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BAXTER'S OUTLOOK FOR SECOND QUARTER

 DEERFIELD, Ill., July 9 /PRNewswire/ -- Baxter International (NYSE: BAX) said today that its sales and earnings per share from continuing operations for the second quarter, ended June 30, are expected to exceed the prior year's second-quarter results. Operating income in the 1993 second quarter, however, is expected to be lower than it was in the year-earlier quarter.
 Operating income in the second quarter of 1992 was $252 million. The company said it expects operating income could be up to 5 percent lower in this year's second quarter, excluding previously disclosed costs associated with staff reductions in the company's Hospital Business. These operating costs will be offset by a one-time non operating gain from the company's sale in April of the Tower Products packaging business.
 In addition to the costs related to the staff reduction, Baxter cited several reasons for the expected decrease in operating income:
 -- The company has experienced higher costs on average in the second quarter, such as those associated with adjusting manufacturing levels to reduce its inventory of selected manufactured products as well as absorbing other costs to meet increased demand. The company said these periodic adjustments are designed to reach levels adequate to meet future demand and that it expects overall manufacturing costs to decline throughout the remainder of the year.
 -- Second quarter results also are expected to be negatively affected by swings in foreign-exchange rates. The company derives approximately 28 percent of its sales from overseas markets and therefore - as with other U.S.-based global corporations - Baxter is somewhat vulnerable to irregular swings in foreign-exchange rates. The company expects, however, that quarterly foreign-exchange swings should not significantly affect the company's annual financial performance.
 -- Baxter is increasing its investments in research and development at a rate that exceeds its sales growth. The company expects to continue this level of investment as it achieves milestones in the development of key products such as its Novacor(R) left ventricular assist system and its hemoglobin-based blood substitute.
 The company is also seeing some changes in purchasing patterns by hospitals in response to short-term uncertainty over health-care reform. Hospitals have reduced their inventories and are more sensitive to price increases. In the long term, however, hospitals are expected to continue to attempt to reduce expenses, in part by buying from a more limited number of broad-based national suppliers, such as Baxter. "We are well positioned with the broadest product line in the industry and a powerful nationwide distribution network so that we can maximize our ability to affect total customer costs," said Vernon R. Loucks Jr., chairman and chief executive officer.
 "While there is some immediate uncertainty about how President Clinton's reform proposals might affect the U.S. health-care industry, there is little doubt that demand for our products and services will continue to be strong, particularly if the president is successful in broadening access to care for the 37 million Americans who lack health insurance today," Loucks said. "Our earnings continue to grow and our strategies are very consistent with health-care reform. To extend our leadership for the long term, we will continue to invest aggressively in new international markets and in emerging medical technology, while providing unsurpassed service to our hospital customers in their effort to reduce their total costs."
 Baxter, through its subsidiaries, is the leading manufacturer and marketer of health-care products, systems and services worldwide. The company reported 1992 sales of $8.5 billion.
 -0- 7/9/93
 /CONTACT: Geoffrey D. Fenton of Baxter International, 708-948-3436/
 (BAX)


CO: Baxter International ST: Illinois IN: HEA SU:

SH -- NY007 -- 9805 07/09/93 09:13 EDT
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Publication:PR Newswire
Date:Jul 9, 1993
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