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Baxter International, Inc. Reports Financial Results For The Third Quarter

Published: Oct 20, 2005

DEERFIELD, Ill., Oct. 20 /PRNewswire-FirstCall/ -- Baxter International Inc. today reported its financial results for the third quarter of 2005.

On an adjusted basis, excluding special charges described below, earnings from continuing operations totaled $296 million, and earnings per diluted share of $0.47 increased 12 percent compared to the third quarter of 2004. Including these previously announced charges of $0.29 per diluted share in the quarter, Baxter's earnings from continuing operations on a GAAP basis totaled $116 million, or $0.18 per diluted share.

The previously announced charges recorded in the third quarter include a charge of $163 million (or $0.26 per diluted share) for the estimated tax expense related to the company's planned repatriation of approximately $2.0 billion in foreign earnings under the American Jobs Creation Act, and an after-tax charge of $20 million (or $0.03 per diluted share) for costs associated with Baxter's decision to discontinue hemodialysis instrument manufacturing.

Worldwide sales totaled $2.4 billion in the third quarter, an increase of 3 percent over the same period last year (including a 1 percentage point benefit from foreign exchange). Domestic sales declined 2 percent to $1.1 billion, while international sales grew 9 percent (including a 3 percentage point benefit from foreign exchange) to $1.3 billion. Contributing to sales growth was the continued strength of the BioScience business, with sales of $950 million, representing an increase of 12 percent compared to the third quarter of 2004. Sales growth in this business was driven by a 15 percent increase in the recombinant business, including $162 million of sales of ADVATE, Antihemophilic Factor (Recombinant), Plasma/Albumin Free Method (rAHF-PFM) for the treatment of hemophilia A. Offsetting the strong sales in the BioScience business were lower sales of the company's COLLEAGUE Infusion Pump, which was on hold during the third quarter. COLLEAGUE Infusion Pump sales totaled approximately $65 million in the third quarter of 2004.

Cash flow from continuing operations totaled $536 million for the quarter, compared to $277 million in the same period last year. Free cash flow (cash flow from continuing operations, less capital expenditures of $116 million in 2005 and $134 million in 2004) was $420 million for the quarter, an improvement of $277 million from the third quarter last year.

"We continue to focus on driving improved operating results and cash flow, which has enhanced our overall financial flexibility," said John Greisch, chief financial officer. "We have again achieved our financial commitments through improved operational execution across all of our businesses."

New Product Launches and Partnerships

"In addition to our strong operating results in the third quarter, we made further progress on achieving R&D milestones and finalizing new partnerships," said Robert L. Parkinson, Jr., chairman and chief executive officer, "We remain committed to providing value to our shareholders through predictable and sustainable growth over the long term, improving cash flow generation and capital allocation, and accelerating internal R&D and business development initiatives."

During the third quarter, Baxter launched several new products and announced new collaborations, including research agreements with Nektar Therapeutics and Lipoxen Technologies. These collaborations focus on further advancing ADVATE, with the objective of reducing the frequency of infusions and enhancing quality of life for hemophilia patients. In addition to these agreements, the company launched GAMMAGARD LIQUID [Immune Globulin Intravenous (Human)] (IVIG) 10% Solution in the United States for the treatment of primary immunodeficiencies, and recently received FDA approval of FLEXBUMIN, the first preparation of human albumin to be packaged in a flexible container.

Nine-Month Results

For the first nine months of 2005, Baxter's worldwide sales grew 7 percent to $7.4 billion, up from $6.9 billion in the same period last year. Foreign exchange favorably impacted sales growth by 3 percentage points year-to-date. Domestic sales totaled $3.3 billion, an increase of 2 percent over the same period last year, while international sales increased 11 percent (including a 5 percentage point benefit from foreign exchange), to $4.1 billion.

On an adjusted basis, excluding charges, the company reported year-to-date earnings from continuing operations of $829 million, or $1.32 per diluted share, an increase of 18 percent over the same period last year. Including the charges and restructuring benefits recorded in the second and third quarters, Baxter's income from continuing operations totaled $664 million, or $1.06 per diluted share, in the first nine months of the year.

Cash flow from continuing operations totaled $1.3 billion for the first nine months of the year, compared to $529 million in the same period in 2004. Free cash flow (cash flow from continuing operations, less capital expenditures of $279 million in 2005 and $363 million in 2004) was $1.0 billion for the first nine months of 2005, an improvement of $870 million from the same period last year.

Fourth Quarter and Full-Year 2005 Outlook

For the fourth quarter of 2005, the company expects organic sales to decline in low single digits, and adjusted earnings per diluted share from continuing operations to total $0.56 to $0.58. Accordingly, for full-year 2005, Baxter expects to achieve organic sales growth of 3 to 4 percent and adjusted earnings per diluted share from continuing operations of $1.88 to $1.90. Baxter also now expects cash flow from continuing operations for full- year 2005 to be approximately $1.7 billion, and to generate free cash flow of approximately $1.2 billion in 2005 (after approximately $500 million of anticipated capital expenditures).

The company's guidance excludes the $0.26 per diluted share from the second and third quarter charges and restructuring adjustments, and also excludes further special charges in the balance of the year, including additional tax effects of the company's planned repatriation of approximately $2 billion under the American Jobs Creation Act, future costs associated with the company's decision to discontinue hemodialysis instrument manufacturing, any additional COLLEAGUE Infusion Pump-related charges, and costs associated with early debt retirement.

A webcast of Baxter's third quarter conference call for investors can be accessed live from a link on the company's website at http://www.baxter.com beginning at 7:30 a.m. CDT on October 20, 2005. The company's fourth quarter conference call for investors is scheduled for January 26, 2006. At that time, Baxter will provide its financial guidance for 2006. 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 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.

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: timely realization of the benefits of the company's restructuring initiatives; the impact of geographic and product mix on the company's sales; actions of regulatory bodies and other governmental authorities, including the Food and Drug Administration and foreign counterparts that could delay, limit or suspend product sales or result in seizures, injunctions and monetary sanctions, including with respect to the COLLEAGUE Infusion Pump; product quality or patient safety concerns leading to product recalls, withdrawals, launch delays, litigation, or declining sales; product development risks; interest rates; demand for and market acceptance risks for new and existing products, such as ADVATE, and other technologies; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; inventory reductions or fluctuations in buying patterns by wholesalers or distributors; foreign currency exchange rates; the availability of acceptable raw materials and component supply; global regulatory, trade and tax policies; the ability to enforce patents; patents of third parties preventing or restricting the company's manufacture, sale or use of affected products or technology; reimbursement policies of government agencies and private payers; results of product testing; 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 web site. The company does not undertake to update its forward-looking statements. Financial schedules, including additional reconciliations of non-GAAP measures, are attached to this release and available on the company's web site.

BAXTER INTERNATIONAL INC. Consolidated Statements of Income (unaudited) (in millions, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------- -------------------- 2005 2004 Change 2005 2004 Change ---- ---- ------ ---- ---- ------ CONTINUING OPERATIONS: NET SALES $2,398 $2,320 3% $7,358 $6,908 7% GROSS PROFIT 1,010 963 5% 3,092 2,795 11% % to Sales 42.1% 41.5% 0.6 pts 42.0% 40.5% 1.5 pts MARKETING AND ADMINISTRATIVE EXPENSES 491 462 6% 1,511 1,460 3% % to Sales 20.5% 19.9% 0.6 pts 20.5% 21.1% (0.6 pts) RESEARCH AND DEVELOPMENT EXPENSES 133 124 7% 399 389 3% SPECIAL CHARGES, NET (5) - NM (32) 543 (106%) ------------------------------------------------------------------------ OPERATING INCOME 391 377 4% 1,214 403 201% ------------------------------------------------------------------------ % to Sales 16.3% 16.3% - pts 16.5% 5.8% 10.7 pts INTEREST, NET 31 20 55% 95 66 44% OTHER EXPENSE, NET 10 11 (9%) 59 74 (20%) ------------------------------------------------------------------------ INCOME BEFORE INCOME TAXES 350 346 1% 1,060 263 303% INCOME TAX EXPENSE (BENEFIT) 234 87 169% 396 (14) NM ------------------------------------------------------------------------ INCOME FROM CONTINUING OPERATIONS $116 $259 (55%) $664 $277 140% ------------------------------------------------------------------------ BASIC EPS FROM CONTINUING OPERATIONS $0.19 $0.42 (55%) $1.07 $0.45 138% ------------------------------------------------------------------------ DILUTED EPS FROM CONTINUING OPERATIONS $0.18 $0.42 (57%) $1.06 $0.45 136% ------------------------------------------------------------------------ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 622 615 621 613 Diluted 632 619 627 617 ------------------------------------------------------------------------ ------------------------------------------------------------------------ RECONCILIATION TO NET INCOME --------------------- Income from continuing operations $116 $259 $664 $277 Discontinued operations - 17 - 5 -------------------------------------------------------------- Net income $116 $276 $664 $282 -------------------------------------------------------------- NM - Not meaningful BAXTER INTERNATIONAL INC. Adjusted Consolidated Statements of Income (unaudited) (in millions, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2005 2004 Change 2005 2004 Change ---- ---- ------ ---- ---- ------ CONTINUING OPERATIONS: NET SALES $2,398 $2,320 3% $7,358 $6,908 7% GROSS PROFIT 1,037 963 8% 3,119 2,840 10% % to Sales 43.2% 41.5% 1.7 pts 42.4% 41.1% 1.3 pts MARKETING AND ADMINISTRATIVE EXPENSES 490 462 6% 1,510 1,405 7% % to Sales 20.4% 19.9% 0.5 pts 20.5% 20.3% 0.2 pts RESEARCH AND DEVELOPMENT EXPENSES 133 124 7% 399 389 3% ------------------------------------------------------------------------ OPERATING INCOME 414 377 10% 1,210 1,046 16% ------------------------------------------------------------------------ % to Sales 17.3% 16.3% 1.0 pts 16.4% 15.1% 1.3 pts INTEREST, NET 31 20 55% 95 66 44% OTHER EXPENSE, NET 10 11 (9%) 59 59 -% ------------------------------------------------------------------------ INCOME BEFORE INCOME TAXES 373 346 8% 1,056 921 15% INCOME TAX EXPENSE 77 87 (11%) 227 230 (1%) ------------------------------------------------------------------------ INCOME FROM CONTINUING OPERATIONS $296 $259 14% $829 $691 20% ------------------------------------------------------------------------ BASIC EPS FROM CONTINUING OPERATIONS $0.48 $0.42 14% $1.34 $1.13 19% ------------------------------------------------------------------------ DILUTED EPS FROM CONTINUING OPERATIONS $0.47 $0.42 12% $1.32 $1.12 18% ------------------------------------------------------------------------ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 622 615 621 613 Diluted 632 619 627 617 ------------------------------------------------------------------------ RECONCILIATION OF ADJUSTED AMOUNTS TO GAAP AMOUNTS ------------------------------------------------------------------------ Net Income ---------- Adjusted net income from continuing operations $296 $259 $829 $691 Special items (180) - (165) (414) Discontinued operations - 17 - 5 -------------------------------------------------------------- GAAP net income $116 $276 $664 $282 -------------------------------------------------------------- Diluted EPS ----------- Adjusted net income from continuing operations $0.47 $0.42 $1.32 $1.12 Special items (0.29) - (0.26) (0.67) Discontinued operations - 0.03 - 0.01 -------------------------------------------------------------- GAAP net income $0.18 $0.45 $1.06 $0.46 -------------------------------------------------------------- Non-GAAP Financial Measures: The non-GAAP (generally accepted accounting principles) financial measures contained in this press release (including the presentation above of 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 performance, and in setting performance compensation targets. BAXTER INTERNATIONAL INC. Consolidated Statements of Income Reconciliation of GAAP to Adjusted Three Months Ended September 30, 2005 and 2004 (unaudited) (in millions, except per share data) Three Months Ended Three Months Ended September 30, 2005 September 30, 2004 ------------------ ------------------ Special Special GAAP Items Adjusted GAAP Items Adjusted ---- ------- -------- ---- ------- -------- CONTINUING OPERATIONS: ---------------------- NET SALES $2,398 $2,398 $2,320 $2,320 GROSS PROFIT 1,010 $27 (A) 1,037 963 963 MARKETING AND ADMINISTRATIVE EXPENSES 491 1 (A) 490 462 462 RESEARCH AND DEVELOPMENT EXPENSES 133 133 124 124 SPECIAL CHARGES, NET (5) (5)(B) - - - -------------------------------------------------------------------------- OPERATING INCOME 391 23 414 377 377 -------------------------------------------------------------------------- INTEREST, NET 31 31 20 20 OTHER EXPENSE, NET 10 10 11 11 -------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 350 23 373 346 346 INCOME TAX EXPENSE 234 157 (C) 77 87 87 -------------------------------------------------------------------------- INCOME FROM CONTINUING OPERATIONS $116 $180 $296 $259 $259 -------------------------------------------------------------------------- BASIC EPS FROM CONTINUING OPERATIONS $0.19 $0.29 $0.48 $0.42 $0.42 -------------------------------------------------------------------------- DILUTED EPS FROM CONTINUING OPERATIONS $0.18 $0.29 $0.47 $0.42 $0.42 -------------------------------------------------------------------------- WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 622 622 615 615 Diluted 632 632 619 619 -------------------------------------------------------------------------- (A) Hemodialysis instruments charge $28 ----- (B) Restructuring reserve adjustments ($5) ----- (C) Tax benefit on hemodialysis instruments charge ($8) Tax expense on restructuring reserve adjustments 2 Tax expense on repatriation of foreign earnings 163 ----- Total income tax expense $157 ----- BAXTER INTERNATIONAL INC. Consolidated Statements of Income Reconciliation of GAAP to Adjusted Nine Months Ended September 30, 2005 and 2004 (unaudited) (in millions, except per share data) Nine Months Ended Nine Months Ended September 30, 2005 September 30, 2004 ------------------ ------------------ Special Special GAAP Items Adjusted GAAP Items Adjusted ---- ------- -------- ---- ------- -------- CONTINUING OPERATIONS: NET SALES $7,358 $7,358 $6,908 $6,908 GROSS PROFIT 3,092 $27 (A) 3,119 2,795 $45 (D) 2,840 MARKETING AND ADMINISTRATIVE EXPENSES 1,511 1 (A) 1,510 1,460 55 (E) 1,405 RESEARCH AND DEVELOPMENT EXPENSES 399 399 389 389 SPECIAL CHARGES, NET (32) (32)(B) - 543 543 (F) - -------------------------------------------------------------------------- OPERATING INCOME 1,214 (4) 1,210 403 643 1,046 -------------------------------------------------------------------------- INTEREST, NET 95 95 66 66 OTHER EXPENSE, NET 59 59 74 15 (G) 59 -------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 1,060 (4) 1,056 263 658 921 INCOME TAX EXPENSE (BENEFIT) 396 169 (C) 227 (14) (244)(H) 230 -------------------------------------------------------------------------- INCOME FROM CONTINUING OPERATIONS $664 $165 $829 $277 $414 $691 -------------------------------------------------------------------------- BASIC EPS FROM CONTINUING OPERATIONS $1.07 $0.27 $1.34 $0.45 $0.68 $1.13 -------------------------------------------------------------------------- DILUTED EPS FROM CONTINUING OPERATIONS $1.06 $0.26 $1.32 $0.45 $0.67 $1.12 -------------------------------------------------------------------------- WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 621 621 613 613 Diluted 627 627 617 617 -------------------------------------------------------------------------- (A) Hemodialysis instruments charge $ 28 (D) Inventory reserves $ 28 ----- Excess cash flow hedges 17 ----- (B) Pump repairs and replacements $ 77 Total $ 45 Restructuring ----- reserve adjustments (109) Total special ----- charges, net ($32) (E) Loan and receivable ----- reserves $ 55 ----- (C) Tax benefit on hemodialysis instruments charge ($8) (F) Restructuring charge $ 543 Tax expense on ----- special charges, net 14 Tax expense on repatriation of foreign earnings 163 (G) Asset ----- impairments $ 15 Total income ----- tax expense $ 169 (H) Tax benefit ----- on restructuring charge ($149) Reversal of tax reserves (55) Tax benefit on other charges (40) Total income ----- tax benefit ($244) ----- BAXTER INTERNATIONAL INC. Cash Flows from Continuing Operations and Changes in Net Debt (unaudited) ($ in millions) -------------------------------------------------------------------------- Cash Flows from Continuing Operations -------------------------------------------------------------------------- (Brackets denote cash outflows) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2005 2004 2005 2004 ---- ---- ---- ---- Income from continuing operations $116 $259 $664 $277 Adjustments Depreciation and amortization 145 150 437 445 Deferred income taxes 80 (35) 199 (238) Restructuring and hemodialysis charges, net 23 - (81) 543 Infusion pump charge - - 77 - Other 24 4 57 151 Changes in balance sheet items Receivables 98 7 118 (155) Inventories (22) 31 68 (44) Accounts payable and accrued liabilities 52 (41) (273) (270) Restructuring payments (22) (74) (95) (136) Other 42 (24) 144 (44) -------------------------------------------------------------------------- Cash flows from continuing operations $536 $277 $1,315 $529 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Changes in Net Debt -------------------------------------------------------------------------- Increase (decrease) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2005 2004 2005 2004 ---- ---- ---- ---- Net debt, beginning of period $3,061 $3,874 $3,185 $3,649 Cash flows from continuing operations (536) (277) (1,315) (529) Capital expenditures 116 134 279 363 Dividends - - 359 361 Acquisitions, net 14 - 14 20 Purchases of treasury stock - - - 18 Other, including the effect of exchange rate changes (5) 36 128 (115) -------------------------------------------------------------------------- Increase (decrease) in net debt (411) (107) (535) 118 -------------------------------------------------------------------------- Net debt, September 30 $2,650 $3,767 $2,650 $3,767 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Key statistics, September 30: Days sales outstanding 61.0 63.9 61.0 63.9 Inventory turns 2.7 2.5 2.7 2.5 Net-debt-to-capital ratio (A) 25.3% 38.3% 25.3% 38.3% -------------------------------------------------------------------------- (A) The net-debt-to-capital ratio was calculated in accordance with the company's primary credit agreements, which give 70% equity credit to the company's December 2002 $1.25 billion issuance of equity units. BAXTER INTERNATIONAL INC. Condensed Consolidated Balance Sheets (unaudited) ($ in millions) September 30, December 31, 2005 2004 ------------- ------------ ASSETS ------ Cash and equivalents $1,712 $1,109 Receivables 1,863 2,091 Inventories 1,948 2,135 Other current assets (1) 556 684 -------------------------- Total current assets 6,079 6,019 -------------------------- Property, plant and equipment, net 4,114 4,369 Other long-term assets (1) 3,590 3,759 -------------------------------------------------------------------------- Total assets $13,783 $14,147 -------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Short-term debt (2) $1,354 $361 Other current liabilities (1) 2,917 3,925 Long-term debt 3,008 3,933 Other long-term liabilities (1) 2,128 2,223 Stockholders' equity 4,376 3,705 -------------------------------------------------------------------------- Total liabilities and stockholders' equity $13,783 $14,147 -------------------------------------------------------------------------- (1) The following is a summary of the company's cross-currency swap assets (liabilities). September 30, December 31, 2005 2004 ------------- ------------ Original swaps -------------- Other current liabilities $- ($465) Other long-term liabilities (540) (831) ---- ------- Total (540) (1,296) ---- ------- Mirror swaps ------------ Other current assets - 109 Other long-term assets - 20 Other long-term liabilities (102) (5) ---- ------- Total (102) 124 ---- ------- Net total of all cross-currency swaps ($642) ($1,172) ---- ------- Note: As further discussed in the company's SEC filings, during the fourth quarter of 2004 the company executed offsetting or mirror swaps. These mirror swaps fix the net amount the company will ultimately pay to settle the swaps subject to this strategy. After execution of the mirror swaps, as the market value of the fixed portion of the original portfolio decreases, the market value of the mirror swaps increases, and vice versa. At September 30, 2005, approximately 52% of the net swaps liability has been fixed by the mirror swaps. During the nine months ended September 30, 2005, the company settled certain swap agreements (and related mirror swaps, as applicable), and made net payments totaling $379 million. In accordance with GAAP, $432 million of outflows were classified in the financing section of the statement of cash flows, and $53 million of inflows were classified in the operating section of the statement of cash flows. (2) The increase in short-term debt from December 31, 2004 to September 30, 2005 principally related to the reclassification of approximately $800 million of notes due in 2006 from long-term to short-term. Baxter International Inc. Net Sales from Continuing Operations Period Ending September 30, 2005 (unaudited) ------------------------------------------------------------------------- Q3 Q3 % Growth @ % Growth @ 2005 2004 Actual Rates Constant Rates ------------------------------------------------------------------------- ($ in millions) ------------------------------------------------------------------------- BioScience United States $449 $408 10% 10% International 501 441 14% 12% Total $950 $849 12% 11% ------------------------------------------------------------------------- ------------------------------------------------------------------------- Medication Delivery United States $531 $593 (10%) (10%) International 426 393 8% 5% Total $957 $986 (3%) (4%) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Renal United States $96 $101 (5%) (5%) International 395 384 3% -% Total $491 $485 1% (1%) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Baxter International Inc. United States $1,076 $1,102 (2%) (2%) International 1,322 1,218 9% 6% Total $2,398 $2,320 3% 2% ------------------------------------------------------------------------- ------------------------------------------------------------------------- YTD YTD % Growth @ % Growth @ 2005 2004 Actual Rates Constant Rates ------------------------------------------------------------------------- ($ in millions) ------------------------------------------------------------------------- ------------------------------------------------------------------------- BioScience United States $1,285 $1,196 7% 7% International 1,557 1,356 15% 10% Total $2,842 $2,552 11% 9% ------------------------------------------------------------------------- ------------------------------------------------------------------------- Medication Delivery United States $1,702 $1,716 (1%) (1%) International 1,316 1,202 9% 5% Total $3,018 $2,918 3% 1% ------------------------------------------------------------------------- ------------------------------------------------------------------------- Renal United States $289 $303 (5%) (5%) International 1,209 1,135 7% 2% Total $1,498 $1,438 4% -% ------------------------------------------------------------------------- ------------------------------------------------------------------------- Baxter International Inc. United States $3,276 $3,215 2% 2% International 4,082 3,693 11% 6% Total $7,358 $6,908 7% 4% ------------------------------------------------------------------------- Baxter International Inc. Key Product Line Sales Period Ending September 30, 2005 (unaudited) ------------------------------------------------------------------------- Q3 Q3 % Growth @ % Growth @ ($ in millions) 2005 2004 Actual Rates Constant Rates ------------------------------------------------------------------------- ------------------------------------------------------------------------- BioScience Recombinants $392 $341 15% 15% Plasma Proteins(1) 242 254 (5%) (6%) Antibody Therapy 123 82 50% 50% Transfusion Therapies 134 124 8% 6% Other(2) 59 48 23% 23% ------------------------------------------------------------------------- Total BioScience $950 $849 12% 11% ------------------------------------------------------------------------- ------------------------------------------------------------------------- Medication Delivery IV Therapies(3) $301 $275 9% 7% Drug Delivery 192 198 (3%) (4%) Infusion Systems 184 248 (26%) (27%) Anesthesia 259 248 4% 4% Other(4) 21 17 24% 18% ------------------------------------------------------------------------- Total Medication Delivery(5) $957 $986 (3%) (4%) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Renal PD Therapy $381 $361 6% 3% HD Therapy 105 123 (15%) (17%) Other 5 1 400% 400% ------------------------------------------------------------------------- Total Renal $491 $485 1% (1%) ------------------------------------------------------------------------- ------------------------------------------------------------------------- TOTAL BAXTER $2,398 $2,320 3% 2% ------------------------------------------------------------------------- ------------------------------------------------------------------------- YTD YTD % Growth @ % Growth @ ($ in millions) 2005 2004 Actual Rates Constant Rates ------------------------------------------------------------------------- ------------------------------------------------------------------------- BioScience Recombinants $1,133 $953 19% 16% Plasma Proteins(1) 767 759 1% (2%) Antibody Therapy 305 252 21% 19% Transfusion Therapies 407 400 2% (1%) Other(2) 230 188 22% 19% ------------------------------------------------------------------------- Total BioScience $2,842 $2,552 11% 9% ------------------------------------------------------------------------- ------------------------------------------------------------------------- Medication Delivery IV Therapies(3) $909 $845 8% 4% Drug Delivery 622 588 6% 5% Infusion Systems 659 669 (1%) (3%) Anesthesia 772 749 3% 2% Other(4) 56 67 (16%) (19%) ------------------------------------------------------------------------- Total Medication Delivery(5) $3,018 $2,918 3% 1% ------------------------------------------------------------------------- ------------------------------------------------------------------------- Renal PD Therapy $1,140 $1,063 7% 4% HD Therapy 345 365 (5%) (10%) Other 13 10 30% 30% ------------------------------------------------------------------------- Total Renal $1,498 $1,438 4% -% ------------------------------------------------------------------------- ------------------------------------------------------------------------- TOTAL BAXTER $7,358 $6,908 7% 4% ------------------------------------------------------------------------- (1) Includes plasma-derived hemophilia (FVII, FVIII, FIX and FEIBA), albumin, biosurgery (Tisseel) and other plasma-based products. (2) Principally includes vaccines and non-plasma-based biosurgery products (FloSeal & CoSeal). (3) Principally includes intravenous solutions and nutritional products. (4) Principally includes other hospital-distributed products. (5) Sales of oncology products, which were previously included in Other, are now reported in Drug Delivery, Infusion Systems or Anesthesia, depending on the product. All prior year sales data has been reclassified to reflect this change. Baxter International Inc. Key Product Line Sales -- US/International Period Ending September 30, 2005 (unaudited) --------------------------------------------------------------------- Q3 2005 --------------------------------------------------------------------- ($ in millions) US International Total --------------------------------------------------------------------- BioScience Recombinants $170 $222 $392 Plasma Proteins (1) 104 138 242 Antibody Therapy 83 40 123 Transfusion Therapies 66 68 134 Other (2) 26 33 59 --------------------------------------------------------------------- Total BioScience $449 $501 $950 --------------------------------------------------------------------- --------------------------------------------------------------------- Medication Delivery IV Therapies (3) $101 $200 $301 Drug Delivery 120 72 192 Infusion Systems 118 66 184 Anesthesia 184 75 259 Other (4) 8 13 21 --------------------------------------------------------------------- Total Medication Delivery (5) $531 $426 $957 --------------------------------------------------------------------- --------------------------------------------------------------------- Renal PD Therapy $65 $316 $381 HD Therapy 30 75 105 Other 1 4 5 --------------------------------------------------------------------- Total Renal $96 $395 $491 --------------------------------------------------------------------- --------------------------------------------------------------------- TOTAL BAXTER $1,076 $1,322 $2,398 --------------------------------------------------------------------- --------------------------------------------------------------------- Q3 2004 --------------------------------------------------------------------- ($ in millions) US International Total --------------------------------------------------------------------- BioScience Recombinants $153 $188 $341 Plasma Proteins (1) 135 119 254 Antibody Therapy 49 33 82 Transfusion Therapies 62 62 124 Other (2) 9 39 48 --------------------------------------------------------------------- Total BioScience $408 $441 $849 --------------------------------------------------------------------- --------------------------------------------------------------------- Medication Delivery IV Therapies (3) $93 $182 $275 Drug Delivery 136 62 198 Infusion Systems 179 69 248 Anesthesia 180 68 248 Other (4) 5 12 17 --------------------------------------------------------------------- Total Medication Delivery (5) $593 $393 $986 --------------------------------------------------------------------- --------------------------------------------------------------------- Renal PD Therapy $65 $296 $361 HD Therapy 36 87 123 Other - 1 1 --------------------------------------------------------------------- Total Renal $101 $384 $485 --------------------------------------------------------------------- --------------------------------------------------------------------- TOTAL BAXTER $1,102 $1,218 $2,320 --------------------------------------------------------------------- --------------------------------------------------------------------- % Growth --------------------------------------------------------------------- ($ in millions) US International Total --------------------------------------------------------------------- BioScience Recombinants 11% 18% 15% Plasma Proteins (1) (23%) 16% (5%) Antibody Therapy 69% 21% 50% Transfusion Therapies 6% 10% 8% Other (2) 189% (15%) 23% --------------------------------------------------------------------- Total BioScience 10% 14% 12% --------------------------------------------------------------------- --------------------------------------------------------------------- Medication Delivery IV Therapies (3) 9% 10% 9% Drug Delivery (12%) 16% (3%) Infusion Systems (34%) (4%) (26%) Anesthesia 2% 10% 4% Other (4) 60% 8% 24% --------------------------------------------------------------------- Total Medication Delivery (5) (10%) 8% (3%) --------------------------------------------------------------------- --------------------------------------------------------------------- Renal PD Therapy -% 7% 6% HD Therapy (17%) (14%) (15%) Other NM 300% 400% --------------------------------------------------------------------- Total Renal (5%) 3% 1% --------------------------------------------------------------------- --------------------------------------------------------------------- TOTAL BAXTER (2%) 9% 3% --------------------------------------------------------------------- (1) Includes plasma-derived hemophilia (FVII, FVIII, FIX and FEIBA), albumin, biosurgery (Tisseel) and other plasma-based products. (2) Principally includes vaccines and non-plasma-based biosurgery products (FloSeal & CoSeal). (3) Principally includes intravenous solutions and nutritional products. (4) Principally includes other hospital-distributed products. (5) Sales of oncology products, which were previously included in Other, are now reported in Drug Delivery, Infusion Systems or Anesthesia, depending on the product. All prior year sales data has been reclassified to reflect this change.

Baxter International Inc.

CONTACT: Media, Deborah Spak, +1-847-948-2349, or Tom Kline,+1-847-948-2251, or Investors, Mary Kay Ladone, +1-847-948-3371, or ClareSullivan, +1-847-948-3085, all of Baxter International Inc.

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