Baxter International Inc. (Baxter) has reported total net sales of $3.14 billion for the third quarter of 2009, compared with the total net sales $3.15 billion in the year-ago quarter. It has also reported a net income of $530 million, or $0.87 per diluted share, for the third quarter of 2009, compared with the net income of $472 million, or $0.74 per diluted share, in the year-ago quarter.

The third quarter results include after-tax special charges totaling $69 million (or $0.11 per diluted share) primarily for fixed asset write-offs related to the discontinuation of the company’s SOLOMIX drug delivery system in development, and planned retirement costs associated with the SYNDEO PCA Syringe Pump. The company recorded after-tax special charges in the third quarter of 2008 totaling $91 million (or $0.14 per diluted share).

On an adjusted basis, excluding special charges in both years, Baxter’s net income of $599 million increased 6% in the third quarter from $563 million reported in the third quarter last year. Adjusted earnings per diluted share of $0.98 increased 11% from $0.88 per diluted share reported in the prior-year period, and compares favorably with the guidance the company previously provided of $0.95 to $0.97 per diluted share. This financial performance was the result of continued margin expansion, expense leverage and benefits derived from the company’s ongoing share repurchase program.

Excluding the impact of foreign currency, Baxter’s worldwide sales increased 6%. Sales within the United States increased 5% to $1.3 billion in the third quarter, while international sales declined 4% to $1.8 billion. Excluding the impact of foreign currency, Baxter’s international sales grew 7%.

Medication Delivery sales of $1.2 billion increased 1% (and excluding foreign currency increased 7%). Renal sales of $576 million declined 3% (and excluding foreign currency increased 4%). Contributing to these results was growth across multiple product categories, including products used in peritoneal dialysis (PD) treatment, intravenous therapies, injectable drugs and anesthesia products.

BioScience revenues totaled $1.4 billion in the third quarter, which represents a 2% increase over the prior-year period. Excluding foreign currency, BioScience sales advanced 8%, reflecting gains across several core franchises. Key drivers of sales performance include continued growth of recombinant therapies, including ADVATE [Antihemophilic Factor (Recombinant), Plasma/Albumin-Free Method] for the treatment of hemophilia, antibody therapies and several specialty plasma therapeutics, as well as biosurgery products.

“We continue to leverage the benefits derived from our diversified healthcare model to achieve solid financial performance, despite a challenging global macro-economic environment,” said Robert L. Parkinson, Jr., chairman and chief executive officer. “G iven our strong financial position, geographic presence, and the medically-necessary nature of Baxter’s products, Baxter is well-positioned to capitalize on opportunities across a broad array of therapeutic areas.”

Nine-Month Results

For the first nine months of 2009, Baxter’s net income totaled $1.6 billion, an increase of 13%. Earnings per diluted share of $2.66 advanced 18% over $2.26 per diluted share reported in the prior-year period. On an adjusted basis, excluding special items from both years, Baxter’s net income of $1.7 billion increased 8% over $1.6 billion reported for the same period last year. Adjusted earnings per diluted share for the nine-month period increased 12% to $2.77 per diluted share, from $2.47 per diluted share reported in 2008.

Baxter’s global sales in the first nine months of the year totaled $9.1 billion, and declined 1% from $9.2 billion reported in the prior-year period. Excluding the impact of foreign currency, sales growth for the first nine months of 2009 was 7%. Sales within the United States totaled $3.9 billion, an increase of 6% over the same period last year, while international sales declined 6% to $5.2 billion. Excluding the impact of foreign currency, Baxter’s international sales grew 8%.

Recent Highlights

Baxter has achieved a number of scientific and commercial milestones over the last several months, including:

The commercial launch of HYLENEX recombinant (hyaluronidase human injection) in the United States for use in pediatric rehydration. HYLENEX, an enzyme, allows fluids to be administered under the skin (subcutaneously) rather than through a vein. This allows for rapid treatment initiation and delivery of intravenous (IV)-like fluid rates, which can help lead to successful rehydration of children in a less invasive manner.

Marketing authorization from the European Commission for CELVAPAN H1N1 pandemic vaccine using Baxter’s Vero cell technology. CELVAPAN H1N1 is the first cell culture-based and non-adjuvanted pandemic influenza vaccine to receive marketing authorization in the European Union.

Completion of the seasonal influenza Phase III confirmatory study in healthy adults in the United States. The company expects final study results to be available by the end of this year, to support filing for regulatory approval in the United States in the first half of 2010.

Initiation of a Phase III study evaluating the use of ARTISS [Fibrin Sealant (Human)] in facial surgery in the United States. Currently, ARTISS is the first and only slow-setting fibrin sealant indicated for use in adhering skin grafts in adult and pediatric burn patients. ARTISS was developed using Baxter’s proven fibrin sealant technology platform and is the newest agent in the company’s expanding biosurgery portfolio.

Filing an Investigational Device Exemption (IDE) with the U.S. Food and Drug Administration (FDA) to begin a clinical study to collect safety and effectiveness data required for a 510(k) application for a new home hemodialysis system.

Completion of the acquisition of certain assets related to Edwards Lifesciences Corporation’s hemofiltration product line, also known as Continuous Renal Replacement Therapy (CRRT). CRRT provides a method of continuous yet adjustable fluid removal that can gradually remove excess fluid and waste products that build up with the acute impairment of kidney function, and is usually administered in an intensive care setting in the hospital.

Fourth Quarter and Full-Year 2009 Outlook

Baxter also announced today its guidance for fourth quarter 2009 and updated its guidance for the full year.

For the fourth quarter of 2009, Baxter expects sales growth, excluding the impact of foreign currency, of 6 to 8%. Based on the company’s outlook for foreign exchange rates, the company expects reported sales including the impact of foreign currency to increase 8 to 10% over the prior-year period. Baxter also expects to achieve earnings per diluted share of $1.02 to $1.04, before any special items, in the fourth quarter.

For the full year, Baxter expects sales growth, excluding the impact of foreign currency, to increase 7 to 8%. Based on the company’s outlook for foreign exchange rates, Baxter expects reported sales growth to increase around 0 to 1%. In addition, the company expects earnings per diluted share of $3.79 to $3.81, before any special items, and continues to expect cash flow from operations to total more than $2.6 billion.