News Release

BAXTER'S SALES AND EARNINGS GROW IN 2002

Sales Advance 10 Percent in the Fourth Quarter, Full-Year 2002

Earnings from Continuing Operations Increase 11 Percent in Quarter, 15 Percent for Full-Year, Excluding Special Charges

DEERFIELD, Ill., January 22, 2003 - Baxter International Inc. (NYSE:BAX) today reported its financial results for the fourth quarter and full-year 2002, with sales from continuing operations advancing 10 percent in the quarter and for the year.

Sales from continuing operations in the fourth quarter totaled $2.26 billion, up from the $2.06 billion reported for the same period last year. Foreign exchange contributed 2 percentage points of growth in the quarter. Domestic sales grew 5 percent, and international sales increased 14 percent.

For the full-year, Baxter reported sales from continuing operations of $8.11 billion, an increase from the $7.36 billion reported for 2001. Foreign exchange had no effect on the full-year sales. Domestic sales totaled $3.97 billion, an increase of 7 percent over last year, and international sales totaled $4.14 billion, an increase of 14 percent.

Excluding discontinued operations and special charges in 2001 and 2002, Baxter's earnings in the quarter totaled $363 million, or $0.59 per diluted share, an increase of 11 percent over the fourth quarter of 2001. Baxter's earnings in the fourth quarter of 2002 included special charges related to the acquisitions of Epic Therapeutics and ESI Lederle, and the planned divestiture of the majority of the company's Renal services portfolio. In the fourth quarter of 2001, Baxter's earnings included special charges related to the company's acquisition of Asta Medica Onkologie and the discontinuation of the Althane series of dialyzers. Including these charges, Baxter reported net income of $9 million for the fourth quarter of 2002, or $0.02 per diluted share. This compares with a net loss of $75 million, or ($0.13) per diluted share, reported for the fourth quarter of 2001.

"Our solid fourth quarter performance enabled us to continue to invest significantly in our research and development programs," said Harry M. Jansen Kraemer, Jr., chairman and chief executive officer. Baxter's investment in research and development increased 23 percent in the fourth quarter, to $142 million.

For the full year, excluding discontinued operations and charges, Baxter's earnings increased 15 percent to $1.24 billion, or 13 percent to $2.00 per diluted share, from the $1.07 billion, or $1.77 per diluted share reported last year. Including charges and discontinued operations, Baxter's net earnings totaled $778 million, or $1.26 per diluted share. This compares with net income of $612 million, or $1.00 per diluted share, reported in 2001.

Baxter's investment in research and development increased 18 percent to $501 million in 2002. The company generated $468 million in operational cash flow from continuing operations (i.e. cash flow of $1.32 billion before capital expenditures) in 2002.

"Despite a challenging environment, we delivered solid sales and earnings growth and cash flow in 2002," Kraemer said. "We advanced several exciting products through our pipeline and the regulatory review process, expanded our production capacity, invested in new technologies, and completed a number of important acquisitions. All of these initiatives position us well to drive long-term growth that is profitable, sustainable and capital efficient."

BioScience

Sales of Baxter's BioScience products grew 7 percent in the fourth quarter, to $842 million. Full-year sales of BioScience products totaled $3.10 billion, an increase of 11 percent.

Contributing to the growth in 2002 were Recombinate Antihemophilic Factor, vaccines and biosurgery products. Baxter once again led the industry in production of recombinant treatment for hemophilia, and in 2002 submitted filings with Canadian, European and United States regulatory authorities for the company's new Antihemophilic Factor (Recombinant), Plasma/Albumin Free Method (rAHF-PFM). Baxter's rAHF-PFM is the first Factor VIII recombinant therapy to be clinically developed and prepared without the addition of any human- or animal-derived raw materials in the cell culture process, purification or final formulation. Also in 2002, Baxter grew its vaccines business with licensure of its NeisVac-C vaccine in several additional countries and completed bulk shipments of smallpox vaccine to partner Acambis, Inc. on behalf of the U.S. government. The company also received licensure for its InfluJect influenza vaccine in the Netherlands, and began construction of two state-of-the-art vaccine production facilities in Krems, Austria and Bohumile, Czech Republic.

Last month, the company announced an agreement to acquire a plasma-derived treatment for hereditary emphysema, Aralast™, and 42 plasma collection centers in the United States from Alpha Therapeutic Corporation, which will expand Baxter's biopharmaceutical product portfolio and enhance the economics of the company's plasma business by increasing the number of fractions it obtains from a liter of plasma.

Baxter's BioScience business develops and produces biopharmaceuticals from plasma and through recombinant methods to treat hemophilia, immune deficiencies and other blood-related disorders, as well as vaccines and biosurgery products.

Medication Delivery

Sales of Baxter's Medication Delivery products advanced 16 percent in the fourth quarter, to $964 million. For the full-year, sales grew 14 percent to $3.32 billion.

Strong contributors to Medication Delivery growth in the quarter and year were anesthesia products and drug delivery technologies. Baxter's fast-growing anesthesia and critical care business will further expand in 2003, as a result of the company's recent acquisition of ESI Lederle from Wyeth. Baxter also expanded its drug delivery technology portfolio in 2002, with its acquisition of privately-held Epic Therapeutics. Baxter provides a range of proprietary and specialized drug formulation and delivery platforms for traditional pharmaceutical companies, including ready-to-use pre-filled syringes, vials and intravenous bags.

Baxter's Medication Delivery business offers a single source for medication delivery products and services, including drug delivery, intravenous solutions, sets, infusion pumps, parenteral nutrition products, anesthesia devices and pharmaceutical agents.

Renal

Baxter's Renal sales increased 4 percent in the fourth quarter to $455 million. For the full year, sales totaled $1.70 billion, an increase of 2 percent.

In the fourth quarter, the company received approval from the U.S. Food and Drug Administration for both a new peritoneal dialysis solution and a new hemofiltration system. Extraneal (icodextrin) peritoneal dialysis solution offers the potential for increased removal of fluid from the blood stream during dialysis. The Accura Hemofiltration System is used in critical care settings to deliver continuous renal replacement and plasma therapies.

Baxter also announced in the fourth quarter its intent to divest the majority of the services component of its Renal business and focus primarily on products used in the treatment of kidney disease.

Baxter's Renal business provides a complete and complimentary portfolio of dialysis-related products used in the treatment of patients with kidney disease.

Outlook for 2003

"Our milestone achievements in 2002 position us well for 2003 and beyond," Kraemer said. "We expect to launch a number of important products across all of our businesses in 2003, and move other promising therapies through the development pipeline and regulatory review process."

Looking ahead to full-year 2003, Baxter expects to achieve sales growth from continuing operations in the 10 to 12 percent range, earnings per share in the $2.22 to $2.29 range, and to generate cash flow from operations of $1.3 billion to $1.5 billion before capital expenditures. For the first quarter of 2003, the company expects to grow sales 7 to 10 percent, and to achieve earnings per diluted share of $0.42 to $0.45.

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.

A webcast of Baxter's fourth 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. CST on January 22, 2003. The company will be making investor presentations on the following dates during the first quarter of 2003: January 28 and February 4. In addition, Baxter will host its annual growth conference in Chicago on March 13, and will webcast that conference. The company will report its first quarter results on Thursday, April 17, 2003, and will conduct a conference call for investors at 7:30 a.m. CDT. A webcast of this call and accompanying slide presentation can be accessed from a link on Baxter's website on April 17. Please visit Baxter's website for additional information about these events.

(Accura, Baxter, Extraneal, InfluJect, NeisVac-C and Recombinate are trademarks of Baxter International Inc.)

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.

Attachments (Adobe Acrobat PDF format)

• Consolidated Statements of Income for the three- and twelve- month periods ended December 31, 2002 and 2001, prepared in accordance with generally accepted accounting principles (GAAP).
• Condensed Operational Cash Flow Information and Changes in Net Debt for the twelve months ended December 31, 2002 and 2001
• Pro Forma Schedule I - Consolidated Statements of Income for the three-and twelve-month periods ended December 31, 2002 and 2001, prepared on a pro forma basis for continuing operations only, with a reconciliation to amounts reported in accordance with GAAP.
• Net Sales from Continuing Operations for the three- and twelve-month periods ended December 31, 2002 and 2001, including sales by operating segment and geographic region.
• Full Year 2002 Net Sales by Quarter
• Key Product Line Sales for 2002, by operating segment, for the four quarters and full year.
• Pro Forma Schedule II - Restated Consolidated Statements of Income for prior 2001 and 2002 quarters, prepared on a pro forma basis for continuing operations only, with a reconciliation to amounts reported in accordance with GAAP.
• Schedule III - Restated Consolidated Statements of Income for prior 2001 and 2002 quarters, for discontinued operations only.

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