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Baxter Reports Record Sales, Earnings and Cash Flow for Full-Year 2012

  Baxter Reports Record Sales, Earnings and Cash Flow for Full-Year 2012

 Increased Investments in R&D and Business Development Set Strong Foundation
                             for 2013 and Beyond

                  Baxter Provides Financial Outlook For 2013

Business Wire

DEERFIELD, Ill. -- January 24, 2013

Baxter International Inc. (NYSE:BAX) today announced financial results for the
fourth quarter of 2012, and provided its financial outlook for the first
quarter and full-year 2013.

Baxter reported net income in the fourth quarter of $494 million, which
compares to $463 million reported in the prior-year period. Earnings per
diluted share of $0.89 compares to $0.82 per diluted share reported in the
fourth quarter of 2011, reflecting an increase of 9 percent. The fourth
quarter 2012 results included special after-tax items of $206 million (or
$0.37 per diluted share) primarily related to costs associated with settlement
of certain U.S. pension obligations and business optimization initiatives.
After-tax special items in the fourth quarter of 2011 totaled approximately
$200 million (or $0.35 per diluted share).

On an adjusted basis, excluding special items in both periods, Baxter’s net
income of $700 million increased 6 percent in the fourth quarter from $662
million in the prior-year period. Adjusted earnings per diluted share of $1.26
advanced 8 percent from $1.17 per diluted share reported in the fourth quarter
of 2011. These results were in line with the company’s previously issued
earnings guidance of $1.24 to $1.27 per diluted share.

Worldwide revenues grew 4 percent in the fourth quarter to $3.8 billion
compared to $3.6 billion in the fourth quarter of 2011. Excluding the impact
of foreign currency, sales increased 5 percent. Sales within the United States
of $1.6 billion advanced 7 percent, and international sales increased 2
percent to $2.2 billion (or 4 percent excluding the impact of foreign
currency).

BioScience revenues totaled $1.7 billion and rose 7 percent (or 9 percent
excluding the impact of foreign currency) from the same period last year.
Driving this performance was robust growth in demand, particularly in the
United States, for ADVATE [Antihemophilic Factor (Recombinant),
Plasma/Albumin-Free Method], and GAMMAGARD LIQUID [Immune Globulin Intravenous
(Human)], as well as other plasma-based therapeutics including FEIBA, an
inhibitor bypass therapy, and albumin. In addition, the company benefited from
milestone payments related to the company’s ongoing collaborations with
governments on the development of influenza vaccines, and the acquisition of
Synovis Life Technologies.

Medical Products sales totaled $2.1 billion and increased 2 percent over the
prior-year period (or 3 percent excluding the impact of foreign currency),
driven primarily by gains in peritoneal dialysis patients in the U.S., as well
as growth in intravenous therapies (including the company’s parenteral
nutrition products), certain injectable drugs including oncolytics and
critical care products, and a benefit from the company’s acquisition of Baxa
Corporation.

Full-Year 2012 Results

For the full year 2012, Baxter reported net income of $2.3 billion or $4.18
per diluted share, compared to net income of $2.2 billion or $3.88 per diluted
share in 2011. On an adjusted basis, excluding special items in both years,
Baxter’s net income was $2.5 billion in 2012, which represents an increase of
2 percent over the prior year, and earnings per diluted share of $4.53 rose 5
percent from earnings per diluted share of $4.31 reported in 2011.

Baxter’s worldwide sales totaled $14.2 billion for full-year 2012 and
increased 2 percent versus the prior-year period (or 5 percent excluding the
impact of foreign currency). Sales within the United States of $6.1 billion
advanced 6 percent in 2012, and international sales declined 1 percent to $8.1
billion (but increased 4 percent excluding the impact of foreign currency).
BioScience sales improved 3 percent (or 6 percent excluding the impact of
foreign currency) to $6.2 billion, while Medical Products sales increased 1
percent to $8.0 billion (or 4 percent excluding the impact of foreign
currency).

Baxter generated strong cash flows from operations in 2012 and returned
significant value to shareholders in the form of dividends and share
repurchases. Cash flows from operations rose 10 percent and totaled more than
$3.1 billion in 2012, a record level. Baxter returned approximately $2.3
billion to shareholders during the year, through dividends totaling $800
million and share repurchases of approximately $1.5 billion (or approximately
25 million shares).

At the same time, Baxter increased its investments in research and development
to $1.2 billion, reflecting an increase of 22 percent, as the company advanced
a number of clinical programs in its pipeline, expanded its portfolio with
several product launches and line extensions, and initiated several new
programs and collaborations. In addition, Baxter announced investments to
enhance future plasma production capacity with a new state-of-the-art
manufacturing facility in Georgia and a collaboration with Stichting Sanquin
Bloedvoorziening (Sanquin Blood Supply Foundation) in the Netherlands to
support growth of its plasma-based treatments. The company also entered into a
number of partnerships, such as a novel public-private partnership in Brazil
to expand patient access to vital hemophilia therapies, and executed several
business development initiatives to enhance future growth, including the
proposed acquisition of Gambro AB, a global medical technology company focused
on developing, manufacturing and supplying dialysis products and therapies for
patients with acute or chronic kidney disease.

''The progress we have made during 2012, together with our solid financial
performance, sets a very strong foundation for 2013 and beyond. We remain very
confident in the long-term growth prospects for our company,'' said Robert L.
Parkinson, Jr., chairman and chief executive officer. ''Baxter’s core
portfolio continues to benefit from our focus on life-saving therapies, and
the increased level of R&D investment has transformed our new product pipeline
into a robust portfolio of products and therapies directed at improving the
quality of care while addressing key, high-potential areas of unmet medical
need. We’ve also entered into a number of partnerships and executed business
development initiatives that align with our core strengths, position Baxter
for future success, and enhance shareholder value.''

Recent achievements reflecting these priorities include the following:

  *Announcement of pivotal Phase III study results evaluating the efficacy
    and safety of routine prophylaxis compared to on-demand treatment of FEIBA
    NF [Anti-Inhibitor Coagulant Complex], Nanofiltered and Vapor Heated, in
    patients with hemophilia A or B that develop inhibitors. Top-line results
    from the study showed a reduced median annual bleed rate from 28.7 during
    FEIBA NF on-demand treatment to 7.9 during FEIBA NF prophylactic treatment
    (a 72.5 percent reduction). The Phase III study will form the basis of a
    biologics license application to be filed with the U.S. Food and Drug
    Administration (FDA) in the first quarter of 2013.
  *Submission of an Investigational New Drug application for hemophilia A
    treatment BAX 855 with the FDA, following positive results from a Phase I
    trial. BAX 855 is a full-length longer-acting recombinant factor VIII
    (rFVIII) that was developed to increase the half-life of ADVATE
    [Antihemophilic Factor (Recombinant) Plasma/Albumin-Free Method] – the
    most widely chosen rFVIII in the world. Baxter expects to start enrollment
    of adult patients in its Phase II/III study in the first quarter of 2013.
  *Execution of an exclusive 20-year partnership with Hemobrás (Empresa
    Brasileira de Hemoderivados e Biotechnologia) to provide hemophilia
    patients in Brazil greater access to recombinant factor VIII (rFVIII)
    therapy for the treatment of hemophilia A.Hemophilia A is a genetic
    condition in which the body does not produce enough clotting protein
    factor VIII. It is estimated that more than 10,000 people in Brazil are
    living with hemophilia A, and today the vast majority are treated with
    plasma-derived FVIII therapy. Through this innovative partnership, Baxter
    will be the exclusive provider of Brazil's recombinant FVIII treatment
    over the next 10 years while the companies work together on a technology
    transfer to support development of local manufacturing capacity by
    Hemobrás.
  *Completion of the first U.S. study of the company’s home hemodialysis
    system and initiation of a nocturnal in-center trial in Canada. Data from
    both trials will support the company’s submission for CE Mark in Europe in
    2013.
  *Conclusion of Baxter's first Phase III trial evaluating IG therapy in mild
    to moderate Alzheimer's disease patients. Initial data from the trial are
    expected to bereleased in the second quarter of 2013, and the company
    continues enrollment in a second, confirmatory Phase III trial.

Outlook for First Quarter, Full-Year 2013

Baxter also announced today its outlook for the first quarter and full-year
2013. The company’s full-year guidance includes the impact of the Gambro AB
acquisition, which is projected to close at the end of the second quarter and
dilute full-year 2013 earnings by $0.10 to $0.15 per diluted share. Including
Gambro, Baxter’s guidance reflects sales growth for the full-year 2013 of
approximately 10 percent, before the impact of foreign exchange. Also, for the
full year, Baxter expects earnings of $4.60 to $4.70 per diluted share, before
any special items, and cash flows from operations of approximately $3.3
billion.

For the first quarter of 2013, the company expects sales growth of
approximately 2 to 3 percent, excluding the impact of foreign currency. Baxter
expects earnings of $1.03 to $1.05 per diluted share in the first quarter,
before any special items.

A webcast of Baxter’s fourth quarter conference call for investors can be
accessed live from a link on the company's website at www.baxter.com beginning
at 7:30 a.m. CST on January 24, 2013. Please visit www.baxter.com for more
information regarding this and future investor events and webcasts.

Baxter International Inc., through its subsidiaries, develops, manufactures
and markets products that save and sustain the lives of people with
hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and
other chronic and acute medical conditions. As a global, diversified
healthcare company, Baxter applies a unique combination of expertise in
medical devices, pharmaceuticals and biotechnology to create products that
advance patient care worldwide.

This release includes forward-looking statements concerning the company’s
financial results, business development activities, R&D pipeline and outlook
for 2013. 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: demand for and market
acceptance risks for new and existing products, such as ADVATE, and other
technologies; future actions of regulatory bodies and other governmental
authorities that could delay, limit or suspend product development,
manufacturing or sales or result in sanctions; product quality or patient
safety concerns leading to product recalls, withdrawals, launch delays,
litigation, or declining sales; the ability of the company to obtain required
regulatory approvals, satisfy closing conditions and close the Gambro AB
transaction in a timely manner; future actions of governmental authorities and
other third parties as U.S. healthcare reform legislation and other austerity
measures are implemented globally; additional legislation, regulation and
other governmental pressures, which may affect pricing, taxation,
reimbursement and rebate policies of government agencies and private payers or
other elements of the company’s business; product development risks, including
satisfactory clinical performance; the company's ability to realize the
anticipated benefits from its business development and R&D activities;
inventory reductions or fluctuations in buying patterns by wholesalers or
distributors; the impact of geographic and product mix on the company's sales;
the impact of competitive products and pricing, including generic competition,
drug reimportation and disruptive technologies; the availability of acceptable
raw materials and component supply; fluctuations in supply and demand and the
pricing of plasma-based therapies; the ability to enforce company patents;
patents of third parties preventing or restricting the company’s manufacture,
sale or use of affected products or technology; the impact of global economic
conditions on Baxter and its customers, including foreign governments in
certain countries in which the company operates; foreign currency fluctuations
and other risks identified in the company’s most recent filing on Form 10-K
and other Securities and Exchange Commission filings, all of which are
available on the company's website. The company does not undertake to update
its forward-looking statements. Financial schedules are attached to this
release and available on the company’s website.

                                             
BAXTER INTERNATIONAL INC.
Consolidated Statements of Income
Three Months Ended December 31, 2012 and 2011
(unaudited)
(in millions, except per share and percentage data)

                                               Three Months Ended
                                               December 31,
                                               2012        2011      Change
                                                                     
NET SALES                                      $3,753      $3,594    4%
                                                                     
COST OF SALES                                  1,848       1,829     1%
                                                              
GROSS MARGIN                                  1,905      1,765    8%
% of Net Sales                                 50.8%       49.1%     1.7 pts
                                                                     
MARKETING AND ADMINISTRATIVE EXPENSES          1,040       886       17%
% of Net Sales                                 27.7%       24.7%     3.0 pts
                                                                     
RESEARCH AND DEVELOPMENT EXPENSES              291         254       15%
% of Net Sales                                 7.8%        7.1%      0.7 pts
                                                                     
NET INTEREST EXPENSE                           22          15        47%
                                                                     
OTHER (INCOME) EXPENSE, NET                    (22)    ^A  71     ^A N/M
                                                              
PRE-TAX INCOME                                574        539      6%
                                                                     
INCOME TAX EXPENSE                            80         76       5%
% of Pre-Tax Income                            13.9%       14.1%     (0.2 pts)
                                                                     
NET INCOME                                    $494       $463     7%
                                                                     
BASIC EPS                                     $0.90      $0.82    10%
DILUTED EPS                                   $0.89      $0.82    9%
                                                                     
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
Basic                                          548         562
Diluted                                       555        566      
                                                                     
ADJUSTED PRE-TAX INCOME (excluding special     $894    ^B  $834   ^B 7%
items)
ADJUSTED NET INCOME (excluding special         $700    ^B  $662   ^B 6%
items)
ADJUSTED DILUTED EPS (excluding special        $1.26   ^B  $1.17  ^B 8%
items)

   
     Other (income) expense, net includes the net results attributable to
     noncontrolling interests, which had been reported separately in the prior
     year. The prior period consolidated statement of income presented above,
^A   the reconciliation of GAAP (generally accepted accounting principles) to
     non-GAAP measures presented on page 9, and the cash flows from operations
     schedule presented on page 12 have been conformed to the current period
     presentation.
     
^B   Refer to page 9 for a description of the adjustments and a reconciliation
     to GAAP measures.

                                                             
BAXTER INTERNATIONAL INC.
Note to Consolidated Statements of Income
Three Months Ended December 31, 2012 and 2011
Description of Adjustments and Reconciliation of GAAP to Non-GAAP Measures
(unaudited)
(in millions, except per share and percentage data)

The company's GAAP results for the three months ended December 31, 2012 and
2011 included special items which impacted the GAAP measures as follows:
                                                                   
                                        Three Months Ended
                                        December 31,
                                        2012          2011         Change
Gross Margin                            $1,905        $1,765       8%
Business optimization items ^ 1         62           95          
Adjusted Gross Margin                   $1,967       $1,860      6%
% of Net Sales                          52.4%         51.8%        0.6 pts
                                                                   
Marketing and Administrative            $1,040        $886         17%
Expenses
Business optimization items ^1          (60)          (97)
Pension settlement items ^ 2            (170)         -
Asset impairment and other items ^      -            (41)        
3
Adjusted Marketing and                  $810         $748        8%
Administrative Expenses
% of Net Sales                          21.6%         20.8%        0.8 pts
                                                                   
Research and Development Expenses       $291          $254         15%
Business optimization items ^ 1         (28)         -           
Adjusted Research and Development       $263         $254        4%
Expenses
% of Net Sales                          7.0%          7.1%         (0.1 pts)
                                                                   
Other (Income) Expense, Net             $(22)         $71          N/M
Asset impairment and other items ^      -            (62)        
3
Adjusted Other (Income) Expense,        $(22)        $9          N/M
Net
                                                                   
Pre-Tax Income                          $574          $539         6%
Impact of special items                 320          295         
Adjusted Pre-Tax Income                 $894         $834        7%
                                                                   
Income Tax Expense                      $80           $76          5%
Impact of special items                 114          96          
Adjusted Income Tax Expense             $194         $172        13%
% of Adjusted Pre-Tax Income            21.7%         20.6%        1.1 pts
                                                                   
Net Income                              $494          $463         7%
Impact of special items                 206          199         
Adjusted Net Income                     $700         $662        6%
                                                                   
Diluted EPS                             $0.89         $0.82        9%
Impact of special items                 0.37         0.35        
Adjusted Diluted EPS                    $1.26        $1.17       8%
                                                                   
WEIGHTED-AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Diluted                                555          566         

   
     The company undertook business optimization initiatives resulting in
^1   charges totaling $150 million ($101 million, or $0.18 per diluted share,
     on an after-tax basis) and $192 million ($128 million, or $0.22 per
     diluted share, on an after-tax basis) in 2012 and 2011, respectively.
     
     Marketing and administrative expenses in 2012 included a charge totaling
^2   $170 million ($105 million, or $0.19 per diluted share, on an after-tax
     basis) primarily related to the settlement of certain pension obligations
     in the United States.
     
     Marketing and administrative expenses and other (income) expense, net in
     2011 included charges totaling $103 million ($71 million, or $0.13 per
^3   diluted share, on an after-tax basis) primarily related to a contribution
     to the Baxter International Foundation and the write-down of Greek
     government bonds.
     
For more information on the company's use of non-GAAP financial measures in
this press release, please see the company's Current Report on Form 8-K filed
with the Securities and Exchange Commission on the date of this press release.

                                            
BAXTER INTERNATIONAL INC.
Consolidated Statements of Income
Twelve Months Ended December 31, 2012 and 2011
(unaudited)
(in millions, except per share and percentage data)

                                                                     
                                              Twelve Months Ended
                                              December 31,
                                              2012        2011       Change
                                                                     
NET SALES                                     $14,190     $13,893    2%
                                                                     
COST OF SALES                                 6,889       6,847      1%
                                                              
GROSS MARGIN                                 7,301      7,046     4%
% of Net Sales                                51.5%       50.7%      0.8 pts
                                                                     
MARKETING AND ADMINISTRATIVE EXPENSES         3,324       3,154      5%
% of Net Sales                                23.4%       22.7%      0.7 pts
                                                                     
RESEARCH AND DEVELOPMENT EXPENSES             1,156       946        22%
% of Net Sales                                8.1%        6.8%       1.3 pts
                                                                     
NET INTEREST EXPENSE                          87          54         61%
                                                                     
OTHER (INCOME) EXPENSE, NET                   (155)    ^A 115     ^A N/M
                                                              
PRE-TAX INCOME                               2,889      2,777     4%
                                                                     
INCOME TAX EXPENSE                           563        553       2%
% of Pre-Tax Income                           19.5%       19.9%      (0.4 pts)
                                                                     
NET INCOME                                   $2,326     $2,224    5%
                                                                     
BASIC EPS                                    $4.22      $3.91     8%
DILUTED EPS                                  $4.18      $3.88     8%
                                                                     
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
Basic                                         551         569
Diluted                                      556        573       
                                                                     
ADJUSTED PRE-TAX INCOME (excluding special    $3,223   ^B $3,151  ^B 2%
items)
ADJUSTED NET INCOME (excluding special        $2,516   ^B $2,471  ^B 2%
items)
ADJUSTED DILUTED EPS (excluding special       $4.53    ^B $4.31   ^B 5%
items)

   
     Other (income) expense, net includes the net results attributable to
     noncontrolling interests, which had been reported separately in the prior
^A   year. The prior period consolidated statement of income presented above,
     the reconciliation of GAAP to non-GAAP measures presented on page 11, and
     the cash flows from operations schedule presented on page 12 have been
     conformed to the current period presentation.
     
^B   Refer to page 11 for a description of the adjustments and a
     reconciliation to GAAP measures.

                                                               
BAXTER INTERNATIONAL INC.
Note to Consolidated Statements of Income
Twelve Months Ended December 31, 2012 and 2011
Description of Adjustments and Reconciliation of GAAP to Non-GAAP Measures
(unaudited)
(in millions, except per share and percentage data)

The company's GAAP results for the twelve months ended December 31, 2012 and
2011 included special items which impacted the GAAP measures as follows:
                                                                 
                                         Twelve Months Ended
                                         December 31,
                                         2012           2011         Change
Gross Margin                             $7,301         $7,046       4%
Business optimization items ^ 1          62             95
Reserve adjustments ^2                   (23)           -
Business development items ^ 3           6             -           
Adjusted Gross Margin                    $7,346        $7,141      3%
% of Net Sales                           51.8%          51.4%        0.4 pts
                                                                     
Marketing and Administrative             $3,324         $3,154       5%
Expenses
Business optimization items ^ 1          (60)           (97)
Business development items ^ 3           (9)            -
Pension settlement items ^ 4             (170)          -
AWP litigation and historical rebate     -              (79)
and discount items  ^5
Asset impairment and other items ^ 6     -             (41)        
Adjusted Marketing and                   $3,085        $2,937      5%
Administrative Expenses
% of Net Sales                           21.7%          21.1%        0.6 pts
                                                                     
Research and Development Expenses        $1,156         $946         22%
Business optimization items ^ 1          (28)           -
Business development items ^ 3           (113)         -           
Adjusted Research and Development        $1,015        $946        7%
Expenses
% of Net Sales                           7.2%           6.8%         0.4 pts
                                                                     
Other (Income) Expense, Net              $(155)         $115         N/M
Reserve adjustments ^2                   91             -
Asset impairment and other items ^ 6     -             (62)        
Adjusted Other (Income) Expense, Net     $(64)         $53         N/M
                                                                     
Pre-Tax Income                           $2,889         $2,777       4%
Impact of special items                  334           374         
Adjusted Pre-Tax Income                  $3,223        $3,151      2%
                                                                     
Income Tax Expense                       $563           $553         2%
Impact of special items                  144           127         
Adjusted Income Tax Expense              $707          $680        4%
% of Adjusted Pre-Tax Income             21.9%          21.6%        0.3 pts
                                                                     
Net Income                               $2,326         $2,224       5%
Impact of special items                  190           247         
Adjusted Net Income                      $2,516        $2,471      2%
                                                                     
Diluted EPS                              $4.18          $3.88        8%
Impact of special items                  0.35          0.43        
Adjusted Diluted EPS                     $4.53         $4.31       5%
                                                                     
WEIGHTED-AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Diluted                                 556           573         

   
     The company undertook business optimization initiatives resulting in
^1   charges totaling $150 million ($101 million, or $0.18 per diluted share,
     on an after-tax basis) and $192 million ($128 million, or $0.22 per
     diluted share, on an after-tax basis) in 2012 and 2011, respectively.
     
     Cost of sales included a net benefit of $23 million ($27 million, or
     $0.05 per diluted share, on an after-tax basis) primarily related to an
     adjustment to the COLLEAGUE infusion pump reserves when the company
     substantially completed its recall activities in the United States in
^2   2012. Other (income) expense, net in 2012 included a benefit of $91
     million, or $0.16 per diluted share, consisting of gains of $53 million
     and $38 million for the reduction of certain contingent payment
     liabilities related to the prior acquisitions of Prism Pharmaceuticals,
     Inc. (Prism) and ApaTech Limited, respectively, for which there was no
     tax expense recognized.
     
     The company incurred business development charges in 2012 totaling $128
     million ($102 million, or $0.19 per diluted share, on an after-tax basis)
     which principally related to R&D charges of $33 million associated with
^3   the company’s global collaboration with Momenta Pharmaceuticals, Inc.
     (Momenta), $30 million associated with the company's global collaboration
     with Chatham Therapeutics, LLC (Chatham), and $50 million associated with
     the company's licensing agreement with Onconova Therapeutics, Inc.
     (Onconova).
     
     Marketing and administrative expenses in 2012 included a charge totaling
^4   $170 million ($105 million, or $0.19 per diluted share, on an after-tax
     basis) primarily related to the settlement of certain pension obligations
     in the United States.
     
     Marketing and administrative expenses in 2011 included a charge totaling
     $79 million ($48 million, or $0.09 per diluted share, on an after-tax
^5   basis) related to the resolution of litigation pertaining to average
     wholesale prices (AWP) and certain historical rebate and discount
     adjustments.
     
     Marketing and administrative expenses and other (income) expense, net in
     2011 included charges totaling $103 million ($71 million, or $0.12 per
^6   diluted share, on an after-tax basis) primarily related to a contribution
     to the Baxter International Foundation and the write-down of Greek
     government bonds.
     
For more information on the company's use of non-GAAP financial measures in
this press release, please see the company's Current Report on Form 8-K filed
with the Securities and Exchange Commission on the date of this press release.

                                
BAXTER INTERNATIONAL INC.
Cash Flows from Operations and Changes in Net Debt
(unaudited)
($ in millions)
                                                                  
Cash Flows from Operations                                          
(Brackets denote cash outflows)   Three Months Ended    Twelve Months Ended
                                 December 31,          December 31,
                                  2012        2011      2012        2011
                                                                            
Net income                        $494        $463      $2,326      $2,224
Adjustments
    Depreciation and              178         167       712         670
    amortization
    Deferred income taxes         (214)       (46)      (17)        172
    Stock compensation            33          25        130         119
    Realized excess tax
    benefits from stock issued
    under employee benefit        (10)        (4)       (24)        (21)
    plans
    Business optimization items   150         192       150         192
    Asset impairment and other    -           103       -           182
    items
    Other                         5           17        (42)        64
Changes in balance sheet items
    Accounts and other current    (113)       (127)     (41)        (229)
    receivables, net
    Inventories                   7           (43)      (129)       (315)
    Accounts payable and          300         188       18          98
    accrued liabilities
    Infusion pump and business    (57)        (89)      (283)       (347)
    optimization payments
   Other                        172     ^A  46       306      ^A 8       ^A
Cash flows from operations       $945       $892     $3,106     $2,817  
                                                                  
Changes in Net Debt                                                 
Increase (decrease)               Three Months Ended    Twelve Months Ended
                                  December 31,          December 31,
                                  2012        2011      2012        2011
                                                                            
Net debt, beginning of period     $2,756      $2,204    $2,290      $1,702
                                                                            
Cash flows from operations        (945)       (892)     (3,106)     (2,817)
Capital expenditures              399         317       1,161       960
Dividends                         246         175       804         709
Proceeds from stock issued        (195)       (39)      (488)       (427)
under employee benefit plans
Purchases of treasury stock       415         170       1,480       1,583
Acquisitions and investments      20          361    ^B 605      ^B 590     ^B
Divestiture and other investing   (21)        (17)      (107)       (123)
activities
Other, including the effect of   (15)       11       21         113     
exchange rate changes
(Decrease) increase in net debt  (96)       86       370        588     
                                                                            
Net debt, December 31            $2,660     $2,290   $2,660     $2,290  
                                                                  
Key statistics, December 31:
Days sales outstanding            53.3        53.5      53.3        53.5
Inventory turns                  2.5        2.7      2.5        2.7     

   
     Other changes in balance sheet items included the pension settlement
     charge of $170 million primarily related to the settlement of certain
^A   pension obligations in the United States in 2012 and the discretionary
     contribution of $150 million to the company's pension plan in the United
     States in 2011.
     
     Acquisitions and investments in 2012 and 2011 included $100 million for
     the third quarter 2012 investment in Onconova preferred stock and
     execution of a licensing agreement, $90 million for the second quarter
     2012 exercise of the company's option to acquire the remaining equity
     interest in Sigma International General Medical Apparatus, LLC, $30
^B   million related to the second quarter 2012 collaboration with Chatham,
     $304 million for the first quarter 2012 acquisition of Synovis Life
     Technologies, Inc., $33 million for the first quarter 2012 payment to
     execute the Momenta collaboration, $360 million for the fourth quarter
     2011 acquisition of Baxa Corporation, and $170 million for the second
     quarter 2011 acquisition of Prism.

                                                                                
BAXTER INTERNATIONAL INC.
Net Sales
Periods Ending December 31, 2012 and 2011
(unaudited)
($ in millions)
                                                                        
                                      %        % Growth                               %        % Growth
                   Q4       Q4       Growth   @                  YTD       YTD       Growth   @
                                      @                                               @
               2012    2011    Actual  Constant      2012     2011     Actual  Constant
                                      Rates    Rates                                  Rates    Rates
                                                                        
BioScience
United States       $825     $735     12%      12%                $3,087    $2,805    10%      10%
International    862     840     3%      6%            3,150    3,248    (3%)    2%
Total            $1,687  $1,575  7%      9%            $6,237   $6,053   3%      6%
BioScience
                                                                        
Medical
Products
United States       $747     $731     2%       2%                 $2,969    $2,904    2%       2%
^1
International    1,319   1,288   2%      3%            4,984    4,936    1%      4%
^1
Total Medical    $2,066  $2,019  2%      3%            $7,953   $7,840   1%      4%
Products ^1
                                                                        
Baxter
International
Inc.
United States       $1,572   $1,466   7%       7%                 $6,056    $5,709    6%       6%
International    2,181   2,128   2%      4%            8,134    8,184    (1%)    4%
Total Baxter     $3,753  $3,594  4%      5%            $14,190  $13,893  2%      5%

   
     Includes revenues associated with manufacturing, distribution and other
     services provided by the company to the buyer of the Transfusion
^1   Therapies (TT) business after the February 2007 divestiture, which had
     previously been reported separately. The prior periods have been recast
     to conform to the current period presentation.

                                                                               
BAXTER INTERNATIONAL INC.
Key Product Line Sales
Periods Ending December 31, 2012 and 2011
(unaudited)
($ in millions)
                                                                       
                                     %        % Growth                               %        % Growth
                  Q4       Q4       Growth   @                  YTD       YTD       Growth   @
                                     @                                               @
              2012    2011    Actual  Constant      2012     2011     Actual  Constant
                                     Rates    Rates                                  Rates    Rates
                                                                       
BioScience
Recombinants       $581     $578     1%       3%                 $2,234    $2,212    1%       4%
Antibody           425      406      5%       5%                 1,593     1,541     3%       5%
Therapy
Plasma             447      397      13%      13%                1,464     1,440     2%       4%
Proteins
Regenerative       180      150      20%      21%                673       580       16%      19%
Medicine
Other  ^1       54      44      23%     30%           273      280      (3%)    5%
Total           $1,687  $1,575  7%      9%            $6,237   $6,053   3%      6%
BioScience
                                                                       
Medical
Products
Renal              $675     $664     2%       2%                 $2,527    $2,530    0%       2%
Global             522      487      7%       8%                 2,075     2,004     4%       5%
Injectables
IV Therapies       500      469      7%       8%                 1,930     1,802     7%       10%
Infusion           210      235      (11%)    (11%)              813       901       (10%)    (9%)
Systems
Anesthesia         140      147      (5%)     (5%)               545       537       1%       3%
Other ^2        19      17      12%     0%            63       66       (5%)    (9%)
Total
Medical         $2,066  $2,019  2%      3%            $7,953   $7,840   1%      4%
Products ^2
                                                                       
Total Baxter    $3,753  $3,594  4%      5%            $14,190  $13,893  2%      5%

   
^1   Principally includes vaccines and sales of plasma to third parties.
     
     Includes revenues associated with manufacturing, distribution and other
     services provided by the company to the buyer of the TT business after
^2   the February 2007 divestiture, which had previously been reported
     separately. The prior periods have been recast to conform to the current
     period presentation.

                                                                                                           
BAXTER INTERNATIONAL INC.
Key Product Line Sales by U.S. and International
Three-Month Periods Ending December 31, 2012 and 2011
(unaudited)
($ in millions)
                                                                                                  
                  Q4 2012                              Q4 2011                              % Growth
              U.S.    International  Total       U.S.    International  Total       U.S.   International  Total
BioScience
Recombinants       $268     $313            $581             $246     $332            $578             9%      (6%)            1%
Antibody           317      108             425              290      116             406              9%      (7%)            5%
Therapy
Plasma             121      326             447              106      291             397              14%     12%             13%
Proteins
Regenerative       102      78              180              81       69              150              26%     13%             20%
Medicine
Other ^ 1       17      37             54          12      32             44          42%    16%            23%
Total           $825    $862           $1,687      $735    $840           $1,575      12%    3%             7%
BioScience
                                                                                                  
Medical
Products
Renal              $109     $566            $675             $96      $568            $664             14%     0%              2%
Global             252      270             522              232      255             487              9%      6%              7%
Injectables
IV Therapies       182      318             500              166      303             469              10%     5%              7%
Infusion           114      96              210              137      98              235              (17%)   (2%)            (11%)
Systems
Anesthesia         78       62              140              92       55              147              (15%)   13%             (5%)
Other ^2        12      7              19          8       9              17          50%    (22%)          12%
Total
Medical         $747    $1,319         $2,066      $731    $1,288         $2,019      2%     2%             2%
Products ^ 2
                                                                                                  
Total Baxter    $1,572  $2,181         $3,753      $1,466  $2,128         $3,594      7%     2%             4%

   
^1   Principally includes vaccines and sales of plasma to third parties.
     
     Includes revenues associated with manufacturing, distribution and other
     services provided by the company to the buyer of the TT business after
^2   the February 2007 divestiture, which had previously been reported
     separately. The prior period has been recast to conform to the current
     period presentation.

Contact:

Baxter International Inc.
Media Contact:
Deborah Spak, (224) 948-2349
or
Investor Contacts:
Mary Kay Ladone, (224) 948-3371
Clare Trachtman, (224) 948-3085
 
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