted                                  638         661

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


    ADJUSTED PRE-TAX INCOME (excluding

     specified item)                            $672        $578 (3)      16%

    ADJUSTED NET INCOME (excluding

     specified item)                            $544        $477 (3)      14%

    ADJUSTED DILUTED EPS (excluding

     specified item)                           $0.85       $0.72 (3)      18%


    (1) A restructuring charge of $70 million ($46 million, or $0.07 per

        share, on an after-tax basis) in 2007 was primarily for costs and

        asset impairments associated with the consolidation of certain

        commercial and manufacturing operations outside of the United States.

    (2) Income tax expense in 2007 included 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 charge

        described in Note 1 above.

    (3) Refer to page 6 for a description of the adjustment and a

        reconciliation to GAAP (generally accepted accounting principles)

        measures.


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

    this press release (pre-tax income, net income 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.

                     Note to Consolidated Statement of Income

                         Three Months Ended June 30, 2007

    Description of Adjustment and Reconciliation of GAAP to Non-GAAP Measures

                                   (unaudited)

               (in millions, except per share and percentage data)



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

    included a restructuring charge, 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   Diluted

                                           Income   Expense   Income       EPS

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

        GAAP                                $508        $77     $431     $0.65

        Restructuring charge                  70         24       46      0.07

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

        Excluding specified item            $578       $101     $477     $0.72

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

        Effective tax rate                            17.5%




                            BAXTER INTERNATIONAL INC.

                       Consolidated Statements of Income

                     Six Months Ended June 30, 2008 and 2007

                                   (unaudited)

               (in millions, except per share and percentage data)



                                               Six Months Ended

                                                   June 30,

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

                                              2008         2007      Change

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


    NET SALES                                $6,066       $5,504         10%


    COST OF GOODS SOLD                        3,059 (1)    2,846          7%

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

    GROSS PROFIT                              3,007        2,658         13%

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

    % of Sales                                49.6%        48.3%      1.3 pts


    MARKETING AND ADMINISTRATIVE EXPENSES     1,343        1,204         12%

    % of Sales                                22.1%        21.9%      0.2 pts


    RESEARCH AND DEVELOPMENT EXPENSES           412          336         23%

    % of Sales                                 6.8%         6.1%      0.7 pts


    RESTRUCTURING CHARGE                          -           70 (2)   (100%)


    NET INTEREST EXPENSE                         42            4          N/M


    OTHER EXPENSE, NET                            4            7        (43%)


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

    PRE-TAX INCOME                            1,206        1,037         16%

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


    INCOME TAX EXPENSE                          233          203         15%

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

    % of Pre-Tax Income                       19.3%        19.6%    (0.3 pts)


    NET INCOME                                 $973         $834         17%

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


    BASIC EPS                                 $1.55        $1.28         21%

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

    DILUTED EPS                               $1.52        $1.26         21%

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


    WEIGHTED AVERAGE NUMBER OF COMMON

     SHARES OUTSTANDING

       Basic                                    629          650

       Diluted                                  641          660

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


    ADJUSTED PRE-TAX INCOME (excluding

     specified items)                        $1,259 (3)   $1,107 (3)     14%

    ADJUSTED NET INCOME (excluding

     specified items)                        $1,018 (3)     $880 (3)     16%

    ADJUSTED DILUTED EPS (excluding

     specified items)                         $1.59 (3)    $1.33 (3)     20%


    (1) Cost of goods sold in the first quarter of 2008 included a charge of

        $53 million ($45 million, or $0.07 per share, on an after-tax basis)

        related to COLLEAGUE infusion pumps.

    (2) A restructuring charge of $70 million ($46 million, or $0.07 per

        share, on an after-tax basis) in 2007 was primarily for costs and

        asset impairments associated with the consolidation of certain

        commercial and manufacturing operations outside of the United States.

    (3) Refer to page 8 for a description of the adjustments and a

        reconciliation to GAAP measures.


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

    in this press release (pre-tax income, net income 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.

                  Notes to Consolidated Statements of Income

                    Six Months Ended June 30, 2008 and 2007

  Description of Adjustments and Reconciliation of GAAP to Non-GAAP Measures

                                  (unaudited)

              (in millions, except per share and percentage data)



    2008 description of adjustment and reconciliation of GAAP to Non-GAAP

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

    The company's GAAP results for the six months ended June 30, 2008

    included a first quarter charge related to COLLEAGUE infusion pumps,

    which impacted the GAAP results as follows:


                                                      Income

                                           Pre-tax       Tax      Net  Diluted

                                            Income   Expense   Income      EPS

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

        GAAP                                $1,206      $233     $973    $1.52

        COLLEAGUE infusion pump charge (A)      53         8       45     0.07

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

        Excluding specified item            $1,259      $241   $1,018    $1.59

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

        Effective tax rate                             19.1%


    (A) Included in the Cost of Goods Sold line in the accompanying

        consolidated statement of income.  Excluding this charge, adjusted

        gross profit was $3,060 and the adjusted gross profit percentage

        was 50.4%.



    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 a restructuring charge, 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  Diluted

                                            Income   Expense   Income      EPS

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

        GAAP                                $1,037      $203     $834    $1.26

        Restructuring charge                    70        24       46     0.07

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

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

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

        Effective tax rate                             20.5%




                            BAXTER INTERNATIONAL INC.

                      Condensed Consolidated Balance Sheets

                                   (unaudited)

                                 ($ in millions)


                                           June 30, 2008     December 31, 2007

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

    Assets

    ------

    Cash and equivalents                          $2,147                $2,539

    Receivables                                    2,217                 2,026

    Inventories                                    2,571                 2,334

    Other current assets                             624                   656

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

       Total current assets                        7,559                 7,555

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

    Property, plant and equipment, net             4,680                 4,487

    Other long-term assets                         3,231                 3,252

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

        Total assets                             $15,470               $15,294

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


    Liabilities and Shareholders' Equity

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

    Short-term debt                                  $62                  $425

    Other current liabilities                      3,331                 3,387

    Long-term debt                                 3,172                 2,664

    Other long-term liabilities                    1,686                 1,902

    Shareholders' equity                           7,219                 6,916

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

        Total liabilities and

         shareholders' equity                    $15,470               $15,294

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




                           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,

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

                                              2008    2007      2008    2007

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

    Net income                                $544    $431      $973    $834

    Adjustments

       Depreciation and amortization           160     147       316     287

       Deferred income taxes                    49      31       110      18

       Stock compensation                       35      36        73      63

       Restructuring and infusion pump

        charges                                  -      70        53      70

       Other                                    14      33        23      37

    Changes in balance sheet items

       Receivables                            (111)    (56)      (93)   (154)

       Inventories                             (50)    (42)     (155)   (170)

       Accounts payable and accrued

        liabilities                             87      67      (254)    (91)

       Restructuring payments                  (14)     (3)      (26)     (6)

       Other                                     6      17        62      58

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

    Cash flows from operations                $720    $731    $1,082    $946

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


    Changes in Net Debt

    Increase (decrease)                  Three Months Ended  Six Months Ended

                                                June 30,          June 30,

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

                                              2008    2007      2008    2007

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

    Net debt, beginning of period           $1,136    $336      $550    $316


    Cash flows from operations                (720)   (731)   (1,082)   (946)

    Capital expenditures                       207     165       364     258

    Dividends                                  137     109       275     489

    Proceeds from sale of Transfusion

     Therapies business                          -       -         -    (421)

    Proceeds from stock issued under

     employee benefit plans                   (133)   (227)     (245)   (428)

    Purchases of treasury stock                388     544       933     814

    Acquisitions of and investments in

     businesses and technologies                 -      11        61      43

    Payments relating to settlements of

     cross-currency swaps                      132       -       301     147

    Other, including the effect of

     exchange rate changes                     (60)     24       (70)    (41)

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

    Increase (decrease) in net debt            (49)   (105)      537     (85)

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


    Net debt, June 30                       $1,087    $231    $1,087    $231

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


    Key statistics, June 30:

    Days sales outstanding                    56.8    56.0      56.8    56.0

    Inventory turns                            2.3     2.6       2.3     2.6




                           Baxter International Inc.

                                   Net Sales

                     Periods Ending June 30, 2008 and 2007

                                  (unaudited)

                                ($ in millions)


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

                                                             % Growth % Growth

                                                                    @        @

                                                Q2        Q2   Actual Constant

                                              2008      2007    Rates    Rates

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


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

       BioScience (1)

       United States                          $590      $532     11%      11%

       International                           795       658     21%       6%

       Total                                $1,385    $1,190     16%       8%

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


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

       Medication Delivery

       United States                          $525      $535     (2%)     (2%)

       International                           639       504     27%      13%

       Total                                $1,164    $1,039     12%       5%

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


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

       Renal

       United States                           $97       $95      2%       2%

       International                           501       458      9%      (2%)

       Total                                  $598      $553      8%      (1%)

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


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

    Baxter excluding Transfusion Therapies

    United States                           $1,212    $1,162      4%       4%

    International                            1,935     1,620     19%       6%

    Total                                   $3,147    $2,782     13%       5%

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


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

       Transfusion Therapies (1)

       United States                           $29       $34    (15%)    (15%)

       International                            13        13      0%     (15%)

       Total                                   $42       $47    (11%)    (15%)

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


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

    Baxter International Inc.

    United States                           $1,241    $1,196      4%       4%

    International                            1,948     1,633     19%       6%

    Total                                   $3,189    $2,829     13%       5%

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


                                                             % Growth % Growth

                                                                    @        @

                                               YTD       YTD   Actual Constant

                                              2008      2007    Rates    Rates

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


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

       BioScience (1)

       United States                        $1,137    $1,016     12%      12%

       International                         1,458     1,246     17%       5%

       Total                                $2,595    $2,262     15%       8%

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


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

       Medication Delivery

       United States                        $1,028    $1,050     (2%)     (2%)

       International                         1,201       979     23%      10%

       Total                                $2,229    $2,029     10%       4%

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


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

       Renal

       United States                          $195      $192      2%       2%

       International                           961       886      8%      (2%)

       Total                                $1,156    $1,078      7%      (1%)

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


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

    Baxter excluding Transfusion Therapies

    United States                           $2,360    $2,258      5%       5%

    International                            3,620     3,111     16%       5%

    Total                                   $5,980    $5,369     11%       5%

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


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

       Transfusion Therapies (1)

       United States                           $60       $77    (22%)    (22%)

       International                            26        58    (55%)    (60%)

       Total                                   $86      $135    (36%)    (39%)

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


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

    Baxter International Inc.

    United States                           $2,420    $2,335      4%       4%

    International                            3,646     3,169     15%       3%

    Total                                   $6,066    $5,504     10%       3%

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


    (1) The results of operations of the Transfusion Therapies (TT) business

        were previously reported in the BioScience business.  The TT business

        was sold on February 28, 2007.  The TT totals above include sales of

        TT products through the date of divestiture, as well as revenues

        associated with manufacturing, distribution and other services

        provided by the company to the buyer of the TT business post-

        divestiture.




                           Baxter International Inc.

                             Key Product Line Sales

                     Periods Ending June 30, 2008 and 2007

                                  (unaudited)

                                ($ in millions)


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

                                                             % Growth % Growth

                                                                    @        @

                                                Q2        Q2   Actual Constant

                                              2008      2007    Rates    Rates

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


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

    BioScience

    Recombinants                              $508      $431     18%      10%

    Plasma Proteins                            291       243     20%      12%

    Antibody Therapy                           315       238     32%      27%

    Regenerative Medicine (1)                  109        87     25%      17%

    Other (2)                                  162       191    (15%)    (27%)

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

    Total BioScience (3)                    $1,385    $1,190     16%       8%

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


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

    Medication Delivery

    IV Therapies                              $408      $346     18%       8%

    Global Injectables                         393       381      3%      (2%)

    Infusion Systems                           229       208     10%       5%

    Anesthesia                                 122        96     27%      22%

    Other                                       12         8     50%      38%

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

    Total Medication Delivery               $1,164    $1,039     12%       5%

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


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

    Renal

    PD Therapy                                $479      $443      8%      (1%)

    HD Therapy                                 119       110      8%      (2%)

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

    Total Renal                               $598      $553      8%      (1%)

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


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

    Baxter excluding Transfusion Therapies  $3,147    $2,782     13%       5%

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


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

    Transfusion Therapies (3)                  $42       $47    (11%)    (15%)

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


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

    TOTAL BAXTER                            $3,189    $2,829     13%       5%

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



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

                                                             % Growth % Growth

                                                                    @        @

                                               YTD       YTD   Actual Constant

                                              2008      2007    Rates    Rates

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


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

    BioScience

    Recombinants                              $944      $819     15%       9%

    Plasma Proteins                            551       468     18%      11%

    Antibody Therapy                           601       460     31%      26%

    Regenerative Medicine (1)                  203       169     20%      14%

    Other (2)                                  296       346    (14%)    (25%)

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

    Total BioScience (3)                    $2,595    $2,262     15%       8%

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


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

    Medication Delivery

    IV Therapies                              $779      $666     17%       8%

    Global Injectables                         761       742      3%      (2%)

    Infusion Systems                           449       417      8%       3%

    Anesthesia                                 221       185     19%      15%

    Other                                       19        19      0%      (5%)

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

    Total Medication Delivery               $2,229    $2,029     10%       4%

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


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

    Renal

    PD Therapy                                $924      $862      7%      (1%)

    HD Therapy                                 232       216      7%      (2%)

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

    Total Renal                             $1,156    $1,078      7%      (1%)

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


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

    Baxter excluding Transfusion Therapies  $5,980    $5,369     11%       5%

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


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

    Transfusion Therapies (3)                  $86      $135    (36%)    (39%)

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


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

    TOTAL BAXTER                            $6,066    $5,504     10%       3%

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


    (1) Previously referred to as BioSurgery.

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

        recombinant FIX (BeneFIX).  Sales of BeneFIX ceased as of June 30,

        2007.

    (3) The results of operations of the TT business were previously reported

        in the BioScience business.  The TT business was sold on February 28,

        2007.  The TT totals above include sales of TT products through the

        date of divestiture, as well as revenues associated with

        manufacturing, distribution and other services provided by the company

        to the buyer of the TT business post-divestiture.



                          Baxter International Inc.

               Key Product Line Sales by US and International

              Three-Month Periods Ending June 30, 2008 and 2007

                                 (unaudited)

                               ($ in millions)


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

                                        Q2 2008                 Q2 2007

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

                                       Interna-                 Interna-

                                   US   tional  Total      US    tional  Total

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

    BioScience

    Recombinants                 $206    $302    $508    $198    $233    $431

    Plasma Proteins                97     194     291      96     147     243

    Antibody Therapy              220      95     315     176      62     238

    Regenerative Medicine (1)      55      54     109      46      41      87

    Other (2)                      12     150     162      16     175     191

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

    Total BioScience (3)         $590    $795  $1,385    $532    $658  $1,190

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


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

    Medication Delivery

    IV Therapies                 $113    $295    $408    $107    $239    $346

    Global Injectables            199     194     393     237     144     381

    Infusion Systems              134      95     229     127      81     208

    Anesthesia                     76      46     122      62      34      96

    Other                           3       9      12       2       6       8

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

    Total Medication Delivery    $525    $639  $1,164    $535    $504  $1,039

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


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

    Renal

    PD Therapy                    $73    $406    $479     $68    $375    $443

    HD Therapy                     24      95     119      27      83     110

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

    Total Renal                   $97    $501    $598     $95    $458    $553

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


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

    Baxter excluding

     Transfusion Therapies     $1,212  $1,935  $3,147  $1,162  $1,620  $2,782

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


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

    Transfusion Therapies (3)     $29     $13     $42     $34     $13     $47

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


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

    TOTAL BAXTER               $1,241  $1,948  $3,189  $1,196  $1,633  $2,829

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



                                                   % Growth @ Actual Rates

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

                                                          Interna-

                                                  US       tional       Total

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

    BioScience

    Recombinants                                  4%         30%         18%

    Plasma Proteins                               1%         32%         20%

    Antibody Therapy                             25%         53%         32%

    Regenerative Medicine (1)                    20%         32%         25%

    Other (2)                                   (25%)       (14%)       (15%)

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

    Total BioScience (3)                         11%         21%         16%

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


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

    Medication Delivery

    IV Therapies                                  6%         23%         18%

    Global Injectables                          (16%)        35%          3%

    Infusion Systems                              6%         17%         10%

    Anesthesia                                   23%         35%         27%

    Other                                        50%         50%         50%

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

    Total Medication Delivery                    (2%)        27%         12%

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


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

    Renal

    PD Therapy                                    7%          8%          8%

    HD Therapy                                  (11%)        14%          8%

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

    Total Renal                                   2%          9%          8%

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


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

    Baxter excluding Transfusion Therapies        4%         19%         13%

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


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

    Transfusion Therapies (3)                   (15%)         0%        (11%)

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


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

    TOTAL BAXTER                                  4%         19%         13%

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


    (1) Previously referred to as BioSurgery.

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

        and recombinant FIX (BeneFIX).  Sales of BeneFIX ceased as of

        June 30, 2007.

    (3) The results of operations of the TT business were previously

        reported in the BioScience business.  The TT business was sold on

        February 28, 2007.  The TT totals above include sales of TT

        products through the date of divestiture, as well as revenues

        associated with manufacturing, distribution and other services

        provided by the company to the buyer of the TT business post-

        divestiture.

CONTACT: Media, Deborah Spak, +1-847-948-2349, Investors, Mary Kay Ladone,+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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A United Business Media Company

Posted: July 2008


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