News Release

Baxter Announces Fourth Quarter And Full Year 2003 Results

Sales and Earnings Increase in the Fourth Quarter

John Greisch Replaces Thomas Glanzmann as President of Baxter´s BioScience Business

DEERFIELD, Ill., January 29, 2004 -- Baxter International Inc. (NYSE:BAX) today reported fourth quarter results, ending the year at $8.9 billion in sales and net earnings per diluted share from continuing operations of $1.52.

Summary of Fourth Quarter Results

Baxter's sales in the fourth quarter grew 12 percent to $2.5 billion, favorably impacted by 6 percentage points from foreign exchange. Domestic sales grew 12 percent and international sales grew 13 percent. Baxter's Medication Delivery sales for the first time exceeded $1 billion in a quarter, growing 14 percent to $1.1 billion, driven by strong drug delivery and anesthesia sales. BioScience sales increased 11 percent in the fourth quarter, totaling $938 million, led by strong sales of recombinant products used in the treatment of hemophilia, which grew 27 percent. Baxter's Renal business benefited from the favorable impact of foreign exchange in the quarter, growing 9 percent to $497 million.

Earnings from continuing operations in the fourth quarter totaled $378 million, or $0.62 per diluted share. The company's fourth quarter results included a $0.03 per diluted share gain from the sale of Baxter's stake in Acambis, Inc., as well as $0.04 per diluted share benefit from the initiatives completed to date relating to the restructuring previously announced in July 2003.

Summary of Full-Year 2003 Financial Results

For the full-year, Baxter's sales grew 10 percent to $8.9 billion, favorably impacted by 5 percentage points from foreign exchange. Domestic sales grew 8 percent to $4.3 billion and international sales grew 12 percent to $4.6 billion. Medication Delivery sales totaled $3.8 billion for the year, an increase of 16 percent. BioScience sales grew 6 percent to $3.3 billion, and Renal sales were up 6 percent in 2003, totaling $1.8 billion.

For full-year 2003, earnings from continuing operations totaled $922 million or $1.52 per diluted share. Baxter's 2003 results included a second quarter restructuring charge of $0.33 per diluted share.

Baxter generated $1.4 billion in cash flow from continuing operations in 2003 after contributing $87 million to the company's pension trusts.

Update on Restructuring Progress and 2004 Outlook

Baxter is on track to achieve anticipated savings from the restructuring announced in July 2003, which involved closing and/or consolidating several facilities, simplifying infrastructure and eliminating approximately 3,000 positions worldwide. Three-quarters of the positions have been eliminated to date, with the remainder slated to occur in 2004 in compliance with local country requirements.

"Over the next year we will be implementing considerable changes at Baxter designed to strengthen our core businesses and position us well for the future," said Thomas T. Stallkamp, lead director for Baxter's board of directors.

Baxter's board and management team will accelerate efforts to improve profitability and cash flow. In the process, the company expects that additional positions will be eliminated. The company is targeting additional cost reductions of $200 to $300 million on an annual basis when fully implemented. The company expects to take restructuring charges beginning in the second quarter of 2004.

"We believe that Baxter will emerge as a more profitable company for shareholders, while continuing to be a formidable competitor, a valued partner to customers and patients, and an exciting and rewarding employer for its team members," Stallkamp added.

For the first quarter 2004, the company expects its sales growth to be between 3 and 5 percent, excluding the impact of foreign currency, and to generate earnings per diluted share of $0.28 to $0.31.

For full-year 2004, Baxter expects sales growth to be between 3 and 5 percent, excluding the impact of foreign currency; earnings per diluted share of $1.75 to $1.85, excluding the impact of additional restructuring; and cash flow from continuing operations of approximately $1.5 billion.

"We are committed to taking the steps necessary to establish a strong foundation for improved profitability and consistency in our financial performance," said Brian P. Anderson, chief financial officer.

Greisch Appointed President of Baxter's BioScience Business

John J. Greisch, age 48, has been named corporate vice president of Baxter and president of the company's BioScience business. Previously, Greisch served as vice president of finance and strategy for the BioScience business. Greisch joined Baxter in 2002 as the vice president of finance for Baxter's Renal business. Previously he was president and CEO of FleetPride Corporation, a distribution company. Greisch replaces Thomas Glanzmann, who has announced that he will be leaving the company.

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 29, 2004. 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.

(Baxter is a registered trademark of Baxter International Inc. and its affiliates.)

This news release contains forward-looking statements that involve risks and uncertainties, including the company's ability to realize in a timely fashion the anticipated benefits of restructuring initiatives, the effect of economic conditions, the impact of the geographic mix of the company's sales, 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.