News Release

BAXTER REPORTS SECOND QUARTER RESULTS

Sales Up 8 Percent in 2nd Quarter, 10 Percent Year-to-Date

Second Quarter Net Earnings Decline with Acquisition and Impairment Charges, Rise 9 Percent Year-to-date

DEERFIELD, ILL., July 18, 2002 -- Baxter International Inc. (NYSE:BAX) today reported that its sales grew 8 percent in the second quarter, while earnings declined as a result of acquisition-related and impairment charges.

Baxter's sales in the quarter rose 8 percent to $2.02 billion, up from the
$1.87 billion reported last year. Excluding the impact of foreign exchange, sales rose 9 percent in the second quarter. Sales within the United States grew 7 percent to $1 billion, while sales outside the United States grew 10 percent (or 12 percent excluding foreign exchange) to $1.02 billion. BioScience sales rose 7 percent to $732 million, Medication Delivery sales advanced 15 percent to $817 million and Renal sales declined 1 percent to $473 million.

Contributing to sales growth in the quarter were Baxter's anesthesia and drug delivery products, as well as continued strong growth in sales of Recombinate, Baxter's recombinant Factor VIII therapy used in the treatment of hemophilia. Recombinate sales rose more than 25 percent in the quarter.

Baxter's net earnings in the second quarter totaled $200 million, or $0.32 per diluted share, a decline of 21 percent from the $253 million, or $0.42 per diluted share reported last year. The second quarter results include two special charges that reduced Baxter's earnings by $0.16 per diluted share. The company recorded a $51 million pre-tax charge for in-process research and development related to its acquisition of Fusion Medical Technologies, Inc., which closed during the second quarter. Baxter also recorded $70 million in pretax impairment charges to reflect the significant decline in the market value of minority interests that it holds in two public companies.

Baxter continued to expand its investment in research and development in the quarter, spending $123 million, an increase of 18 percent.

"Our business fundamentals remain strong, and, excluding special charges, our second quarter earnings were in line with our expectations," said Harry M. Jansen Kraemer, Jr., chairman and chief executive officer. "With continued strong sales of Medication Delivery products and Recombinate hemophilia therapy, as well as improvements in BioScience production yields and cycle times, we expect our sales growth to accelerate in the second half of this year."

Excluding the charges, Baxter expects to meet its full-year 2002 commitments of sales growth in the low teens, earnings per share growth in the mid-teens and operational cash flow of $500 million.

Year-to-date, Baxter's sales have grown 10 percent to $3.97 billion, up from the $3.63 billion reported last year. Excluding the impact of foreign exchange, sales rose 11 percent. BioScience sales rose 12 percent to $1.48 billion, Medication Delivery sales advanced 13 percent to $1.56 billion and Renal sales grew 1 percent to $938 million. Sales within the United States totaled $1.96 billion in the first six months of this year, up 9 percent. Sales outside the United States increased 10 percent (or 13 percent excluding foreign exchange), to $2.01 billion. Net earnings for the first six months of this year advanced 9 percent to $453 million, with earnings per diluted share up 7 percent to $0.73, including charges.

Baxter continued to invest in its future growth during the second quarter with the achievement of several important milestones and the completion and announcement of acquisitions. The company launched its BAXJECT needleless transfer device, which eases the preparation of hemophilia medication for patients and their caregivers, and submitted a Biologics License Application with the U.S. Food and Drug Administration for marketing approval of the company's new Antihemophilic Factor (Recombinant), Plasma/Albumin Free Method (rAHF-PFM). In conjunction with its partner Cerus Corporation, Baxter received CE mark approval for the INTERCEPT Blood System disposable set for inactivating pathogens in platelets. Baxter completed its acquisition of Fusion Medical Technologies, Inc., expanding the company's portfolio of biosurgery products, and announced that it intends to acquire the majority of ESI Lederle from Wyeth. ESI Lederle is a leading manufacturer and distributor of injectable drugs used in the U.S. hospital market.

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 10:00 a.m. CDT on July 18, 2002. Please visit Baxter's website for additional information about this event.

Baxter International Inc. is a global health care company that, through its subsidiaries, provides critical therapies for people with life-threatening conditions. Baxter's bioscience, medication delivery and renal products and services are used to treat patients with some of the most challenging medical conditions including cancer, hemophilia, immune deficiencies, infectious diseases, kidney disease and trauma.

(Baxter, BAXJECT, INTERCEPT and Recombinate are trademarks of Baxter International Inc.)

This news release contains forward-looking statements that involve risks and uncertainties, including technological advances in the medical field, product demand and market acceptance, actions of regulatory bodies, the impact of competitive products and pricing, 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.

FOR ADDITIONAL INFORMATION:

	Media Contact: Deborah Spak, 847-948-2349 Sally Benjamin Young, 847-948-2304 Investor Contacts: Neville Jeharajah, 847-948-2875 Mary Kay Ladone, 847-948-3371