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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-4448
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Baxter International Inc.
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DELAWARE 36-0781620
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State of Incorporation I.R.S. Employer Identification No.
ONE BAXTER PARKWAY, DEERFIELD, ILLINOIS 60015
(708) 948-2000
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Address, including zip code, and telephone number,
including area code, of principal executive offices
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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Common stock, $1 par value New York Stock Exchange
Midwest Stock Exchange
Pacific Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
(currently traded with common stock) Midwest Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes _X_ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in the definitive proxy statement incorporated
by reference in Part III of this Form 10-K or any amendment to this Form
10-K. / /
The aggregate market value of the voting stock held by non-affiliates of the
registrant (based on the per share closing sale price of $22.38 on March 1,
1994, and for the purpose of this computation only, the assumption that all
registrant's directors and executive officers are affiliates) was approximately
$6.1 billion.
The number of shares of the registrant's common stock, $1 par value,
outstanding as of March 1, 1994, was 276,729,809.
DOCUMENTS INCORPORATED BY REFERENCE
Those sections or portions of the registrant's 1993 annual report to
stockholders and of the registrant's proxy statement for use in connection with
its annual meeting of stockholders to be held on April 29, 1994, described in
the cross reference sheet and table of contents attached hereto are incorporated
by reference in this report.
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CROSS REFERENCE SHEET
AND
TABLE OF CONTENTS
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PAGE NUMBER OR
(REFERENCE) (1)
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Item 1. Business.
(a) General Development of Business............................... 3(2)
(b) Financial Information about Industry Segments................. 3(3)
(c) Narrative Description of Business............................. 3(4)
(d) Financial Information about Foreign and Domestic Operations
and Export Sales............................................ 8(5)
Item 2. Properties........................................................ 8
Item 3. Legal Proceedings................................................. 8(6)
Item 4. Submission of Matters to a Vote of Security Holders............... 13
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters......................................................... 14(7)
Item 6. Selected Financial Data........................................... 14(8)
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................... 14(9)
Item 8. Financial Statements and Supplementary Data....................... 14(10)
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................ 14
Item 10. Directors and Executive Officers of the Registrant
(a) Identification of Directors................................... 15(11)
(b) Identification of Executive Officers.......................... 15
(c) Compliance with Section 16(a) of the Securities Exchange Act
of 1934......................................................... 16(12)
Item 11. Executive Compensation............................................ (13)
Item 12. Security Ownership of Certain Beneficial Owners and Management.... (14)
Item 13. Certain Relationships and Related Transactions.................... (15)
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K... 17
(a) Financial Statements.......................................... 19
(b) Reports on Form 8-K...........................................
(c) Exhibits...................................................... 29
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(1) Information incorporated by reference to the Company's Annual Report to
Stockholders for the year ended December 31, 1993 ("Annual Report") and
the board of directors' proxy statement for use in connection with the
Registrant's annual meeting of stockholders to be held April 29, 1994
("Proxy Statement").
(2) Annual Report, pages 53-67, section entitled "Notes to Consolidated
Financial Statements" and pages 35-46, section entitled "Financial
Review."
(3) Annual Report, pages 65-66, section entitled "Notes to Consolidated
Financial Statements -- Segment Information."
(4) Annual Report, pages 35-46, section entitled "Financial Review" and pages
65-66, section entitled "Notes to Consolidated Financial Statements --
Segment Information."
(5) Annual Report, pages 65-66, section entitled "Notes to Consolidated
Financial Statements -- Segment Information."
(6) Annual Report, pages 61-64, section entitled "Notes to Consolidated
Financial Statements -- Legal Proceedings."
(7) Annual Report, page 67, section entitled "Notes to Consolidated Financial
Statements -- Quarterly Financial Results and Market for the Company's
Stock."
(8) Annual Report, inside back cover, section entitled "Six-Year Summary of
Selected Financial Data."
(9) Annual Report, pages 35-46, section entitled "Financial Review."
(10) Annual Report, pages 48-67, sections entitled "Report of Independent
Accountants," "Consolidated Balance Sheets," "Consolidated Statements of
Income," "Consolidated Statements of Cash Flows," "Consolidated Statements
of Stockholders' Equity" and "Notes to Consolidated Financial Statements."
(11) Proxy Statement, pages 2-3, sections entitled "Board of Directors" and
"Election of Directors."
(12) Proxy Statement, page 17, section entitled "Section 16 Reporting."
(13) Proxy Statement, pages 6-17, sections entitled "Compensation of Directors"
and "Compensation of Named Executive Officers," and page 16, section
entitled "Pension Plan and Excess Plan."
(14) Proxy Statement, pages 18-20, section entitled "Ownership of Company
Securities."
(15) Proxy Statement, pages 10-11, section entitled "Mr. Tobin's Separation
Agreement."
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Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015
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PART I
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ITEM 1. BUSINESS.
(a) GENERAL DEVELOPMENT OF BUSINESS.
Baxter International Inc. was incorporated under Delaware law in 1931. As
used in this report, except as otherwise indicated in information incorporated
by reference, "Baxter" means Baxter International Inc. and the "Company" means
Baxter and its subsidiaries.
The Company is engaged in the worldwide development, distribution and
manufacture of a diversified line of products, systems and services used
primarily in the health care field. Products are manufactured by the Company in
21 countries and sold in approximately 100 countries. Health care is concerned
with the preservation of health and with the diagnosis, cure, mitigation and
treatment of disease and body defects and deficiencies. The Company's more than
200,000 products are used primarily by hospitals, clinical and medical research
laboratories, blood and dialysis centers, rehabilitation centers, nursing homes,
doctors' offices and at home under physician supervision. The Company also
distributes and manufactures a wide range of products for research and
development facilities and manufacturing facilities.
For information regarding acquisitions, investments in affiliates and
divestitures, see the Company's Annual Report to Stockholders for the year ended
December 31, 1993 (the "Annual Report"), page 54, section entitled "Notes to
Consolidated Financial Statements -- Acquisitions, Investments in Affiliates,
Divestitures and Discontinued Operations," which is incorporated by reference.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
Incorporated by reference from the Annual Report, pages 65-66, section
entitled "Notes to Consolidated Financial Statements -- Segment Information."
(c) NARRATIVE DESCRIPTION OF BUSINESS.
Recent Developments
In November 1993, the Company announced that its board of directors approved
a series of strategic actions to improve shareholder value, to extend positions
of leadership in health-care markets and to reduce costs. These actions are
designed to make the Company's domestic medical/laboratory products and
distribution segment more efficient and more responsive in addressing the
sweeping changes occurring in the United States health-care system and
accelerate growth of its medical specialties businesses worldwide. The Company
recorded a $700 million pre-tax provision to cover costs associated with these
restructuring initiatives.
The actions include realigning the Company's United States sales
organization; restructuring the distribution organization and investing in new
systems to improve manufacturing and distribution efficiencies worldwide;
seeking to divest its diagnostics-products manufacturing businesses and exiting
selected non-strategic product lines in other businesses, as well as reducing
corporate staff and layers of management to give business units more autonomy.
These actions are expected to result in a reduction of the Company's
worldwide work force by approximately 7 percent, or 4,500 positions, most of of
which will occur over the next two to three years.
The pre-tax restructuring charge of $700 million includes approximately $300
million for non-cash valuation adjustments as a result of the Company's decision
to close facilities or exit non-strategic businesses and investments. The
Company expects to spend approximately $400 million in cash related to the
restructuring programs described above, with most of that expended over the next
two to three years. In return, the
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Company expects to generate annual pre-tax savings of approximately $100 million
in 1994, $200 million in 1995, $275 million in 1996, $325 million in 1997 and
exceeding $350 million in 1998. Management anticipates that these savings will
be partially invested in increased research and development spending and the
Company's expansion into growing international markets.
There is fundamental change occurring in the United States health-care
system and significant change occurring in the Company's marketplace.
Competition among all health-care providers is becoming much more intense as
they attempt to gain patients on the basis of price, quality and service. Each
is under pressure to decrease the total cost of health-care delivery, and
therefore, is looking for ways to reduce materials handling costs, decrease
supply utilization, increase product standardization per procedure, and to
closely control capital expenditures. There has been increased consolidation in
the Company's customer base and by its competitors and these trends are expected
to continue. In recent years, the Company's overall price increases have been
below the increases in the Consumer Price Index, and these industry trends may
inhibit the Company's ability to increase its supply prices in the future.
On November 30, 1992, Baxter paid a dividend to its common stockholders of
all the common stock of Caremark International Inc., formerly a wholly-owned
subsidiary of the Company.
Industry Segments
The Company is a world leader in global manufacturing and distribution of
health-care products and services for use in hospitals and other health-care and
industrial settings. It offers a broad array of products and services. The
Company announced a significant restructuring in the fourth quarter of 1993
designed to make the Company's domestic medical/laboratory products and
distribution segment more efficient and more responsive in addressing the
sweeping changes occurring in the United States health-care system and to
accelerate growth of its medical specialties businesses worldwide. See "Recent
Developments." As a consequence, the Company has redefined its industry segments
to be consistent with its strategic direction and management process. The
Company's operations are reported in the following two industry segments.
Medical Specialties
The Company develops, manufactures and markets on a global basis highly
specialized medical products for treating kidney and heart disease and blood
disorders and for collecting and processing blood. These products include
dialysis equipment and supplies; prosthetic heart valves and cardiac catheters;
blood-clotting therapies; and machines and supplies for collecting, separating
and storing blood. These products require extensive research and development and
investment in worldwide distribution, marketing, and administrative
infrastructure. The Company's International Hospital unit, which manufactures
and distributes intravenous solutions and other medical products outside the
United States is also included in this segment because it shares facilities,
resources and customers with the other medical specialty businesses in several
locations worldwide.
Medical/Laboratory Products and Distribution
The Company manufactures medical and laboratory supplies and equipment,
including intravenous fluids and pumps, diagnostic-testing equipment and
reagents, surgical instruments and procedure kits, and a range of disposable and
reusable medical products. These self-manufactured products, as well as a
significant volume of third party manufactured medical products, are primarily
distributed through the Company's extensive distribution system to United States
hospitals, alternate-site care facilities, medical laboratories, and industrial
and educational facilities.
Information about operating results by segment is incorporated by reference
from the Annual Report, pages 35-46, section entitled "Financial Review" and
pages 65-66, section entitled "Notes to Consolidated Financial Statements --
Segment Information."
Joint Ventures
The Company conducts a portion of its business through joint ventures,
including a joint venture with Nestle, S.A. to develop, market and distribute
clinical nutrition products worldwide. The Company also conducts a joint venture
with International Business Machines Corporation to provide computer software
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and services to hospitals and other health-care providers. These joint ventures
are accounted for under the equity method of accounting and therefore, are
excluded from the two industry segments in which the Company operates.
Health Care Environment
A decade ago, significant changes began taking place in the funding and
delivery of health-care throughout the world. Continuing cost containment
efforts by national governments and other health-care payors are restructuring
health-care delivery systems; and accelerating cost pressures on hospitals are
resulting in increased out-patient and alternate-site health-care service
delivery and a focus on cost-effectiveness and quality. These forces
increasingly shape the demand for, and supply of medical care.
The changes in the United States market began when Congress adopted
legislation to limit reimbursement for treatment of Medicare patients. The
previous system reimbursed hospitals for the reasonable costs of services. Under
the prospective reimbursement system, hospitals are reimbursed at a fixed rate
based on the patient's particular diagnosis, regardless of actual costs
incurred.
Many private health-care payors have adopted similar reimbursement plans and
are providing other incentives for consumers to seek lower cost care outside the
hospital. Many corporations' employee health plans have been restructured to
provide financial incentives for patients to utilize the most cost-effective
forms of treatment (managed care programs, such as health maintenance
organizations, have become more common); and physicians have been encouraged to
provide more cost-effective treatments.
With the change of administrations in Washington, and continuing throughout
1993, significant national attention is being focused on the costs and
shortcomings of the United States' health-care financing and delivery system.
Specifically, and as a result of this attention, the administration is in the
process of proposing legislation aimed at restructuring health-care funding in
the United States. Based on information presently available to the Company,
there will be no material adverse impact upon the Company's business or
financial condition if these measures are enacted. The Company continues to
believe that its strategy of providing unmatched service to its health-care
customers and achieving the best overall cost in its delivery of health-care
products and services is compatible with any restructuring of the United States
health-care system which may ultimately occur.
The future financial success of suppliers, such as the Company, will depend
on their ability to work with hospitals to help them enhance their
competitiveness. The Company believes it can help hospitals achieve savings in
the total supply system by automating supply-ordering procedures, optimizing
distribution networks, improving materials management and achieving economies of
scale associated with aggregating supply purchases.
Methods of Distribution
The Company conducts its selling efforts through its subsidiaries and
divisions. Many subsidiaries and divisions have their own sales forces and
direct their own sales efforts. In addition, sales are made to independent
distributors, dealers and sales agents. Distribution centers, which may serve
more than one division, are stocked with adequate inventories to facilitate
prompt customer service. Sales and distribution methods include frequent contact
by sales representatives, automated hospital communications via versions of the
ASAP-R- automated purchasing system, circulation of catalogs and merchandising
bulletins, direct mail campaigns, trade publications and advertising.
The Company is expanding the use of versions of the ASAP system. These
versions allow customers to order supplies directly using a telephone-linked
terminal. The system can be tailored to individual customer needs, enabling
hospitals, laboratories and other customers to order products in predetermined
groupings, as well as individually. The ASAP system can also provide the
customer with computerized price information and order confirmation.
The Company's Corporate program provides large hospitals and multi-hospital
systems with a single point of contact for all of the Company's products,
services and special value-added programs. The Company is allied with other
companies through its ACCESS-TM- program. Through this program, the Company
provides its Corporate customers with products and services from leading
companies in related industries which go beyond the Company's scope of
proprietary product offerings. The Company maintains ACCESS alliances with a
subsidiary of WMX Technologies, Inc. (formerly Waste Management of America,
Inc.) for
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handling and disposal of medical waste; with Comdisco, Inc. for high technology
asset management and contingency services; with Kraft Foodservice Inc., a
subsidiary of Kraft General Foods, Inc., to distribute and market a broad array
of hospital food service products; with the Graphics and Technology Group, a
division of North American Paper Company; and with various divisions of Trammell
Crow Company for facilities management and real estate planning services.
The Company's ValueLink-R- hospital inventory management service is designed
to deliver health-care products in ready-to-use packaging directly to individual
hospital departments on a "just-in-time" basis. As of the end of 1993, 53
hospitals were participating in the Company's ValueLink program. With ValueLink
services, hospitals reduce their inventories and the related warehousing costs
for medical-surgical supplies and rely on the Company for frequent, standardized
deliveries and improved service levels. The Company has distribution facilities
across the United States to serve the nation's hospitals.
In late 1991, the Company developed the Quality Enhanced Distribution
Services-TM- program, reducing the time it takes for a hospital to receive and
store supplies and to process accounts payable. Based on each customer's unique
requirements, the Company's products are delivered in a manner which facilitates
efficient processing of products and related documents by the hospital's
personnel. As a result, many hospital customers have been able to reduce the
amount of labor associated with the receipt and storage of supplies. As of the
end of 1993, 724 Enhanced Distribution Services initiatives were serving United
States hospital customers.
International sales and distribution are made in approximately 100 countries
either on a direct basis or through independent local distributors.
International subsidiaries employ their own field sales forces in Australia,
Austria, Belgium, Brazil, Canada, China, Colombia, Czech Republic, Denmark,
Finland, France, Germany, Greece, Hong Kong, Hungary Italy, Japan, Korea,
Malaysia, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal,
Republic of Ireland, Singapore, Spain, Sweden, Switzerland, Taiwan, Thailand,
Turkey, the United Kingdom, Venezuela and Zimbabwe. In other countries, sales
are made through independent distributors or sales agents.
Raw Materials
Raw materials essential to the Company's business are purchased worldwide in
the ordinary course of business from numerous suppliers. The vast majority of
these materials are generally available, and no serious shortages or delays have
been encountered. Certain raw materials used in producing some of the Company's
products can be obtained only from a small number of suppliers.
In some of these situations, the Company has long-term supply contracts with
such suppliers, although it does not consider its obligations under such
contracts to be material. The Company does not always recover cost increases
through customer pricing due to contractual limits on such price increases. See
"Contractual Arrangements."
Patents and Trademarks
The Company owns a number of patents and trademarks throughout the world and
is licensed under patents owned by others. While it seeks patents on new
developments whenever feasible, the Company does not consider any one or more of
its patents, or the licenses granted to or by it, to be essential to its
business.
Products manufactured by the Company are sold primarily under its own
trademarks and trade names. Some products purchased and resold by the Company
are sold under the Company's trade names while others are sold under trade names
owned by its suppliers.
Competition
The Company is a major factor in the distribution and manufacture of
hospital and laboratory products and services and medical specialties. Although
no single company competes with the Company in all of its industry segments, the
Company is faced with substantial competition in all of its markets.
Historically, competition in the health-care industry has been characterized
by the search for technological and therapeutic innovations in the prevention,
diagnosis and treatment of disease. The Company believes that it has benefited
from the technological advantages of certain of its products. While others will
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continue to introduce new products which compete with those sold by the Company,
the Company believes that its research and development effort will permit it to
remain competitive in all presently material product areas.
The changing health-care environment in recent years has led to increasingly
intense competition among health-care suppliers. Competition is focused on
price, service and product performance. Pressure in these areas is expected to
continue. See "Health Care Environment." In part through the 1993 restructuring
program, the Company continues to increase its efforts to minimize costs and
better meet accelerating price competition. The Company believes that its cost
position will continue to benefit from improvements in manufacturing technology
and increased economies of scale. The Company continues to emphasize its
investments in innovative technologies and the quality of its products and
services.
Credit and Working Capital Practices
The Company's debt ratings of A3 on senior debt by Moody's, A-by Standard &
Poor's and A by Duff & Phelps were reaffirmed by each rating agency after the
1993 restructuring announcement. Standard & Poors and Duff & Phelps have
indicated that continuation of these ratings in the future is dependent on the
Company's successful implementation of the restructuring program announced in
November 1993, and the reduction of its financial leverage which is expected to
result from the planned divestiture of its diagnostics-products manufacturing
businesses.
Although the Company's credit practices and related working capital needs
vary across industry segments, they are comparable to those of other market
participants. Collection periods tend to be longer for sales outside the United
States.
Customers may return defective merchandise for credit or replacement. In
recent years, such returns have been insignificant.
Quality Control
The Company places great emphasis on providing quality products and services
to its customers. An integrated network of quality systems, including control
procedures that are developed and implemented by technically trained
professionals, result in rigid specifications for raw materials, packaging
materials, labels, sterilization procedures and overall manufacturing process
control. The quality systems integrate the efforts of raw material and finished
goods suppliers to provide the highest value to customers. On a statistical
sampling basis, a quality assurance organization tests components and finished
goods at different stages in the manufacturing process to assure that exacting
standards are met.
Research and Development
The Company is actively engaged in research and development programs to
develop and improve products, systems and manufacturing methods. These
activities are performed at 35 research and development centers located around
the world and include facilities in Australia, Belgium, Germany, Italy, Japan,
Malaysia, Malta, the Netherlands, Switzerland, the United Kingdom and the United
States. Expenditures for Company-sponsored research and development activities
were $337 million in 1993, $317 million in 1992 and $288 million in 1991.
The Company's research efforts emphasize self-manufactured product
development, and portions of that research relate to multiple product lines. For
example, many product categories benefit from the Company's research effort as
applied to the human body's circulatory systems. In addition, research relating
to the performance and purity of plastic materials has resulted in advances that
are applicable to a large number of the Company's products. Principal areas of
strategic focus for research are treatments for kidney failure, blood disorders
and cardiovascular disease.
Government Regulation
Most products manufactured or sold by the Company in the United States are
subject to regulation by the Food and Drug Administration ("FDA"), as well as by
other federal and state agencies. The FDA regulates the introduction and
advertising of new drugs and devices as well as manufacturing procedures,
labeling and record keeping with respect to drugs and devices. The FDA has the
power to seize adulterated or misbranded drugs and devices or to require the
manufacturer to remove them from the market and the
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power to publicize relevant facts. From time to time, the Company has removed
products from the market that were found not to meet acceptable standards. This
may occur in the future. Similar product regulatory laws are found in most other
countries where the Company does business.
Environmental policies of the Company mandate compliance with all applicable
regulatory requirements concerning environmental quality and contemplate, among
other things, appropriate capital expenditures for environmental protection.
Various non-material capital expenditures for environmental protection were made
by the Company during 1993 and similar expenditures are planned for 1994. See
Item 3. -- "Legal Proceedings."
Employees
As of December 31, 1993, the Company employed approximately 60,400 people,
including approximately 35,500 in the United States and Puerto Rico.
Contractual Arrangements
A substantial portion of the Company's products are sold through contracts
with purchasers, both international and domestic. Some of these contracts are
for terms of more than one year and include limits on price increases. In the
case of hospitals, clinical laboratories and other facilities, these contracts
may specify minimum quantities of a particular product or categories of products
to be purchased by the customer.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES.
International operations are subject to certain additional risks inherent in
conducting business outside the United States, such as changes in currency
exchange rates, price and currency exchange controls, import restrictions,
nationalization, expropriation and other governmental action.
Financial information is incorporated by reference from the Annual Report,
pages 65-66, section entitled "Notes to Consolidated Financial Statements --
Segment Information."
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ITEM 2. PROPERTIES.
The Company owns or has long-term leases on substantially all of its major
manufacturing facilities. The Company maintains 48 manufacturing facilities in
the United States, including nine in Puerto Rico, and also manufactures in
Australia, Belgium, Brazil, Canada, Colombia, Costa Rica, the Dominican
Republic, France, Germany, Italy, Japan, Malaysia, Malta, Mexico, the
Netherlands, Republic of Ireland, Singapore, Spain, Switzerland and the United
Kingdom. Many of the major manufacturing facilities are multi-product and
manufacture items for both of the Company's industry segments.
The Company owns or operates 98 distribution centers in the United States
and Puerto Rico and 55 located in 22 foreign countries. Many of these facilities
handle products for both of the Company's industry segments.
The Company maintains a continuing program for improving its properties,
including the retirement or improvement of older facilities and the construction
of new facilities. This program includes improvement of manufacturing facilities
to enable production and quality control programs to conform with the current
state of technology and government regulations. Capital expenditures were $516
million in 1993, $537 million in 1992 and $503 million in 1991. In addition, the
Company added to the pool of equipment leased or rented to customers, spending
$89 million in 1993, $103 million in 1992 and $89 million in 1991.
The Company's facilities are suitable for their respective uses and, in
general, are adequate for the Company's current needs.
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ITEM 3. LEGAL PROCEEDINGS.
As of December 31, 1993, the Company was a defendant, together with other
defendants, in 3,445 lawsuits and had 1,425 pending claims from individuals, all
of which seek damages for injuries allegedly caused by silicone mammary
prostheses ("mammary implants") manufactured by the American Heyer-
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Schulte division of American Hospital Supply Corporation ("American"). The
Company's responsibility for mammary implants results from the American
Heyer-Schulte division of American which manufactured these products from 1974
until 1984, at which time the products and related assets were sold to Mentor
Corporation. American retained the product liability responsibility for products
sold before the divestiture, and that responsibility was assumed by a subsidiary
of the Company as part of its 1985 acquisition of American. The Company has not
manufactured or sold this product since 1984 nor does it have any of the product
in its inventory.
The typical case or claim alleges that the individual's mammary implants
caused one or more of a wide range of ailments, including non-specific
autoimmune disease, scleroderma, lupus, rheumatoid arthritis, fibromyalgia,
mixed connective tissue disease, Sjogren's Syndrome, dermatomyositis,
polymyositis, and chronic fatigue. The comparable number of cases and claims was
137 as of December 31, 1991 and 1,612 as of December 31, 1992. In 1991, 76 cases
and claims were disposed of; in 1992, 309 cases and claims were disposed of; and
in 1993, 634 cases and claims were disposed of.
Continuing publicity and action taken by the U.S. Food and Drug
Administration limiting the use of gel-filled silicone mammary implants has
caused a significant increase in the number of product liability cases
concerning these products brought against the Company. In addition to the
individual suits against the Company, a class action on behalf of all women with
mammary implants filed against all manufacturers of such implants has been
conditionally certified and is pending in the United States District Court for
the Northern District of Alabama (DANTE, ET AL., V. DOW CORNING, ET AL.,
U.S.D.C., N. Dist., Ala., 92-2589; part of IN RE: SILICONE GEL BREAST IMPLANT
PRODUCT LIABILITY LITIGATION, U.S.D.C., N. Dist. Ala., MDL 926, (U.S.D.C., N.
Dist. Ala., CV 92-P-10000-S)). Another class action has been certified and is
pending in state court in Louisiana (SPITZFADDEN, ET AL., V. DOW CORNING CORP.,
ET AL., Dist. Ct., Parish of Orleans, 92-2589). Baxter also has been named in
three purported additional class actions, none of which is currently certified.
(BARCELLONA, ET AL., V. DOW CORNING, ET AL., U.S.D.C., Mich., 9300 72045 DT and
MOSS, ET AL., V. DOW CORNING, ET AL., U.S.D.C., Minn., 92-P-10560-S, both of
which have been transferred to and are part of IN RE: SILICONE GEL BREAST
IMPLANT PRODUCT LIABILITY LITIGATION, U.S.D.C., N. Dist. Ala., MDL-926 for
discovery purposes, and DOE, ET AL., V. INAMED CORPORATION, ET AL., Circuit Ct.,
Dade County, Fla, 92-07034.) A suit seeking class certification on behalf of all
residents of the Province of Ontario, Canada, who received Heyer-Schulte
implants has also been filed (BURKE, V. AMERICAN HEYER-SCHULTE, ET AL., Ontario
Prov. Court, Gen. Div., 15981/93.)
Additionally, the Company has been served with a purported class action
brought on behalf of children allegedly exposed to silicone in utero and through
breast milk. (FEUER, ET AL., V. MCGHAN, ET AL., U.S.D.C., E. Dist. N.Y.,
93-0146.) The suit names all mammary implant manufacturers as defendants and
seeks to establish a medical monitoring fund.
These implant cases and claims generally raise difficult and complex factual
and legal issues and are subject to many uncertainties and complexities,
including, but not limited to, the facts and circumstances of each particular
case or claim, the jurisdiction in which each suit is brought, and differences
in applicable law. Many of the cases and claims are at very preliminary stages,
and the Company has not been able to obtain information sufficient to evaluate
each case and claim.
There also are issues concerning which of the Company's insurers is
responsible for covering each matter and the extent of the Company's claims for
contribution against third parties. The Company believes that a substantial
portion of the liability and defense costs related to mammary implant cases and
claims will be covered by insurance, subject to self-insurance retentions,
exclusions, conditions, coverage gaps, policy limits and insurer solvency. Most
of the Company's insurers have reserved (i.e., neither admitted nor denied), and
may attempt to reserve in the future, the right to deny coverage, in whole or in
part, due to differing theories regarding, among other things, the applicability
of coverage and when coverage may attach. The Company has been, and will
continue to be, engaged in active negotiations with its insurers concerning
coverages and the potential settlement described below. Also, some of the
mammary implant cases pending against the Company seek punitive damages and
compensatory damages arising out of alleged intentional torts. Depending on
policy language, applicable law and agreements with insurers, the damages
awarded pursuant to such claims may or may not be covered, in whole or in part,
by insurance. On February 7, 1994, the Company filed suit against all of the
insurance companies which issued product liability
9
policies to American, American Heyer-Schulte and Baxter for a declaratory
judgment that: the policies cover each year of injury or claim, the Company may
choose among multiple coverages; coverage begins with the date of implant; and
legal fees and punitive damages are covered.
Representatives of the plaintiffs and defendants in these cases have
negotiated a global settlement of the issues under the jurisdiction of the Court
in the DANTE, ET AL. V. DOW CORNING, ET AL. case. The monetary provisions of the
settlement proposal providing compensation for all present and future plaintiffs
and claimants based on a series of specific funds and scheduled medical
conditions have been agreed upon by most of the significant defendants and
representatives of the plaintiffs. Under the proposal, the total of all of the
specific funds, which would be paid-in and made available over approximately
thirty years following final approval of the settlement by the Courts, is capped
at $4.75 billion. The settling defendants have agreed to fund $4 billion of this
amount. The Company's share of this settlement has been established by the
settlement negotiations at $556 million. This settlement is subject to a series
of court proceedings, including a court review of its fairness, and the
opportunity for individual plaintiffs and claimants to elect to remove
themselves from the settlement ("opt-out"). At present, the Company is not able
to estimate the nature and extent of its potential future liability with respect
to opt-outs.
In the fourth quarter of 1993, the Company accrued $556 million for its
estimated liability resulting from a potential global settlement of the mammary
implant class action and recorded a receivable for estimated insurance recovery
of $426 million, resulting in a net charge of $130 million. The reserves for the
settlement do not include any provisions for opt-outs and are in addition to the
general reserves for the mammary implant cases discussed below.
In connection with its acquisition of American, the Company had established
reserves at the time of the merger for product liability, including mammary
implant cases and claims. At December 31, 1993, the reserve allocated to mammary
implant cases and claims was approximately $42 million. Based on current
information, management believes that this reserve represents the Company's
minimum net exposure in connection with future mammary implant cases and claims
beyond the effect of the global settlement described above.
Upon resolution of any of the uncertainties concerning these cases, the
Company may ultimately incur charges in excess of presently established
reserves. While such a future charge could have a material adverse impact on the
Company's net income in the period in which it is recorded, management believes
that any outcome of this litigation will not have a material adverse effect on
the Company's consolidated financial position.
As of December 31, 1993, the Company was a defendant, together with other
defendants, in 121 lawsuits, and has one pending claim, in the United States and
Canada involving individuals who have hemophilia, or their representatives.
Those cases and claim seek damages for injuries allegedly caused by
anti-hemophilic factor concentrates VIII and IX derived from human blood plasma
processed and sold by the Company. Furthermore, 58 lawsuits seeking damages
based on similar allegations are pending in Ireland and Japan.
The typical case or claim alleges that the individual with hemophilia was
infected with HIV by infusing Factor VIII or Factor IX concentrates ("Factor
Concentrates") containing HIV. The total number of cases and claims asserted
against the Company as of December 31, 1991, was 16, and as of December 31,
1992, was 52. In 1991, 11 cases and claims were disposed of; in 1992, 9 cases
and claims were disposed of; and in 1993, 11 cases and claims were disposed of.
In addition to the individual suits against the Company, a purported class
action was filed on September 30, 1993, on behalf of all U.S. residents with
hemophilia (and their families) who were treated with Factor Concentrates and
who allegedly are infected with HIV as a result of the use of such Factor
Concentrates. This lawsuit was filed in the United States District Court for the
Northern District of Illinois (WADLEIGH, ET AL., V. RHONE-POULENC RORER, ET AL.,
U.S.D.C., N. Dist., Ill. 93C 5969). A state-wide class action also has been
filed on behalf of all New Jersey residents with hemophilia and HIV. (D.K., ET
AL., V. ARMOUR PHARMACEUTICAL COMPANY, ET AL., Sup. Ct., Middlesex County, N.J.,
L8134-93.) Neither class action has yet been certified.
Many of the cases and claims are at very preliminary stages, and the Company
has not been able to obtain information sufficient to evaluate each case and
claim. In most states, the Company's potential
10
liability is limited by laws which provide that the sale of blood or blood
derivatives, including Factor Concentrates, is not the sale of a "good," and
thus is not covered by the doctrine of strict liability. As a result, each
claimant will have to prove that his or her injuries were caused by the
Company's negligence. The WADLEIGH case alleges that the Company was negligent
in failing: to use available purification technology; to promote research and
development for product safety; to withdraw Factor Concentrates once it knew or
should have known of viral contamination of such concentrates; to screen plasma
donors properly; to recall contaminated Factor Concentrates; and to warn of
risks known at the time the product was used. The Company denies these
allegations and will file a challenge to the class proceedings later in 1994.
The Company is not able to estimate the nature and extent of its potential or
ultimate future liability with respect to these cases and claims, but as a
result of settlement discussions and opinions of litigation counsel, has
established the reserve described below.
The Company believes that a substantial portion of the liability and defense
costs related to anti-hemophilic factor concentrates cases and claims will be
covered by insurance, subject to self-insurance retentions, exclusions,
conditions, coverage gaps, policy limits and insurer solvency. Most of the
Company's insurers have reserved (i.e., neither admitted nor denied), and may
attempt to reserve in the future, the right to deny coverage, in whole or in
part, due to differing theories regarding, among other things, the applicability
of coverage and when coverage may attach. Zurich Insurance Co., one of the
Company's comprehensive general liability insurance carriers, on February 1,
1994, filed a suit against the Company seeking a declaratory judgment that the
policies it had issued do not cover the losses that the Company has notified it
of for a number of reasons, including that Factor Concentrates are products, not
services, and are, therefore, excluded from the policy coverage, and that the
Company has failed to comply with various obligations of tender, notice, and the
like under the policies. On February 8, 1994, the Company filed suit against all
of the insurance companies which issued comprehensive general liability and
product liability policies to the Company for a declaratory judgment that the
policies for all of the excess carriers covered both products and services. In
that suit, the Company also sued Zurich for failure to defend it and Zurich and
Columbia Casualty Company for failure to indemnify it.
The Company is engaged in notifying its insurers concerning coverages and
the potential settlement discussed below. Also, some of the anti-hemophilic
factor concentrates cases pending against the Company seek punitive damages and
compensatory damages arising out of alleged intentional torts. Depending on
policy language, applicable law and agreements with insurers, the damages
awarded pursuant to such claims may or may not be covered, in whole or in part,
by insurance. Accordingly, the Company is not currently in a position to
estimate the amount of its potential future recoveries from its insurers, but
has estimated its recovery with respect to the reserves it has established.
The National Hemophilia Foundation ("NHF") asked the U.S. commercial
producers of anti-hemophilic factor concentrates (Alpha Therapeutics, Armour
Pharmaceuticals, Baxter Healthcare Corporation and Miles Laboratories) to
provide $1.5 billion as part of a fund for HIV positive hemophiliacs. The
Company and some of the other producers made a counter-proposal that the NHF
rejected. The Company is vigorously defending each of the cases and claims
against it. At the same time, it is likely that the Company will continue to
seek ways to resolve pending and threatened litigation concerning these issues
through a negotiated resolution.
In Canada, the provincial governments created a settlement fund to which all
of the fractionators, including the Company, have contributed. The Company's
contribution to the fund was approximately $3 million. Those Canadian claimants
who avail themselves of this fund must sign releases in favor of the Company
against further litigation. The period in which to file a claim against the fund
expired on March 15, 1994.
In the fourth quarter of 1993, the Company accrued $131 million for its
estimated worldwide liability for litigation and settlement expenses involving
anti-hemophilic Factor Concentrate cases, and recorded a receivable for
insurance coverage of $83 million, resulting in a net charge of $48 million. The
expense of the Canadian settlement is covered by this reserve.
Upon resolution of any of the uncertainties concerning these cases, or if
the Company, along with the other defendants, enters into a comprehensive
settlement of the class actions described above, the Company may incur charges
in excess of presently established reserves. While such a future charge could
have a
11
material adverse impact on the Company's net income in the period in which it is
recorded, management believes that any outcome of this litigation will not have
a material adverse effect on the Company's consolidated financial position.
Most of the individuals who served as directors of American in 1985,
including Mr. Cathcart and Ms. Evans, who currently are directors of the
Company, are defendants in a pending lawsuit filed as a derivative action. LEWIS
V. BAYS, ET AL. was filed on March 23, 1990, in the Circuit Court of Cook
County, Illinois. The plaintiffs allege breach of fiduciary duty claims relating
to American's buyout of an agreement with Hospital Corporation of America
("HCA") in connection with the Company's merger with American in 1985. In
November 1992, the Board of Directors appointed a special litigation committee
consisting of three current directors of the Company who were neither directors
of the Company nor American at the time of the merger.
The special litigation committee was appointed to determine the best
interests of the Company relating to this lawsuit, which seeks $200 million in
damages from the individual defendants and HCA as well as other relief. On
August 9, 1993, counsel for the special litigation committee filed a motion with
the Court to dismiss this case on the basis that there is no merit to the claims
against any defendant and that pursuing this litigation is not in the best
interests of the Company or its stockholders. The proceedings on this motion
have been stayed while the parties discuss the possibility of resolving the case
without further court proceedings.
On January 14, 1994, the parties in this case filed with the court a
Memorandum of Understanding which provides a basis for resolving the case. The
parties have undertaken proceedings necessary to demonstrate the fairness of the
proposed settlement. It is anticipated that these actions will be completed by
April 1994, following which the parties expect to sign a settlement agreement
and present it to the court for approval. Management believes that the terms of
any possible resolution will have not have a material adverse effect on the
Company's results of operations or consolidated financial position.
At the start of 1993, the Company was a defendant in patent litigation
brought by Scripps Clinic and Research Foundation ("Scripps") and Rhone-Poulenc
Rorer, Inc. (formerly Rorer Group, Inc.) ("Rorer") in which the plaintiffs
alleged that the Company's monoclonal anti-hemophilic Factor VIII and its
recombinant Factor VIII infringed a patent originally owned by Scripps and
subsequently licensed to Rorer. Trial of this litigation before a judge without
a jury was concluded in 1992. Before a ruling on the trial was received, the
Company entered into a worldwide settlement of the litigation with Scripps and
Rorer. The settlement agreement required Baxter to pay $105 million to Rorer to
settle claims relating to certain anti-hemophilic Factor VIII products
manufactured and sold prior to January 1, 1993. As part of this agreement,
Baxter was also granted a non-exclusive sub-license for future use of the
related patents. This license agreement is royalty-bearing when used in
conjunction with the Company's monoclonally purified and Recombinant Factor VIII
products.
Baxter Healthcare Corporation ("BHC") has been named as a defendant in a
purported class action on behalf of all medical and dental personnel in the
State of California who suffered allergic reactions to natural rubber latex
gloves and other protective equipment or who have been exposed to natural rubber
latex products. (KENNEDY, ET AL., V. BAXTER HEALTHCARE CORPORATION, ET AL., Sup.
Ct., Sacramento Co., Cal., #535632.) The case, which was filed in August 1993,
alleges that users of various natural rubber latex products, including medical
gloves made and sold by BHC and other manufacturers, suffered allergic reactions
to the products ranging from skin irritation to systemic anaphylaxis. BHC filed
a demurrer to the compliant, which was granted, and the Complaint was dismissed
with leave to file an amended complaint. The amended complaint was filed in
December 1993, and BHC has filed a demurrer to the Amended Complaint. Management
believes that the outcome of this matter will not have a material adverse effect
on the Company's results of operations or consolidated financial position.
On August 13, 1993, the Company received a notice from the Department of
Veterans Affairs ("DVA") suspending it from competing for, or receiving, new
contracts with any agency within the Executive Branch of the Federal Government
on the basis of the Company's guilty plea to an information charging it with one
count of violating the Anti-boycott Statute by providing information to Arab
League Boycott Officials. On the same day, the Company's subsidiary, BHC,
received a notice from the DVA suspending it on the basis of the Company's plea,
its commonality of management with, and its ownership by, the Company, and its
alleged misrepresentation concerning the status of products on its Federal
Supply Schedule Contracts with the government.
12
On the same day, Vernon R. Loucks Jr., chairman and chief executive officer
of the Company, and James R. Tobin, the former president and chief operating
officer of the Company, each received notices from the DVA proposing their
individual debarments from competing for, or receiving, contracts on the basis
of the Company's plea and on the assertion that each knew or should have known
of the actions of the Company and its former senior vice president, secretary,
and general counsel, G. Marshall Abbey, recited in the plea agreement. Mr. Abbey
also received a notice of proposed debarment from the DVA.
On December 21, 1993, the Company and the DVA reached an agreement to settle
these proceedings. As a result, the Company and BHC were immediately reinstated
as federal contractors by the DVA, and the suspensions imposed in August 1993,
were lifted. The settlement agreement between Baxter, BHC, Messrs. Loucks and
Tobin, and the DVA resolved all civil and administrative disputes involved in
the suspension proceeding. The DVA also terminated debarment proceedings against
Loucks and Tobin. As a part of the settlement, BHC agreed to provide the agency
with $2.8 million in financial consideration over three years for past, present
and future costs associated with the suspension proceedings, and establish a
service center dedicated exclusively to federal accounts and staffed by
customer-service representatives who will receive training emphasizing
government-contracting regulations and federal procurement requirements. The
payment and actions agreed to by Baxter, BHC, Messrs. Loucks and Tobin, and the
DVA did not constitute an admission of liability or wrongdoing.
All of the individuals who served as directors of the Company as of
September 1, 1993, as well as Lester B. Knight, executive vice president of the
Company, are named as defendants in a pending lawsuit ostensibly filed as a
"demand excused" derivative action. SEIGEL V. LOUCKS, ET AL., was filed
September 15, 1993, in the Court of Chancery in New Castle County, Delaware Cir.
Ct., New Castle Co., Del., Cir. Act #13130. On October 24, 1993, a substantially
identical complaint was filed in the same court by Bartholomew J. Millano. The
two complaints have been consolidated. The plaintiffs allege, among other
things, that the directors failed to oversee management in connection with
actions which are the basis for the dispute between the Company and the DVA
which are described above, failed to prevent such actions, and failed to create
a compliance program to prevent or detect such actions. The complaint seeks to
recover alleged damages incurred by the Company as the result of lost sales due
to the proposed debarment discussed above, as well as the compensation paid to
Messrs. Gantz, Knight, Loucks and Tobin since 1991. The Company and its
directors have filed motions to dismiss the suit, have answered the complaint
and have filed a counterclaim seeking to permanently bar and enjoin the
plaintiff from prosecuting this case because her claims have been disposed of
and barred in a prior suit against the Company.
The Company has been named as a potentially responsible party for unsettled
claims for cleanup costs at 18 hazardous waste sites. The Company was a
significant contributor to waste disposed on only one of these sites, the
Thermo-Chem site in Muskegon, Michigan. The company expects that the total
cleanup costs for this site will be between $37 million and $82 million, of
which the Company's share will be approximately $5 million. This amount has been
reserved and reflected in the Company's financial statements.
In all of the other sites, the Company was a minor contributor and,
therefore, does not have information on the total cleanup costs. The Company
has, however, in most of these cases been advised by the potentially responsible
party of its roughly estimated exposure at these sites. Those estimated
exposures total approximately $5 million.
The Company is a defendant in a number of other claims, investigations and
lawsuits. Based on the advice of counsel, management does not believe that the
other claims, investigations and lawsuits individually or in the aggregate, will
have a material adverse effect on the Company's operations or its consolidated
financial condition.
- --------------------------------------------------------------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
13
PART II
- --------------------------------------------------------------------------------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Incorporated by reference from the Annual Report, page 67, section entitled
"Notes to Consolidated Financial Statements -- Quarterly Financial Results and
Market for the Company's Stock."
- --------------------------------------------------------------------------------
ITEM 6. SELECTED FINANCIAL DATA.
Incorporated by reference from the Annual Report, inside back cover, section
entitled "Six-Year Summary of Selected Financial Data."
- --------------------------------------------------------------------------------
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Incorporated by reference from the Annual Report, pages 35-46, section
entitled "Financial Review." Also incorporated by reference is the section of
this Form 10-K, Part I captioned "Recent Developments," "Health Care
Environment" and "Legal Proceedings" on pages 3 to 4, 5 and 9 to 13,
respectively.
- --------------------------------------------------------------------------------
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Incorporated by reference from the Annual Report, pages 48-67, sections
entitled "Report of Independent Accountants," "Consolidated Balance Sheets,"
"Consolidated Statements of Income," "Consolidated Statements of Cash Flows,"
"Consolidated Statements of Stockholders' Equity," and "Notes to Consolidated
Financial Statements."
- --------------------------------------------------------------------------------
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
14
PART III
- --------------------------------------------------------------------------------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
a) IDENTIFICATION OF DIRECTORS
Incorporated by reference from the board of directors' proxy statement for
use in connection with Baxter's annual meeting of stockholders to be held on
April 29, 1994 (the "Proxy Statement"), pages X-X, sections entitled "Board of
Directors" and "Election of Directors."
b) IDENTIFICATION OF EXECUTIVE OFFICERS
Following are the names and ages of the executive officers of Baxter
International Inc. as of February 28, 1994, their positions with it and
summaries of their backgrounds and business experience. All executive officers
are elected or appointed by the board of directors and hold office until the
next annual meeting of directors and until their respective successors are
elected and qualified. The annual meeting of directors is held after the annual
meeting of stockholders.
WILLIAM B. GRAHAM, age 82, has been senior chairman of the board of
directors since 1985. Mr. Graham became president of the Company in 1953 and
chief executive officer in 1960 and continued in these positions until 1971.
From 1971 to 1980 he was chairman of the board and chief executive officer, and
thereafter he served as chairman until he became senior chairman.
VERNON R. LOUCKS JR., age 59, has been chairman of the board of directors
since 1987 and chief executive officer of Baxter since 1980. Mr. Loucks was
first elected an officer of Baxter in 1971.
LESTER B. KNIGHT, age 35, has been an executive vice president of Baxter
since 1992, and a vice president since 1990. Mr. Knight previously was president
of a division of a subsidiary of Baxter, and prior to that was employed in
various management capacities with the same subsidiary. Mr. Knight is the son of
Charles F. Knight, a director of Baxter.
TONY L. WHITE, age 47, has been an executive vice president of Baxter since
1992, and a vice president since 1986, when he was first elected an officer.
HENRY R. AUTRY, age 45, has been senior vice president and chief
administrative officer of Baxter since 1993. Mr. Autry previously was president
of a division of a subsidiary of Baxter. Before joining the Company, Mr. Autry
was vice president of international sales at Federal Express Corporation.
HARRY M. JANSEN KRAEMER, JR., age 39, has been senior vice president and
chief financial officer of Baxter since 1993. Mr. Kraemer previously was the
vice president of finance and operations for a subsidiary of Baxter. Prior to
that he was employed as controller, group controller, and president of various
divisions of subsidiaries of Baxter.
ARTHUR F. STAUBITZ, age 54, has been senior vice president, secretary and
general counsel of Baxter since 1993. Mr. Saubitz previously was vice
president/general manager of the ventures group of a subsidiary of Baxter. Prior
to that he was senior vice president, secretary and general counsel of Amgen,
Inc. Prior to that he was a vice president of a Baxter subsidiary, and prior to
that he was a vice president and deputy general counsel of Baxter.
BARBARA Y. MORRIS, age 48, has been a senior vice president of Baxter since
1992. Ms. Morris was first elected an officer of Baxter in 1986.
HERBERT E. WALKER, age 59, has been senior vice president of Baxter since
1993. Mr. Walker previously was vice president of human resources of a division
of a subsidiary of Baxter.
DALE A. SMITH, age 62, has been a group vice president of Baxter since 1979,
when he was first elected an officer.
RONALD H. ABRAHAMS, age 51, has been a vice president of Baxter since 1990.
Mr. Abrahams previously was vice president -- quality assurance and regulatory
affairs of a subsidiary of Baxter.
15
DAVID J. AHO, age 44, has been a vice president of Baxter since 1989. Mr.
Aho previously was vice president of government affairs of a subsidiary of
Baxter.
JAMES H. TAYLOR, JR., age 55, has been a vice president of Baxter since
1992. Mr. Taylor previously was the general manager of operations of a division
of a subsidiary of Baxter, and prior to that was vice president of manufacturing
of that division.
BRIAN P. ANDERSON, age 43, has been the controller of Baxter since 1993. Mr.
Anderson previously was the vice president of corporate audit of a subsidiary of
Baxter, and prior to that was a partner in the international accounting firm of
Deloitte & Touche.
LAWRENCE D. DAMRON, age 47, has been treasurer of Baxter since 1992. Mr.
Damron previously was a vice president and controller of a division of a
subsidiary of Baxter, and prior to that was the corporate auditor of another
subsidiary. Prior to that, he was vice president and controller of a division of
that subsidiary.
c) COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934.
Incorporated by reference from Proxy Statement, page 17, section entitled
"Section 16 Reporting."
16
- --------------------------------------------------------------------------------
PART IV
- --------------------------------------------------------------------------------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following documents are filed as a part of this report:
(a) Financial Statements Location
FINANCIAL STATEMENTS REQUIRED BY ITEM 8 OF THIS FORM
Consolidated Balance Sheets Annual Report, page 49
Consolidated Statements of Income Annual Report, page 50
Consolidated Statements of Cash Flows Annual Report, page 51
Consolidated Statements of Stockholders' Equity Annual Report, page 52
Notes to Consolidated Financial Statements Annual Report, page
53-66
Report of Independent Accountants Annual Report, page 48
SCHEDULES REQUIRED BY ARTICLE 12 OF REGULATION S-X
Report of Independent Accountants on Financial Statement page 18
Schedules
II Amounts Receivable from Related Parties and Underwriters, page 19
Pro- moters, and Employees other than Related Parties
V Property, Plant and Equipment page 20
VI Accumulated Depreciation and Amortization of Property, page 21
Plant and
Equipment
VIII Valuation and Qualifying Accounts page 22
IX Short-Term Borrowings page 23
X Supplementary Income Statement Information page 24
All other schedules have been omitted because they are not applicable or not
required.
(b) Reports on Form 8-K
A report on Form 8-K, dated October 27, 1993, was filed with the Securities and
Exchange Commission ("SEC") under Item 5, Other Events, to file a press release which
announced the signing of a five-year agreement.
A report on Form 8-K, dated November 16, 1993, was filed with the SEC under Item 5,
Other Events, to file a press release which announced adoption of a plan of strategic
actions to improve stockholder value, among other matters.
A report on Form 8-K, dated December 22, 1993, was filed with the SEC under Item 5,
Other Events, to file a press release which announced the lifting of a governmental
suspension.
A report on Form 8-K, dated December 27, 1993, was filed with the SEC under Item 5,
Other Events, to file a press release which announced the resignations of an officer
and director, as well as another director.
(c) Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index,
which is incorporated herein by reference.
17
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
- --------------------------------------------------------------------------------
Board of Directors
BAXTER INTERNATIONAL INC.
Our audits of the consolidated financial statements referred to in our
report dated February 10, 1994 appearing on page 48 of the 1993 Annual Report to
Stockholders of Baxter International Inc. (which report and consolidated
financial statements are incorporated by reference in this Annual Report on Form
10-K) also included an audit of the Financial Statement Schedules listed in Item
14(a) of this Form 10-K. In our opinion, these Financial Statement Schedules
present fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements.
PRICE WATERHOUSE
Chicago, Illinois
February 10, 1994
18
SCHEDULE II
- --------------------------------------------------------------------------------
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
(In thousands of dollars)
- --------------------------------------------------------------------------------
DEDUCTIONS BALANCE AT
BALANCE AT ------------------------ CLOSE OF PERIOD
BEGINNING AMOUNTS AMOUNTS ------------------------
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT LONG-TERM
- ------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993:
Robert Kleinert (B) $ 9 $ -- $ 9 $ -- $ -- $ --
Douglas Berg (C) -- 127 -- -- 127 --
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1992:
V. Gordon Clemens, Jr. (A) $ 385 $ -- $ 385 $ -- $ -- $ --
Danny Ray Haynes (A) 460 -- 460 -- -- --
Robert Kleinert (B) 225 -- 216 -- 9 --
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1991:
V. Gordon Clemens, Jr. (A) $ 385 $ -- $ -- $ -- $ -- $ 385
Danny Ray Haynes (A) 460 -- -- -- -- 460
Robert Kleinert (B) -- 225 -- -- 225 --
- -------------------------------------------------------------------------------------------
(A) Amounts represent mortgages to former employees of Caremark Inc. As part of
the spin-off from Baxter on November 30, 1992, these loans were allocated
to Caremark International Inc.
(B) Amount represents mortgage to an employee of a division of the Company. The
loan was at the prime interest rate.
(C) Amount represents a relocation loan to an employee of a division of the
Company. No interest is charged on this loan. This loan will be repaid
during 1994, when a prior residence is sold.
19
SCHEDULE V
- --------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
(In millions of dollars)
- --------------------------------------------------------------------------------
BALANCE AT OTHER BALANCE AT
BEGINNING ADDITIONS CHANGES-ADD END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS (DEDUCT)(A) PERIOD
- ------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993:
Land $ 195 $ 6 $ -- $ 2 $ 203
Buildings and leasehold improvements 976 10 (12) 77 1,051
Machinery and other equipment 2,298 138 (122) 194 2,508
Equipment leased or rented to customers 343 89 (33) (9) 390
Construction in progress 397 362 (5) (415) 339
- -------------------------------------------------------------------------------------------
Total $ 4,209 $ 605 $ (172) $ (151) $ 4,491
----------- ----- ----- ----- -----------
----------- ----- ----- ----- -----------
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1992:
Land $ 196 $ 2 $ (3) $ -- $ 195
Buildings and leasehold improvements 947 17 (23) 35 976
Machinery and other equipment 2,102 130 (151) 217 2,298
Equipment leased or rented to customers 274 103 (27) (7) 343
Construction in progress 319 388 (1) (309) 397
- -------------------------------------------------------------------------------------------
Total $ 3,838 $ 640 $ (205) $ (64) $ 4,209
----------- ----- ----- ----- -----------
----------- ----- ----- ----- -----------
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1991:
Land $ 184 $ 1 $ -- $ 11 $ 196
Buildings and leasehold improvements 915 13 (10) 29 947
Machinery and other equipment 1,915 134 (80) 133 2,102
Equipment leased or rented to customers 207 89 (20) (2) 274
Construction in progress 208 355 (2) (242) 319
- -------------------------------------------------------------------------------------------
Total $ 3,429 $ 592 $ (112) $ (71) $ 3,838
----------- ----- ----- ----- -----------
----------- ----- ----- ----- -----------
- -------------------------------------------------------------------------------------------
(A) Property, plant and equipment of acquired or divested companies, foreign
currency translation adjustments and reclassification of assets.
20
SCHEDULE VI
- --------------------------------------------------------------------------------
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
(In millions of dollars)
- --------------------------------------------------------------------------------
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING COSTS AND CHANGES-ADD END OF
CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS (DEDUCT)(A) PERIOD
- ------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993:
Buildings and leasehold improvements $ 235 $ 47(B) $ (6) $ (13) $ 263
Machinery and other equipment 1,155 344(B) (102) (42) 1,355
Equipment leased or rented to customers 172 73 (24) (3) 218
- -------------------------------------------------------------------------------------------
Total $ 1,562 $ 464 $ (132) $ (58) $ 1,836
----------- ----- ----- --- -----------
----------- ----- ----- --- -----------
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1992:
Buildings and leasehold improvements $ 220 $ 32 $ (14) $ (3) $ 235
Machinery and other equipment 1,097 231 (156) (17) 1,155
Equipment leased or rented to customers 134 60 (19) (3) 172
- -------------------------------------------------------------------------------------------
Total $ 1,451 $ 323 $ (189) $ (23) $ 1,562
----------- ----- ----- --- -----------
----------- ----- ----- --- -----------
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1991:
Buildings and leasehold improvements $ 199 $ 33 $ (5) $ (7) $ 220
Machinery and other equipment 1,007 207 (91) (26) 1,097
Equipment leased or rented to customers 101 45 (13) 1 134
- -------------------------------------------------------------------------------------------
Total $ 1,307 $ 285 $ (109) $ (32) $ 1,451
----------- ----- ----- --- -----------
----------- ----- ----- --- -----------
- -------------------------------------------------------------------------------------------
(A) Accumulated depreciation of divested companies, foreign currency
translation adjustments and reclassification of assets.
(B) Includes amounts provided for by the restructuring charge.
The estimated lives used in determining depreciation and amortization are as
follows:
20 to 44
Buildings and leasehold improvements years
Machinery and other equipment 3 to 20 years
Equipment leased to customers 1 to 5 years
21
SCHEDULE VIII
- --------------------------------------------------------------------------------
VALUATION AND QUALIFYING ACCOUNTS
(In millions of dollars)
- --------------------------------------------------------------------------------
ADDITIONS
------------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER DEDUCTIONS END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS(A) FROM RESERVES PERIOD
- ------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993:
Accounts receivable $ 29 $ 8 $ -- $ (5) $ 32
--
--
--- --- --- ---
--- --- --- ---
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1992:
Accounts receivable $ 27 $ 6 $ 1 $ (5) $ 29
--
--
--- --- --- ---
--- --- --- ---
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1991:
Accounts receivable $ 27 $ 12 $ (1) $ (11) $ 27
--
--
--- --- --- ---
--- --- --- ---
- -------------------------------------------------------------------------------------------
(A) Valuation accounts of acquired or divested companies and foreign currency
translation adjustments. Reserves are deducted from assets to which they
apply.
22
SCHEDULE IX
- --------------------------------------------------------------------------------
SHORT-TERM BORROWINGS
(In millions of dollars)
- --------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
WEIGHTED AMOUNT AMOUNT AVERAGE
BALANCE AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE AT END OF INTEREST DURING THE DURING THE DURING THE
SHORT-TERM BORROWINGS PERIOD RATE(C) PERIOD(D) PERIOD(E) PERIOD(F)
- ------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993:
Notes payable to banks $ 271 4.2% $ 574 $ 448 5.1%
--
--
--------- ----- ----- ---
--------- ----- ----- ---
Commercial paper $ 833 3.5% $ 931 $ 589 4.8%
Short-term notes $ 467 3.5% $ 722 $ 587 4.8%
Reclassified to long-term debt(A) $ (1,000)
---------
Balance classified as short-term(B) $ 300
---------
---------
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1992:
Notes payable to banks $ 351 5.0% $ 461 $ 325 6.6%
--
--
--------- ----- ----- ---
--------- ----- ----- ---
Commercial paper $ 475 3.9% $ 664 $ 612 5.2%
Short-term notes $ 465 4.0% $ 720 $ 613 5.2%
Reclassified to long-term debt(A) $ (830)
---------
Balance classified as short-term(B) $ 110
---------
---------
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1991:
Notes payable to banks $ 263 7.6% $ 286 $ 259 10.7%
--
--
--------- ----- ----- ---
--------- ----- ----- ---
Commercial paper $ 676 5.4% $ 676 $ 527 6.7%
Short-term notes $ 445 5.5% $ 549 $ 508 6.7%
Reclassified to long-term debt(A) $ (1,121)
---------
Balance classified as short-term(B) $ 0
---------
---------
- -------------------------------------------------------------------------------------------
Refer to "Notes to consolidated Financial Statement -- Credit Facilities" of the 1993 annual report to Stockholders.
(A) At December 31, 1993, 1992 and 1991, this amount of commercial paper and
short-term notes has been classified with long-term debt as it is supported
by long-term credit facilities and will continue to be refinanced.
(B) Amounts included in current maturities of long-term debt and lease
obligations at December 31, 1993, 1992 and 1991.
(C) Calculated as the average interest rate of outstanding debt obligations as
of the end of the period.
(D) Maximum amount outstanding calculated for each category using month-end
balances during the period. Maximum combined short-term borrowings were
$1,932, $1,660 and $1,417 million for 1993, 1992 and 1991, respectively.
(E) Calculated using month-end balances during the period for notes payable to
banks and the daily balances for commercial paper and short-term notes.
(F) Calculated by dividing the interest expense for the year for such
borrowings by the average amounts outstanding during the period.
23
SCHEDULE X
- --------------------------------------------------------------------------------
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(In millions of dollars)
- --------------------------------------------------------------------------------
Year ended December 31,
- -------------------------------------------------------------------------------------------
Item 1993 1992 1991
- -------------------------------------------------------------------------------------------
Charged to costs and expenses:
Maintenance and repairs $ 111 $ 115 $ 108
--------- --------- ---------
--------- --------- ---------
Depreciation and amortization of intangible assets,
preoperating costs, and similar deferrals $ 132 $ 124 $ 126
--------- --------- ---------
--------- --------- ---------
- -------------------------------------------------------------------------------------------
Amounts charged to (1) taxes other than payroll and income taxes, (2) royalties,
and (3) advertising costs, have been omitted since each is less than 1% of net
sales.
24
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) 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/ VERNON R. LOUCKS JR.
--------------------------------------
Vernon R. Loucks Jr.
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Date: March 21, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
(i) Principal Executive Officer:
/S/ VERNON R. LOUCKS JR.
-------------------------------------
Vernon R. Loucks Jr.
DIRECTOR, CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
(ii) Principal Financial Officer:
/S/ HARRY M. JANSEN KRAEMER, JR.
-------------------------------------
Harry M. Jansen Kraemer, Jr.
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
(iii) Controller:
/S/ BRIAN P. ANDERSON
-------------------------------------
Brian P. Anderson
CONTROLLER
(iv) A Majority of the Board of Directors:
SILAS S. CATHCART
DAVID C.K. CHIN, M.D.
JOHN W. COLLOTON
SUSAN CROWN
JAMES D. EBERT
MARY JOHNSTON EVANS
FRANK R. FRAME
DAVID W. GRAINGER
MARTHA R. INGRAM
GEORGES C. ST. LAURENT, JR.
FRED L. TURNER
By: /S/ VERNON R. LOUCKS JR.
-------------------------------------
Vernon R. Loucks Jr.
DIRECTOR AND ATTORNEY-IN-FACT
25
- --------------------------------------------------------------------------------
APPENDICES
DESCRIPTION PAGE
- ----------------------------------------------------------------------------------------------------------- -----
Computation of Primary Earnings per Common Share (Exhibit 11.1) 30
Computation of Fully Diluted Earnings per Common Share (Exhibit 11.2) 31
Computation of Ratio of Earnings to Fixed Charges (Exhibit 12) 32
Subsidiaries of the Company (Exhibit 21) 33
- --------------------------------------------------------------------------------
EXHIBITS FILED WITH SECURITIES AND EXCHANGE COMMISSION
NUMBER AND DESCRIPTION OF EXHIBIT
- -------------------------------------------------------------------------------------------------------------------
3. Certificate of Incorporation and Bylaws
3.1* Restated Certificate of Incorporation, filed as exhibit 3.1 to the Company's annual report on
Form 10-K for the year ended December 31, 1990, file number 1-4448 (the "1990 Form 10-K").
3.2* Certificate of Designation of Series A Junior Participating Preferred Stock, filed under the
Securities Act of 1933 as exhibit 4.3 to the Company's registration statement on Form S-8
(No. 33-28428).
3.3* Bylaws (as amended), filed as exhibit 3.3 to the Form 10-Q for the quarter ended September
30, 1993, file number 1-4448.
4. Instruments defining the rights of security holders, including indentures
4.1* Indenture for 4 3/4% Convertible Subordinated Debentures due January 1, 2001, filed under the
Securities Act of 1933 as exhibit 2(d) to the Company's registration statement on Form S-7
(No. 2-55622).
4.2* Indenture dated November 15, 1985 between the Company and Bankers Trust Company, filed as
exhibit 4.8 to the Company's current report on Form 8-K dated December 16, 1985, file no.
1-4448.
4.3* Amended and Restated Indenture dated November 15, 1985, between the Company and Continental
Illinois National Bank and Trust Company of Chicago, filed under the Securities Act of 1933
as exhibit 4.1 to the Company's registration statement on Form S-3 (No. 33-1665).
4.4* First Supplemental Indenture to Amended and Restated Indenture dated November 15, 1985,
between the Company and Continental Illinois National Bank and Trust Company of Chicago,
filed under the Securities Act of 1933 as exhibit 4.1(A) to the Company's registration
statement on Form S-3 (No. 33-6746).
4.5* Indenture dated as of August 15, 1977, between the Company and Midlantic National Bank, as
supplemented, filed as exhibit 4.7 to the Company's annual report on Form 10-K for the year
ended December 31, 1985, file no. 1-4448 (the "1985 Form 10-K").
4.6* Fiscal and Paying Agency Agreement dated as of April 26, 1984, among American Hospital Supply
International Finance N.V., the Company and The Toronto-Dominion Bank, as amended, filed as
exhibit 4.9 to the 1985 Form 10-K.
4.7* Fiscal and Paying Agency Agreement dated as of November 15, 1984, between the Company and
Citibank, N.A., as amended, filed as exhibit 4.16 to the Company's annual report on Form
10-K for the year ended December 31, 1987, file no. 1-4448 (the "1987 Form 10-K").
4.8* Specimen Medium-Term Note, filed as exhibit 4.10 to the 1985 Form 10-K.
4.9* Specimen Extendible Note, filed as exhibit 4.11 to the 1985 Form 10-K.
26
NUMBER AND DESCRIPTION OF EXHIBIT
- -------------------------------------------------------------------------------------------------------------------
4.10* Specimen 13 1/8% Note, filed as exhibit 4.12 to the 1985 Form 10-K.
4.11* Specimen 9 5/8% Note, filed as exhibit 4.13 to the 1987 Form 10-K.
4.12* Specimen 8 7/8% Debenture, filed as exhibit 4.2(a) to the Company's current report on Form
8-K dated June 15, 1988, file no. 1-4448.
4.13* Specimen 9 1/2% Note, filed as exhibit 4.3(a) to the Company's current report on Form 8-K
dated June 23, 1988, file no. 1-4448.
4.14* Specimen 9.85% Senior Note due 1993, filed as Annex A to exhibit 1.3 to the Company's current
report on Form 8-K dated May 23, 1986, file no. 1-4448.
4.15* Specimen 9 1/4% Note, filed as exhibit 4.3(a) to the Company's current report on Form 8-K
dated September 13, 1989, file number 1-4448.
4.16* Specimen 9 1/4% Note, filed as exhibit 4.3(a) to the Company's current report on Form 8-K
dated December 7, 1989, file number 1-4448.
10. Material Contracts
10.1* Employment Agreement between William B. Graham and the Company, filed as exhibit 10.1 to the
1985 Form 10-K.
10.2* Form of Employment Agreement signed by listed executives, field as exhibit 19.4 to the
Company's quarterly report on Form 10-Q for the quarter ended June 30, 1985, file no.
1-4448.
10.3 Amended list of executives listed in exhibit 10.2 filed as exhibit 10.3 to the Company's
annual report on Form 10-K for the year ended December 31, 1991, file no. 1-4448 (the "1991
Form 10-K").
10.4* Supplemental retirement agreement and supplemental retirement benefit agreement between
Robert J. Lambrix and the Company, filed as exhibit 10.16 to the Company's annual report on
Form 10-K for the year ended December 31, 1986, file no. 1-4448 (the "1986 Form 10-K").
10.5* Form of Indemnification Agreement entered into with directors and officers, filed as exhibit
19.4 to the Company's quarterly report on Form 10-Q for the quarter ended September 30,
1986, file no. 1-4448.
10.6* Stock Option Plan of 1977 (as amended and restated), filed as exhibit 19.3 to the Company's
quarterly report on Form 10-Q for the quarter ended September 30, 1984, file no. 1-4448.
10.7* 1988 Long-Term Incentive Plan, filed as exhibit 10.12 to the 1987 Form 10-K.
10.8* 1987-1989 Long-Term Performance Incentive Plan, filed as exhibit 10.15 to the 1986 Form 10-K.
10.9* 1989 Long-Term Incentive Plan, filed as exhibit 10.12 to the Company's annual report on Form
10-K for the year ended December 31, 1988, file no. 1-4448 (the "1988 Form 10-K").
10.10* Stock Option Plan Adopted July 25, 1988, filed as exhibit 10.13 to the 1988 Form 10-K.
10.11* 1991 Officer Incentive Compensation Plan, filed as exhibit 10.11 to the 1990 Form 10-K.
10.12* Restricted Stock Plan for Non-Employee Directors, filed as exhibit 10.16 to the 1988 Form
10-K.
10.13* Baxter International Inc. and Subsidiaries Incentive Investment Excess Plan, filed as exhibit
10.17 to the 1988 Form 10-K.
10.14* Baxter International Inc. and Subsidiaries Supplemental Pension Plan, filed as exhibit 10.18
to the 1988 Form 10-K.
27
NUMBER AND DESCRIPTION OF EXHIBIT
- -------------------------------------------------------------------------------------------------------------------
10.15* Amendment to Stock Option Plan of 1977, filed as exhibit 19.2 to the Company's quarterly
report on Form 10-Q for the quarter ended September 30, 1989, file no. 1-4448 (the
"September, 1989 Form 10-Q").
10.16* Amendment to Restricted Stock Plan for Non-Employee Directors, filed as exhibit 19.3 to the
September, 1989 Form 10-Q.
10.17* Limited Rights Plan, filed as exhibit 19.6 to the September, 1989 Form 10-Q.
10.18* Amended and Restated Restricted Stock Plan for Non-Employee Directors (1989), filed as
exhibit 19.8 to the September, 1989 Form 10-Q.
10.19* Amendments to various stock option plans, including those listed as exhibits 10.7, 10.8, 10.9
and 10.10 above, regarding disability, filed as exhibit 19.9 to the September, 1989 Form
10-Q.
10.20* Amendments to 1987-1989 Long-Term Performance Incentive Plan and 1988 Long-Term Incentive
Plan, filed as exhibit 19.10 to the September, 1989 Form 10-Q.
10.21* 1987 Incentive Compensation Program, filed as exhibit C to the Company's proxy statement for
use in connection with its May 13, 1987, annual meeting of stockholders, file no. 1-4448.
10.22* Rights Agreement between the Company and The First National Bank of Chicago, filed as exhibit
1 to a registration statement on Form 8-A dated March 21, 1989, file no. 1-4448.
10.23* Amendment to 1987 Incentive Compensation Program, filed as exhibit 19.1 to September, 1989
Form 10-Q.
10.24* Deferred Compensation Plan (1990), filed as exhibit 10.24 to the 1990 Form 10-K.
10.25* Restricted Stock Grant Terms and Conditions, filed as exhibit 10.25 to the 1991 Form 10-K.
10.26* Vernon R. Loucks Restricted Stock Grant Terms and Conditions, filed as exhibit 10.26 to the
1991 Form 10-K.
10.27* Deferred Compensation Plan (1990), as amended in 1992, filed as exhibit 10.27 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1992, file no. 1-4448
(the "1992 Form 10-K").
10.28* Restricted Stock Plan for Non-Employee Directors (as amended and restated in 1992), filed as
exhibit 10.28 to the 1992 Form 10-K.
10.29* 1992 Officer Incentive Compensation Plan, filed as exhibit 10.29 to the 1992 Form 10-K.
10.30* 1993 Officer Incentive Compensation Plan, filed as exhibit 10.30 to the 1992 Form 10-K.
10.31 1994 Officer Incentive Compensation Plan.
10.32 Separation Agreement: James R. Tobin.
10.34* Corporate Aviation Policy, filed as exhibit 10.33 to the 1992 Form 10-K.
10.35* Plan and Agreement of Reorganization Between Baxter and Caremark International Inc., filed as
exhibit 10.34 to the 1992 Form 10-K.
11. Statement re: computation of per share earnings.
11.1 Computation of primary earnings per common share.
11.2 Computation of fully diluted earnings per common share.
12. Statements re: computation of ratios.
13. 1993 Annual Report to Stockholders (such report, except to the extent incorporated herein by reference,
is being furnished for the information of the Securities and Exchange Commission only and is not deemed
to be filed as part of this annual report on Form 10-K).
21. Subsidiaries of the Company.
28
NUMBER AND DESCRIPTION OF EXHIBIT
- -------------------------------------------------------------------------------------------------------------------
23. Consent of Price Waterhouse.
24. Powers of Attorney.
28.* Pro Forma Summary of Operations for the year ended December 31, 1985, filed as exhibit 28 to the 1990
Form 10-K.
- ------------------------
* Incorporated herein by reference.
(All other exhibits are inapplicable.)
Copies of the above exhibits are available at a
charge of 35 cents per page upon written request to
the Stockholder Services Department, Baxter
International Inc., One Baxter Parkway, Deerfield,
Illinois, 60015. Copies are also available at a
charge of at least 25 cents per page from the Public
Reference Section of the Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D.C.
20549.
29
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Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015