
                                                                    Exhibit 99.2


                             ALLEGIANCE CORPORATION
                   FINANCIAL STATEMENT FOOTNOTE FOR FORM 10-Q
                                      DRAFT


Subsequent Event - Goodwill Write-down

Allegiance Corporation became an independent public company on October 1, 1996
when it spun off from Baxter International Inc.

As part of Baxter, Allegiance followed the accounting policies established by
Baxter for its consolidated group.  At September 30, 1996, goodwill, net of
accumulated amortization, was approximately $1,060 million.  Baxter s policy was
to evaluate the overall recoverability of goodwill using projected undiscounted
cash flows.

Subsequent to the Distribution Date, the market value of Allegiance s stock was
substantially below its historical book value.  As a result of this market value
and management s expectations that cost-containment efforts in the health-care
industry will continue to result in intense competitive pressures among health-
care suppliers, management reevaluated its accounting policy regarding goodwill
impairment.  On October 31, 1996, the Company s board of directors approved the
adoption of a new policy for assessing goodwill impairment based upon a fair
value approach.  The Company believes that fair value is a preferable method to
assess goodwill as it is a more objective indicator of the Company s inherent
value as a separate publicly-traded entity and will be reflective of the
challenges and pressures that continue to be a fundamental part of the U.S.
health-care system.

The change in the method of assessing goodwill impairment will result in a
fourth quarter 1996 charge of $550 million to operations.  This change will also
result in a reduction of $18.9 million and $4.7 million of goodwill amortization
expense on an annual and quarterly basis, respectively, for the next twenty-nine
years.

The Company computes fair value based upon the price/earnings ( P/E ) multiple
for a group of similar companies.  This P/E multiple, calculated based on actual
quoted market prices per share and analysts  consensus earnings estimates for
these companies, is applied to management s best estimate of earnings for
Allegiance to arrive at an overall fair value of the Company.  Management will
continue to utilize the same group of companies in order to determine this
multiple, provided that there are no significant changes in the underlying
characteristics of such companies.

The Company will assess goodwill impairment every quarter based upon the above
methodology.  In addition, when evaluating the need to record a charge for
goodwill impairment, the Company will evaluate whether such impairments are of a
temporary or permanent nature, and will record appropriate charges (if any) to
operations for permanent goodwill impairments.


