8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) July 22, 2010

Baxter International Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

1-4448	36-0781620
(Commission File Number)	(IRS Employer Identification No.)
One Baxter Parkway, Deerfield, Illinois	60015-4633
(Address of principal executive offices)	(Zip Code)

(847) 948-2000

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On July 22, 2010, Baxter International Inc. issued an earnings press release for the quarterly period ended June 30, 2010. The press release, including attachments, is furnished as Exhibit 99.1 to this report.

The press release furnished as Exhibit 99.1 contains financial measures that are not calculated in accordance with generally accepted accounting principles (GAAP). The non-GAAP financial measures include adjusted sales, adjusted net income, adjusted earnings per diluted share and adjusted pre-tax income, each excluding special items. Special items are excluded because they are unusual or nonrecurring and accordingly 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 measures, when used in conjunction with the results presented in accordance with GAAP and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of the company’s operations and can facilitate a fuller analysis of the company’s results of operations, particularly in evaluating performance from one period to another. Accordingly, management uses these non-GAAP measures internally in financial planning, to monitor business unit performance, and in some cases for purposes of determining incentive compensation.

The company strongly encourages investors to review its consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP measures used by the company may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

Item 9.01. Financial Statements and Exhibits.

(d)	Exhibits.
	99.1	Press Release dated July 22, 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BAXTER INTERNATIONAL INC.
By:	/s/ Stephanie A. Shinn
	Stephanie A. Shinn
	Corporate Vice President, Associate General Counsel and Corporate Secretary

Date: July 22, 2010

Exhibit Index

Exhibit No.		Description
	99.1	Press Release dated July 22, 2010.

EX-99.1

Baxter International Inc.
One Baxter Parkway
Deerfield, IL 60015

FOR IMMEDIATE RELEASE

Media Contact:
Deborah Spak, (847) 948-2349

Investor Contacts:
Mary Kay Ladone, (847) 948-3371
Clare Trachtman, (847) 948-3085

BAXTER REPORTS SECOND QUARTER FINANCIAL RESULTS
IN LINE WITH GUIDANCE

Company Confirms Full-Year Outlook

     DEERFIELD, Ill., July 22, 2010 — Baxter International Inc. (NYSE:BAX) today announced its financial results for the second quarter of 2010, reporting earnings in line with the company’s previously issued guidance of $0.90 to $0.93 per diluted share.

     Baxter reported net income of $535 million, which declined 9 percent from $587 million reported in the second quarter of 2009. Earnings per diluted share of $0.90 declined 6 percent from $0.96 per diluted share reported in the prior-year period. These results included an after-tax charge of $22 million (or $0.03 per diluted share) for the write-down of certain accounts receivable in anticipation of a settlement with the government of Greece. On an adjusted basis, excluding the special charge, the company reported second quarter net income of $557 million or $0.93 per diluted share.

     Worldwide sales in the second quarter totaled $3.2 billion and increased 2 percent over the same period last year. Excluding the impact of foreign currency, worldwide sales were comparable to the prior year. Sales within the United States increased 2 percent to $1.4 billion and international sales grew

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BAXTER REPORTS SECOND QUARTER FINANCIAL RESULTS — Page 2

2 percent to $1.8 billion. Excluding the impact of foreign currency, international sales declined 2 percent.

     By business, BioScience revenues totaled $1.4 billion and declined 4 percent from the same period last year (or declined 5 percent excluding the impact of foreign currency), primarily due to the increase in Medicaid rebates required by manufacturers of drugs and biologics under recently enacted U.S. healthcare reform legislation, as well as lower revenues derived from antibody therapies, vaccines, and international hemophilia tenders. Partially offsetting this decline was continued growth of ADVATE [Antihemophilic Factor (Recombinant), Plasma/Albumin-Free Method] for the treatment of hemophilia and ARALAST NP [Alpha 1-Proteinase Inhibitor (Human)] for the treatment of hereditary emphysema, as well as strong sales of biosurgery products.

     Medication Delivery sales increased 9 percent (or 6 percent excluding the impact of foreign currency) to $1.2 billion, driven by growth of parenteral nutrition and intravenous therapies, anesthesia products, and sales of the Sigma SPECTRUM infusion pump and certain injectable drugs. Renal sales of $585 million increased 6 percent (or 1 percent excluding the impact of foreign currency), as the company continued to post solid gains in peritoneal dialysis patients, particularly in the United States, Latin America and Asia, and benefited from the recently acquired continuous renal replacement therapy business.

Six-Month Results

     For the first six months of 2010, Baxter reported net income of $472 million or $0.78 per diluted share, compared to net income of $1.1 billion or $1.79 per

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BAXTER REPORTS SECOND QUARTER FINANCIAL RESULTS — Page 3

diluted share from the same period last year. On an adjusted basis, excluding special charges of $649 million, Baxter’s net income for the six-month period increased 2 percent to $1.1 billion, and earnings per diluted share increased 4 percent to $1.86 per share.

     Baxter’s worldwide sales totaled $6.1 billion for the first half of 2010, including the prior-quarter revenue adjustment of $213 million associated with the COLLEAGUE infusion pump recall. On an adjusted basis, Baxter’s worldwide sales totaled $6.3 billion, an increase of 7 percent over the prior year (or a 2 percent increase excluding the impact of foreign currency).

     Baxter generated strong cash flow in the first six months of 2010, with cash flows from operations totaling $1.1 billion, after a $300 million contribution to the company’s U.S. pension fund in the first quarter. In addition, the company repurchased 23 million shares of common stock for approximately $1.1 billion, and paid dividends totaling $348 million, which represents a 12 percent per share increase versus the prior year period.

     “Despite a number of challenges, we were pleased to deliver financial results in line with our guidance,” said Robert L. Parkinson, Jr., chairman and chief executive officer. “We remain committed to accelerating earnings growth in the future by leveraging our diversified healthcare model, broad geographic reach, and strong new product pipeline.”

Recent Highlights

     Baxter continues to expand its pipeline through investments in research and development as evidenced by a number of recent achievements:

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BAXTER REPORTS SECOND QUARTER FINANCIAL RESULTS — Page 4

• Extending leadership in hemophilia with the initiation of a global Phase I/II clinical trial studying the safety and tolerability of BAX 817, an on-demand recombinant Factor VIIa therapy for patients with hemophilia A or B with an inhibitor.

• Initiation of a Phase I clinical trial for recombinant Factor IX, a treatment for patients with hemophilia B.

• Acceptance by the U.S. Food and Drug Administration (FDA) of Baxter’s Biologics License Application (BLA) for its 10% liquid immunoglobulin therapy for subcutaneous administration in patients with primary immune deficiency. The BLA is supported by clinical trial data which demonstrated efficacy, tolerability and safety of the subcutaneous formulation that were comparable to intravenous therapy.

• Approval in Europe and Canada for the first and only 30-gram dose vial for GAMMAGARD LIQUID (marketed as KIOVIG in Europe). This new dosage form is the most frequently prescribed dose and will enhance user convenience.

     In addition, the company recently announced final details from the FDA order to recall COLLEAGUE infusion pumps in the U.S. market. Baxter will offer replacement Sigma SPECTRUM infusion pumps or refunds to owners of COLLEAGUE pumps and will execute the recall over the next two years to minimize disruption to patient care.

Third Quarter and Full-Year 2010 Outlook

     Baxter also provided financial guidance for the third quarter and confirmed its outlook for the full-year 2010. For the third quarter of 2010, the company expects sales growth of 1 to 3 percent, excluding the impact of foreign currency, and earnings of $0.96 to $0.99 per diluted share, before any special items.

     For full-year 2010, Baxter’s outlook includes sales growth of 1 to 3 percent, excluding the impact of foreign exchange and the first quarter COLLEAGUE

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BAXTER REPORTS SECOND QUARTER FINANCIAL RESULTS — Page 5

adjustment, and earnings of $3.93 to $3.98 per diluted share, before any special items. In addition, the company reiterated its projection to generate cash flow from operations of approximately $2.7 billion.

     A webcast of Baxter’s second 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. CDT on July 22, 2010. Please visit Baxter’s website 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 and outlook for 2010. 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, including with respect to the company’s implementation of the COLLEAGUE recall, 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; Sigma’s ability to build production capacity to meet customer demand; future actions of governmental authorities and other third parties as recently adopted U.S. healthcare reform legislation is implemented; additional legislation, regulation and other governmental pressures, which may affect pricing, reimbursement and rebate policies of government agencies and private payers or other elements of the company’s business; product development risks; 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

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materials and component supply; 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; any impact of the commercial and credit environment on Baxter and its customers; 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.

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BAXTER — PAGE 7

BAXTER INTERNATIONAL INC.
Consolidated Statements of Income
Three Months Ended June 30, 2010 and 2009
(unaudited)
(in millions, except per share and percentage data)

	Three Months Ended
	June 30,
	2010			2009			Change
NET SALES	$	3,194		$	3,123			2%
COST OF SALES		1,556			1,485			5%
GROSS MARGIN		1,638			1,638			0%
% of Net Sales		51.3%			52.4%		(1.1 pts		)
MARKETING AND ADMINISTRATIVE EXPENSES		721	A		660			9%
% of Net Sales		22.6%			21.1%		1.5 pts
RESEARCH AND DEVELOPMENT EXPENSES		219			231			(5%	)
% of Net Sales		6.9%			7.4%		(0.5 pts		)
NET INTEREST EXPENSE		25			24			4%
OTHER EXPENSE (INCOME), NET		3			(1	)		N/M
PRE-TAX INCOME		670			724			(7%	)
INCOME TAX EXPENSE		133			135			(1%	)
% of Pre-Tax Income		19.9%			18.6%		1.3 pts
NET INCOME		537			589			(9%	)
LESS: NONCONTROLLING INTERESTS		2			2			0%
NET INCOME ATTRIBUTABLE TO BAXTER	$	535		$	587			(9%	)
BASIC EPS	$	0.90		$	0.97			(7%	)
DILUTED EPS	$	0.90		$	0.96			(6%	)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic		593			607
Diluted		596			612
ADJUSTED PRE-TAX INCOME (excluding specified item)	$	698	B	$	724
ADJUSTED NET INCOME ATTRIBUTABLE TO BAXTER (excluding specified item)	$	557	B	$	587
ADJUSTED DILUTED EPS (excluding specified item)	$	0.93	B	$	0.96

A	Marketing and administrative expenses in 2010 included a charge of $28 million ($22 million, or $0.03 per diluted share, on an after-tax basis) to write down accounts receivable in Greece, principally as a result of the anticipated settlement of certain accounts receivable with the Greek government.
B	Refer to page 8 for a description of the adjustment and a reconciliation to GAAP (generally accepted accounting principles) measures.

BAXTER — PAGE 8

BAXTER INTERNATIONAL INC.
Note to Consolidated Statements of Income
Three Months Ended June 30, 2010 and 2009
Description of Adjustment 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 June 30, 2010 included a charge related to the write-down of accounts receivable in Greece, which impacted the GAAP results as follows:

	Three Months Ended June 30,
	2010							2009
			Greece			Excluding
			receivable			specified
	GAAP		charge		A	item		GAAP		B	Change		C
NET SALES	$	3,194	$	—		$	3,194	$	3,123			2%
COST OF SALES		1,556		—			1,556		1,485			5%
GROSS MARGIN		1,638		—			1,638		1,638			0%
% of Net Sales		51.3%					51.3%		52.4%		(1.1 pts		)
MARKETING AND ADMINISTRATIVE EXPENSES		721		(28	)		693		660			5%
% of Net Sales		22.6%					21.7%		21.1%		0.6 pts
RESEARCH AND DEVELOPMENT EXPENSES		219		—			219		231			(5%	)
% of Net Sales		6.9%					6.9%		7.4%		(0.5 pts		)
NET INTEREST EXPENSE		25		—			25		24			4%
OTHER EXPENSE (INCOME), NET		3		—			3		(1	)		N/M
PRE-TAX INCOME		670		28			698		724			(4%	)
INCOME TAX EXPENSE		133		6			139		135			3%
% of Pre-Tax Income		19.9%					19.9%		18.6%		1.3 pts
NET INCOME		537		22			559		589			(5%	)
LESS: NONCONTROLLING INTERESTS		2		—			2		2			0%
NET INCOME ATTRIBUTABLE TO BAXTER	$	535	$	22		$	557	$	587			(5%	)
BASIC EPS	$	0.90	$	0.04		$	0.94	$	0.97			(3%	)
DILUTED EPS	$	0.90	$	0.03		$	0.93	$	0.96			(3%	)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic		593					593		607
Diluted		596					596		612

A	Marketing and administrative expenses in 2010 included a charge of $28 million ($22 million, or $0.03 per diluted share, on an after-tax basis) to write down accounts receivable in Greece, principally as a result of the anticipated settlement of certain accounts receivable with the Greek government.
B	There were no specified items included in the 2009 GAAP results.
C	Represents the percentage change between the 2010 results excluding specified item and the 2009 GAAP results.

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 — PAGE 9

BAXTER INTERNATIONAL INC.
Consolidated Statements of Income
Six Months Ended June 30, 2010 and 2009
(unaudited)
(in millions, except per share and percentage data)

	Six Months Ended
	June 30,
	2010			2009		Change
NET SALES	$	6,121	A	$	5,947		3%
COST OF SALES		3,440	A		2,821		22%
GROSS MARGIN		2,681			3,126		(14%	)
% of Net Sales		43.8%			52.6%	(8.8 pts		)
MARKETING AND ADMINISTRATIVE EXPENSES		1,404	B		1,271		10%
% of Net Sales		22.9%			21.4%	1.5 pts
RESEARCH AND DEVELOPMENT EXPENSES		446			443		1%
% of Net Sales		7.3%			7.4%	(0.1 pt		)
NET INTEREST EXPENSE		44			50		(12%	)
OTHER EXPENSE, NET		5			1		N/M
PRE-TAX INCOME		782			1,361		(43%	)
INCOME TAX EXPENSE		305	C		254		20%
% of Pre-Tax Income		39.0%			18.7%	20.3 pts
NET INCOME		477			1,107		(57%	)
LESS: NONCONTROLLING INTERESTS		5			4		25%
NET INCOME ATTRIBUTABLE TO BAXTER	$	472		$	1,103		(57%	)
BASIC EPS	$	0.79		$	1.81		(56%	)
DILUTED EPS	$	0.78		$	1.79		(56%	)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic		597			610
Diluted		602			616
ADJUSTED PRE-TAX INCOME (excluding specified items)	$	1,398	D	$	1,361
ADJUSTED NET INCOME ATTRIBUTABLE TO BAXTER (excluding specified items)	$	1,121	D	$	1,103
ADJUSTED DILUTED EPS (excluding specified items)	$	1.86	D	$	1.79

A	A charge was taken in the first quarter of 2010 of $588 million, or $0.98 per diluted share, which related to the recall of COLLEAGUE infusion pumps from the U.S. market and other actions the company intends to undertake outside of the United States, for which there was no net tax benefit recognized. The charge impacted net sales and cost of sales by $213 million and $375 million, respectively.
B	Marketing and administrative expenses in the second quarter of 2010 included a charge of $28 million ($22 million, or $0.03 per diluted share, on an after-tax basis) to write down accounts receivable in Greece, principally as a result of the anticipated settlement of certain accounts receivable with the Greek government.
C	Income tax expense in the first quarter of 2010 included a charge of $39 million, or $0.07 per diluted share, to write off a deferred tax asset as a result of a change in the tax treatment of reimbursements under the Medicare Part D retiree prescription drug subsidy program.
D	Refer to page 10 for a description of the adjustments and a reconciliation to GAAP measures.

BAXTER — PAGE 10

BAXTER INTERNATIONAL INC.
Note to Consolidated Statements of Income
Six Months Ended June 30, 2010 and 2009
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 six months ended June 30, 2010 included a charge related to the recall of COLLEAGUE infusion pumps from the U.S. market and other actions the company intends to undertake outside of the United States, a tax charge related to the write-off of a deferred tax asset as a result of a change in the tax treatment of reimbursements under the Medicare Part D retiree prescription drug subsidy program, and a charge related to the write-down of accounts receivable in Greece. These charges impacted the GAAP results as follows:

	Six Months Ended June 30,
	2010													2009
			COLLEAGUE						Greece			Excluding
			infusion pump			Deferred tax			receivable			specified
	GAAP		charge		A	write-off		B	charge		C	items		GAAP		D	Change		E
NET SALES	$	6,121	$	213		$	—		$	—		$	6,334	$	5,947			7%
COST OF SALES		3,440		(375	)		—			—			3,065		2,821			9%
GROSS MARGIN		2,681		588			—			—			3,269		3,126			5%
% of Net Sales		43.8%											51.6%		52.6%		(1.0 pt		)
MARKETING AND ADMINISTRATIVE EXPENSES		1,404		—			—			(28	)		1,376		1,271			8%
% of Net Sales		22.9%											21.7%		21.4%		0.3 pts
RESEARCH AND DEVELOPMENT EXPENSES		446		—			—			—			446		443			1%
% of Net Sales		7.3%											7.0%		7.4%		(0.4 pts		)
NET INTEREST EXPENSE		44		—			—			—			44		50			(12%	)
OTHER EXPENSE, NET		5		—			—			—			5		1			N/M
PRE-TAX INCOME		782		588			—			28			1,398		1,361			3%
INCOME TAX EXPENSE		305		—			(39	)		6			272		254			7%
% of Pre-Tax Income		39.0%											19.5%		18.7%		0.8 pts
NET INCOME		477		588			39			22			1,126		1,107			2%
LESS: NONCONTROLLING INTERESTS		5		—			—			—			5		4			25%
NET INCOME ATTRIBUTABLE TO BAXTER	$	472	$	588		$	39		$	22		$	1,121	$	1,103			2%
BASIC EPS	$	0.79	$	0.98		$	0.07		$	0.04		$	1.88	$	1.81			4%
DILUTED EPS	$	0.78	$	0.98		$	0.07		$	0.03		$	1.86	$	1.79			4%
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic		597											597		610
Diluted		602											602		616

A	A charge was taken in the first quarter of 2010 of $588 million, or $0.98 per diluted share, which related to the recall of COLLEAGUE infusion pumps from the U.S. market and other actions the company intends to undertake outside of the United States, for which there was no net tax benefit recognized. The charge impacted net sales and cost of sales by $213 million and $375 million, respectively.
B	Income tax expense in the first quarter of 2010 included a charge of $39 million, or $0.07 per diluted share, to write off a deferred tax asset as a result of a change in the tax treatment of reimbursements under the Medicare Part D retiree prescription drug subsidy program.
C	Marketing and administrative expenses in the second quarter of 2010 included a charge of $28 million ($22 million, or $0.03 per diluted share, on an after-tax basis) to write down accounts receivable in Greece, principally as a result of the anticipated settlement of certain accounts receivable with the Greek government.
D	There were no specified items included in the 2009 GAAP results.
E	Represents the percentage change between the 2010 results excluding specified items and the 2009 GAAP results.

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 — PAGE 11

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						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Net income	$	537		$	589		$	477		$	1,107
Adjustments
Depreciation and amortization		169			154			335			302
Deferred income taxes		29			76			120	A		135
Stock compensation		33			36			63			74
Realized excess tax benefits from stock issued under employee benefit plans		(3	)		(3	)		(34	)		(81	)
COLLEAGUE infusion pump charge		—			—			588			—
Greece receivable charge		28			—			28			—
Other		(4	)		5			5			14
Changes in balance sheet items
Accounts and other current receivables		(5	)		(103	)		(38	)		(58	)
Inventories		(25	)		1			(119	)		(85	)
Accounts payable and accrued liabilities		(55	)		40			(162	)		(264	)
Restructuring and cost optimization payments		(14	)		(7	)		(31	)		(28	)
Other		93			23			(170	) B		(68	) B
Cash flows from operations	$	783		$	811		$	1,062		$	1,048
Changes in Net Debt
Increase (decrease)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Net debt, beginning of period	$	2,080		$	2,207		$	1,365		$	1,625
Cash flows from operations		(783	)		(811	)		(1,062	)		(1,048	)
Capital expenditures		237			216			467			387
Dividends		174			158			348			318
Proceeds from stock issued under employee benefit plans		(61	)		(62	)		(201	)		(123	)
Purchases of treasury stock		677			300			1,112			866
Acquisitions of and investments in businesses and technologies		20			102			254	C		102
Other, including the effect of exchange rate changes		170			(80	)		231			(97	)
Increase (decrease) in net debt		434			(177	)		1,149			405
Net debt, June 30	$	2,514		$	2,030		$	2,514		$	2,030
Key statistics, June 30:
Days sales outstanding		54.3			53.9			54.3			53.9
Inventory turns		2.5			2.3			2.5			2.3

Selected balance sheet information:	June 30, 2010		December 31, 2009
Cash and equivalents	$	2,300	$	2,786
Accounts and other current receivables	$	2,072	$	2,302
Inventories	$	2,384	$	2,557
Accounts payable and accrued liabilities	$	3,390	$	3,753

A	Deferred income taxes in the first quarter of 2010 included a charge of $39 million to write off a deferred tax asset as a result of a change in the tax treatment of reimbursements under the Medicare Part D retiree prescription drug subsidy program.
B	Other cash flows from operations in the first quarters of 2010 and 2009 included planned contributions of $300 million and $100 million, respectively, to the company’s pension plan in the United States.
C	Acquisitions of and investments in businesses and technologies in 2010 principally related to the first quarter acquisition of ApaTech Limited, an orthobiologic products company based in the United Kingdom.

BAXTER — PAGE 12

BAXTER INTERNATIONAL INC.
Net Sales
Periods Ending June 30, 2010 and 2009
(unaudited)
($ in millions)

	Q2		Q2		% Growth @			% Growth @			YTD			YTD		% Growth @			% Growth @
	2010		2009		Actual Rates			Constant Rates			2010			2009		Actual Rates			Constant Rates
BioScience
United States	$	636	$	671		(5%	)		(5%	)	$	1,246		$	1,293		(4%	)		(4%	)
International		722		747		(3%	)		(5%	)		1,474			1,377		7%			1%
Total BioScience	$	1,358	$	1,418		(4%	)		(5%	)	$	2,720		$	2,670		2%			(1%	)
Medication Delivery
United States	$	612	$	546		12%			12%		$	1,191		$	1,060		12%			12%
International		627		588		7%			0%			1,230			1,109		11%			1%
Total Medication Delivery - Adjusted 1	$	1,239	$	1,134		9%			6%		$	2,421		$	2,169		12%			7%
COLLEAGUE infusion pump charge 1												(213	)
Total Medication Delivery - GAAP 1	$	1,239	$	1,134		9%			6%		$	2,208		$	2,169		2%			(3%	)
Renal
United States	$	98	$	96		2%			2%		$	193		$	188		3%			3%
International		487		454		7%			1%			976			877		11%			3%
Total Renal	$	585	$	550		6%			1%		$	1,169		$	1,065		10%			3%
Transfusion Therapies 2
United States	$	9	$	12		(25%	)		(25%	)	$	18		$	25		(28%	)		(28%	)
International		3		9		(67%	)		(67%	)		6			18		(67%	)		(67%	)
Total Transfusion Therapies	$	12	$	21		(43%	)		(43%	)	$	24		$	43		(44%	)		(44%	)
Baxter International Inc.
United States	$	1,355	$	1,325		2%			2%		$	2,648		$	2,566		3%			3%
International		1,839		1,798		2%			(2%	)		3,686			3,381		9%			1%
Total Baxter - Adjusted 1	$	3,194	$	3,123		2%			0%		$	6,334		$	5,947		7%			2%
COLLEAGUE infusion pump charge 1												(213	)
Total Baxter - GAAP 1	$	3,194	$	3,123		2%			0%		$	6,121		$	5,947		3%			(1%	)

1	GAAP net sales in the first quarter of 2010 included a charge of $213 million related to the recall of COLLEAGUE infusion pumps from the U.S. market. Refer to page 16 for a reconciliation to GAAP measures.
2	Represents revenues associated with manufacturing, distribution and other services provided by the company to the buyer of the Transfusion Therapies (TT) business after the February 2007 divestiture.

BAXTER — PAGE 13

BAXTER INTERNATIONAL INC.
GAAP Key Product Line Sales
Periods Ending June 30, 2010 and 2009
(unaudited)
($ in millions)

	GAAP		GAAP		% Growth @			% Growth @			GAAP		GAAP		% Growth @			% Growth @
	Q2 2010		Q2 2009		Actual Rates			Constant Rates			YTD 2010		YTD 2009		Actual Rates			Constant Rates
BioScience
Recombinants	$	525	$	515		2%			1%		$	1,035	$	966		7%			4%
Plasma Proteins		314		353		(11%	)		(12%	)		606		627		(3%	)		(8%	)
Antibody Therapy		310		344		(10%	)		(10%	)		632		681		(7%	)		(8%	)
Regenerative Medicine		133		109		22%			21%			252		208		21%			18%
Other 1		76		97		(22%	)		(22%	)		195		188		4%			(2%	)
Total BioScience	$	1,358	$	1,418		(4%	)		(5%	)	$	2,720	$	2,670		2%			(1%	)
Medication Delivery
IV Therapies	$	418	$	384		9%			4%		$	809	$	728		11%			5%
Global Injectables		472		418		13%			10%			923		789		17%			12%
Infusion Systems 2		216		205		5%			2%			212		404		(48%	)		(52%	)
Anesthesia		130		120		8%			6%			257		229		12%			8%
Other		3		7		(57%	)		(57%	)		7		19		(63%	)		(53%	)
Total Medication Delivery 2	$	1,239	$	1,134		9%			6%		$	2,208	$	2,169		2%			(3%	)
Renal
PD Therapy	$	480	$	454		6%			0%		$	954	$	874		9%			2%
HD Therapy		105		96		9%			5%			215		191		13%			5%
Total Renal	$	585	$	550		6%			1%		$	1,169	$	1,065		10%			3%
Transfusion Therapies 3	$	12	$	21		(43%	)		(43%	)	$	24	$	43		(44%	)		(44%	)
Total Baxter 2	$	3,194	$	3,123		2%			0%		$	6,121	$	5,947		3%			(1%	)

1	Principally includes vaccines and sales of plasma to third parties.
2	GAAP net sales in the first quarter of 2010 included a charge of $213 million related to the recall of COLLEAGUE infusion pumps from the U.S. market. Refer to page 16 for a reconciliation to GAAP measures.
3	Represents revenues associated with manufacturing, distribution and other services provided by the company to the buyer of the TT business after the February 2007 divestiture.

BAXTER — PAGE 14

BAXTER INTERNATIONAL INC.
Adjusted Key Product Line Sales
Periods Ending June 30, 2010 and 2009
(unaudited)
($ in millions)

	GAAP		GAAP		% Growth @			% Growth @			Adjusted		GAAP		% Growth @			% Growth @
	Q2 2010		Q2 2009		Actual Rates			Constant Rates			YTD 2010		YTD 2009		Actual Rates			Constant Rates
BioScience
Recombinants	$	525	$	515		2%			1%		$	1,035	$	966		7%			4%
Plasma Proteins		314		353		(11%	)		(12%	)		606		627		(3%	)		(8%	)
Antibody Therapy		310		344		(10%	)		(10%	)		632		681		(7%	)		(8%	)
Regenerative Medicine		133		109		22%			21%			252		208		21%			18%
Other 1		76		97		(22%	)		(22%	)		195		188		4%			(2%	)
Total BioScience	$	1,358	$	1,418		(4%	)		(5%	)	$	2,720	$	2,670		2%			(1%	)
Medication Delivery
IV Therapies	$	418	$	384		9%			4%		$	809	$	728		11%			5%
Global Injectables		472		418		13%			10%			923		789		17%			12%
Infusion Systems - Adjusted 2		216		205		5%			2%			425		404		5%			1%
Anesthesia		130		120		8%			6%			257		229		12%			8%
Other		3		7		(57%	)		(57%	)		7		19		(63%	)		(53%	)
Total Medication Delivery - Adjusted 2	$	1,239	$	1,134		9%			6%		$	2,421	$	2,169		12%			7%
Renal
PD Therapy	$	480	$	454		6%			0%		$	954	$	874		9%			2%
HD Therapy		105		96		9%			5%			215		191		13%			5%
Total Renal	$	585	$	550		6%			1%		$	1,169	$	1,065		10%			3%
Transfusion Therapies 3	$	12	$	21		(43%	)		(43%	)	$	24	$	43		(44%	)		(44%	)
Total Baxter - Adjusted 2	$	3,194	$	3,123		2%			0%		$	6,334	$	5,947		7%			2%

1	Principally includes vaccines and sales of plasma to third parties.
2	Adjusted net sales in the first quarter of 2010 excluded a charge of $213 million related to the recall of COLLEAGUE infusion pumps from the U.S. market. Refer to page 16 for a reconciliation to GAAP measures.
3	Represents revenues associated with manufacturing, distribution and other services provided by the company to the buyer of the TT business after the February 2007 divestiture.

BAXTER — PAGE 15

BAXTER INTERNATIONAL INC.
Key Product Line Sales by U.S. and International
Three-Month Periods Ending June 30, 2010 and 2009
(unaudited)
($ in millions)

	Q2 2010							Q2 2009						% Growth
	U.S.			International		Total		U.S.		International		Total		U.S.			International			Total
BioScience
Recombinants	$	233		$	292	$	525	$	230	$	285	$	515		1%			2%			2%
Plasma Proteins		110			204		314		118		235		353		(7%	)		(13%	)		(11%	)
Antibody Therapy		211			99		310		255		89		344		(17%	)		11%			(10%	)
Regenerative Medicine		76			57		133		62		47		109		23%			21%			22%
Other 1		6			70		76		6		91		97		0%			(23%	)		(22%	)
Total BioScience	$	636		$	722	$	1,358	$	671	$	747	$	1,418		(5%	)		(3%	)		(4%	)
Medication Delivery
IV Therapies	$	134		$	284	$	418	$	116	$	268	$	384		16%			6%			9%
Global Injectables		263			209		472		228		190		418		15%			10%			13%
Infusion Systems		132			84		216		122		83		205		8%			1%			5%
Anesthesia		84			46		130		79		41		120		6%			12%			8%
Other		(1	)		4		3		1		6		7		N/M			(33%	)		(57%	)
Total Medication Delivery	$	612		$	627	$	1,239	$	546	$	588	$	1,134		12%			7%			9%
Renal
PD Therapy	$	79		$	401	$	480	$	76	$	378	$	454		4%			6%			6%
HD Therapy		19			86		105		20		76		96		(5%	)		13%			9%
Total Renal	$	98		$	487	$	585	$	96	$	454	$	550		2%			7%			6%
Transfusion Therapies 2	$	9		$	3	$	12	$	12	$	9	$	21		(25%	)		(67%	)		(43%	)
Total Baxter	$	1,355		$	1,839	$	3,194	$	1,325	$	1,798	$	3,123		2%			2%			2%

1	Principally includes vaccines and sales of plasma to third parties.
2	Represents revenues associated with manufacturing, distribution and other services provided by the company to the buyer of the TT business after the February 2007 divestiture.

BAXTER — PAGE 16

BAXTER INTERNATIONAL INC.
Reconciliation of GAAP to Non-GAAP Net Sales Measures
Periods Ending June 30, 2010 and 2009
(unaudited)
($ in millions)

The company’s GAAP net sales results for the six months ended June 30, 2010 included a $213 million charge related to the recall of COLLEAGUE infusion pumps from the U.S. market, which impacted GAAP net sales as follows:

													% Growth @								% Growth @
	2010 YTD						2009 YTD						Actual Rates								Constant Rates
	U.S.		International		Total		U.S.		International		Total		U.S.			International		Total			U.S.			International		Total
Infusion Systems - GAAP					$	212					$	404							(48%	)							(52%	)
COLLEAGUE infusion pump charge						213
Infusion Systems - Adjusted					$	425					$	404							5%								1%
Total Medication Delivery - GAAP	$	978		$1,230	$	2,208	$	1,060		$1,109	$	2,169		(8%	)		11%		2%			(8%	)		1%		(3%	)
COLLEAGUE infusion pump charge		213				213
Total Medication Delivery - Adjusted	$	1,191		$1,230	$	2,421	$	1,060		$1,109	$	2,169		12%			11%		12%			12%			1%		7%
Total Baxter - GAAP	$	2,435		$3,686	$	6,121	$	2,566		$3,381	$	5,947		(5%	)		9%		3%			(5%	)		1%		(1%	)
COLLEAGUE infusion pump charge		213				213
Total Baxter - Adjusted	$	2,648		$3,686	$	6,334	$	2,566		$3,381	$	5,947		3%			9%		7%			3%			1%		2%

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.