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| Baxter International 2000 10-K Report (Partial 10-K shown; subscribers can see the entire 10-K report.) |
0000950131-01-500106.hdr.sgml : 20010315
ACCESSION NUMBER: 0000950131-01-500106
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 8
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010314
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: BAXTER INTERNATIONAL INC
CENTRAL INDEX KEY: 0000010456
STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
IRS NUMBER: 360781620
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 001-04448
FILM NUMBER: 1567882
BUSINESS ADDRESS:
STREET 1: ONE BAXTER PKWY
CITY: DEERFIELD
STATE: IL
ZIP: 60015
BUSINESS PHONE: 8479482000
MAIL ADDRESS:
STREET 1: ONE BAXTER PARKWAY
CITY: DEERFIELD
STATE: IL
ZIP: 60015
FORMER COMPANY:
FORMER CONFORMED NAME: BAXTER TRAVENOL LABORATORIES INC
DATE OF NAME CHANGE: 19880522
FORMER COMPANY:
FORMER CONFORMED NAME: BAXTER LABORATORIES INC
DATE OF NAME CHANGE: 19760608
10-K
1
d10k.txt
FORM 10-K
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(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, 2000
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
- -------------------------------------------------------------------------------
Baxter International Inc.
- -------------------------------------------------------------------------------
(Exact Name of Registrant in Its Charter)
Delaware 36-0781620
- -------------------------------------------------- --------------------------
(State or Other Jurisdiction of Incorporation or (I.R.S. Employer
Organization) Identification No.)
One Baxter Parkway, Deerfield, Illinois 60015
- -------------------------------------------------- --------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code 847.948.2000
--------------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
on which registered
New York Stock Exchange,
Title of each class Inc.
Common stock, $1 par value Chicago Stock Exchange,
Inc.
Pacific Exchange, Inc.
Preferred Stock Purchase Rights New York Stock Exchange,
(currently traded with common stock) Inc.
Chicago Stock Exchange,
Inc.
Pacific Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
----------------
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 definitive proxy or information
statements 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 common equity held by non-
affiliates of the registrant (based on the per share closing sale price of
$92.61 on February 28, 2001, and for the purpose of this computation only, the
assumption that all registrant's directors and executive officers are
affiliates) was approximately $27.3 billion. There is no non-voting common
equity held by non-affiliates of the registrant.
The number of shares of the registrant's common stock, $1 par value,
outstanding as of February 28, 2001, was 295,263,214.
Documents Incorporated By Reference
Those sections or portions of the registrant's annual report to
stockholders for fiscal year ended December 31, 2000 and of the registrant's
proxy statement for use in connection with its annual meeting of stockholders
to be held on May 1, 2001, described in the cross reference sheet and table of
contents attached hereto are incorporated by reference in this report.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CROSS REFERENCE SHEET
and
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
Page Number or
(Reference)
(1)
--------------
Item 1. Business
(a) General Development of Business.................. 1(2)
(b) Financial Information about Segments............. 1(3)
(c) Narrative Description of Business................ 1(4)
(d) Financial Information about Foreign and Domestic
Operations and Export Sales...................... 7(5)
Item 2. Properties........................................... 8
Item 3. Legal Proceedings.................................... 8
Item 4. Submission of Matters to a Vote of Security Holders.. 11
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters................................. 12(6)
Item 6. Selected Financial Data.............................. 12(7)
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 12(8)
Item 7A. Quantitative and Qualitative Disclosures about Market
Risk................................................ 12(9)
Item 8. Financial Statements and Supplementary Data.......... 12(10)
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................. 12
Item 10. Directors and Executive Officers of the Registrant... 13
(a) Identification of Directors...................... 13(11)
(b) Identification of Executive Officers............. 13
(c) Compliance with Section 16(a) of the Securities
Exchange Act of 1934............................. 14(12)
Item 11. Executive Compensation............................... 15(13)
Item 12. Security Ownership of Certain Beneficial Owners and
Management.......................................... 15(14)
Item 13. Certain Relationships and Related Transactions....... 15
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K......................................... 15
(a) Financial Statements............................. 15
(b) Reports on Form 8-K.............................. 15
(c) Exhibits......................................... 15
(1) Information incorporated by reference to Baxter's Annual Report to
Stockholders for the year ended December 31, 2000 (Annual Report) and
Baxter's proxy statement for use in connection with its annual meeting of
stockholders to be held May 1, 2001 (Proxy Statement).
(2) Annual Report, pages 35-37, section entitled "Notes to Consolidated
Financial Statements--Acquisitions and Divestitures."
(3) Annual Report, pages 46-47, section entitled "Notes to Consolidated
Financial Statements--Segment Information."
(4) Annual Report, pages 19-27, section entitled "Management's Discussion and
Analysis" and pages 46-47, section entitled "Notes to Consolidated
Financial Statements--Segment Information."
(5) Annual Report, pages 46-47, section entitled "Notes to Consolidated
Financial Statements--Segment Information."
(6) Annual Report, page 48, section entitled "Notes to Consolidated Financial
Statements--Quarterly Financial Results and Market for the Company's
Stock (Unaudited)."
(7) Annual Report, inside back cover, section entitled "Five-Year Summary of
Selected Financial Data."
(8) Annual Report, pages 19-27, section entitled "Management's Discussion and
Analysis."
(9) Annual Report, page 26, section entitled "Financial Instrument Market
Risk."
(10) Annual Report, pages 28-48, sections entitled "Report of Independent
Accountants," "Consolidated Balance Sheets," "Consolidated Statements of
Income," "Consolidated Statements of Cash Flows," "Consolidated
Statements of Stockholders' Equity and Comprehensive Income" and "Notes
to Consolidated Financial Statements."
(11) Proxy Statement, page 12, section entitled "Board of Directors--Director
Biographies."
(12) Proxy Statement, page 29, section entitled "Section 16(2) Beneficial
Ownership Reporting Compliance."
(13) Proxy Statement, pages 16-17, section entitled "Board of Directors--
Compensation of Directors" and pages 23-27 section entitled "Executive
Compensation."
(14) Proxy Statement, pages 28-29, section entitled "Ownership of Baxter
Stock."
- --------------------------------------------------------------------------------
[LOGO] BAXTER
Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015
- --------------------------------------------------------------------------------
PART I
- --------------------------------------------------------------------------------
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 International" means Baxter International Inc. and
"Baxter" or the "company" means Baxter International and its subsidiaries.
Baxter engages in the worldwide development, manufacture and distribution of
a diversified line of products, systems and services used primarily in the
health care field. We manufacture products in 27 countries and sell them in
over 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. Our products are used by hospitals, clinical and
medical research laboratories, blood and blood dialysis centers, rehabilitation
centers, nursing homes, doctors' offices and by patients, at home, under
physician supervision.
For information regarding significant acquisitions, investments in
affiliates and divestitures, see our Annual Report to Stockholders for the year
ended December 31, 2000 (Annual Report), pages 35-37, section entitled "Notes
to Consolidated Financial Statements--Acquisitions and Divestitures" which is
incorporated by reference.
(b) Financial Information About Segments.
Incorporated by reference from the Annual Report, pages 46-47, section
entitled "Notes to Consolidated Financial Statements--Segment Information."
(c) Narrative Description of Business.
Recent Developments
On February 27, 2001, the Baxter International Board of Directors approved a
two-for-one split of the company's common stock, subject to stockholder
approval of an increase in the number of shares of common stock authorized to
be issued by Baxter International from the current 350 million to one billion
at the annual stockholders' meeting to be held May 1, 2001. If the increase in
authorized shares is approved, stockholders of record at the close of business
on May 9, 2001 will receive one additional share of Baxter International common
stock for each share they hold as of the record date. The additional shares of
common stock will be distributed on May 30, 2001.
On February 1, 2001, Baxter acquired Sera-Tec Biologicals, L.P., which owns
and operates approximately 80 plasmapheresis centers in 28 states, and a
central testing laboratory. This purchase brings the total number of plasma
collection centers owned by Baxter to approximately 110 worldwide and is
intended to help provide Baxter with a consistent, stable supply of source
plasma for processing into life-saving plasma-based products.
Company Overview
Baxter operates as a global leader in critical therapies for life-
threatening conditions. We develop, manufacture and market products and
technologies related to the blood and circulatory system. Our continuing
operations are comprised of three segments: Medication Delivery, which develops
technologies and systems to improve intravenous medication delivery and
distributes medical products; BioScience, which develops biopharmaceutical and
blood collection and separation products and technologies; and Renal, which
develops products and provides services to treat end-stage kidney disease. Our
three businesses enjoy leading positions in
1
the medical products and services fields. Unless otherwise indicated, each of
the factors discussed in this Part I do not materially differ in their impact
across each of our three segments.
Information about operating results is incorporated by reference from
Annual Report pages 19-27, section entitled "Management's Discussion and
Analysis" and pages 46-47, section entitled "Notes to Consolidated Financial
Statements--Segment Information."
Medication Delivery
Business Description. Baxter manufactures a range of products that deliver
fluids and drugs to patients. These include large- and small-volume
intravenous (IV) solutions, IV administration sets, premixed drugs for IV
administration, reconstitution devices, IV nutrition solutions and devices, IV
infusion pumps, anesthesia-delivery devices, anesthetic agents, acute-care
injectible pharmaceuticals, ambulatory infusion systems and pharmacy services.
Growth Strategy. Baxter continues to participate in the consolidation of
the global marketplace for medication-delivery products, particularly in
developing markets where there are still a large number of local and regional
players. The company will accelerate expansion of its higher-margin specialty
products outside the United States, where currently the business has a strong
base in IV sets and solutions, and will continue to develop new technologies
for medication delivery through internal product development and acquisitions
and alliances. Baxter also will leverage its strength in the anesthesia
marketplace to expand its position in medication delivery across the peri-
operative arena--pre-surgery, surgery and post-surgery.
Product Development. In 2000, Baxter upgraded its Colleague electronic
infusion pump for global use and added multiple languages for certain key
markets. Worldwide placements of the Colleague pump continue to rise, with
50,000 new channels placed in 2000. Also in 2000, the company introduced a new
pump for post-operative pain management, called the Ipump Pain Management
System, in the United States. Also programmed in multiple languages and
designed for global use, Baxter will launch the Ipump in Europe and Canada in
2001. In addition, the company launched several new premixed IV drugs in 2000,
including its first global premixed drug, called AGGRASTAT, a cardiac compound
developed by Merck.
Acquisitions and Alliances. Over the last two years, Baxter has made
several acquisitions intended to broaden its portfolio of medication-delivery
products. These include Ohmeda Pharmaceutical Products, enhancing Baxter's
offering in anesthesia; Pharmacia & Upjohn's German-based IV and nutrition
business; and the ambulatory infusion pump business of Sabratek Corporation.
Baxter also reacquired the distribution rights for the Ohmeda pharmaceutical
products in Europe and Canada to serve as a base to build its specialty-
product offerings in these key markets. Baxter acquired a French company
called Biodome, which has a technology for efficient, low-cost reconstitution
of drugs for both injection and infusion. The company also received exclusive
U.S. distribution rights from Physiometrix Inc. for the PSA 4000 anesthesia
monitoring system, which helps anesthesiologists monitor a patient's level of
consciousness during surgery.
BioScience
Business Description. Baxter is a leading producer of biopharmaceuticals
for the treatment of hemophilia, immune deficiencies and other life-
threatening disorders. These products include coagulation factors, immune
globulins, biosurgery products and vaccines. The company also is a leading
manufacturer of manual and automated blood-collection, processing and storage
systems. These products are used by hospitals, blood banks and plasma-
collection centers to collect and process blood components for therapeutic
use. Therapeutic blood components are used to treat patients undergoing
surgery, cancer therapy and other critical therapies.
Growth Strategy. Baxter will continue to grow its global leadership in
biopharmaceuticals for the treatment of hemophilia and immune deficiencies by
broadening its portfolio, advancing technology and increasing production
capacity. Growth opportunities are presented by the tremendous need for and
increasing use of these products around the world, and the continued growth of
both plasma-derived and recombinant-derived therapies. Baxter will continue to
expand its pipeline of innovative biopharmaceuticals and vaccines through both
internal development and acquisitions and alliances. Baxter also continues to
focus on increased production and safety of transfusion products through
advanced automation, leukoreduction and pathogen inactivation.
2
Product Development. In 2000, Baxter received approval in the United Kingdom
for NeisVac-C, a new meningococcemia vaccine. The company also received
approval from the U.S. Food and Drug Administration (FDA) for a new application
device for its Tisseel fibrin sealant. In the next 12 months, Baxter expects
FDA approval for a liquid form of IGIV, and European approval for a new
therapeutic protein for protein C deficiency and pathogen-inactivation
technology for platelets. Other products in development include a next-
generation recombinant Factor VIII using a totally protein-free manufacturing
process; a cell culture-derived vaccine for influenza; a new tetanus,
diphtheria and acellular pertussis vaccine; a European vaccine for Lyme
Disease; pathogen-inactivation technology for plasma and red cells; and a
recombinant form of hemoglobin that may be used instead of blood to carry
oxygen to vital organs.
Acquisitions and Alliances. In 2000, Baxter completed its acquisition of
North American Vaccine Inc., based in Columbia, Maryland, broadening its
position in the global vaccines market. The company also established an equity
position in British vaccine developer Acambis (formerly known as Peptide
Therapeutics Group), which will better position each company to develop and
commercialize their respective vaccine pipelines. In addition, Baxter formed
alliances with XOMA Ltd. for the rights to a recombinant protein for treatment
of a range of diseases caused by bacteria; Arriva Pharmaceuticals (formerly
known as AlphaOne Pharmaceuticals, Inc.) to co-develop a recombinant alpha 1-
antitrypsin protein to treat hereditary emphysema and other respiratory
diseases; and Pharming Group N.V. to collaborate on the development of a
recombinant, transgenic C1 inhibitor to treat hereditary angioedema.
Renal
Business Description. Baxter provides a range of products and services for
the treatment of kidney disease. These include products for both peritoneal
dialysis (PD) and hemodialysis (HD) as well as research initiatives in
xenotransplantation. Baxter is the world's leading manufacturer of PD products,
which include dialysis solutions, container systems and automated cyclers. For
HD, Baxter manufactures dialyzers and HD machines. The company's Renal Therapy
Services (RTS) business operates dialysis clinics in partnership with local
physicians in 12 countries outside the United States, while RMS Disease
Management Inc. partners with U.S. nephrologists to provide a kidney disease
management program to health-care payers. Baxter's RMS Lifeline Inc. helps to
improve the delivery and outcomes of interventional renal care in the United
States through dedicated outpatient centers.
Growth Strategy. The company's strategy is to continue to drive PD growth
while also investing in significant expansion of HD products and services. New
products will come from internal development, acquisitions, alliances and e-
health initiatives. The company also continues to grow its RTS business and
expand its product lines globally, particularly in developing markets where
many people with end-stage renal disease are currently under-treated. In
addition, Baxter intends to continue developing technology-based products and
services that improve therapeutic outcomes.
Product Development. Baxter continues to develop new PD solutions to better
manage specific patient needs. One example is Extraneal, which improves the
removal of excess fluids and toxins from patients with end-stage renal disease.
Introduced in Europe in 1997 and approved in 28 countries, Extraneal today is
being used by more than 6,000 European patients--more than a third of Baxter's
European PD population--and is currently under regulatory review in the United
States. Another solution, Physioneal, was introduced in Europe and began
clinical trials in Japan in 2000. Also in 2000, as a result of Baxter's
acquisition of Althin Medical, the company began selling an HD machine globally
called the Tina. Baxter also introduced a new HD machine called Meridian in the
United States. Future products include several new HD dialyzers and the Aurora
home HD machine. The company also is continuing research in the area of
xenotransplantation.
Acquisitions and Alliances. In March 2000, Baxter completed its acquisition
of Althin Medical AB, a leading manufacturer of HD products, based in Ronneby,
Sweden. The acquisition greatly expands Baxter's product offering for HD and
strengthens its position in the global HD marketplace. The company's joint
venture with Gambro AB of Sweden for the manufacture of dialyzers for both
Baxter and Gambro at Baxter's renal-products plant in Mountain Home, Arkansas,
continues to perform well, with more than 3 million dialyzers manufactured in
2000.
3
United States Markets
The health care marketplace continues to be highly competitive. There has
been consolidation in the company's customer base, and by its competitors,
which has resulted in pricing and market share pressures. These industry
trends are expected to continue. The company intends to continue to manage
these issues by developing new products and services, leveraging its cost
structure, making acquisitions and entering alliances.
International Markets
Baxter generates more than 50 percent of its revenues outside the United
States. While health care cost containment continues to be a focus around the
world, demand for health care products and services continues to be strong
worldwide, particularly in developing markets. The company's strategies
emphasize global expansion and technological innovation to advance medical
care worldwide.
Joint Ventures and Affiliations
As described above, Baxter has entered into a United States-based
manufacturing joint venture with Gambro, an international medical technology
and health care company based in Sweden. The joint venture, named Tandem,
sources dialyzers from an existing Baxter production facility in Mountain
Home, Arkansas. Baxter manages the day-to-day operations on behalf of the
joint venture.
In addition, the company conducts a non-material amount of business through
other joint ventures. Many of these joint ventures are conducted by the
company's Medication Delivery and Renal businesses.
In March 2000, Baxter teamed with four of the largest, most experienced
companies in the health care industry to form the Global Healthcare Exchange
(GHX). GHX provides business-to-business procurement for the health care
industry. Utilizing Internet-based technology, GHX integrates hospitals and
suppliers, in an attempt to improve efficiencies and add value throughout the
supply chain. GHX was founded in March 2000 and now is comprised of more than
50 supplier members.
Baxter also owns minority positions in certain other publicly-traded
companies, including Cerus Corporation, with which it is jointly developing a
pathogen inactivation system for platelets, plasma and red blood cells for
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