|
Demo version. Subscribers have full viewing and printing access to our 5,600 Annual Reports and 8,800 10-Ks. Click here ordering information |
|
<- Back to Baxter International company page. Baxter International 10-K Reports: 2008 2007 2006 2005 2004 2003 2001 2000 1999 1998 1997 1996 1995 1994 1993 |
| Baxter International 1998 10-K Report (Partial 10-K shown; subscribers can see the entire 10-K report.) |
0000950131-99-001586.hdr.sgml : 19990322
ACCESSION NUMBER: 0000950131-99-001586
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 8
CONFORMED PERIOD OF REPORT: 19981231
FILED AS OF DATE: 19990319
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: 99568874
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
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, 1998
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)
847.948.2000
Registrant's telephone number, including area code ____________________________
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,
Inc.
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.
X
Yes 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 or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
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
$73.25 on March 5, 1999, and for the purpose of this computation only, the
assumption that all registrant's directors and executive officers are
affiliates) was approximately $20.8 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 March 5, 1999, was 287,041,108.
Documents Incorporated By Reference
Those sections or portions of the registrant's annual report to stockholders
for fiscal year ended December 31, 1998 and of the registrant's proxy
statement for use in connection with its annual meeting of stockholders to be
held on May 4, 1999, 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 Industry Segments.... 1(3)
(c) Narrative Description of Business................ 1(4)
(d) Financial Information about Foreign and Domestic
Operations and Export Sales....................... 6(5)
Item 2. Properties........................................... 7
Item 3. Legal Proceedings.................................... 7
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
(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................................. 15
Item 11. Executive Compensation............................... 15(12)
Item 12. Security Ownership of Certain Beneficial Owners and
Management........................................... 15(13)
Item 13. Certain Relationships and Related Transactions....... 15
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.......................................... 16
(a) Financial Statements............................. 16
(b) Reports on Form 8-K.............................. 16
(c) Exhibits ........................................ 16
- --------
(1) Information incorporated by reference to the Company's Annual Report to
Stockholders for the year ended December 31, 1998 ("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 4, 1999
("Proxy Statement").
(2) Annual Report, pages 36-50, section entitled "Notes to Consolidated
Financial Statements" and pages 21-30, section entitled "Management's
Discussion and Analysis."
(3) Annual Report, pages 48-49, section entitled "Notes to Consolidated
Financial Statements--Segment Information."
(4) Annual Report, pages 21-30, section entitled "Management's Discussion and
Analysis" and pages 48-49, section entitled "Notes to Consolidated
Financial Statements--Segment Information."
(5) Annual Report, pages 48-49, section entitled "Notes to Consolidated
Financial Statements--Segment Information."
(6) Annual Report, page 50, 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 21-30, section entitled "Management's Discussion and
Analysis."
(9) Annual Report, pages 27-28, section entitled "Financial Instrument Market
Risk."
(10) Annual Report, pages 31-50, 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 4-7, section entitled "Board of Directors--
Director Biographies."
(12) Proxy Statement, pages 9 and 14-17, sections entitled "Compensation of
Directors" and "Executive Compensation" and page 17, section entitled
"Pension Plan, Excess Plans and Supplemental Plans."
(13) Proxy Statement, pages 19-20, section entitled "Ownership of Baxter
Stock."
- -------------------------------------------------------------------------------
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" 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 28 countries and sold 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. The Company's products
are used by hospitals, clinical and medical research laboratories, blood and
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 the Company's Annual Report to Stockholders
for the year ended December 31, 1998 (the "Annual Report"), pages 37-39,
section entitled "Notes to Consolidated Financial Statements--Acquisitions and
Divestitures" which is incorporated by reference. See also "Recent
Acquisitions."
(b) Financial Information About Industry Segments.
Incorporated by reference from the Annual Report, pages 48-49, section
entitled "Notes to Consolidated Financial Statements--Segment Information."
(c) Narrative Description of Business.
Recent Acquisitions
Somatogen, Inc.
In May 1998, the Company acquired Somatogen, Inc. ("Somatogen"), a
biopharmaceutical company which is developing recombinant hemoglobin
technology. The purchase price was approximately $206 million and was
principally settled with 3,547,004 shares of Baxter common stock. In addition,
Somatogen shareholders are entitled to a contingent deferred cash payment of
up to $2.00 per Somatogen share, based on a percentage of sales of certain
future products through the year 2007.
Bieffe Medital S.p.A.
In early 1998, the Company acquired a majority interest in Bieffe Medital
S.p.A., a European manufacturer of dialysis and intravenous solutions and
containers, with the remaining shares purchased in July 1998. The total
purchase price was approximately $188 million.
1
Company Overview
The Company operates as a global leader in critical therapies for life-
threatening conditions. It develops, manufactures and markets products and
technologies related to the blood and circulatory system. The Company conducts
its businesses in four segments: Blood Therapies, which develops
biopharmaceutical and blood collection and separation products and
technologies; I.V. Systems/Medical Products, which develops technologies and
systems to improve intravenous ("I.V.") medication delivery and distributes
medical products; Renal, which develops products and provides services to treat
end-stage kidney disease; and CardioVascular, which develops products and
provides services to treat late-stage heart disease and vascular disorders.
These four businesses enjoy leading positions in 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 the
Company's four segments.
Information about operating results is incorporated by reference from the
Annual Report, pages 21-30, section entitled "Management's Discussion and
Analysis" and pages 48-49, section entitled "Notes to Consolidated Financial
Statements--Segment Information."
The Company's Businesses
Blood Therapies
The Company's Blood Therapies segment develops and manufactures therapeutic
proteins from human blood plasma and through recombinant methods. These
proteins are used to treat hemophilia, immune deficiencies and other blood-
related disorders. The Blood Therapies business also manufactures blood-
collection containers and automated blood-cell separation and collection
systems used by hospitals and blood banks to collect blood components. These
components are used to treat patients undergoing surgery, cancer therapy and
other therapies. Products used by plasma centers to collect plasma for
fractionation are also manufactured by this business.
I.V. Systems/Medical Products
The Company's I.V. Systems/Medical Products segment provides a range of
products that deliver fluids and drugs to patients, and is the leading
manufacturer and marketer of intravenous products for use in hospitals and
other health-care settings. These products include I.V. solutions in flexible
plastic containers, I.V. tubing sets, electronic infusion pumps, I.V. nutrition
products, anesthesia products and pharmaceutical agents, and ambulatory I.V.
delivery systems.
Renal
The Company's Renal segment provides products and services for kidney
dialysis--the primary treatment for end-stage renal disease, or kidney failure.
This business is a leading manufacturer of products for peritoneal dialysis, a
home-based renal therapy, and it also manufactures products for hemodialysis, a
treatment administered in a hospital or clinic. In selected international
markets, through its Renal Therapy Services unit, this business operates
dialysis clinics. Through Renal Management Strategies Inc., it also works in
concert with United States nephrologists as a kidney-disease management
company.
CardioVascular
The Company's CardioVascular segment develops and manufactures products to
treat late-stage heart disease and vascular disorders. These products include
replacement heart valves and valve-repair products; perfusion products, used to
provide oxygen to the blood while the heart and lungs are stopped during open-
heart surgery; vascular products which remove clots from peripheral blood
vessels; cardiac monitoring catheters; heart-assist systems; and contract
perfusion services.
2
United States Markets
The health-care marketplace continues to be 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
capitalizing on its market-leading positions, developing new products and
services, leveraging its cost structure and making acquisitions.
International Markets
The Company 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
The Company conducts a non-material amount of business through joint
ventures. Many of these joint ventures are conducted by the Company's I.V.
Systems/Medical Products and Renal businesses, and most are accounted for under
the equity method of accounting.
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 and through
independent distributors, dealers and sales agents. In the United States,
Allegiance Healthcare Corporation distributes a significant portion of the
Company's products. These distribution centers are generally stocked with
adequate inventories to facilitate prompt customer service. Sales and
distribution methods include frequent contact by sales representatives,
automated communications via various electronic purchasing systems, circulation
of catalogs and merchandising bulletins, direct-mail campaigns, trade
publications and advertising. Customers may return defective merchandise for
credit or replacement. In recent years, such returns have been insignificant.
International sales and distribution are made in over 100 countries either on
a direct basis or through independent local distributors. International
subsidiaries employ their own field sales forces in Argentina, Australia,
Austria, Belgium, Brazil, Canada, Chile, China, Colombia, the Czech Republic,
Denmark, Ecuador, Finland, France, Germany, Greece, Guatemala, Hungary, India,
Indonesia, Ireland, Italy, Japan, Korea, Mexico, the Netherlands, New Zealand,
Norway, Panama, Peru, the Philippines, Portugal, Russia, Singapore, Spain,
Switzerland, Taiwan, Thailand, Turkey, the United Kingdom and Venezuela. 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 are available only from a small number of suppliers. In
addition, certain biomaterials for medical implant applications (primarily
polymers) are becoming more difficult to obtain due to market withdrawals by
biomaterial suppliers, primarily as a result of perceived exposures to
liability in the United States.
In some of these situations, the Company has long-term supply contracts with
its 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 and market pressure on such
price increases. See "Contractual Arrangements."
3
Patents and Trademarks
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.
The Company owns a number of patents and trademarks throughout the world and
is licensed under patents owned by others. The Company's policy is to protect
its products and technology through patents and trademarks on a worldwide
basis. This protection is sought in a manner that balances the cost of such
protection against obtaining the greatest value for the Company. The Company
also recognizes the need to promote the enforcement of its patents and
trademarks. However, while the Company can not make any assurances that any of
its patents will not be circumvented, it does not consider its overall business
to be materially dependent upon any individual patent or trademark.
Competition
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
continue to introduce new products which compete with those sold by the
Company, the Company believes that its research and development efforts will
permit it to remain competitive in all presently material product areas.
Although no single company competes with the Company in all of its businesses,
the Company is faced with substantial competition in all of its markets.
The changing health-care environment in recent years has led to increasingly
intense competition among United States and certain European health-care
suppliers. Competition is focused on price, service and product performance.
Pressure in these areas is expected to continue.
The Company continues to increase its efforts to minimize costs and meet
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 intends to continue to develop new products and services,
invest in capital and human resources to upgrade and expand facilities,
leverage its cost structure and make selected acquisitions.
Credit and Working Capital Practices
As of January 28, 1999, the Company's debt ratings on senior debt were A3 by
Moody's, A by Standard & Poor's and A- by Duff & Phelps. The Company's credit
practices and related working capital needs are comparable to those of other
market participants. Collection periods tend to be longer for sales outside the
United States.
Quality Management
The Company places significant emphasis on providing quality products and
services to its customers. A major portion of the Company's quality systems
relate to the manufacturing, packaging, sterilization, handling, distribution
and labeling of the products by the Company. These 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 suppliers of both raw
materials and finished goods to provide the highest value to customers. On a
statistical sampling basis, internal quality assurance organizations test
|
|
(Partial 10-K shown; subscribers can see the entire 10-K report.) |
|
Demo version. Subscribers have full viewing and printing access to our 5,600 Annual Reports and 8,800 10-Ks. Click here ordering information |
Buckmaster Annual Stockholder Reports
© Copyright 2010 Buckmaster Publishing. All rights reserved.
A collection of over 5,600 Annual Stockholder Reports dating back as far as 1995.
For information or to order a Buckmaster Annual Stockholder Reports subscription call 800-282-5628
E-mail: info@buck.com
*Fortune is a registered trademark of Time Inc.
Fortune 500 is a trademark of Fortune Magazine.