Company Plans to Record Fourth Quarter, Non-Cash Asset Impairment Charges For Influenza Vaccine Program and Other Assets
 
DEERFIELD, Ill., January 10, 2005 – Baxter International Inc. (NYSE:BAX) today confirmed earnings guidance for the fourth quarter 2004 of $0.54 to $0.58 per diluted share, excluding non-cash, asset impairment charges related to the company’s influenza vaccine program and other assets.   
 
The non-cash, after-tax charges are expected to total approximately $245 million (or $0.40 per diluted share).   Including the expected charges, earnings per diluted share for the fourth quarter are expected to be $0.14 to $0.18.  
 
Last month, the company announced that it had voluntarily suspended enrollment in the Phase II/III clinical study in Europe of its PreFluCel influenza vaccine, due to a higher than expected rate of mild fever and associated symptoms in the clinical trial participants.  Due to uncertainty regarding the ultimate successful commercialization of an influenza vaccine, and in accordance with generally accepted accounting principles (GAAP), the company expects to record a non-cash, after-tax impairment charge of approximately $170 million for the write-down of certain assets related to its influenza vaccine program.
 
In addition, the company expects to record a non-cash, after-tax impairment charge of approximately $45 million for the write-down of assets related to the development of an erythropoietin drug (EPOMAX) for the treatment of anemia, and an impairment charge of approximately $30 million for the write-down of excess recombinant manufacturing assets in Thousand Oaks, California.   The write-down of assets related to the EPOMAX program, which are primarily intangible assets acquired in 2001, is based upon the uncertainty of successful commercialization of the product given the delays in getting the product to market.  The write-down of assets in Thousand Oaks relates to “Suite D,” which had been under construction since 2001 and was substantially completed in 2004.  Based upon manufacturing process improvements at the company’s Neuchatel, Switzerland facility, and the existing manufacturing capacity available at Thousand Oaks, where Baxter’s RECOMBINATE Antihemophilic Factor is produced, the company now believes it has sufficient capacity for existing and anticipated demand of its recombinant Factor VIII products. 
 
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 27, 2005. 
 
Baxter International Inc., through its subsidiaries, assists health-care 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 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. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, changed assumptions or otherwise; and all forward-looking statements speak only as of the time when made.  Actual results or experience could differ materially from the forward-looking statements.