Baxter Reports Earnings Per Share of $0.51 and 8 Percent Increase in Sales in Second Quarter

DEERFIELD, Ill., July 21 /PRNewswire-FirstCall/ -- Baxter International Inc. today reported its results for the second quarter of 2005.

Earnings per diluted share from continuing operations were $0.51, compared to a loss of $0.28 reported last year. Baxter's income from continuing operations totaled $324 million for the quarter, compared to a loss of $169 million reported in the same period last year. The second quarter 2005 results include a $65 million (or $0.10 per diluted share) after-tax charge associated with the COLLEAGUE(R) Volumetric Infusion Pump remediation efforts announced today. If additional remediation efforts are necessary in the future, further charges may be required. The second quarter results also include an $80 million (or $0.12 per diluted share) after-tax benefit from adjustments to Baxter's restructuring charges, which were recorded originally in 2003 and 2004. On an adjusted basis, excluding the charge and restructuring benefit, earnings from continuing operations were $309 million in the second quarter, or $0.49 per diluted share. Contributing to the growth in earnings was strong operational performance, including improved sales, gross and operating margin, and lower taxes.

The second-quarter results include a $0.03 per diluted share benefit from a year-to-date tax adjustment, as the company adjusted its income tax rate to the anticipated 2005 full-year rate of 22 percent. This rate reflects savings related to a change in estimate of the company's tax rate due to ongoing improvements to the company's geographic product sourcing strategy.

Worldwide sales in the second quarter totaled $2.6 billion, an increase of 8 percent over the same period last year (including a 3 percentage point benefit from foreign exchange). Domestic sales increased 6 percent to $1.2 billion, while international sales grew 11 percent (including a 7 percentage point benefit from foreign exchange) to $1.4 billion. In addition to the positive impact of foreign exchange, strong performance from the company's recombinant and drug delivery businesses contributed to sales growth in the quarter. Sales of Baxter's recombinant products grew 24 percent to $397 million, including $148 million in sales of ADVATE(R), the company's Antihemophilic Factor (Recombinant), Plasma/Albumin Free Method (rAHF-PFM) product for the treatment of hemophilia A.

Cash flow from continuing operations totaled $508 million for the quarter, compared to $305 million in the same period last year. Free cash flow (cash flow from continuing operations, less capital expenditures of $98 million in 2005 and $139 million in 2004) was $410 million for the quarter, an improvement of $244 million from the second quarter last year.

"We are pleased with the improvement in our operational and financial performance. We've continued to meet our commitments with solid improvement in operating margin, earnings and cash flow," said Robert L. Parkinson, Jr., chairman and chief executive officer. "We are committed to improve our business processes and product quality, continue to execute upon our long-term business strategies, and leverage the value inherent within our business portfolio."

Six-Month Results

For the first six months of 2005, Baxter's worldwide sales grew 8 percent to $5.0 billion, up from $4.6 billion in the same period last year. Foreign exchange favorably impacted sales growth by 3 percentage points year-to-date. Domestic sales totaled $2.2 billion, an increase of 4 percent over the same period last year, while international sales increased 12 percent (including an 6 percentage point benefit from foreign exchange), to $2.8 billion.

Baxter's income from continuing operations totaled $548 million, or $0.88 per diluted share, in the first six months of the year, including the charge and restructuring benefit recorded in the second quarter. Excluding these items, the company reported year-to-date income from continuing operations of $533 million, and earnings per diluted share from continuing operations of $0.85.

Cash flow from continuing operations totaled $779 million for the first six months of the year, compared to $252 million in the same period in 2004. Free cash flow (cash flow from continuing operations, less capital expenditures of $163 million in 2005 and $229 million in 2004) was $616 million for the first half of 2005, an improvement of $593 million from the same period last year.

Third Quarter and Full-Year 2005 Outlook

For the third quarter of 2005, the company expects organic sales growth of 2 to 4 percent, and earnings per diluted share from continuing operations of $0.45 to $0.47.

For full-year 2005, Baxter expects organic sales growth of 2 to 4 percent and adjusted earnings per diluted share from continuing operations of $1.86 to $1.90. Baxter also expects cash flow from continuing operations to exceed $1.6 billion, and to generate free cash flow of at least $1.0 billion in 2005 (after approximately $550 million of anticipated capital expenditures).

The company's guidance above excludes the $0.02 per diluted share net benefit from the second-quarter charge and restructuring adjustment, future pre-tax charges expected to total $40 to $50 million related to the rationalization of its hemodialysis instrument manufacturing capacity, and the cost to repatriate foreign earnings under the American Jobs Creation Act of 2004. Including the $0.02 per diluted share net benefit of the second-quarter items, Baxter's full-year earnings guidance under Generally Accepted Accounting Principles (GAAP) is expected to be $1.88 to $1.92 per diluted share.

A webcast of Baxter's second 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 July 21, 2005. 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 for the third quarter and full year, as well as developments with respect to the COLLEAGUE infusion pump. 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 and distribution, including with respect to the COLLEAGUE infusion pump; product quality or patient safety concerns leading to product recalls, withdrawals, launch delays 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; regulatory, legal or other developments relating to the company's A, AF and AX series dialyzers; 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 Six Months Ended June 30, June 30, 2005 2004 Change 2005 2004 Change CONTINUING OPERATIONS: NET SALES $2,577 $2,379 8% $4,960 $4,588 8% GROSS PROFIT 1,113 939 19% 2,082 1,832 14% % to Sales 43.2% 39.5% 3.7 pts 42.0% 39.9% 2.1 pts MARKETING AND ADMINISTRATIVE EXPENSES 537 532 1% 1,020 998 2% % to Sales 20.8% 22.4% (1.6 pts) 20.6% 21.8% (1.2 pts) RESEARCH AND DEVELOPMENT EXPENSES 133 129 3% 266 265 -% SPECIAL CHARGES, NET (27) 543 NM (27) 543 NM OPERATING INCOME (LOSS) 470 (265) NM 823 26 NM % to Sales 18.2% (11.1%) NM 16.6% 0.6% 16.0 pts INTEREST, NET 33 25 32% 64 46 39% OTHER EXPENSE, NET 25 42 (40%) 49 63 (22%) INCOME (LOSS) BEFORE INCOME TAXES 412 (332) NM 710 (83) NM INCOME TAX EXPENSE (BENEFIT) 88 (163) NM 162 (101) NM INCOME (LOSS) FROM CONTINUING OPERATIONS $324 ($169) NM $548 $18 NM BASIC EPS FROM CONTINUING OPERATIONS $0.52 ($0.28) NM $0.88 $0.03 NM DILUTED EPS FROM CONTINUING OPERATIONS $0.51 ($0.28) NM $0.88 $0.03 NM WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 621 613 620 613 Diluted 626 613 624 617 RECONCILIATION TO NET INCOME Income (loss) from continuing operations $324 ($169) $548 $18 Discontinued operations (2) (1) - (12) Net income (loss) $322 ($170) $548 $6 NM - Not meaningful BAXTER INTERNATIONAL INC. Adjusted Consolidated Statements of Income (unaudited) (in millions, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 Change 2005 2004 Change CONTINUING OPERATIONS: NET SALES $2,577 $2,379 8% $4,960 $4,588 8% GROSS PROFIT 1,113 984 13% 2,082 1,877 11% % to Sales 43.2% 41.4% 1.8 pts 42.0% 40.9% 1.1 pts MARKETING AND ADMINISTRATIVE EXPENSES 537 477 13% 1,020 943 8% % to Sales 20.8% 20.1% 0.7 pts 20.6% 20.6% - pts RESEARCH AND DEVELOPMENT EXPENSES 133 129 3% 266 265 -% OPERATING INCOME 443 378 17% 796 669 19% % to Sales 17.2% 15.9% 1.3 pts 16.0% 14.6% 1.4 pts INTEREST, NET 33 25 32% 64 46 39% OTHER EXPENSE, NET 25 27 (7%) 49 48 2% INCOME BEFORE INCOME TAXES 385 326 18% 683 575 19% INCOME TAX EXPENSE 76 81 (6%) 150 143 5% INCOME FROM CONTINUING OPERATIONS $309 $245 26% $533 $432 23% BASIC EPS FROM CONTINUING OPERATIONS $0.50 $0.40 25% $0.86 $0.70 23% DILUTED EPS FROM CONTINUING OPERATIONS $0.49 $0.40 23% $0.85 $0.70 21% WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 621 613 620 613 Diluted 626 613 624 617 RECONCILIATION OF ADJUSTED AMOUNTS TO GAAP AMOUNTS Net Income Adjusted net income from continuing operations $309 $245 $533 $432 Special charges, net 15 (414) 15 (414) Discontinued operations (2) (1) - (12) GAAP net income (loss) $322 ($170) $548 $6 Diluted EPS Adjusted net income from continuing operations $0.49 $0.40 $0.85 $0.70 Special charges, net 0.02 (0.68) 0.03 (0.67) Discontinued operations - - - (0.02) GAAP net income (loss) $0.51 ($0.28) $0.88 $0.01 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 June 30, 2005 and 2004 (unaudited) (in millions, except per share data) Three Months Ended June 30, 2005 Special GAAP Items Adjusted CONTINUING OPERATIONS: NET SALES $2,577 $2,577 GROSS PROFIT 1,113 1,113 MARKETING AND ADMINISTRATIVE EXPENSES 537 537 RESEARCH AND DEVELOPMENT EXPENSES 133 133 SPECIAL CHARGES, NET (27) (27)(A) - OPERATING INCOME (LOSS) 470 (27) 443 INTEREST, NET 33 33 OTHER EXPENSE, NET 25 25 INCOME (LOSS) BEFORE INCOME TAXES 412 (27) 385 INCOME TAX EXPENSE (BENEFIT) 88 12 (B) 76 INCOME (LOSS) FROM CONTINUING OPERATIONS $324 ($15) $309 BASIC EPS FROM CONTINUING OPERATIONS $0.52 ($0.02) $0.50 DILUTED EPS FROM CONTINUING OPERATIONS $0.51 ($0.02) $0.49 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 621 621 Diluted 626 626 (A) Pump repairs and replacements $77 Restructuring reserve adjustments (104) Total ($27) (B) Tax expense on special charges, net $12 Three Months Ended June 30, 2004 Special GAAP Items Adjusted CONTINUING OPERATIONS: NET SALES $2,379 $2,379 GROSS PROFIT 939 $45 (C) 984 MARKETING AND ADMINISTRATIVE EXPENSES 532 55 (D) 477 RESEARCH AND DEVELOPMENT EXPENSES 129 129 SPECIAL CHARGES, NET 543 543 (E) - OPERATING INCOME (LOSS) (265) 643 378 INTEREST, NET 25 25 OTHER EXPENSE, NET 42 15 (F) 27 INCOME (LOSS) BEFORE INCOME TAXES (332) 658 326 INCOME TAX EXPENSE (BENEFIT) (163) (244)(G) 81 INCOME (LOSS) FROM CONTINUING OPERATIONS ($169) $414 $245 BASIC EPS FROM CONTINUING OPERATIONS ($0.28) $0.68 $0.40 DILUTED EPS FROM CONTINUING OPERATIONS ($0.28) $0.68 $0.40 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 613 613 Diluted 613 613 (C) Inventory reserves $28 Excess cash flow hedges 17 Total $45 (D) Loan and receivable reserves $55 (E) Restructuring and asset impairment charges $543 (F) Asset impairments $15 (G) Tax benefit of restructuring charge ($149) Reversal of tax reserves (55) Tax benefit of other charges (40) Total ($244) BAXTER INTERNATIONAL INC. Consolidated Statements of Income Reconciliation of GAAP to Adjusted Six Months Ended June 30, 2005 and 2004 (unaudited) (in millions, except per share data) Six Months Ended June 30, 2005 Special GAAP Items Adjusted CONTINUING OPERATIONS: NET SALES $4,960 $4,960 GROSS PROFIT 2,082 2,082 MARKETING AND ADMINISTRATIVE EXPENSES 1,020 1,020 RESEARCH AND DEVELOPMENT EXPENSES 266 266 SPECIAL CHARGES, NET (27) (27)(A) - OPERATING INCOME 823 (27) 796 INTEREST, NET 64 64 OTHER EXPENSE, NET 49 49 INCOME (LOSS) BEFORE INCOME TAXES 710 (27) 683 INCOME TAX EXPENSE (BENEFIT) 162 12 (B) 150 INCOME FROM CONTINUING OPERATIONS $548 ($15) $533 BASIC EPS FROM CONTINUING OPERATIONS $0.88 ($0.02) $0.86 DILUTED EPS FROM CONTINUING OPERATIONS $0.88 ($0.03) $0.85 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 620 620 Diluted 624 624 (A) Pump repairs and replacements $77 Restructuring reserve adjustments (104) Total ($27) (B) Tax expense on special charges, net $12 Six Months Ended June 30, 2004 Special GAAP Items Adjusted CONTINUING OPERATIONS: NET SALES $4,588 $4,588 GROSS PROFIT 1,832 $45 (C) 1,877 MARKETING AND ADMINISTRATIVE EXPENSES 998 55 (D) 943 RESEARCH AND DEVELOPMENT EXPENSES 265 265 SPECIAL CHARGES, NET 543 543 (E) - OPERATING INCOME 26 643 669 INTEREST, NET 46 46 OTHER EXPENSE, NET 63 15 (F) 48 INCOME (LOSS) BEFORE INCOME TAXES (83) 658 575 INCOME TAX EXPENSE (BENEFIT) (101) (244)(G) 143 INCOME FROM CONTINUING OPERATIONS $18 $414 $432 BASIC EPS FROM CONTINUING OPERATIONS $0.03 $0.67 $0.70 DILUTED EPS FROM CONTINUING OPERATIONS $0.03 $0.67 $0.70 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 613 613 Diluted 617 617 (C) Inventory reserves $28 Excess cash flow hedges 17 Total $45 (D) Loan and receivable reserves $55 (E) Restructuring and asset impairment charges $543 (F) Asset impairments $15 (G) Tax benefit of restructuring charge ($149) Reversal of tax reserves (55) Tax benefit of other charges (40) Total ($244) BAXTER INTERNATIONAL INC. Cash Flows from Continuing Operations and Changes in Net Debt (unaudited) ($ in millions) Cash Flows from Continuing Operations (Brackets denote cash outflows) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 Income (loss) from continuing operations $324 ($169) $548 $18 Adjustments Depreciation and amortization 145 146 292 295 Deferred income taxes 96 (213) 119 (203) Special charges, net (27) 543 (27) 543 Other 15 124 33 147 Changes in balance sheet items Accounts receivable (24) (66) 20 (162) Inventories 71 (9) 90 (75) Accounts payable and accrued liabilities (80) 23 (325) (229) Restructuring payments (30) (25) (73) (62) Other 18 (49) 102 (20) Cash flows from continuing operations $508 $305 $779 $252 Changes in Net Debt Increase (decrease) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 Net debt, beginning of period $3,493 $4,161 $3,185 $3,649 Cash flows from continuing operations (508) (305) (779) (252) Capital expenditures 98 139 163 229 Dividends - - 359 361 Acquisitions, net - 15 - 20 Purchases of treasury stock - 7 - 18 Other, including the effect of exchange rate changes (22) (143) 133 (151) Increase (decrease) in net debt (432) (287) (124) 225 Net debt, June 30 $3,061 $3,874 $3,061 $3,874 Key statistics, June 30: Days sales outstanding 58.4 60.5 58.4 60.5 Inventory turns 2.9 2.6 2.9 2.6 Net-debt-to-capital ratio (A) 30.1% 41.2% 30.1% 41.2% (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) June 30, December 31, 2005 2004 ASSETS Cash and equivalents $1,428 $1,109 Receivables 1,959 2,091 Inventories 1,944 2,135 Other current assets (1) 508 684 Total current assets 5,839 6,019 Property, plant and equipment, net 4,157 4,369 Other long-term assets (1) 3,630 3,759 Total assets $13,626 $14,147 LIABILITIES AND STOCKHOLDERS' EQUITY Short-term debt (2) $1,450 $361 Other current liabilities (1) 2,911 3,925 Long-term debt 3,039 3,933 Other long-term liabilities (1) 2,016 2,223 Stockholders' equity 4,210 3,705 Total liabilities and stockholders' equity $13,626 $14,147 (1) The following is a summary of the company's cross-currency swap assets (liabilities). June 30, December 31, 2005 2004 Original swaps Other current liabilities ($67) ($465) Other long-term liabilities (577) (831) Total (644) (1,296) Mirror swaps Other current assets - 109 Other long-term assets - 20 Other current liabilities (4) - Other long-term liabilities (85) (5) Total (89) 124 Net total of all cross-currency swaps ($733) ($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 June 30, 2005, approximately 55% of the net swaps liability has been fixed by the mirror swaps. During the first half of 2005, the company settled certain swap agreements (and related mirror swaps, as applicable), and made net payments totaling $308 million. In accordance with GAAP, $363 million of outflows were classified in the financing section of the statement of cash flows, and $55 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 June 30, 2005 principally related to the reclassification of approximately $800 million of notes due in 2006 from long-term to short-term. Baxter International Inc. Net Sales from Continuing Operations Period Ending June 30, 2005 (unaudited) Q2 Q2 % Growth @ % Growth @ ($ in millions) 2005 2004 Actual Rates Constant Rates BioScience United States $438 $403 9% 9% International 552 490 13% 6% Total $990 $893 11% 7% Medication Delivery United States $619 $589 5% 5% International 464 417 11% 5% Total $1,083 $1,006 8% 5% Renal United States $99 $102 (3%) (3%) International 405 378 7% 1% Total $504 $480 5% -% Baxter International Inc. United States $1,156 $1,094 6% 6% International 1,421 1,285 11% 4% Total $2,577 $2,379 8% 5% YTD YTD % Growth @ % Growth @ ($ in millions) 2005 2004 Actual Rates Constant Rates BioScience United States $836 $788 6% 6% International 1,056 915 15% 9% Total $1,892 $1,703 11% 8% Medication Delivery United States $1,171 $1,123 4% 4% International 890 809 10% 4% Total $2,061 $1,932 7% 4% Renal United States $193 $202 (4%) (4%) International 814 751 8% 3% Total $1,007 $953 6% 1% Baxter International Inc. United States $2,200 $2,113 4% 4% International 2,760 2,475 12% 6% Total $4,960 $4,588 8% 5% Baxter International Inc. Key Product Line Sales Period Ending June 30, 2005 (unaudited) Q2 Q2 % Growth @ % Growth @ ($ in millions) 2005 2004 Actual Rates Constant Rates BioScience Recombinants $397 $320 24% 20% Plasma Proteins(1) 266 267 -% (3%) Antibody Therapy 93 90 3% 1% Transfusion Therapies 140 136 3% 1% Other(2) 94 80 18% 10% Total BioScience $990 $893 11% 7% Medication Delivery IV Therapies(3) $312 $288 8% 4% Drug Delivery 226 202 12% 11% Infusion Systems 245 233 5% 3% Anesthesia 282 259 9% 7% Other(4) 18 24 (25%) (33%) Total Medication Delivery(5) $1,083 $1,006 8% 5% Renal PD Therapy $385 $357 8% 3% HD Therapy 114 118 (3%) (8%) Other 5 5 -% -% Total Renal $504 $480 5% -% TOTAL BAXTER $2,577 $2,379 8% 5% YTD YTD % Growth @ % Growth @ ($ in millions) 2005 2004 Actual Rates Constant Rates BioScience Recombinants $741 $612 21% 17% Plasma Proteins(1) 525 505 4% 1% Antibody Therapy 182 170 7% 4% Transfusion Therapies 273 276 (1%) (4%) Other(2) 171 140 22% 17% Total BioScience $1,892 $1,703 11% 8% Medication Delivery IV Therapies(3) $608 $570 7% 3% Drug Delivery 430 390 10% 9% Infusion Systems 475 421 13% 11% Anesthesia 513 501 2% 1% Other(4) 35 50 (30%) (32%) Total Medication Delivery(5) $2,061 $1,932 7% 4% Renal PD Therapy $759 $702 8% 4% HD Therapy 240 242 (1%) (6%) Other 8 9 (11%) (11%) Total Renal $1,007 $953 6% 1% TOTAL BAXTER $4,960 $4,588 8% 5% (1) Includes plasma-derived hemophilia (FVII, FVIII, FIX and FEIBA), albumin, biosurgery (Tisseel) and other plasma-based products. (2) Principally includes vaccines and non-plasma-based biosurgery products (FloSeal & CoSeal). (3) Principally includes intravenous solutions and nutritional products. (4) Principally includes other hospital-distributed products. (5) Sales of oncology products, which were previously included in Other, are now reported in Drug Delivery, Infusion Systems or Anesthesia, depending on the product. All prior year sales data has been reclassified to reflect this change. Baxter International Inc. Key Product Line Sales -- US/International Period Ending June 30, 2005 (unaudited) Q2 2005 ($ in millions) US International Total BioScience Recombinants $170 $227 $397 Plasma Proteins(1) 125 141 266 Antibody Therapy 50 43 93 Transfusion Therapies 68 72 140 Other(2) 25 69 94 Total BioScience $438 $552 $990 Medication Delivery IV Therapies(3) $98 $214 $312 Drug Delivery 148 78 226 Infusion Systems 163 82 245 Anesthesia 204 78 282 Other(4) 6 12 18 Total Medication Delivery(5) $619 $464 $1,083 Renal PD Therapy $63 $322 $385 HD Therapy 34 80 114 Other 2 3 5 Total Renal $99 $405 $504 TOTAL BAXTER $1,156 $1,421 $2,577 Q2 2004 ($ in millions) US International Total BioScience Recombinants $146 $174 $320 Plasma Proteins(1) 121 146 267 Antibody Therapy 53 37 90 Transfusion Therapies 65 71 136 Other(2) 18 62 80 Total BioScience $403 $490 $893 Medication Delivery IV Therapies(3) $99 $189 $288 Drug Delivery 140 62 202 Infusion Systems 159 74 233 Anesthesia 187 72 259 Other(4) 4 20 24 Total Medication Delivery(5) $589 $417 $1,006 Renal PD Therapy $65 $292 $357 HD Therapy 32 86 118 Other 5 - 5 Total Renal $102 $378 $480 TOTAL BAXTER $1,094 $1,285 $2,379 % Growth ($ in millions) US International Total BioScience Recombinants 16% 30% 24% Plasma Proteins(1) 3% (3%) -% Antibody Therapy (6%) 16% 3% Transfusion Therapies 5% 1% 3% Other(2) 39% 11% 18% Total BioScience 9% 13% 11% Medication Delivery IV Therapies(3) (1%) 13% 8% Drug Delivery 6% 26% 12% Infusion Systems 3% 11% 5% Anesthesia 9% 8% 9% Other(4) 50% (40%) (25%) Total Medication Delivery(5) 5% 11% 8% Renal PD Therapy (3%) 10% 8% HD Therapy 6% (7%) (3%) Other (60%) NM -% Total Renal (3%) 7% 5% TOTAL BAXTER 6% 11% 8% (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.