-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-A...
-
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SECURITIES AND EXCHANGE COMMISSION
WASH...
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein a...
Data....................................................................
10(8)
Item 7. Management's Discussion and Analysi...
(10) Annual Report, pages 45-70, sections entitled "Report of Independent
Accountants," "Consolidated Balance Sheets," "Co...
On November 28, 1995, the board of directors of Baxter approved in principle
a plan to distribute to Baxter stockholders a...
the Company utilized $60 million of restructuring reserves related to its
continuing operations, including $36 million in ...
Though the federal government failed to enact health-care reform,
fundamental change continued to be a part of the United ...
Joint Ventures
The Company conducts a portion of its business through joint ventures,
including a joint venture with Nestl...
Historically, competition in the health-care industry has been characterized
by the search for technological and therapeut...
The Company's research efforts emphasize self-manufactured product
development, and portions of that research relate to mu...
The Company owns or has long-term leases on substantially all of its major
manufacturing facilities. The Company maintains...
"Notes to Consolidated Financial Statements--Quarterly Financial Results and
Market for the Company's Stock."
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----------...
stockholder, Baxter) may be taken by written consent in lieu of a meeting.
(1) BAXTER INTERNATIONAL INC. EXECUTIVE OFFICER...
KATHY B. WHITE, age 46, has been vice president and chief information
officer of Baxter since 1995. Ms. White previously w...
and World Trade since March 3, 1995. Between 1992 to 1995, Mr. Perez was
president of a division of a subsidiary of Baxter...
SCHEDULES REQUIRED BY ARTICLE 12 OF REGULATION S-X
Report of Independent Accountants on Financial Statement
Schedule page ...
when read in conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
Chicago, Illinois
Februa...
--
--
---
--- --- ---
---
--- --- ---
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--------------------------------------------------------------------------------
-...
(iii) Controller:
/s/ BRIAN P. ANDERSON By: /s/ VERNON R.
LOUCKS JR.
---------------------
----------------------------
Br...
4.1* Indenture for 4 3/4% Convertible Subordinated Debentures
due January 1, 2001, filed under the
Securities Act of 1933 ...
dated June 23, 1988, file no. 1-4448.
4.14* Specimen 9 1/4% Note, filed as exhibit 4.3(a) to the
Company's current report ...
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------------------------------------
<C...
10.33 1996 Officer Incentive Compensation Plan.
10.34 1995 Stock Option Plan Terms and Conditions.
10.35 Separation Agreem...
1. ELIGIBILITY
Officers of the Company are eligible to participate in the Plan during 1996
("Plan Year") if the officer's ...
Participants may elect to defer payment in accordance with the Baxter
International Inc. and Subsidiaries Deferred Compens...
shares are then exercisable, for the number of shares then exercisable. Shares
of Common Stock may not be used to pay the ...
that it is completely independent of the reduction in force the Company
announced in the fourth quarter of 1993.
You will ...
Supplement, you have agreed to postpone payment of the Pension Supplement and
your benefit under the Pension Plan until Se...
--------------------------------------------------------------------------------
------------------
8/2/93 NQ 27,000 $26.0...
11/14/94 8,580 1 year after earned none have ben earned or
vested; all will be
forfeited on your
Termination Date
</TABLE>...
Company property, including proprietary information.
All amounts payable to you or on your behalf under this Agreement wil...
(Date)
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.36
<SEQUENCE>5
<DESCRIPTION>EXHIBIT 10.36
<TEXT>
<PAGE>
Exhibit 10-36
Ma...
You are eligible to continue your active participation in the Company's
Incentive Investment Plan until your Termination D...
expiration date
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--------------------------------------------------------------------------------
-----------------------...
<S> <C> <C> <C>
9/7/90 15,580 1 year after 12,453 shares have been
earned, vested and
earned distributed; 3,127 shares
wer...
discrimination in regard to age, race, sex, color, religion, national origin and
handicap under Title VII of the Civil Rig...
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baxter international

  1. 1. -----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GlJGW8l8WknYYcoqx3DAVpFm97lWoM7eDD7XuflavI4vObaMBeeZljfneDWW9+Ua pZYl+A/wWicZprdzEz2hjw== <SEC-DOCUMENT>0000912057-96-004966.txt : 19960325 <SEC-HEADER>0000912057-96-004966.hdr.sgml : 19960325 ACCESSION NUMBER: 0000912057-96-004966 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960322 SROS: NYSE 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: 1934 Act SEC FILE NUMBER: 001-04448 FILM NUMBER: 96537405 BUSINESS ADDRESS: STREET 1: ONE BAXTER PKWY CITY: DEERFIELD STATE: IL ZIP: 60015 BUSINESS PHONE: 7089482000 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 </SEC-HEADER> <DOCUMENT> <TYPE>10-K <SEQUENCE>1 <DESCRIPTION>BAXTER INTERNATIONAL 10-K <TEXT> <PAGE>
  2. 2. - -------------------------------------------------------------------------------- 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, 1995 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 - -------------------------------------------------------------------------------- [LOGO] Baxter International Inc. - -------------------------------------------------------------------------------- <TABLE> <S> <C> DELAWARE 36-0781620 - ----------------------- -------------------------------- State of Incorporation I.R.S. Employer Identification No. </TABLE> ONE BAXTER PARKWAY, DEERFIELD, ILLINOIS 60015 (847) 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: <TABLE> <CAPTION> NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED - ----------------------------------- ------------------------- <S> <C> Common stock, $1 par value New York Stock Exchange Chicago Stock Exchange Pacific Stock Exchange Preferred Stock Purchase Rights New York Stock Exchange (currently traded with common Chicago Stock Exchange stock) Pacific Stock Exchange </TABLE> 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 ____
  3. 3. 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 $43.88 on March 8, 1996, and for the purpose of this computation only, the assumption that all registrant's directors and executive officers are affiliates) was approximately $11.8 billion. The number of shares of the registrant's common stock, $1 par value, outstanding as of March 8, 1996, was 273,957,449. DOCUMENTS INCORPORATED BY REFERENCE Those sections or portions of the registrant's 1995 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 6, 1996, described in the cross reference sheet and table of contents attached hereto are incorporated by reference in this report. - -------------------------------------------------------------------------------- <PAGE> CROSS REFERENCE SHEET AND TABLE OF CONTENTS - -------------------------------------------------------------------------------- <TABLE> <CAPTION> PAGE NUMBER OR (REFERENCE) (1) ----------------- <S> <C> <C> <C> 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...................................................................... ........... 9 Item 3. Legal Proceedings..................................................................... ..... 9(6) Item 4. Submission of Matters to a Vote of Security Holders........................................ 9 Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters......................................................................... ........... 10(7) Item 6. Selected Financial
  4. 4. Data.................................................................... 10(8) Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations...................................................................... ........ 10(9) Item 8. Financial Statements and Supplementary Data................................................ 10(10) Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...................................................................... . 10 Item 10. Directors and Executive Officers of the Registrant (a) Identification of Directors..................................................... 11(11) (b) Identification of Executive Officers............................................ 11 (c) Compliance with Section 16(a) of the Securities Exchange Act of 1934............ 13(12) Item 11. Executive Compensation.................................................................... . 13(13) Item 12. Security Ownership of Certain Beneficial Owners and Management............................. 13(14) Item 13. Certain Relationships and Related Transactions............................................. 13 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8- K............................ 14 (a) Financial Statements............................................................ 14 (b) Reports on Form 8- K............................................................. 14 (c) Exhibits........................................................................ 14 </TABLE> - ------------------------ (1) Information incorporated by reference to the Company's Annual Report to Stockholders for the year ended December 31, 1995 ("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 6, 1996 ("Proxy Statement"). (2) Annual Report, pages 50-70, section entitled "Notes to Consolidated Financial Statements" and pages 30-43, section entitled "Management's Discussion and Analysis." (3) Annual Report, pages 68-69, section entitled "Notes to Consolidated Financial Statements-- Industry and Geographic Information." (4) Annual Report, pages 30-43, section entitled "Management's Discussion and Analysis" and pages 68-69, section entitled "Notes to Consolidated Financial Statements--Industry and Geographic Information." (5) Annual Report, pages 68-69, section entitled "Notes to Consolidated Financial Statements-- Industry and Geographic Information." (6) Annual Report, page 62-68, section entitled "Notes to Consolidated Financial Statements-- Legal Proceedings." (7) Annual Report, page 70, 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 "Five-Year Summary of Selected Financial Data." (9) Annual Report, pages 30-43, section entitled "Management's Discussion and Analysis."
  5. 5. (10) Annual Report, pages 45-70, 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 2-5, sections entitled "Board of Directors" and "Election of Directors." (12) Proxy Statement, page 18, section entitled "Section 16 Reporting." (13) Proxy Statement, pages 6-12, sections entitled "Compensation of Directors" and "Compensation of Named Executive Officers," and page 17-18, section entitled "Pension Plan, Excess Plans and Supplemental Plans." (14) Proxy Statement, pages 18-20, section entitled "Ownership of Company Securities." <PAGE> - -------------------------------------------------------------------------------- [BAXTER LOGO] 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 23 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 by hospitals, clinical and medical research laboratories, blood and dialysis centers, rehabilitation centers, nursing homes, doctors' offices and at home under physician supervision. See "Recent Developments." For information regarding acquisitions, investments in affiliates and divestitures, see the Company's Annual Report to Stockholders for the year ended December 31, 1995 (the "Annual Report"), page 53, section entitled "Notes to Consolidated Financial Statements--Acquisitions, Investments in Affiliates and Divestitures" which is incorporated by reference. (b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. Incorporated by reference from the Annual Report, pages 68-69, section entitled "Notes to Consolidated Financial Statements--Industry and Geographic Information." (c) NARRATIVE DESCRIPTION OF BUSINESS. Recent Developments SPIN-OFF OF HEALTH CARE COST MANAGEMENT BUSINESS
  6. 6. On November 28, 1995, the board of directors of Baxter approved in principle a plan to distribute to Baxter stockholders all of the outstanding stock of its health-care cost management business in a spin-off transaction (the "Distribution") which is expected to be tax-free. The creation of two independent companies will enable Baxter and the new company to devote management time, attention and investments directly to the core strategies of each business. The new health-care cost management business will consist of the Company's cost management services, United States distribution, surgical products and respiratory-therapy operations and will operate as a medical supplier focused on helping customers manage the total cost of providing patient care. The Distribution is expected to occur in late 1996 and will result in the health-care cost management business operating as an independent entity with publicly-traded common stock. OFFER TO ACQUIRE NATIONAL MEDICAL CARE; SUBSEQUENT WITHDRAWAL On February 1, 1996, Baxter publicly announced its proposal to acquire the National Medical Care ("NMC") subsidiary of W.R. Grace and Company ("Grace") in a tax-free transaction for $3.8 billion, consisting of $1.8 billion of Baxter common stock and a payment to Grace of $2.0 billion comprised of cash, notes and assumed debt. Grace had previously announced its intention to spin-off or divest NMC. Completion of this transaction in 1996 would have resulted in a dilution of Baxter's net earnings, but 3 <PAGE> would have been accretive after approximately six quarters of combined results. The Company's net-debt-to-net-capital ratio would have risen to approximately 42% (compared to 36.3% at December 31, 1995) but was expected to decline to approximately 40% within two years of the acquisition, all else remaining constant. On February 5, 1996, Grace announced that it had agreed to combine its NMC subsidiary with the worldwide dialysis business of Fresenius A.G. (a German company) to form a new company called Fresenius Medical Care in a transaction designed to be tax-free. Fresenius A.G. is a major competitor of the Company's renal division and NMC is a large United States customer of the renal division. Under the proposed transaction with Fresenius A.G., Grace shareholders would receive a 44.8% equity interest in Fresenius Medical Care and Grace would receive $2.3 billion in cash provided by proceeds of debt financing by Fresenius Medical Care. This transaction is subject to the approval of the shareholders of Grace, Fresenius U.S.A. and Fresenius A.G. If the transaction with Grace is consummated with Fresenius A.G., there will be an increased competitive threat to the Company's renal division. However, management believes that this would not have a material adverse effect on Baxter's financial condition or results of operations in 1996. Since the management of Grace refused to discuss the Company's proposed transaction, Baxter withdrew its offer on February 22, 1996. RESTRUCTURING PROGRAMS The Company currently has two restructuring programs in process. In November 1993, the Company initiated a restructuring program designed to accelerate growth and reduce costs in the Company's businesses worldwide, including reorganizations and consolidations in the United States, Europe, Japan and Canada. In the third quarter of 1995, the Company initiated a second restructuring program to consolidate manufacturing operations in Puerto Rico in order to eliminate excess capacity and reduce manufacturing costs. Since the announcement of the 1993 restructuring program, the Company has implemented, or is in the process of implementing, all of the major strategic actions associated therewith and is satisfied that the program is progressing on schedule and will meet previously established financial targets. During 1995,
  7. 7. the Company utilized $60 million of restructuring reserves related to its continuing operations, including $36 million in cash payments. Cash outflows pertain primarily to employee-related costs for severance, outplacement assistance, relocation and retention. The Company has eliminated from continuing operations approximately 1,250 positions of the approximately 1,640 positions affected by the program. The majority of the remaining reductions will occur in 1996 and 1997, as facility closures and consolidations are completed as planned. During 1995, the Company realized approximately $90 million in continuing operations savings which represents a shortfall of approximately $20 million from its estimated savings target. This shortfall is primarily due to timing delays in the implementation of a number of projects. Management has forecasted continuing operations savings of approximately $110 million in 1996, $130 million in 1997 and exceeding $140 million in 1998. Management anticipates that these savings will be partially invested in increased research and development and expansion into growing international markets. Management further believes that its remaining restructuring reserves are adequate to complete the actions contemplated by the 1993 restructuring program. Management is at the very early stages of implementing the 1995 restructuring program, which is expected to be completed by the end of 1998. The pretax restructuring charge of $93 million includes approximately $67 million for valuation adjustments as a result of the Company's decision to close facilities. The Company expects to spend approximately $26 million in cash over the next two years, including severance related to the approximately 1,450 positions that will be eliminated in connection with the 1995 plan. The plant closures and consolidations in Puerto Rico will lower the Company's manufacturing costs. Management believes these actions will help mitigate the Company's exposure to future gross 4 <PAGE> margin erosion arising from pricing pressure, primarily in the United States. In addition to the consolidation of the Company's manufacturing operations in Puerto Rico, the Company has initiated plans for other organizational structure changes which have resulted in a $10 million provision for cash payments related to employee severance. Management anticipates that future cash expenditures related to both the 1993 and 1995 restructuring programs will be funded from cash generated from operations. Industry Overview The Company operates in a single industry segment as a world leader in providing health-care products for use in hospitals and other health-care settings. On a global basis, the Company develops, manufactures and markets intravenous solutions and related administration equipment, and highly specialized medical products for treating kidney and heart disease, blood disorders, and for collecting and processing blood. These products include intravenous solutions and pumps; 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 manufacturing, marketing and administrative infrastructure. Information about segment operating results is incorporated by reference from the Annual Report, pages 30-43, section entitled "Management's Discussion and Analysis" and pages 68-69, section entitled "Notes to Consolidated Financial Statements--Industry and Geographic Information." UNITED STATES MARKETS
  8. 8. Though the federal government failed to enact health-care reform, fundamental change continued to be a part of the United States health-care system in 1995. Competition for patients among health-care providers continues to intensify. Increasingly, providers are looking for ways to better manage costs in areas such as materials handling, supply utilization, product standardization for specific procedures and capital expenditures. The new health-care cost management business is being distributed to stockholders to more optimally meet these emerging market needs, remove limitations, and improve the competitiveness of both Baxter and the new company. There has also been 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 have been below the Consumer Price Index, and industry trends and competition may inhibit the Company's ability to increase prices in the future. INTERNATIONAL MARKETS Throughout the world, as developing countries create more wealth, improving the health and well-being of their citizens becomes a much higher social priority and usually leads to increased per-capita spending on health care. The world's largest developing markets in the Pacific Rim countries and Latin America are all poised for significant economic growth. Based on these factors, management believes there will be improved expansion opportunities for the Company with its broad portfolio of proven cost-effective products, services and therapies to meet the demands of these markets. In the developed world--especially in Western Europe and Japan--there continues to be strong demand for more technologically advanced and cost-effective therapies, products and services, and the Company has long been a leader in these markets. In view of these conditions, management believes the Company's best opportunities for growth are outside the United States. Consequently, the Company's strategies emphasize international expansion to capitalize on the Company's strong global positions in intravenous products, renal therapy, biotechnology and cardiovascular therapies. HEALTH-CARE COST ENVIRONMENT Accelerating cost pressures on United States hospitals are resulting in increased out-patient and alternate-site health-care service delivery and a focus on cost-effectiveness and quality. In addition, technological advances in health-care product and service offerings are increasingly evaluated on their ability to both improve the quality of care and provide more cost-effective outcomes. These forces increasingly shape the demand for, and supply of, medical care. 5 <PAGE> Many private health-care payers are providing 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. The future financial success of health-care product and service companies, such as the Company, will depend on their ability to work with health-care customers to help them enhance their competitiveness. The Company believes it can help its customers achieve savings in the total health-care system by automating supply-ordering procedures, optimizing distribution networks, improving materials management and achieving economies of scale associated with aggregating purchases. 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 realignment of the United States health-care system which may ultimately occur.
  9. 9. 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. This joint venture is accounted for under the equity method of accounting and therefore, is excluded from the Company's segment results. 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 communications via various electronic purchasing systems, circulation of catalogs and merchandising bulletins, direct mail campaigns, trade publications and advertising. 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 Argentina, Australia, Austria, Belgium, Brazil, Brunei, Canada, China, Colombia, Ecuador, Denmark, Finland, France, Germany, Hong Kong, India, Indonesia, Italy, Japan, Malaysia, Mexico, the Netherlands, New Zealand, Norway, Pakistan, the Philippines, Singapore, Spain, Sweden, Switzerland, Taiwan, Thailand and the United Kingdom. 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, including its latex 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." 6 <PAGE> 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
  10. 10. 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 effort 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 health-care suppliers. Competition is focused on price, service and product performance. Pressure in these areas is expected to continue. See "Health-Care Cost Environment" and "United States Markets." In part through its restructuring programs, 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 and cost-effective technologies and the quality of its product 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 in 1995. However, the rating agencies have placed the Company on credit watch pending clarification of the Company's capital structure in conjunction with the Distribution of the health-care cost management business. 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. 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 21 research and development centers located around the world and include facilities in Australia, Belgium, Germany, 7 <PAGE> Italy, Japan, Malta, the Netherlands, Sweden, the United Kingdom and the United States. Expenditures for Company-sponsored research and development activities related to continuing operations were $345 million in 1995, $303 million in 1994 and $280 million in 1993.
  11. 11. 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 biotechnology, renal therapy and transplantation, 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 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. Product regulatory laws exist 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 1995 and similar expenditures are planned for 1996. See Item 3.--"Legal Proceedings." Employees As of December 31, 1995, the Company employed approximately 56,580 people, including approximately 31,430 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 68-69, section entitled "Notes to Consolidated Financial Statements--Industry and Geographic Information." 8 <PAGE> - -------------------------------------------------------------------------------- ITEM 2. PROPERTIES.
  12. 12. The Company owns or has long-term leases on substantially all of its major manufacturing facilities. The Company maintains 33 manufacturing facilities in the United States, including seven in Puerto Rico, and also manufactures in Australia, Belgium, Brazil, Canada, the Czech Republic, Chile, China, Colombia, Costa Rica, the Dominican Republic, France, Ireland, Italy, Japan, Malaysia, Malta, Mexico, the Netherlands, Singapore, Spain, Russia, Turkey and the United Kingdom. The Company owns or operates 83 distribution centers in the United States and Puerto Rico and 66 located in 22 foreign countries. 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 related to continuing operations were $309 million in 1995, $308 million in 1994 and $276 million in 1993. In addition, the Company added to the continuing operations pool of equipment leased or rented to customers, spending $90 million in 1995, $72 million in 1994 and $56 million in 1993. - -------------------------------------------------------------------------------- ITEM 3. LEGAL PROCEEDINGS. Incorporated by reference from the Annual Report, pages 62-68, section entitled "Notes to Consolidated Financial Statements--Legal Proceedings." Additionally, in March 1996, and after the Annual Report was printed, the courts in Osaka and Tokyo issued second settlement plans and second interim opinions in the Japanese Factor Concentrate cases. Those plans and opinions supplement the courts' original plans for resolution of the litigation by confirming the approximate $450,000 up-front payment to each plaintiff, which is to be funded 60% by the corporate defendants and 40% by the Japanese government. The courts' plans and opinions also establish on-going payments to AIDS-manifested hemophiliacs at $1,500 per month and set attorneys' fees at $35,000 per current plaintiff and $15,000 per future plaintiff. The courts' plans provide that the Japanese government will fund 40% of those amounts, and that the corporate defendants will fund 60% with the corporate defendants funding their amounts in proportion to their 1983 market shares, resulting in the Company paying 12.5% of the overall corporate defendants' share. The courts' plans also provide for the continuation of the Yuai Zaidan for non-plaintiffs through March 2001, for the Japanese government to fund 40% of the aggregate amount required for the Yuai Zaidan, for 100% credit of future Yuai Zaidan payments to individuals against settlement amounts paid after the settlement is approved, and for the entry of future plaintiffs into the fund. On March 13, 1996, the Company accepted the basic terms of the courts' imposed settlement. Negotiations on the details of the settlement are continuing. - -------------------------------------------------------------------------------- ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. 9 <PAGE> PART II - -------------------------------------------------------------------------------- ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Incorporated by reference from the Annual Report, page 70, section entitled
  13. 13. "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 "Five 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 30-43, section entitled "Management's Discussion and Analysis." - -------------------------------------------------------------------------------- ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Incorporated by reference from the Annual Report, pages 45-70, 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. 10 <PAGE> 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 May 6, 1996 (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, as of March 1, 1996, of the executive officers of Baxter International Inc. ("Baxter"), and one or both of its two principal direct subsidiaries, Baxter Healthcare Corporation ("Healthcare") and Baxter World Trade Corporation ("World Trade"), their positions and summaries of their backgrounds and business experience. All executive officers of Baxter 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. All executive officers of Healthcare and World Trade are elected or appointed by the boards of directors of the applicable subsidiary and hold office until their respective successors are elected and qualified. As permitted by applicable law, actions by these boards (and their sole
  14. 14. stockholder, Baxter) may be taken by written consent in lieu of a meeting. (1) BAXTER INTERNATIONAL INC. EXECUTIVE OFFICERS VERNON R. LOUCKS JR., age 61, 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. MANUEL A. BAEZ, age 54, has been an executive vice president of Baxter since 1995, and a group vice president of World Trade since 1994. Between 1990 and 1994, Mr. Baez was a group vice president of Baxter. Mr. Baez was first elected an officer of Baxter in 1989. LESTER B. KNIGHT, age 37, has been an executive vice president of Baxter since 1992, and a corporate vice president since 1990, when he was first elected an officer. HARRY M. JANSEN KRAEMER, Jr., age 41, has been a 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 56, has been senior vice president and general counsel of Baxter since 1993. From 1993 to 1994, he was also secretary of Baxter. Mr. Staubitz 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. MICHAEL J. TUCKER, age 43, has been senior vice president of Baxter since 1995. From 1994 to 1995, he was a corporate vice president of World Trade. Mr. Tucker previously was a vice president of a division of World Trade, and prior to that, was a vice president of another division of a subsidiary of Baxter. HERBERT E. WALKER, age 61, has been senior vice president of Baxter since 1993. Mr. Walker previously was vice president of human resources of a division of Healthcare. FABRIZIO BONANNI, age 49, has been a vice president of Baxter since 1995. From 1994 to 1995, he was a corporate vice president of World Trade. Mr. Bonanni previously was a vice president of a division of World Trade. 11 <PAGE> JOHN F. GAITHER, Jr., age 46, has been a vice president of Baxter since 1994. Between 1991 and 1994, Mr. Gaither was vice president of law and strategic planning for a subsidiary of Baxter, and prior to that, was secretary and deputy general counsel of Baxter. DAVID C. MCKEE, age 48, has been a vice president of Baxter since 1996. Between 1994 and 1996, Mr. McKee was Baxter's deputy general counsel, and prior to that, was associate general counsel of a subsidiary of Baxter. KSHITIJ MOHAN, age 51, has been a vice president of Baxter since 1995. In 1995, Mr. Mohan also was a corporate vice president of World Trade. Mr. Mohan previously was a vice president of a division of Healthcare. JOHN L. QUICK, age 51, has been a vice president of Baxter since 1995. From 1994 to 1995, he was a corporate vice president of Healthcare. Mr. Quick previously was a vice president of a division of Healthcare, and prior to that, was a vice president of another division of that subsidiary.
  15. 15. KATHY B. WHITE, age 46, has been vice president and chief information officer of Baxter since 1995. Ms. White previously was vice president of information systems of Allied Signal Corporation, and prior to that, was a corporate officer responsible for human resources and information systems with Guilford Mills, Inc. BRIAN P. ANDERSON, age 45, has been 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 49, 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. A. GERARD SIECK, age 39, has been secretary of Baxter since 1994. Between 1992 and 1994, Mr. Sieck was assistant secretary of Baxter, and prior to that, was corporate counsel in the law department of Healthcare. (2) HEALTHCARE AND WORLD TRADE EXECUTIVE OFFICERS TIMOTHY B. ANDERSON, age 49, has been a group vice president of Healthcare and World Trade since 1994. Between 1992 and 1994, Mr. Anderson was a vice president of Baxter. Mr. Anderson previously was president of several divisions of a subsidiary of Baxter. JOSEPH F. DAMICO, age 42, has been a group vice president of Healthcare since 1994. Between 1992 and 1994, Mr. Damico was a vice president of Baxter. Mr. Damico previously was president of a division of Healthcare, and prior to that was a vice president - general manager of that division. DONALD W. JOSEPH, age 58, has been a group vice president of Healthcare and World Trade since 1994. Between 1990 and 1994, Mr. Joseph was a vice president of Baxter. JACK L. MCGINLEY, age 49, has been a group vice president of Healthcare since 1994. Between 1992 and 1994, Mr. McGinley was a vice president of Baxter. Mr. McGinley previously was president of a division of Healthcare, and prior to that was president of the Japanese subsidiary of World Trade. TERRENCE J. MULLIGAN, age 50, has been a group vice president of Healthcare since 1994. Between 1990 and 1994, Mr. Mulligan was a senior vice president of Baxter. Mr. Mulligan was first elected an officer of Baxter in 1985. MICHAEL A. MUSSALLEM, age 43, has been a group vice president of Healthcare since 1994. From 1993 to 1994, Mr. Mussallem was president of a division of Healthcare, and from 1990 to 1993, was president of another division of that subsidiary. 12 <PAGE> CARLOS DEL SALTO, age 53, has been a corporate vice president of World Trade since 1994. Between 1992 and 1994, Mr. del Salto was a vice president of Baxter. Mr. del Salto previously was president-- Latin America/Switzerland/Austria of a subsidiary of Baxter, and prior to that, he was vice president-- Latin America of that subsidiary. J. ROBERT HURLEY, age 46, has been a corporate vice president of World Trade since 1993. Mr. Hurley previously was vice president of a division of World Trade. ROBERTO E. PEREZ, age 46, has been a corporate vice president of Healthcare
  16. 16. and World Trade since March 3, 1995. Between 1992 to 1995, Mr. Perez was president of a division of a subsidiary of Baxter, and prior to that was a vice president of that division. (c) COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934. Incorporated by reference from Proxy Statement, page 18, section entitled "Section 16 Reporting." - -------------------------------------------------------------------------------- ITEM 11. EXECUTIVE COMPENSATION. Incorporated by reference from the Proxy Statement, pages 6-16, sections entitled "Compensation of Directors" and "Compensation of Named Executive Officers," and pages 17-18, section entitled "Pension Plan, Excess Plans and Supplemental Plans." - -------------------------------------------------------------------------------- ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Incorporated by reference from the Proxy Statement, pages 18-20, section entitled "Ownership of Company Securities." - -------------------------------------------------------------------------------- ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. None. 13 <PAGE> - -------------------------------------------------------------------------------- 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: <TABLE> <S> <C> <C> (a) Financial Statements Location FINANCIAL STATEMENTS REQUIRED BY ITEM 8 OF THIS FORM Consolidated Balance Sheets Annual Report, page 46 Consolidated Statements of Income Annual Report, page 47 Consolidated Statements of Cash Flows Annual Report, page 48 Consolidated Statements of Stockholders' Equity Annual Report, page 49 Annual Report, pages Notes to Consolidated Financial Statements 50-70 Report of Independent Accountants Annual Report, page 45
  17. 17. SCHEDULES REQUIRED BY ARTICLE 12 OF REGULATION S-X Report of Independent Accountants on Financial Statement Schedule page 15 II Valuation and Qualifying Accounts page 16 All other schedules have been omitted because they are not applicable or not required. </TABLE> <TABLE> <S> <C> (b) Reports on Form 8-K A report on Form 8-K, dated November 14, 1995, was filed with the SEC under Item 5, Other Events, to file a press release which announced, among other things, a $500 million stock repurchase program and participation in a revised settlement of mammary-implant litigation. A report on Form 8-K, dated November 28, 1995, was filed with the SEC under Item 5, Other Events, to file a press release which announced a plan to distribute to Baxter shareholders publicly-traded stock for a new health-care cost management company. A report on Form 8-K, dated February 2, 1996, was filed with the SEC under Item 5, Other Events, to file a press release which announced an offer to acquire the National Medical Care, Inc. subsidiary of W. R. Grace & Co. A report on Form 8-K, dated February 29, 1996, was filed with the SEC under Item 5, Other Events, to file a press release which announced the withdrawal of a February 2, 1996 offer to acquire the National Medical Care, Inc. subsidiary of W. R. Grace & Co. (c) Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index, which is incorporated herein by reference. </TABLE> 14 <PAGE> REPORT OF INDEPENDENT ACCOUNTS ON THE FINANCIAL STATEMENT SCHEDULE - -------------------------------------------------------------------------------- To the Board of Directors of Baxter International Inc. Our audits of the consolidated financial statements referred to in our report dated February 14, 1996 appearing on page 45 of the 1995 Annual Report to Stockholders of Baxter International Inc. (which report and consolidated financial statements are incorporated by reference in the Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein
  18. 18. when read in conjunction with the related consolidated financial statements. PRICE WATERHOUSE LLP Chicago, Illinois February 14, 1996 15 <PAGE> SCHEDULE II - -------------------------------------------------------------------------------- VALUATION AND QUALIFYING ACCOUNTS (In millions of dollars) <TABLE> <CAPTION> - -------------------------------------------------------------------------------- --------------------------------------------- ADDITIONS ------------------------------ BALANCE AT CHARGED TO CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER DEDUCTIONS END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(A) FROM RESERVES PERIOD - -------------------------------------------------------------------------------- --------------------------------------------- <S> <C> <C> <C> <C> <C> YEAR ENDED DECEMBER 31, 1995: Accounts receivable $ 21 $ 9 $ 1 $ (9) $ 22 -- -- --- --- --- --- --- --- --- --- - -------------------------------------------------------------------------------- --------------------------------------------- YEAR ENDED DECEMBER 31, 1994: Accounts receivable $ 19 $ 7 $ 1 $ (6) $ 21 -- -- --- --- --- --- --- --- --- --- - -------------------------------------------------------------------------------- --------------------------------------------- YEAR ENDED DECEMBER 31, 1993: Accounts receivable $ 16 $ 6 $ (1) $ (2) $ 19
  19. 19. -- -- --- --- --- --- --- --- --- --- - -------------------------------------------------------------------------------- --------------------------------------------- </TABLE> (A) Valuation accounts of acquired or divested companies and foreign currency translation adjustments. Reserves are deducted from assets to which they apply. 16 <PAGE> 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, 1996 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. <TABLE> <S> <C> <C> <C> (i) Principal Executive Officer: (iv) A Majority of the Board of Directors Silas S. Cathcart /S/ VERNON R. LOUCKS JR. Pei-yuan Chia ----------------------- Vernon R. Loucks Jr. John W. Colloton DIRECTOR, CHAIRMAN OF THE BOARD Susan Crown AND CHIEF EXECUTIVE OFFICER Mary Johnston Evans Frank R. Frame David W. Grainger Martha R. Ingram Lester B. Knight Harry M. Jansen Kraemer, Jr. (ii) Principal Financial Officer: Arnold J. Levine Georges C. St. Laurent, Jr. Monroe E. Trout, M.D. /S/ HARRY M. JANSEN KRAEMER, JR. Fred L. Turner -------------------------------- Harry M. Jansen Kraemer, Jr. SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
  20. 20. (iii) Controller: /s/ BRIAN P. ANDERSON By: /s/ VERNON R. LOUCKS JR. --------------------- ---------------------------- Brian P. Anderson Vernon R. Loucks Jr. CONTROLLER DIRECTOR AND ATTORNEY-IN-FACT </TABLE> 17 <PAGE> - -------------------------------------------------------------------------------- APPENDICES <TABLE> <CAPTION> DESCRIPTION PAGE - -------------------------------------------------------------------------------- ---------------------- --------- <S> <C> Computation of Primary Earnings per Common Share (Exhibit 11.1) 22 Computation of Fully Diluted Earnings per Common Share (Exhibit 11.2) 23 Computation of Ratio of Earnings to Fixed Charges (Exhibit 12) 24 Subsidiaries of the Company (Exhibit 21) 25 </TABLE> - -------------------------------------------------------------------------------- EXHIBITS FILED WITH SECURITIES AND EXCHANGE COMMISSION <TABLE> <CAPTION> NUMBER AND DESCRIPTION OF EXHIBIT - -------------------------------------------------------------------------------- ------------------------------------ <C> <C> <S> 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, 1992, file number 1-4448 (the "1992 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* Amended and Restated Bylaws, filed as exhibit 3.3 to the Form 10-Q for the quarter ended September 30, 1994, file number 1-4448. 4. Instruments defining the rights of security holders, including indentures
  21. 21. 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. </TABLE> 18 <PAGE> <TABLE> <CAPTION> NUMBER AND DESCRIPTION OF EXHIBIT - -------------------------------------------------------------------------------- ------------------------------------ <C> <C> <S> 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
  22. 22. dated June 23, 1988, file no. 1-4448. 4.14* 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. 4.15* 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 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. 10.3* 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. 10.4* 1988 Long-Term Incentive Plan, filed as exhibit 10.12 to the 1987 Form 10-K. 10.5* 1987-1989 Long-Term Performance Incentive Plan, filed as exhibit 10.15 to the Company's annual report on Form 10-K for the year ended December 31,1986 (the "1986 Form 10-K"). 10.6* 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"). 10.7* Stock Option Plan Adopted July 25, 1988, filed as exhibit 10.13 to the 1988 Form 10-K. 10.8* 1991 Officer Incentive Compensation Plan, filed as exhibit 10.11 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"). 10.9* Baxter International Inc. and Subsidiaries Incentive Investment Excess Plan, filed as exhibit 10.17 to the 1988 Form 10-K. 10.10* Baxter International Inc. and Subsidiaries Supplemental Pension Plan, filed as exhibit 10.18 to the 1988 Form 10-K. 10.11* 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"). 10.12* Limited Rights Plan, filed as exhibit 19.6 to the September, 1989 Form 10-Q. 10.13* Amendments to various plans regarding disability, filed as exhibit 19.9 to the September, 1989 Form 10-Q. 10.14* 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. </TABLE> 19 <PAGE> <TABLE> <CAPTION> NUMBER AND DESCRIPTION OF EXHIBIT
  23. 23. - -------------------------------------------------------------------------------- ------------------------------------ <C> <C> <S> 10.15* 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. 10.16* 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. 10.17* Amendment to 1987 Incentive Compensation Program, filed as exhibit 19.1 to September, 1989 Form 10-Q. 10.18* Deferred Compensation Plan (1990), filed as exhibit 10.24 to the 1990 Form 10-K. 10.19* Restricted Stock Grant Terms and Conditions, filed as exhibit 10.25 to the Company's annual report on Form 10-K for the year ended December 31, 1991, file number 1-4448 (the "1991 Form 10-K"). 10.20* Vernon R. Loucks Restricted Stock Grant Terms and Conditions, filed as exhibit 10.26 to the 1991 Form 10-K. 10.21* Deferred Compensation Plan (1990), as amended in 1992, filed as exhibit 10.27 to the 1992 Form 10-K. 10.22* Restricted Stock Plan for Non-Employee Directors (as amended and restated in 1992), filed as exhibit 10.28 to the 1992 Form 10-K. 10.23* Restricted Stock Grant Terms and Conditions (as amended), filed as exhibit 10.31 to the 1992 Form 10-K. 10.24* 1992 Officer Incentive Compensation Plan, filed as exhibit 10.29 to the 1992 Form 10-K. 10.25* 1993 Officer Incentive Compensation Plan, filed as exhibit 10.30 to the 1992 Form 10-K. 10.26* 1994 Officer Incentive Compensation Plan, filed as exhibit 10.31 to the Company's annual report on Form 10-K for the year ended December 31, 1993, file number 1-4448 (the "1993 Form 10-K"). 10.27* Corporate Aviation Policy, filed as exhibit 10.33 to the 1992 Form 10-K. 10.28* Plan and Agreement of Reorganization Between Baxter and Caremark International Inc., filed as exhibit 10.34 to the 1992 Form 10-K 10.29* 1994 Incentive Compensation Program, filed as exhibit A to the Company's proxy statement for use in connection with its April 29, 1994 annual meeting of stockholders, file no. 1-4448. 10.30* 1994 Shared Investment Plan and Terms and Conditions, filed as exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 1994. 10.31* 1995 Officer Incentive Compensation Plan, filed as exhibit 10.31 to the Company's annual report on Form 10-K for the year ended December 31, 1994 (the "1994 Form 10-K"). 10.32* Baxter International Inc. Restricted Stock Plan for Non-Employee Directors, as amended and restated effective May 8, 1995, filed as exhibit 10.32 to the 1994 Form 10-K.
  24. 24. 10.33 1996 Officer Incentive Compensation Plan. 10.34 1995 Stock Option Plan Terms and Conditions. 10.35 Separation Agreement: Tony L. White. 10.36 Separation Agreement: Manuel A. Baez </TABLE> 20 <PAGE> <TABLE> <CAPTION> NUMBER AND DESCRIPTION OF EXHIBIT - -------------------------------------------------------------------------------- ------------------------------------ <C> <C> <S> 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. 1995 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. 23. Consent of Price Waterhouse. 24. Powers of Attorney. 27. Financial Statement Schedule. </TABLE> - ------------------------ <TABLE> <C> <C> <S> * Incorporated herein by reference. (All other exhibits are inapplicable.) </TABLE> 21 </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-10.33 <SEQUENCE>2 <DESCRIPTION>EXHIBIT 10.33 <TEXT> <PAGE> BAXTER INTERNATIONAL INC. 1996 OFFICER INCENTIVE COMPENSATION PLAN This 1996 Officer Incentive Compensation Plan ("Plan") of Baxter International Inc. ("Baxter") and its subsidiaries (collectively, the "Company") is adopted pursuant to the Baxter International Inc. 1987 Incentive Compensation Program (the "Program") for the purposes stated in the Program. The Plan is intended to comply with the requirements of Section 162(m)(4)(C) of the Internal Revenue Code of 1986 ("IRC"), as amended, and the related income tax regulations issued thereunder.
  25. 25. 1. ELIGIBILITY Officers of the Company are eligible to participate in the Plan during 1996 ("Plan Year") if the officer's participation is approved by the Compensation Committee of the Board of Directors of Baxter (the "Committee"). Officers so approved by the Committee shall be referred to herein as "Participants". 2. BONUS AWARD 2.1 Each Participant shall be eligible to receive a "Bonus Award" in accordance with the terms provided herein and any other terms established by the Committee. To determine a Participant's Bonus Award, the Committee shall establish a) Company performance goals for the Plan Year ("Company Performance Criteria"), b) a "Bonus Range" for each Participant, and c) the amount within a Participant's Bonus Range that will be payable to a Participant based upon the achievement of the Company Performance Criteria. The terms described in the preceding sentence must be established by April 1, 1996, and such terms shall not thereafter be changed, except as permitted by paragraph 2.2. 2.2 By March 31, 1997, the Committee shall assess the extent to which the Company has achieved the Company Performance Criteria based on the Company's publicly reported results for the Plan Year. The Committee shall exclude the effect of acquisitions, divestitures, changes in accounting principles, and other extraordinary or non-recurring events occurring in 1996 when assessing the extent to which the Company has achieved the Company Performance Criteria, but only if such exclusion would enhance the Company's performance relative to the Company Performance Criteria. The exclusion authorized by the preceding sentence shall only apply to the extent it is consistent with IRC Section 162(m)(4)(C) and the related regulations described above. The Committee shall then determine each Participant's Bonus Award based upon the terms described in paragraph 2.1 above. The <PAGE> Committee, however, has the discretion to reduce the amount of a Participant's Bonus Award determined under the preceding sentence. The Committee's determination shall be consistent with IRC Section 162(m)(4)(C) and the related regulations described above. In addition, the committee may exercise discretion in the determination of the Bonus Awards earned under the Plan with respect to participants who are not subject to IRC Section162(m). 2.3 If an officer becomes a Participant in the Plan during 1996, but after January 1, 1996, the Committee shall establish a prorated Bonus Range for such Participant based on the number of full months remaining in 1996 after he or she becomes a Participant. To the extent applicable, the determination of a prorated Bonus Range shall be consistent with IRC Section 162(m)(4)(C) and the related regulations described above. 3. PAYMENT 3.1 Except as otherwise determined by the Committee and except with respect to Participants who have filed deferral elections pursuant to paragraph 4, all bonuses will be paid in cash as soon as possible following determination of Bonus Awards by the Committee. 3.2 No Participant will be eligible to receive a Bonus Award unless he or she continues to be employed by the Company through February 1, 1997, except as otherwise determined by the Committee. The Committee's Bonus Award determination with respect to such participant may be determined in the same manner as provided in paragraphs 2.1 and 2.2 above. 4. DEFERRAL OF PAYMENT
  26. 26. Participants may elect to defer payment in accordance with the Baxter International Inc. and Subsidiaries Deferred Compensation Plan. </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-10.34 <SEQUENCE>3 <DESCRIPTION>EXHIBIT 10.34 <TEXT> <PAGE> BAXTER INTERNATIONAL INC. STOCK OPTION PLAN ADOPTED JULY 31, 1995 TERMS AND CONDITIONS 1. PURPOSE This Stock Option Plan ("Plan") is adopted pursuant to the Baxter International Inc. 1994 Incentive Compensation Program ("Program") for the purposes stated in the Program. 2. PARTICIPANTS Participants in this Plan ("Optionee") shall be valued employees of Baxter International Inc. or its subsidiaries ("Company") who have been selected by the Committee, as defined in the Program ("Committee"), and to whom the Committee makes an award of an option ("Option") under this Plan. 3. AWARDS Each Option shall consist of a Stock Option as defined in the Program and is granted under the terms and conditions contained in the Program and this Plan. To the extent that any of the terms and conditions contained in this Plan are inconsistent with the Program, the terms of the Program shall control. Terms defined in the Program shall have the same meaning in these terms and conditions. The Option is not intended to qualify as an Incentive Stock Option within the meaning of section 422 of the United States Internal Revenue Code. Residents of the United Kingdom may also be subject to additional terms and conditions in the form contained in the Baxter International Inc. Rules of the Baxter International United Kingdom Stock Option, to the extent deemed necessary by the Committee. 4. VESTING, EXERCISE AND EXPIRATION 4.1 The Option becomes vested five years from the date of grant, subject to acceleration in accordance with the following. One hundred percent of the Option shall become vested on the first Business Day (as defined in section 4.4) after the ninetieth consecutive calendar day during which the average Fair Market Value (as defined in the Program) of the Common Stock (as defined in the Program) equals or exceeds $50.00 per share. The Option shall not vest more than three years after the <PAGE> Optionee's employment is terminated by retirement at or after age 55 but shall otherwise continue to vest until the Option expires pursuant to section 4.4. 4.2 When vested and until it expires, the Option may be exercised in whole or in part in the manner specified by the Stockholder Services Department of Baxter International Inc. If exercised in part, the Option must be exercised in installments consisting of at least 100 shares or, if options for less than 100
  27. 27. shares are then exercisable, for the number of shares then exercisable. Shares of Common Stock may not be used to pay the exercise price of the Option unless certificates representing such shares have been issued and are delivered by the Optionee in accordance with the requirements specified by the Stockholder Services Department. Residents of the United Kingdom may not use shares of Common Stock to pay the exercise price of the Option in any circumstances. 4.3 If the Optionee's employment by the Company is terminated by death or disability more than 12 months after the date on which the Option is granted, the Optionee or the Optionee's legal representative or the person or persons to whom the Optionee's rights under the Option are transferred by will or the laws of descent and distribution shall have the right to exercise the Option until it expires in accordance with its terms with respect to all or any part of the shares remaining subject to the Option (whether or not such shares were purchasable by the Optionee under section 4.1 at the time of death.) 4.4 The Option shall expire at the close of business on the earlier of a date determined as follows or, if such date is not a Business Day, then the last Business Day preceding such date: (i) one year after the date on which employment of the Optionee by the Company shall have been terminated by his death or disability; (ii) five years after the date on which employment of the Optionee by the Company shall have been terminated by retirement at or after age 55; (iii) three months after the date on which employment of the Optionee by the Company shall have terminated except as provided in subsection 4.4(i) and (ii), unless the Optionee dies or becomes disabled during said three-month period, in which case the relevant date shall be one year after the termination; or (iv) ten years from the date on which the Option was granted. "Business Day" shall mean any day, other than Saturday or Sunday, when the corporate headquarters of the Company is open for the transaction of business and when the Common Stock is traded on the New York Stock Exchange. A transfer of an Optionee from employment by one corporation to another among Baxter International Inc. and its subsidiaries, or a transfer of an Optionee to employment by another corporation which assumes the Option or issues a substitute option in a transaction to which section 424 of the Internal Revenue Code applies, shall not be considered a termination of employment for purposes of the Option. </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-10.35 <SEQUENCE>4 <DESCRIPTION>EXHIBIT 10.35 <TEXT> <PAGE> Exhibit 10-35 [BAXTER LETTERHEAD] September 18, 1995 Mr. Tony L. White 575 Stable Lane Lake Forest, IL 60045 Dear Tony: This letter confirms our agreement concerning your termination of employment with Baxter International Inc. and its affiliates ("Company"). You and the Company acknowledge that your employment termination is by mutual agreement, and
  28. 28. that it is completely independent of the reduction in force the Company announced in the fourth quarter of 1993. You will cease to be a director and officer of the Company effective September 18, 1995 ("Transition Date"). You will continue to be an employee of the Company through December 31, 1995 ("Termination Date"). Between your Transition Date and your Termination Date, you will assist the Company in the smooth transition of your responsibilities to your successors. If you satisfy your obligation to assist the Company in the smooth transition of your responsibilities to your successors, you will receive a cash bonus ("Cash Bonus") of up to $300,000. The Cash Bonus is payable to you within thirty days after your Termination Date. I will determine both whether you are eligible to receive the Cash Bonus and the final amount at year end. If the Cash Bonus is paid to you, it will be deemed eligible 1995 compensation for purposes of calculating the Pension Supplement described on page 2 of the Agreement. You will continue to receive your monthly car allowance, flexible spending allowance, home security system and club reimbursements until your Termination Date. You will not receive any bonus under the 1995 Officer Incentive Compensation Plan. You are not eligible to participate in any Company bonus plans which are adopted after the date of this Agreement. You will not earn any restricted shares for 1995 performance under the Company's 1989 Long-Term Incentive Plan (LTI-3). Before your Termination Date, you will receive a total of $35,288, in a single sum, for all of your accrued but unused vacation time, in accordance with the Company's policy. You will not accrue any vacation time after your Termination Date. <PAGE> You are eligible to receive medical coverage through the Company's retiree medical plan, in accordance with the plan's provisions. You may postpone retiree medical coverage and elect, in accordance with a federal statute (COBRA), to continue your medical and dental benefits under the Company's Flexible Benefits Program for up to 18 months after your Termination Date. You may not obtain medical coverage through the retiree medical plan and COBRA simultaneously. You are eligible to continue your active participation in the Company's Incentive Investment Plan until your Termination Date, in accordance with the Plan's provisions. Your vested accrued benefits in the Incentive Investment Plan will be distributed in accordance with its provisions. Your active participation in the Baxter International Inc. and Subsidiaries Pension Plan ("Pension Plan") will continue until your Termination Date, in accordance with the Plan's provisions. Your vested accrued benefit in the Pension Plan will be distributed in accordance with its provisions. In addition, the Company will provide you with a non-qualified and unfunded supplemental pension benefit ("Pension Supplement") equal to the difference between a) your accrued benefit calculated under the provisions of the Pension Plan and b) the accrued benefit which you would have under the Pension Plan if you had ten additional years of participation in the Pension Plan. Your Pension Supplement is payable at the same time and in the same form as your benefit under the Pension Plan. In consideration of your receipt of the Pension
  29. 29. Supplement, you have agreed to postpone payment of the Pension Supplement and your benefit under the Pension Plan until September 1, 1996 or later. The ten additional years of Pension Plan participation provided in this paragraph will not be counted when determining the amount you must pay for coverage through the Company's retiree medical plan. Your participation, if any, in the Company's Employee Stock Purchase Plan will cease on your Termination Date. You will receive a cash refund of the balance, if any, in your subscription account, in accordance with the Plan's provisions. Your participation in the Company's split-dollar life insurance plan will cease on your Termination Date. You may elect to continue your split-dollar life insurance coverage in accordance with the Plan's provisions. 2 <PAGE> Your options and restricted shares will be vested or forfeited as listed below: <TABLE> <CAPTION> OPTIONS # OF OPTIONS EXPIRATION DATE GRANTED TYPE GRANTED OPTION PRICE DATE(2) VESTING <S> <C> <C> <C> <C> <C> - -------------------------------------------------------------------------------- ------------------ 11/21/88 NQ 10,470(1) $15.89(1) 3/29/96 All are vested; may exercise before expiration date - -------------------------------------------------------------------------------- ------------------ 11/19/89 NQ 10,993(1) $22.21(1) 3/29/96 all are vested; may exercise before expiration date - -------------------------------------------------------------------------------- ------------------ 7/30/90 NQ 11,517(1) $24.36(1) 3/29/96 all are vested; may exercise before expiration date - -------------------------------------------------------------------------------- ------------------ 8/9/91 NQ 4,397(1) $34.15(1) 3/29/96 all are vested; may exercise before expiration date - -------------------------------------------------------------------------------- ------------------ 8/3/92 NQ 13,296(1) $36.66(1) 3/29/96 all are vested; may exercise before expiration date -
  30. 30. -------------------------------------------------------------------------------- ------------------ 8/2/93 NQ 27,000 $26.00 3/29/96 18,000 are vested; may exercise before expiration date; remainder will be forfeited on your Termination Date - -------------------------------------------------------------------------------- ------------------ 7/31/95 NQ 44,800 $37.25 3/29/96 None are vested; all will be forfeited on your Termination Date unless accelerated vesting occurs, in accordance with the option grant terms and conditions, before the expiration date - -------------------------------------------------------------------------------- ------------------ </TABLE> (1) As equitably adjusted in connection with the Caremark spin-off (2) Option expiration dates consistent with option grant terms and conditions relating to employment termination 3 <PAGE> <TABLE> <CAPTION> RESTRICTED SHARES # of Options Date Granted Granted Vesting Date Disposition <S> <C> <C> <C> 11/21/88 25,100 1 year after earned 24,262 shares have been earned, vested and distributed; 838 were earned in 1994 and will be allowed to vest on 12/31/95 8/9/91 10,040 1 year after earned All were earned in 1994; 6,787 will be allowed to vest on 12/31/95; remaining 3,253 will be forfeited on your Termination Date 12/7/92 19,400 1 year after earned 4,247 were earned in 1994; all 19,400 will be forfeited on your Termination Date
  31. 31. 11/14/94 8,580 1 year after earned none have ben earned or vested; all will be forfeited on your Termination Date </TABLE> You will not receive any additional grants of options or restricted shares. Your participation in the Shared Investment Plan will continue in accordance with the Plan's provisions. To preserve your rights to make various elections under the Company's Flexible Benefits Program, Pension Plan and Incentive Investment Plan, you must contact the Human Resources Department before your Termination Date. You acknowledge that the compensation and benefits provided in this Agreement exceed the compensation and benefits which you would normally receive in connection with your employment termination. In exchange for the compensation and benefits under this Agreement, you waive your right to file or participate as a class member in any claims or lawsuits (whether or not you now know of the basis for the claims or lawsuits) with federal or state agencies or courts against the Company and its employee benefit plans, including their present and former directors, officers, employees, agents and fiduciaries. This general waiver and release includes, but is not limited to, all claims of unlawful discrimination in regard to age, race, sex, color, religion, national origin and handicap under Title VII of the Civil Rights Act, the Age Discrimination in Employment Act or any other federal or state statutes, all claims for wrongful employment termination or breach of contact and any other claims relating to your employment or termination of 4 <PAGE> employment with the Company. This waiver and release also apply to your heirs, assigns, executors and administrators. This waiver and release do not waive rights or claims which may arise after the date this Agreement is signed except as stated in the next sentence. To be eligible to receive the Pension Supplement described above, you agree that this waiver and general release will be deemed to be signed by you again when your Pension Supplement begins to be paid. You agree: (a) not to intentionally disparage the Company, its employees or products; (b) not to intentionally engage in actions contrary to the interest of the Company; provided, however, that this subsection (b) shall not apply to conduct otherwise permissible under your employment agreement with the Company; (c) not to disclose or allow disclosure of any provisions of this Agreement, except to your attorney or pursuant to subpoena or court order (although the Company may be required to disclose this Agreement in its 1996 proxy statement and as an exhibit to its Form 10-K for 1995); (d) to conduct the transition period in a constructive and positive manner; (e) to remain bound by the non- compete and confidentiality provisions of your employment agreement with the Company (the Company acknowledges that your employment with The Perkin-Elmer Corporation does not violate the non-compete provisions of your employment agreement); (f) to refrain from soliciting any Company employees for employment at The Perkin-Elmer Corporation, or any other future employer of you, until January 1, 1997 and (g) to return to the Company, by September 30, 1995, all
  32. 32. Company property, including proprietary information. All amounts payable to you or on your behalf under this Agreement will be reported to appropriate governmental agencies as taxable income to the extent required, and appropriate withholding will be made where necessary. In addition, all amounts payable to you under this Agreement are expressed as amounts prior to payment or withholding of any taxes, and the Company will not gross-up the amounts or otherwise reimburse you for the taxes you pay relating to such amounts. The amounts payable to you under this Agreement are in lieu of all severance compensation and other severance benefits from the Company to which you might otherwise be entitled. The Company may terminate the Pension Supplement if you fail to comply with any of your obligations under the Agreement. You acknowledge that the Company has made no promises to you which are not included in this Agreement, and that this Agreement contains the entire understanding between you and the Company relating to your employment termination. You acknowledge that the terms of this Agreement are contractually binding. If any portion of this Agreement is declared invalid or unenforceable, the remaining portions of this Agreement will continue in force. 5 <PAGE> You acknowledge that you carefully read the terms of this Agreement, you know and understand its content and meaning, you were given 21-day period to review it, you were encouraged to consult with an attorney before accepting it, and you accept it voluntarily. If this letter accurately reflects our agreement, please sign two copies, and return one of them to me by October 6, 1995. The terms of this Agreement are subject to the approval of the Compensation Committee of the Baxter International Inc. Board of Directors. Sincerely. /S/ Vernon R. Loucks Jr. - ---------------------------- Vernon R. Loucks Jr. ACCEPTED AND AGREED: /S/ Tony L. White - ---------------------------- (Signature) 9/23/95 - ----------------------------
  33. 33. (Date) </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-10.36 <SEQUENCE>5 <DESCRIPTION>EXHIBIT 10.36 <TEXT> <PAGE> Exhibit 10-36 March 18, 1996 Mr. Manuel A. Baez 3502 Derby Lane Ft. Lauderdale, FL 33331 Dear Manny: This letter confirms our agreement concerning your termination of employment with Baxter International Inc. and its affiliates ("Company"). You and the Company acknowledge that your employment termination is by mutual agreement, and that it is completely independent of the reduction in force the Company announced in the fourth quarter of 1993. You will cease to be an employee and an officer of the Company effective May 3, 1996 ("Termination Date"). Until your Termination Date, you will assist the Company in the smooth transition of your responsibilities to your successors. You will continue to receive your current salary, monthly car allowance, and flexible spending allowance until your Termination Date. You will be eligible to receive a pro-rated bonus, up to a maximum of $78,000, under the 1996 Officer Incentive Compensation Plan. Your bonus will be determined based on the extent to which the Company achieves the 1996 performance criteria under the Plan and based on the extent to which you satisfy your obligation to assist the Company in the smooth transition of your responsibilities to your successors. Your 1996 bonus will be determined and paid at the same time and in the same manner applicable to all other participants in the Plan. You will not earn any restricted shares for 1996 performance under the Company's 1989 Long-Term Incentive Plan (LTI-3). Before your Termination Date, you will receive a total of $42,560, in a single sum, for all of your accrued but unused vacation time, in accordance with the Company's policy. You will not accrue any vacation time after your Termination Date. <PAGE> You are eligible to receive medical coverage through the Company's retiree medical plan, in accordance with the plan's provisions. You may postpone retiree medical coverage and elect, in accordance with a federal statute (COBRA), to continue your medical and dental benefits under the Company's Flexible Benefits Program for up to 18 months after your Termination Date. You may not obtain medical coverage through the retiree medical plan and COBRA simultaneously.
  34. 34. You are eligible to continue your active participation in the Company's Incentive Investment Plan until your Termination Date, in accordance with the Plan's provisions. Your vested accrued benefits in the Incentive Investment Plan will be distributed in accordance with its provisions. Your active participation in the Baxter International Inc. and Subsidiaries Pension Plan ("Pension Plan") will continue until your Termination Date, in accordance with the Plan's provisions. Your vested accrued benefit in the Pension Plan will be distributed in accordance with its provisions. In addition, the Company will provide you with a non-qualified and unfunded supplemental pension benefit ("Pension Supplement") equal to the difference between your accrued benefit under the qualified Pension Plan determined as of your Termination Date and the accrued benefit you would have under the qualified Pension Plan if on your Termination Date you were five years older, and had five additional years of benefit service. Your non-qualified and unfunded supplemental pension benefit will be paid to you at the same time and in the same manner as your benefit under the qualified Pension Plan. In the event of your death prior to your Termination Date, the provisions of this paragraph will be applied as if your Termination Date were the day before your death and you selected a pension payment option of 100% Joint and Survivor. The five additional years of benefit service and the five additional years of age provided in this paragraph will not be counted when determining the amount you must pay for coverage through the Company's retiree medical plan. Your participation, if any, in the Company's Employee Stock Purchase Plan will cease on your Termination Date. You will receive a cash refund of the balance, if any, in your subscription account, in accordance with the Plan's provisions. You are eligible to continue your participation in the Company's split-dollar life insurance plan. Your participation will continue in accordance with the plan's provisions as they apply to participants whose employment terminates after accumulating 65 age and years of participation points under the Company's Pension Plan. Your stock options and restricted shares will be vested or forfeited as listed below: - 2 - <PAGE> OPTIONS <TABLE> <CAPTION> - -------------------------------------------------------------------------------- ------------------------------ # of Date Options Option Expiration Granted Type Granted Price Date(2) Vesting - -------------------------------------------------------------------------------- ------------------------------ <S> <C> <C> <C> <C> <C> 7/30/90 NQ 11,517(1) $24.36(1) 8/2/96 all are vested; may exercise before
  35. 35. expiration date - -------------------------------------------------------------------------------- ------------------------------ 8/9/91 NQ 8,794(1) $34.15(1) 8/2/96 all are vested; may exercise before expiration date - -------------------------------------------------------------------------------- ------------------------------ 8/3/92 NQ 2,303(1) $36.66(1) 8/2/96 all are vested; may exercise before expiration date - -------------------------------------------------------------------------------- ------------------------------ 8/2/93 NQ 16,500 $26.00 8/2/96 11,000 are vested; may exercise before expiration date; remainder will be vested on 8/2/96 and you may exercise them on 8/2/96 only - -------------------------------------------------------------------------------- ------------------------------ 7/31/95 NQ 23,700 $37.25 8/2/96 None are vested; all will be forfeited on the expiration date unless accelerated vesting occurs, in accordance with the option grant terms and conditions, before the expiration date - -------------------------------------------------------------------------------- ------------------------------ </TABLE> (1)As equitably adjusted in connection with the Caremark spin-off (2)Option expiration dates consistent with option grant terms and conditions relating to employment termination. RESTRICTED SHARES <TABLE> <CAPTION> - -------------------------------------------------------------------------------- ------------------------- Date # of Shares Granted Granted Vesting Date Disposition - -------------------------------------------------------------------------------- -------------------------
  36. 36. <S> <C> <C> <C> 9/7/90 15,580 1 year after 12,453 shares have been earned, vested and earned distributed; 3,127 shares were earned in 1995 and will be allowed to vest on 12/31/96 - -------------------------------------------------------------------------------- ------------------------- 12/7/92 9,200 1 year after 5,189 shares were earned in 1995 and will be earned allowed to vest on 12/31/96; remaining 4,011 will be forfeited on your Termination Date - -------------------------------------------------------------------------------- ------------------------- 2/17/92 19,115 12/31/98 12,743 shares will be allowed to vest on 12/31/96; you may elect to have shares withheld to pay the taxes due on 12/31/96, but the 12,743 shares (less the shares withheld to pay taxes) will not be distributed to you until 12/31/98, the original vesting date. The remaining 6,372 shares will be forfeited on your Termination Date. - -------------------------------------------------------------------------------- ------------------------- </TABLE> You will not receive any additional grants of options or restricted shares. - 3 - <PAGE> Your participation in the Shared Investment Plan will continue in accordance with the Plan's provisions. To preserve your rights to make various elections under the Company's Flexible Benefits Program, Pension Plan and Incentive Investment Plan, you must contact the Human Resources Department before your Termination Date. To exercise your stock options, you must contact the Stockholder Services Department. You acknowledge that the compensation and benefits provided in the Agreement exceed the compensation and benefits which you would normally receive in connection with your employment termination. In exchange for the compensation and benefits under this Agreement, you waive your right to file or participate as a class member in any claims or lawsuits (whether or not you now know of the basis for the claims or lawsuits) with federal or state agencies or courts against the Company and its employee benefit plans, including their present and former directors, officers, employees, agents and fiduciaries. This general waiver and release includes, but is not limited to, all claims of unlawful
  37. 37. discrimination in regard to age, race, sex, color, religion, national origin and handicap under Title VII of the Civil Rights Act, the Age Discrimination in Employment Act or any other federal or state statutes, all claims for wrongful employment termination or breach of contract and any other claims relating to your employment or termination of employment with the Company. This waiver and release also apply to your heirs, assigns, executors and administrators. This waiver and release do not waive rights or claims which may arise after the date this Agreement is signed except as stated in the next three sentences. To be eligible to receive the Pension Supplement described above, you agree that this waiver and general release will be deemed to be signed by you again when your Pension Supplement begins to be paid. To be eligible to receive the restricted stock which was earned in 1995 and allowed to vest on December 31, 1996, you agree that this waiver and general release will be deemed to be signed by you again when those shares are distributed to you. To be eligible to receive the additional shares of restricted stock which are distributable to you on December 31, 1998, you agree that this waiver and general release will be deemed to be signed by you again when those shares are distributed to you. You agree: (a) not to intentionally disparage the Company, its employees or products; (b) not to intentionally engage in actions contrary to the interests of the Company; (c) not to disclose or allow disclosure of any provisions of this Agreement, except to your attorney or pursuant to subpoena or court order (although the Company may be required to disclose this Agreement in its 1996 proxy statement and as an exhibit to its Form 10-K for 1995); (d) to conduct the transition period in a constructive and positive manner; (e) to remain bound by the non-compete and confidentiality provisions of your employment agreement with the Company; and (f) to return to the company, by May 10, 1996, all Company property, including proprietary information. In addition to the obligations under your employment agreement with the Company, you agree that, until one year from your Termination Date, you will not directly or indirectly, as a consultant, employee or owner, engage in any activity which is competitive with - 4 - <PAGE> the businesses of the Company, on your Termination Date, without the Company's prior approval. I assure you it is the Company's intention to be fair and reasonable in considering this issue and to grant such approval whenever your competition will not adversely affect one of the Company's major businesses. All amounts payable to you or on your behalf under this Agreement will be reported to appropriate governmental agencies as taxable income to the extent required, and appropriate withholding will be made where necessary. In addition, all amounts payable to you under this Agreement are expressed as amounts prior to payment or withholding of any taxes, and the Company will not gross-up the amounts or otherwise reimburse you for the taxes you pay relating to such amounts. The amounts payable to you under this Agreement are in lieu of all severance compensation and other severance benefits from the Company to which you might otherwise be entitled. The Company may terminate the Pension Supplement, forfeit all of your outstanding restricted stock and eliminate your 1996 cash bonus eligibility if you fail to comply with any of your obligations under this Agreement. You acknowledge that the compensation and benefits provided to you under this Agreement assume your continued employment with the Company until your Termination Date. If you die before your Termination Date, your employment, salary and perquisite allowances will cease on the date of your death, and

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