RNS Number:6725N
Baxter International Inc
17 July 2003



Corporate News

Baxter International Inc.
One Baxter Parkway
Deerfield, IL  60015


FOR IMMEDIATE RELEASE





Media contacts:            Deborah Spak, (847) 948-2349
                           Cindy Resman, (847) 948-2815


Investor contacts:         Neville Jeharajah, (847) 948-2875
                           Mary Kay Ladone, (847) 948-3371



               BAXTER'S SALES GROW 11 PERCENT IN SECOND QUARTER



            -- The Company Moves Forward with Initiatives to Improve
                      Profitability and Return on Assets -


         -- Baxter to Discontinue Hemoglobin Therapeutic Development --



DEERFIELD, Ill., July 17, 2003 -- Baxter International Inc. (NYSE: BAX) today
reported its second quarter results, with sales increasing 11 percent and income
from continuing operations declining primarily as a result of a previously
announced restructuring charge.

Sales in the second quarter totaled $2.16 billion, an increase of 11 percent.
Foreign exchange favorably impacted sales by 5 percent.  Baxter's sales within
the United States increased 4 percent to $997 million, while sales outside the
United States grew 18 percent (including an 11 percent benefit from foreign
exchange) to $1.17 billion.  In the second quarter, Medication Delivery sales
grew 17 percent to $938 million, Renal sales grew 11 percent to $452 million,
and BioScience sales grew 5 percent to $773 million.

Income from continuing operations totaled $49 million or $0.08 per diluted share
in the second quarter, including a special charge resulting from the company's
recently announced restructuring plans.  The charge totals $337 million, or $202
million after-tax (approximately two-thirds cash and one-third non-cash), or
$0.33 per share.  This charge includes severance costs for approximately 3,200
employees, representing about 6 percent of Baxter's global workforce, and the
write-down of certain facilities.  The second quarter results compare to income
from continuing operations of $204 million, or $0.33 per diluted share, in the
same period last year, including charges.  Cash flows from continuing operations
in the second quarter were $228 million, an increase of $144 million from the
same period last year.

"While our financial results for the second quarter were in line with our
expectations, we are confident that our recently announced actions will drive
greater profitability, cash flows and shareholder returns over the long term,"
said Harry M. Jansen Kraemer, Jr., chairman and chief executive officer.  "
Specifically, we are simplifying our infrastructure by consolidating functions
and facilities, as well as continuing to prioritize and focus our R&D
investments."

Restructuring Update

Under Baxter's previously announced restructuring plans, approximately 40
percent of reductions in total company positions will be in the United States,
with the remaining 60 percent in the rest of the world.  Across functional
areas, about half of the total workforce reductions are manufacturing-related,
with the remainder primarily general and administrative positions.



As part of its restructuring initiatives, Baxter is consolidating and
integrating certain global facilities, including those in Frankfurt, Germany;
Issoire, France; and Mirandola, Italy.  While Baxter expects to achieve
significant efficiencies as a result of these consolidations, there will be no
impact on the company's ability to provide current products to customers.
Including the 27 facility closings announced earlier this month, a total of 30
facilities will be shut down.

Research and Development Prioritization

In addition, Baxter continues to rigorously manage its research and development
(R&D) pipeline and R&D assets.  Specifically, the company will discontinue its
Phase I recombinant hemoglobin protein program because it did not meet the
expected clinical results.  Baxter is exploring a variety of options for use of
its state-of-the-art biotechnology facility in Boulder, Colorado, where the
hemoglobin program was based, including a potential sale.

Another change resulting from the company's ongoing R&D prioritization efforts
is in the vaccines arena.  Going forward, Baxter will focus its vaccines
business on development programs that utilize its proprietary cell-culture
technologies and platforms, including the influenza vaccine.  As a result of
this decision, Baxter will be consolidating vaccines R&D in California and
Austria, and focusing its Maryland operations on manufacturing.

Financial Results Year-to-Date

Year-to-date, Baxter's sales have grown 9 percent to $4.16 billion, up from the
$3.8 billion reported last year.  Excluding the impact of foreign exchange,
sales rose 4 percent.  BioScience sales rose 2 percent to $1.5 billion,
Medication Delivery sales advanced 17 percent to $1.79 billion and Renal sales
grew 6 percent to $859 million.  Sales within the United States totaled $2.0
billion in the first six months of this year, up 4 percent.  Sales outside the
United States increased 13 percent (including a 10 percent benefit from foreign
exchange), to $2.2 billion.  Income from continuing operations for the first six
months of this year declined to $266 million, or $0.44 per diluted share,
including charges.  This compares with $457 million, or $0.73 per diluted share,
including charges, reported last year.  Year-to-date, Baxter generated $205
million in cash flows from continuing operations, which compares with an outflow
of $11 million for the same period last year.

2003 Outlook

For the third quarter, the company expects to achieve sales growth in the range
of 8 to 12 percent and earnings from continuing operations per diluted share in
the range of $0.45 to $0.50.

For the full-year 2003, the company expects to achieve sales growth in the 8 to
10 percent range, earnings from continuing operations per diluted share of $1.65
to $1.75 (including the current quarter $0.33 restructuring charge) and cash
flows from continuing operations of approximately $1.2 billion.

A webcast of Baxter's second quarter conference call for investors can be
accessed live from a link on Baxter's website at www.baxter.com beginning at 7:
30 a.m. CDT on July 17, 2003.  Please visit Baxter's website for additional
information.

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

Questions and Answers

What is the status of ADVATE?  Have you received any questions from the FDA or
European Regulatory Agencies regarding your submission?

We have received and responded to questions from the regulatory agencies and
continue to expect ADVATE (Antihemophilic Factor (Recombinant), Plasma/
Albumin-Free Method) rAHF-PFM approval in the second half of 2003.



Does your Q3 guidance include any impact from ADVATE?

We continue to expect ADVATE approval in the second half of this year and have
included some sales of ADVATE as one of the many variables for our third quarter
guidance.  The wider range for the third quarter guidance reflects this
possibility.



What is the status of Baxter's inventory of Recombinate with distributors?
What's happening with your levels of inventory?

Homecare distributor inventory levels of Baxter's Recombinate have fallen to
approximately 30-40 days on hand versus over 100 days at the end of 2002.
Baxter's own level of Recombinate inventory continues to be approximately 30
days.



Does the charge include a write-off of any inventory?  What impact will it have
on your inventory levels going forward?

The charge does not include a write-off of any inventory.  We expect the plasma
products inventory to decline annually beginning in 2004.



How much will Baxter save as a result of the restructuring changes?

Now that the number of employees and facilities has been determined to be
higher, the company expects that these actions will generate incremental annual
savings of $0.15 to $0.20 per share when fully implemented, before the impact of
anticipated increases in pension and other employee benefit costs in 2004 and
beyond.



What are your plans for exiting the equity forward agreements?

Given the timing of the restructuring announcement, we decided not to exit the
remaining 12 million equity forward agreements in Q2.   However, we do expect to
be completely out of the equity forward agreements in the third quarter.  We do
not expect this to have any impact on our EPS estimates for 2003.



If the vaccines business is doing well, why are you making changes?

Regardless of whether or not a business is doing well, we continually seek
opportunities to enhance their operations.  Vaccines is an example of a business
we can streamline while it continues to do very well, with sales expectations of
approximately $200 million in 2003.  We have decided to focus on projects that
leverage our proprietary technologies, including the development of our
Influenza vaccine.  We will also continue with our smallpox contracts and the
partnership projects already in place.  We are canceling the early-stage
conjugate meningitis combination vaccine (CYW) and Group A step vaccine (GAS)
projects, which were based on other technology platforms.




What is happening with the Alpha Therapeutic acquisition?

Since the announcement of our intent to acquire certain Alpha Therapeutic
assets, another company is acquiring the remainder of Alpha's assets.  These
developments have increased the complexity and changed the timing of closing.
We now expect this transaction to close in the third quarter.

 (Baxter, ADVATE and Recombinate are registered trademarks of Baxter
International Inc. and its affiliates.)

This news release contains forward-looking statements that involve risks and
uncertainties, including the effect of economic conditions, actions of
regulatory bodies, product development risks, product demand and market
acceptance, the impact of competitive products and pricing, foreign currency
exchange rates and other risks detailed in the company's filings with the
Securities and Exchange Commission. These forward-looking statements are based
on estimates and assumptions made by management of the company and are believed
to be reasonable, though are inherently uncertain and difficult to predict.
Actual results or experience could differ materially from the forward-looking
statements.

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