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10-K

1

FORM 10-K







  

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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, 1994

                                       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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                                      LOGO

                           Baxter International Inc.

 

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                DELAWARE                        36-0781620

            ----------------             -------------------------

                State of                      I.R.S. Employer

             Incorporation                  Identification No.

 

                 ONE BAXTER PARKWAY, DEERFIELD, ILLINOIS 60015

                                 (708) 948-2000

                  ------------------------------------------

               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

TITLE OF EACH CLASS                                   ON WHICH REGISTERED

                                                      --------------------

Common stock, $1 par value                            New York Stock Exchange

                                                      Chicago Stock Exchange

                                                      Pacific Stock Exchange

Preferred Stock Purchase Rights                       

(currently traded with common stock)                  New York Stock Exchange

                                                      Chicago Stock Exchange

                                                      Pacific Stock Exchange

 

        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 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 $31.63 on March 10,

1995, and for the purpose of this computation only, the assumption that all

registrant's directors and executive officers are affiliates) was approximately

$8.7 billion.

 

  The number of shares of the registrant's common stock, $1 par value,

outstanding as of March 10, 1995, was 282,851,308.

 

                      DOCUMENTS INCORPORATED BY REFERENCE

 

  Those sections or portions of the registrant's 1994 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 May 8, 1995, 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)

                                                                 ---------------

                                                           

 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............................       17(12)

 Item 11. Executive Compensation..............................       17(13)

 Item 12. Security Ownership of Certain Beneficial Owners and

           Management.........................................       17(14)

 Item 13. Certain Relationships and Related Transactions......       17(15)

 Item 14. Exhibits, Financial Statement Schedules and Reports

           on Form 8-K........................................       18

          (a)Financial Statements.............................       18

          (b)Reports on Form 8-K..............................       18

          (c)Exhibits.........................................       18



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 (1) Information incorporated by reference to the Company's Annual Report to

     Stockholders for the year ended December 31, 1994 ("Annual Report") and

     the board of directors' proxy statement for use in connection with the

     Registrant's annual meeting of stockholders to be held May 8, 1995 ("Proxy

     Statement").

 (2) Annual Report, pages 49-66, section entitled "Notes to Consolidated

     Financial Statements" and pages 31-42, section entitled "Management's

     Discussion and Analysis."

 (3) Annual Report, pages 63-65, section entitled "Notes to Consolidated

     Financial Statements--Segment Information."

 (4) Annual Report, pages 31-42, section entitled "Management's Discussion and

     Analysis" and pages 63-65, section entitled "Notes to Consolidated

     Financial Statements--Segment Information."

 (5) Annual Report, pages 63-65, section entitled "Notes to Consolidated

     Financial Statements--Segment Information."

 (6) Annual Report, page 59-63, section entitled "Notes to Consolidated

     Financial Statements--Legal Proceedings."

 (7) Annual Report, page 66, 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 "Seven-Year Summary of

     Selected Financial Data."

 (9) Annual Report, pages 31-42, section entitled "Management's Discussion and

     Analysis."

(10) Annual Report, pages 44-66, 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 2-4, sections entitled "Board of Directors" and

     "Election of Directors."

(12) Proxy Statement, page 18, section entitled "Section 16 Reporting."

(13) Proxy Statement, pages 6-16, sections entitled "Compensation of Directors"

     and "Compensation of Named Executive Officers," and page 17, section

     entitled "Pension Plan and Excess Plan."

(14) Proxy Statement, pages 19-20, section entitled "Ownership of Company

     Securities."

(15)Proxy Statement, page 18, section entitled "Significant Business

Relationships."



 

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                                      LOGO

 

    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, 1994 (the "Annual Report"), page 51, 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 63-65, section

entitled "Notes to Consolidated Financial Statements--Segment Information."

 

(c) Narrative Description of Business.

 

Recent Developments

 

  There are fundamental changes occurring in the United States health-care

system and significant changes are 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

control capital expenditures. There was increased consolidation in the

Company's customer base and by its competitors. These trends are expected to

continue. In recent years, the Company's overall price increases were 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.

 

  Accordingly, in November 1993, the Company undertook a series of strategic

actions to improve shareholder value, to extend positions of leadership in

health-care markets and to reduce costs. These actions were designed to make

the Company's domestic medical/laboratory products and distribution segment

more efficient and more responsive in addressing the 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 in 1993 to cover costs associated with these restructuring

initiatives. The $700 million charge included 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 1993

restructuring program, with most of that expended from 1994 through 1996.

 

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