As filed with the Securities and Exchange Commission on November 15, 2001.
Registration No. 333-67772
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BAXTER INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
Delaware 36-0781620
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Baxter Parkway
Deerfield, Illinois 60015
(847) 948-2000
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(Address, including zip code of registrant's principal executive offices)
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J. Patrick Fitzsimmons
Corporate Counsel
Baxter International Inc.
One Baxter Parkway
Deerfield, Illinois 60015
(847) 948-2000
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(Name, address, and telephone number,
including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement as
determined in light of market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
========================================================================================================================
PROPOSED PROPOSED MAXIMUM PROPOSED AMOUNT
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING OF AGGREGATE
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
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1-1/4% Convertible
Debentures due 2021................. $800,000,000 100% $800,000,000 $200,000
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Common Stock, no par value.......... (2) (3) (3) (3)
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(1) Estimated solely for purposes of calculating the registration fee. The
debentures were issued at an original issue discount price of 100 % of the
principal amount, which represents an aggregate issue price of $800,000,000.
(2) Registered hereon also are an indeterminate number of shares of common
stock issuable upon conversion of the debentures. The debentures are initially
convertible into 15.3411 shares of common stock per $1,000 principal amount of
debentures, subject to adjustments under certain circumstances. Thus, initially,
the number of shares of common stock issuable upon conversion of the debentures
is 12,272,894. Pursuant to Rule 416 under the Securities Act, such number of
shares of common stock registered hereby shall include an indeterminate number
of shares of common stock that may be issued in connection with a stock split,
stock dividend, recapitalization or similar event or adjustment in the number of
shares issuable as provided in the indenture governing the debentures.
(3) The shares of common stock issuable upon conversion of the debentures will
be issued for no additional consideration, and therefore no registration fee is
required pursuant to Rule 457(i).
________________________________________________________________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
PROSPECTUS
$800,000,000
[LOGO]
Baxter International Inc.
1 1/4% Convertible Debentures due June 1, 2021
---------------------
This prospectus relates to the offering for resale of Baxter International
Inc.'s 1 1/4% Convertible Debentures due June 1, 2021 and the shares of our
common stock issuable upon conversion of the debentures. In this prospectus, the
terms "Baxter", "we", "us", and "our" will each refer to Baxter International
Inc., unless the context otherwise requires.
We issued the debentures in a private placement in May 2001 at par. This
prospectus will be used by selling securityholders to resell their debentures
and shares of our common stock issuable upon conversion of their debentures. We
will not receive any proceeds from sales by the selling securityholders. The
debentures are unsecured unsubordinated obligations of Baxter International Inc.
The debentures will accrue interest at an initial rate of 1 1/4%, which will be
reset (but not below 1 1/4% or above 2 9/10%) on December 1, 2005, December 1,
2010 and December 1, 2015. We will pay interest on the debentures on June 1 and
December 1 of each year. The first interest payment will be made on December 1,
2001. The debentures will not be listed on any exchange, but they are eligible
for trading in The Portal(SM) Market, a subsidiary of The Nasdaq Stock Market,
Inc.
On or after June 5, 2006, we may redeem for cash all or part of the
debentures that have not previously been converted or repurchased at a price
equal to 100% of the principal amount of the debentures plus accrued interest up
to but not including the date of redemption. Holders may require us to
repurchase for cash all or part of their debentures on June 1, 2002, June 1,
2006, June 1, 2011 or June 1, 2016, at a price equal to 100% of the principal
amount of the debentures plus accrued interest up to but not including the date
of repurchase. In addition, upon a change of control (as defined herein), each
holder may require us to repurchase for cash all or a portion of the holder's
debentures.
Holders may surrender their debentures for conversion into shares of Baxter
common stock, par value $1.00 per share, at the conversion price (initially
$65.1843 per share, and subject to certain adjustments) if any of the following
conditions is satisfied:
. if the closing sale price of Baxter common stock for at least 20
trading days in the 30 trading day period ending on the trading day
prior to the date of surrender is more than 110% of the conversion
price per share of Baxter common stock on that preceding trading day;
. if we have called the debentures for redemption; or
. upon the occurrence of specified corporate transactions.
Our common stock is listed on the New York Stock Exchange under the symbol
"BAX." On November 14, 2001, the last reported sale price for our common stock
was $48.00 per share.
Purchasing the debentures involves risks. See "Risks Related to the
Debentures" beginning on page 9.
The date of this prospectus is November 15, 2001.
TABLE OF CONTENTS
Page
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Notice to Investors 1
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Where You Can Find More Information 1
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Note Regarding Forward-looking
Statements 2
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Summary 4
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Risks Related to the Debentures 11
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Price Range of Common Stock 11
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Use of Proceeds 12
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Selected Financial Information 13
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Description of Debentures 15
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Description of Baxter Common Stock
and Preferred Stock 27
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Certain United States Federal
Income Tax Considerations 31
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Selling Securityholders 38
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Plan of Distribution 39
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Validity of Securities 40
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Independent Accountants 40
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NOTICE TO INVESTORS
Neither the Securities and Exchange Commission ("SEC") nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED, OR INCORPORATED BY REFERENCE,
IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS
PROSPECTUS.
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process or continuous offering process.
Under this shelf registration process, the selling securityholders may, from
time to time, sell the securities described in this prospectus in one or more
offerings.
This prospectus provides you with a general description of the securities
which may be offered by the selling securityholders. Each time a selling
securityholder sells securities, the selling securityholder is required to
provide you with a prospectus and a prospectus supplement containing specific
information about the selling securityholder and the terms of the securities
being offered. That prospectus supplement may include additional risk factors or
other special considerations applicable to those securities. Any prospectus
supplement may also add, update or change information in this prospectus. If
there is any inconsistency between the information in this prospectus and any
prospectus supplement, you should rely on the information in that prospectus
supplement. You should read both this prospectus and any prospectus supplement
together with additional information described under "Where You Can Find More
Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549 or at the SEC's regional offices located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade
Center, Suite 1300, New York, New York 10048. You may obtain further information
on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-
0330. Our SEC filings are also available to the public over the Internet at the
SEC's Web site at http://www.sec.gov. Our SEC filings are also available at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
We incorporate by reference in this prospectus the following documents
filed by us with the SEC:
. Our Annual Report on Form 10-K for the fiscal year ended December 31,
2000;
. Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30 and September 30, 2001;
. Our Current Reports on Form 8-K filed with the SEC on February 28, May 1
and 22, June 27 and November 5, 2001; and
. The description of our capital stock set forth in our registration
statement filed with the SEC under Section 12 of the Securities Exchange Act of
1934 (the "Exchange Act"), including any subsequent amendment or any report
filed for the purpose of updating such description.
Any statement made in a document incorporated by reference or deemed
incorporated herein by reference is deemed to be modified or superseded for
purposes of this prospectus if a statement contained in this prospectus or in
any other subsequently filed document which also is incorporated or deemed
incorporated by reference herein modifies or supersedes that statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus. We also incorporate by
reference all documents filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this prospectus and prior to the termination
of this offering.
Statements made in this prospectus or in any document incorporated by
reference in this prospectus as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the documents incorporated by reference, each such statement
being qualified in all material respects by such reference.
We will provide a copy of these filings and any exhibits specifically
incorporated by reference in these filings and a copy of the indenture and
registration rights agreement referred to herein at no cost by request directed
to us at the following address: Corporate Secretary, Baxter International Inc.,
One Baxter Parkway, Deerfield, Illinois 60015.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements throughout this prospectus that are not historical facts,
including, but not limited to, statements in the "Summary" section of this
prospectus (including material incorporated herein by reference) are forward-
looking statements. These statements are based on our current expectations and
involve numerous risks and uncertainties. Some of these risks and uncertainties
are factors that affect all international businesses, while some are specific to
us and the health care areas in which we operate.
The factors below in some cases have affected and could affect our actual
results, causing results to differ, and possibly differ materially, from those
expressed in any such forward-looking statements. These factors include
technological advances in the medical field, economic conditions, demand and
market acceptance risks for new and existing products, technologies and health
care services, the impact of competitive products and pricing, manufacturing
capacity, new plant start-ups, global regulatory, trade and tax policies,
ongoing product testing, regulatory, legal or other developments relating to our
series A dialyzers, continued price competition, product development risks,
including technological difficulties, ability to enforce patents and unforeseen
commercialization and regulatory factors. Additionally, as discussed in
Item 3.--"Legal Proceedings," in our Form 10-K for the year ended December 31,
2000 which is incorporated herein by reference, upon the resolution of certain
legal matters, we may incur charges in excess of presently established reserves.
Any such charge could have a material adverse effect on our results of
operations or cash flows in the period in which it is recorded. See our Form 8-K
dated November 5, 2001.
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.
Currency fluctuations are also a significant variable for global companies,
especially fluctuations in local currencies where hedging opportunities are
unreasonably expensive or unavailable. If the United States dollar strengthens
significantly against most foreign currencies, our ability to realize projected
growth rates in our sales and net earnings outside the United States could be
negatively impacted.
We believe that our expectations with respect to forward-looking statements
are based upon reasonable assumptions within the bounds of our knowledge of our
business and operations, but there can be no assurance that our actual results
or performance will conform to any future results or performance expressed or
implied by such forward-looking statements.
SUMMARY
The following summary may not contain all the information that may be
important to you. You should read the entire prospectus, as well as the
information incorporated by reference, before making an investment decision.
Baxter International Inc. and Subsidiaries
We were incorporated under Delaware law in 1931. We engage in the worldwide
development, manufacture and distribution of a diversified line of products,
systems and services used primarily in the health care field. Throughout the
rest of this Summary Business Description, "we" refers to Baxter International
Inc., our parent company, together with its subsidiary companies, taken as a
consolidated enterprise. We manufacture products in 27 countries and sell them
in over 100 countries. Health care is concerned with the preservation of health
and with the diagnosis, cure, mitigation and treatment of disease and body
defects and deficiencies. Our products are used by hospitals, clinical and
medical research laboratories, blood and blood dialysis centers, rehabilitation
centers, nursing homes, doctors' offices and by patients, at home, under
physician supervision.
We operate as a global leader in critical therapies for life-threatening
conditions. We develop, manufacture and market products and technologies related
to the blood circulatory system. Our continuing operations are comprised of
three segments: Medication Delivery, which develops technologies and systems to
improve intravenous medication delivery and distributes medical products;
BioScience, which develops biopharmaceutical and blood collection and separation
products and technologies; and Renal, which develops products and provides
services to treat end-stage kidney disease. Our three businesses enjoy leading
positions in the medical products and services fields. Unless otherwise
indicated, each of the factors discussed in this summary do not materially
differ in their impact across each of our three segments.
Medication Delivery
We manufacture a range of products that deliver fluids and drugs to
patients. These include large- and small-volume intravenous (IV) solutions, IV
administration sets, premixed drugs for IV administration, reconstitution
devices, IV nutrition solutions and devices, IV infusion pumps, anesthesia-
delivery devices, anesthetic agents, acute-care injectible pharmaceuticals,
ambulatory infusion systems and pharmacy services.
We continue to participate in the consolidation of the global marketplace
for medication-delivery products, particularly in developing markets where there
are still a large number of local and regional players. We will accelerate the
expansion of our higher-margin specialty products outside the United States,
where currently the business has a strong base in IV sets and solutions, and
will continue to develop new technologies for medication delivery through
internal product development and acquisitions and alliances. We also will
leverage our strength in the anesthesia marketplace to expand our position in
medication delivery across the peri-operative arena -- pre-surgery, surgery and
post-surgery.
In August 2001, we acquired specified medication delivery assets of the
Cook Medical Group. In 2000, we upgraded our Colleague electronic infusion pump
for global use and added multiple languages for certain key markets. Worldwide
placements of the Colleague pump continue to rise, with 50,000 new channels
placed in 2000. Also in 2000, we introduced a new pump for post-operative pain
management, called the Ipump Pain Management System, in the United States. Also
programmed in multiple languages and designed for global use, we will launch the
Ipump in Europe and Canada in 2001. In addition, we launched several new
premixed IV drugs in 2000, including our first global premixed drug, called
AGGRASTAT, a cardiac compound developed by Merck.
Over the last two years, we have made several acquisitions intended to
broaden our portfolio of medication-delivery products. These include Ohmeda
Pharmaceutical Products, enhancing our offering in anesthesia; Pharmacia
& Upjohn's German-based IV and nutrition business; and the ambulatory infusion
pump business of Sabratek Corporation. We also reacquired the distribution
rights for the Ohmeda pharmaceutical products in Europe and Canada to serve as a
base to build our specialty-product offerings in these key markets. We acquired
a French company called Biodome, which has a technology for efficient, low-cost
reconstitution of drugs for both injection and infusion. We also received
exclusive U.S. distribution rights from Physiometrix Inc. for the PSA 4000
anesthesia monitoring system, which helps anesthesiologists monitor a patient's
level of consciousness during surgery.
BioScience
We are a leading producer of biopharmaceuticals for the treatment of
hemophilia, immune deficiencies and other life-threatening disorders. These
products include coagulation factors, immune globulins, biosurgery products and
vaccines. We are also a leading manufacturer of manual and automated blood-
collection, processing and storage systems. These products are used by
hospitals, blood banks and plasma-collection centers to collect and process
blood components for therapeutic use. Therapeutic blood components are used to
treat patients undergoing surgery, cancer therapy and other critical therapies.
We will continue to grow our global leadership in biopharmaceuticals for
the treatment of hemophilia and immune deficiencies by broadening our portfolio,
advancing technology and increasing production capacity. Growth opportunities
are presented by the tremendous need for and increasing use of these products
around the world, and the continued growth of both plasma-derived and
recombinant-derived therapies. We will continue to expand our pipeline of
innovative biopharmaceuticals and vaccines through both internal development and
acquisitions and alliances. We also continue to focus on increased production
and safety of transfusion products through advanced automation, leukoreduction
and pathogen inactivation.
In 2000, we received approval in the United Kingdom for NeisVac-C, a new
meningococcemia vaccine. We also received approval from the U.S. Food and Drug
Administration (FDA) for a new application device for our Tisseel fibrin
sealant. In the next 12 months, we expect FDA approval for a liquid form of
IGIV, and European approval for a new therapeutic protein for protein C
deficiency and pathogen-inactivation technology for platelets. Other products in
development include a next-generation recombinant Factor VIII using a totally
protein-free manufacturing process; a cell culture-derived vaccine for
influenza; a new tetanus, diphtheria and acellular pertussis vaccine; a European
vaccine for Lyme Disease; pathogen-inactivation technology for plasma and red
cells; and a recombinant form of hemoglobin that may be used instead of blood to
carry oxygen to vital organs.
In 2000, we completed the acquisition of North American Vaccine Inc., based
in Columbia, Maryland, broadening our position in the global vaccines market. We
also established an equity position in British vaccine developer Acambis
(formerly known as Peptide Therapeutics Group), which will better position each
company to develop and commercialize their respective vaccine pipelines. In
addition, we formed alliances with XOMA Ltd. for the rights to a recombinant
protein for treatment of a range of diseases caused by bacteria; Arriva
Pharmaceuticals (formerly known as AlphaOne Pharmaceuticals, Inc.) to co-develop
a recombinant alpha 1-antitrypsin protein to treat hereditary emphysema and
other respiratory diseases; and Pharming Group N.V. to collaborate on the
development of a recombinant, transgenic C1 inhibitor to treat hereditary
angioedema. In February 2001, we acquired Sera-Tec Biologicals, L.P., which owns
and operates 80 plasma centers in 28 states and a central testing laboratory.
Renal
We provide a range of products and services for the treatment of kidney
disease. These include products for both peritoneal dialysis (PD) and
hemodialysis (HD) as well as research initiatives in xenotransplantation. We are
the world's leading manufacturer of PD products, which include dialysis
solutions, container systems and automated cyclers. For HD, we manufacture
dialyzers and HD machines. Our Renal Therapy Services (RTS) business operates
dialysis clinics in partnership with local physicians in 12 countries outside
the United States, while RMS Disease Management Inc. partners with U.S.
nephrologists to provide a kidney disease management
program to health-care payers. Our RMS Lifeline Inc. helps to improve the
delivery and outcomes of interventional renal care in the United States through
dedicated outpatient centers.
Our strategy is to continue to drive PD growth while also investing in
significant expansion of HD products and services. New products will come from
internal development, acquisitions, alliances and e-health initiatives. We also
continue to grow our RTS business and expand our product lines globally,
particularly in developing markets where many people with end-stage renal
disease are currently under-treated. In addition, we intend to continue
developing technology-based products and services that improve therapeutic
outcomes.
We continue to develop new PD solutions to better manage specific patient
needs. One example is Extraneal, which improves the removal of excess fluids and
toxins from patients with end-stage renal disease. Introduced in Europe in 1997
and approved in 28 countries, Extraneal today is being used by more than 6,000
European patients--more than a third of our European PD population--and is
currently under regulatory review in the United States. Another solution,
Physioneal, was introduced in Europe and began clinical trials in Japan in 2000.
Also in 2000, as a result of our acquisition of Althin Medical, we began selling
an HD machine globally called the Tina. We also introduced a new HD machine
called Meridian in the United States. Future products include several new HD
dialyzers and the Aurora home HD machine. We also are continuing research in the
area of xenotransplantation.
In March 2000, we completed our acquisition of Althin Medical AB, a leading
manufacturer of HD products, based in Ronneby, Sweden. Our joint venture with
Gambro AB of Sweden for the manufacture of dialyzers for both Baxter and Gambro
at our renal-products plant in Mountain Home, Arkansas, continues to perform
well, with more than 3 million dialyzers manufactured in 2000.
The Offering
Debentures.
$800,000,000 aggregate principal amount of our 1 1/4%
Convertible Debentures due June 1, 2021.
Interest.
We pay interest on the debentures semi-annually on June
1 and December 1, commencing on December 1, 2001. The
debentures accrue interest at an initial rate of
1 1/4% per annum, which will be reset on December 1,
2005, December 1, 2010 and December 1, 2015 at a rate
per annum equal to the interest rate payable 120 days
prior to such reset date on 5-year U.S. Treasury Notes
minus 3.70%. In no event, however, will the interest
rate be reset below 1 1/4% or above 2 9/10% per
annum.
Maturity of Debentures.
June 1, 2021.
Conversion Rights.
Holders may convert their debentures into Baxter common
stock if the closing sale price of the Baxter common
stock for at least 20 trading days in the 30 trading
day period ending on the trading day prior to the date
of conversion is more than 110% of the conversion price
per share of Baxter common stock at such preceding
trading day. Even if the foregoing condition is not
satisfied, debentures or portions of debentures in
integral multiples of $1,000 principal amount called
for redemption may be surrendered for conversion until
the close of business that is two days prior to the
redemption date. In addition, if we make a significant
distribution to holders of our Baxter common stock or
if we are a party to specified consolidations, mergers
or transfers or leases of all or substantially all of
our assets, holders may surrender debentures for
conversion as provided in "DESCRIPTION OF DEBENTURES--
Conversion Rights." The ability to surrender
debentures for conversion will expire at the close of
business on June 1, 2021, unless the debentures
previously have been redeemed or purchased.
We have the option to designate a financial institution
to which debentures surrendered for conversion by a
holder of debentures will be initially offered by the
conversion agent for exchange in lieu of us converting
those debentures. In order to accept debentures
surrendered for conversion, the designated institution
must agree to exchange for those debentures a number of
shares of Baxter common stock equal to the number of
shares the holder of those debentures would receive
upon conversion, plus cash for any fractional shares.
If the designated institution declines to accept for
exchange any debentures in whole or
in part, or if the designated institution agrees to
accept any debentures for exchange but does not timely
deliver the related shares of Baxter common stock,
those debentures or parts of debentures will be
converted.
Ranking.
The debentures are our unsecured unsubordinated
obligations and rank equal in right of payment with all
of our existing and future unsecured and unsubordinated
indebtedness. The debentures are effectively
subordinated to third party indebtedness of our
subsidiaries. The indenture for the debentures does not
contain restrictions on the incurrence of indebtedness,
including additional senior indebtedness, by us or our
subsidiaries.
Sinking Fund.
None.
Redemption of Debentures at the Option of Baxter.
We may redeem all or a portion of the debentures for
cash at any time on or after June 5, 2006, at a price
equal to 100% of the principal amount of the debentures
plus accrued interest up to but not including the date
of redemption. See "DESCRIPTION OF DEBENTURES--
Redemption of Debentures at the Option of Baxter."
Purchase of the Debentures at the Option of the Holder.
Holders may require us to purchase for cash all or a
portion of their debentures on June 1, 2002, June 1,
2006, June 1, 2011 and June 1, 2016 for a price equal
to 100% of the principal amount of the debentures being
repurchased, together with interest to, but excluding,
the date of repurchase. See "DESCRIPTION OF DEBENTURES-
-Purchase of Debentures at the Option of the Holder."
Change of Control.
If a change of control (as defined herein) occurs, each
holder of debentures will have the right, at the
holder's option, to require us to repurchase all or a
portion of such holder's debentures at a purchase price
equal to 100% of the principal amount thereof, plus
accrued interest.
Events of Default.
If there is an event of default on the debentures, the
principal amount of the debentures plus accrued
interest may be declared immediately due and payable.
These amounts automatically become due and payable in
certain circumstances.
Use of Proceeds.
We will receive no net proceeds from the resale of the
debentures being registered hereby.
DTC Eligibility.
The debentures were issued in book-entry form and are
represented by permanent global certificates deposited
with a custodian for and registered in the name of a
nominee of The Depository Trust Company ("DTC") in New
York, New York. Beneficial interests in any such
securities will be shown on, and transfers will be
effected only through, records maintained by DTC and
its direct and indirect participants and any such
interest may not be exchanged for certificated
securities, except in limited circumstances. See
"DESCRIPTION OF DEBENTURES--Book-Entry Delivery and
Form."
United States Federal Income Tax Considerations.
We will treat the debentures as indebtedness subject to
the U.S. Treasury regulations governing contingent
payment debt instruments. Each holder will agree, for
U.S. federal income tax purposes, to treat the
debentures as "contingent payment debt instruments"
and to be bound by our application of the Treasury
Regulations that govern contingent payment debt
instruments, including our determination that the rate
at which interest will be deemed to accrue for federal
income tax purposes will be 6.1%, which is the rate
comparable to the rate at which we have determined we
would borrow on a noncontingent, nonconvertible
borrowing with terms and conditions otherwise
comparable to the debentures (including the level of
subordination, term, timing of payments and general
market conditions). Accordingly, each holder will be
required to accrue interest on a constant yield to
maturity basis at that rate, with the result that
holder will recognize taxable income significantly in
excess of any cash received while the debentures are
outstanding. In addition, a holder will recognize
ordinary income upon a conversion of a debenture into
our common stock equal to the excess, if any, between
the value of our common stock received on the
conversion and the sum of the original purchase price
of the holder's debenture and accrued but unpaid
interest. However, there is some uncertainty as to the
proper application of the Treasury regulations that
govern contingent payment debt instruments to a holder
of a debenture, and if our treatment were successfully
challenged by the Internal Revenue Service, it might be
determined that, among other differences, a holder
should have accrued interest income at a lower rate,
should not have recognized ordinary income upon the
conversion, and should have recognized capital rather
than ordinary income or loss upon a taxable disposition
of its debenture.
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE
TAX TREATMENT OF THE DEBENTURES AND WHETHER A PURCHASE
OF THE DEBENTURES IS ADVISABLE IN LIGHT OF THE AGREED
UPON TAX TREATMENT AND THE HOLDER'S PARTICULAR TAX
SITUATION.
Resale Registration.
The debentures and the shares of Baxter common stock
issuable upon conversion of the debentures are being
registered under the Securities Act on the registration
statement to which this prospectus relates. Until they
are so registered, the debentures and such shares of
Baxter common stock may not be offered or sold except
pursuant to an exemption from or in transactions not
subject to the registration requirements of the
Securities Act and applicable state laws.
Registration Rights.
We have filed with the Securities and Exchange
Commission ("SEC"), a shelf registration statement for
the resale of the debentures and Baxter common stock
issuable upon conversion of the debentures under a
registration rights agreement. Upon our failure to
comply with certain of our obligations under the
registration rights agreement, additional interest will
be payable on the debentures. See "DESCRIPTION OF
DEBENTURES--Registration Rights."
RISKS RELATED TO THE DEBENTURES
Prospective investors should carefully consider the following information with
the other information contained in this offering circular before purchasing the
debentures.
An active trading market for the debentures may not develop.
We cannot assure you that an active trading market for the debentures will
develop or as to the liquidity or substainability of any such market, the
ability of holders to sell their debentures or the price at which holders of the
debentures will be able to sell their debentures. Future trading prices of the
debentures will depend on many factors, including, among other things,
prevailing interest rates, our operating results, the price of our common stock
and the market for similar securities.
We may not be able to raise the funds necessary to finance a change in control
purchase or a purchase at the option of the holder.
Holders of the debentures may require us to purchase their debentures for cash
on June 1, 2002, June 1, 2006, June 1, 2011 and June 1, 2016 and upon the
occurrence of specific kinds of changes of control as described herein. It is
possible that we would not have sufficient funds at that time to make the
required purchase of debentures with cash. See "DESCRIPTION OF DEBENTURES--
Purchase of Debentures at the Option of the Holder" and "--Repurchase at Option
of Holder Upon a Change of Control."
PRICE RANGE OF COMMON STOCK
The common stock of Baxter International Inc. is quoted on the New York Stock
Exchange under the symbol "BAX." The following table sets forth, for the periods
indicated, the high and low sales prices (adjusted to reflect the two-for-one
stock split effective on May 30, 2001) for the Common Stock:
- -----------------------------------------------------------------
High Low
-------- ---------
- -----------------------------------------------------------------
1999
- -----------------------------------------------------------------
First Quarter............................... $36.41 $29.59
- -----------------------------------------------------------------
Second Quarter.............................. 33.00 28.63
- -----------------------------------------------------------------
Third Quarter............................... 33.96 27.58
- -----------------------------------------------------------------
Fourth Quarter.............................. 33.36 27.22
- -----------------------------------------------------------------
2000
- -----------------------------------------------------------------
First Quarter............................... $32.46 $ 24.80
- -----------------------------------------------------------------
Second Quarter.............................. 36.03 27.75
- -----------------------------------------------------------------
Third Quarter............................... 42.82 33.75
- -----------------------------------------------------------------
Fourth Quarter.............................. 45.13 36.03
- -----------------------------------------------------------------
2001
- -----------------------------------------------------------------
First Quarter............................... $47.60 $ 40.07
- -----------------------------------------------------------------
Second Quarter.............................. 54.31 43.55
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Third Quarter............................... 55.05 47.50
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Fourth Quarter (through November 13, 2001).. 55.50 45.95
- -----------------------------------------------------------------
USE OF PROCEEDS
We will receive no net proceeds from any resales of the debentures registered
under this prospectus. Our net proceeds from the original issuance/private
placement of the debentures in May 2001 were approximately $791,900,000.
SELECTED FINANCIAL INFORMATION
Selected Financial Data
The following table sets forth our selected consolidated financial information
for the fiscal years ended December 31, 2000, 1999, 1998, 1997, and 1996 and the
nine months ended September 30, 200l and 2000. The information for the fiscal
years ended December 31, 2000, 1999, 1998, 1997, and 1996 was derived from our
audited Consolidated Financial Statements. However, it should be noted that
these statements do not reflect the two-for-one stock split, which was declared
effective on May 30, 2001. The information for the nine months ended September
30, 2001 and 2000 was derived from our unaudited Condensed Consolidated
Financial Statements contained in our Quarterly Report on Form 10-Q filed with
the SEC on November 6, 2001.
The financial data below is only a summary. It should be read in conjunction
with our historical Consolidated Financial Statements and related notes
contained in the annual, quarterly and other reports filed by us with the SEC
and incorporated by reference into this offering circular.
As of or for the
----------------
nine
----
months ended
------------
As of or for the years ended December 31, September 30,
----------------------------------------- -------------
- ------------------------------------------------------------------------------------------------------------------
2000/1,2/ 1999/5/ 1998/3/ 1997/4/ 1996/2/ 2001/5/ 2000/1,2/
--------- ------- ------- ------- ------- ------- ---------
- ------------------------------------------------------------------------------------------------------------------
(amounts in millions, except for per share data)
- ------------------------------------------------------------------------------------------------------------------
Income Statement Data
- ------------------------------------------------------------------------------------------------------------------
Net sales....................... $6,896 $6,380 $5,706 $5,259 $4,583 $5,527 $4,964
- ------------------------------------------------------------------------------------------------------------------
Income from continuing
operations..................... $ 738 $ 779 $ 275 $ 371 $ 505 $ 739 $ 468
- ------------------------------------------------------------------------------------------------------------------
Income from continuing
operations per common
share/6/:
- ------------------------------------------------------------------------------------------------------------------
Basic......................... $ 1.26 $ 1.34 $ 0.49 $ 0.67 $ 0.93 $ 1.25 $ 0.80
- ------------------------------------------------------------------------------------------------------------------
Diluted....................... $ 1.24 $ 1.32 $ 0.48 $ 0.66 $ 0.91 $ 1.22 $ 0.79
- ------------------------------------------------------------------------------------------------------------------
Balance Sheet Data
- ------------------------------------------------------------------------------------------------------------------
Total assets.................... $8,733 $9,644 $9,873 $8,511 $7,407 $9,663 $8,808
- ------------------------------------------------------------------------------------------------------------------
Long-term debt and lease
obligations.................... $1,726 $2,601 $3,096 $2,635 $1,695 $2,576 $2,246
- ------------------------------------------------------------------------------------------------------------------
Other Data
- ------------------------------------------------------------------------------------------------------------------
Cash dividends
declared per common
share/6/....................... $0.582 $0.582 $0.582 $0.570 $0.585 $ -- $ --
- ---------------------------------------------------------------------------------------------------------------------
1 Income from continuing operations includes a charge for in-process research
and development and acquisition related costs of $286 million in the second
quarter and income from litigation of $29 million in the fourth quarter.
2 Certain balance sheet and other data are affected by the spin-off of
Edwards Lifesciences Corporation in 2000 and the spin off of Allegiance
Corporation in 1996.
3 Income from continuing operations includes charges for in-process research
and development, net litigation, and exit and other reorganization costs of
$116 million, $178 million and $122 million, respectively.
4 Income from continuing operations includes a charge for in-process research
and development of $220 million.
5 Income from continuing operations before cumulative effect of accounting
change.
6 On February 27, 2001, the board of directors of Baxter International Inc.
(Baxter) approved a two-for-one split of Baxter's common stock. On May 30,
2001, shareholders of record on May 9, 2001 received one additional share
of Baxter common stock for each share held on May 9, 2001.
Computation of Pro Forma Ratio of Earnings
to Fixed Charges after Adjustment for Issuance
of Convertible Debentures
Year ended Nine months ended
December 31, 2000 September 30, 2001
----------------- ------------------
A
Income from continuing operations
before income taxes and cumulative
effect of accounting change plus fixed
charges, less interest costs capitalized
and losses of less than majority-owned
affiliates, net of dividends $ 1,098 $ 1,104
----------------- -----------------
Fixed charges 168 123
Adjustments:
Estimated net decrease in
interest expense from refinancing (28) (10)
----------------- -----------------
Total pro forma fixed charges $ 140 $ 113
----------------- -----------------
----------------- -----------------
Pro forma ratio of earnings to fixed charges 7.84 9.77
----------------- -----------------
(A) Excluding a $286 million charge for in-process research and development and
acquisition-related costs, the pro forma ratio of earnings to fixed charges
was 9.89.
DESCRIPTION OF DEBENTURES
The debentures were issued under an Indenture, dated as of May 21, 2001 (the
"Indenture"), between us and Bank One Trust Company, N.A., as trustee (the
"Trustee"). A copy of the Indenture may be obtained from us upon written
request. The statements under this caption relating to the Indenture and the
debentures are summaries and do not purport to be complete. Such summaries make
use of certain terms defined in the Indenture and are qualified in their
entirety by express reference to the Indenture. The terms of the debentures also
include those made a part of the Indenture by reference to the Trust Indenture
Act of 1939. For purposes of this section, the terms "we," "us," "our" and
the "Company" means only Baxter International Inc. and not its subsidiaries.
General
The debentures are our general unsecured unsubordinated obligations limited to
an aggregate principal amount of $800,000,000. The debentures bear interest from
the closing date of the private placement (May 21, 2001) at the initial rate of
1 1/4% per annum, and will mature on June 1, 2021 (unless earlier redeemed at
our option, converted into Baxter common stock at the option of the holder or
repurchased by us at the option of the holder). Interest will be payable semi-
annually on June 1 and December 1, commencing December 1, 2001, to the
registered holders of record on the preceding May 15 and November 15,
respectively. Interest will be calculated on the basis of a 360-day year of
twelve 30-day months. On December 1, 2005, December 1, 2010 and December 1, 2015
the interest rate on the debentures will be reset to a rate per annum equal to
the interest rate payable 120 days prior to such reset date on 5-year U.S.
Treasury Notes minus 3.70%. However, in no event will the interest rate be reset
below 1 1/4% or above 2 9/10% per annum.
See "--Book-Entry Delivery and Form" for information regarding the form,
documents and mechanics for transferring the debentures.
The Indenture does not contain any restrictions on the payment of dividends or
the repurchase of our securities or any financial covenants. The Indenture will
contain no covenants or other provisions to afford protection to holders of
debentures in the event of a highly leveraged transaction or a change in control
of the Company except to the extent described under "--Repurchase at Option of
Holder Upon a Change in Control."
Conversion Rights
General
Holders may surrender debentures for conversion into shares of Baxter common
stock at a conversion price of $65.1843 per share (after giving effect to a two-
for-one stock split effective on May 30, 2001) if any of the following
conditions is satisfied:
. if the closing sale price of the Baxter common stock for at least 20
trading days in the 30 trading day period ending on the trading day prior
to the day of surrender is more than 110% of the conversion price per share
of Baxter common stock at such preceding trading day;
. if we have called the debentures for redemption; or
. upon the occurrence of specified corporate transactions.
We describe each of these conditions in greater detail below.
Conversion Upon Satisfaction of Market Price Condition
Holders may surrender debentures for conversion into shares of Baxter common
stock if the closing sale price of the Baxter common stock on the New York Stock
Exchange, or if the shares are not then quoted on the New York Stock Exchange,
such other principal national securities exchange on which the Baxter common
stock is listed, for at least 20 trading days in a period of 30 consecutive
trading days ending on the trading day prior to the day of surrender, exceeds
110% of the conversion price per share of Baxter common stock on that preceding
trading day.
The conversion agent will, on our behalf, determine daily if the debentures
are convertible and will notify us and the trustee accordingly.
Conversion Upon Notice of Redemption
A holder may surrender for conversion a debenture called for redemption at any
time prior to the close of business on the day that is two business days prior
to the redemption date, even if it is not otherwise convertible at such time. If
a holder has already delivered a purchase notice or change of control purchase
notice with respect to a debenture, however, the holder may not surrender that
debenture for conversion until the holder has withdrawn the notice in accordance
with the Indenture.
Conversion Upon Specified Corporate Transactions
Even if the market price contingency described above under "--Conversion
Rights--Conversion Upon Satisfaction of Market Price Condition" has not
occurred, if we elect to distribute to all holders of Baxter common stock:
. certain rights or warrants entitling them to subscribe for or purchase
Baxter common stock at less than the current market price (as defined in
the Indenture) on the record date for such issuance (excluding purchase
rights governed by our stockholder rights plan) or
. cash, debt securities (or other evidence of indebtedness) or other assets
(excluding dividends or distributions described in clauses (i), (ii) or (v)
of the description below of adjustments to the conversion price), which
distribution has a per share value exceeding 15% of the current market
price of Baxter common stock as of the trading day immediately preceding
the declaration date for such distribution,
we must notify the holders of debentures at least 20 days prior to the ex-
dividend date for such distribution. Once we have given such notice, holders may
surrender their debentures for conversion at any time until the earlier of the
close of business on the business day prior to the ex-dividend date or our
announcement that such distribution will not take place.
In addition, if we are party to a consolidation, merger or transfer or lease
of all or substantially all of our assets pursuant to which our Baxter common
stock would be converted into cash, securities or other assets, a holder may
surrender debentures for conversion at any time from and after the date which is
15 days prior to the anticipated effective date of the transaction until 15 days
after the actual date of such transaction. If we are a party to a consolidation,
merger or transfer or lease of all or substantially all of our assets pursuant
to which Baxter common stock is converted into cash, securities or other assets,
then at the effective time of the transaction, the right to convert a debenture
into Baxter common stock will be changed into a right to convert it into the
kind and amount of cash, securities or other property which the holder would
have received if the holder had converted its debenture immediately prior to the
transaction (assuming, in a case in which our stockholders may exercise rights
of election, that a holder of debentures would not have exercised any rights of
election as to the stock, other securities or other property or assets
receivable in connection therewith and received per share the kind and amount
received per share
by a plurality of nonelecting shares). If the transaction also constitutes a
"Change of Control," as defined below, the holder can require us to purchase all
or a portion of its debentures as described under "--Repurchase at Option of
Holder Upon a Change of Control."
The right of conversion attaching to any debenture may be exercised (a) if
such debenture is represented by a global debenture, by book-entry transfer to
the conversion agent (which will initially be the Trustee) through the
facilities of DTC, or (b) if such debenture is represented by a definitive
debenture, by delivery of such debenture at the specified office of the
conversion agent, accompanied, in either case, by a duly signed and completed
notice of conversion and appropriate endorsements and transfer documents if
required by the conversion agent. The conversion date shall be the date on which
the debenture and all of the items required for conversion shall have been so
delivered and the requirements for conversion have been met. A holder delivering
a debenture for conversion will be required to pay any taxes or duties payable
in respect of the issue or delivery of the Baxter common stock upon conversion
in a name other than that of the holder.
The conversion privilege and price will be subject to adjustment upon the
occurrence of certain events, including (i) the issuance of our capital stock as
a dividend (or other distribution) on the Baxter common stock, (ii) the
distribution to all holders of Baxter common stock of rights or warrants
entitling them to subscribe for or purchase Baxter common stock at less than the
current market price (as defined in the Indenture) on the record date for such
issuance, (iii) subdivisions, combinations and certain reclassifications of
Baxter common stock, (iv) certain distributions to all holders of Baxter common
stock of cash, debt securities (or other evidence of indebtedness) or other
assets (excluding dividends or distributions described in clauses (i) or (ii)
above or (v) below), (v) a dividend or other distribution consisting exclusively
of cash to all holders of Baxter common stock, excluding (A) cash dividends that
do not exceed the per share amount of the immediately preceding regular cash
dividend (as adjusted to reflect any of the events referred to in clauses (i)
through (vi) of this sentence) and (B) cash dividends to the extent that the
annualized per share amount thereof does not exceed 15% of the current market
price of Baxter common stock as of the trading day immediately preceding the
date of declaration of such dividend, and (vi) payment to holders of Baxter
common stock in respect of a tender or exchange offer (other than an odd-lot
offer) by us or any of our subsidiaries for Baxter common stock at a price in
excess of 110% of the current market price of Baxter common stock on the last
date tenders or exchanges may be made pursuant to such tender or exchange offer.
On February 27, 2001, the Board of Directors of Baxter approved a two-for-one
split of the Baxter common stock. This approval was subject to shareholder
approval of the authorization of additional shares, which was received at our
annual meeting on May 1, 2001. Shareholders of record at the close of business
on May 9, 2001 received one additional share of Baxter common stock for each
share they held as of the record date. The additional shares were distributed as
of May 30, 2001. The conversion price for the debentures reflects this stock
split.
No adjustment in the conversion price will be required unless such adjustment
would require a change of at least 1% in the conversion price then in effect;
provided that any adjustment that would otherwise be required to be made shall
be earned forward and taken into account in any subsequent adjustment. We from
time to time may voluntarily reduce the conversion price for a period of at
least 20 days. Fractional shares of Baxter common stock will not be issued upon
conversion, but, in lieu thereof, we will issue a check for the current market
value of such fractional shares rounded to the nearest cent based upon the
market price of the Baxter common stock. No payment or adjustment will be made
for interest accrued on a converted debenture or for dividends or distributions
on any Baxter common stock issued upon conversion of any debenture.
Exchange In Lieu of Conversion
We have the option to designate a financial institution to which debentures
surrendered for conversion by a holder of debentures will be initially offered
by the conversion agent for exchange in lieu of our converting the debentures.
When a holder surrenders debentures for conversion, the conversion agent will
cause the debentures first to be offered to a financial institution chosen by us
for exchange in lieu of conversion. We expect that when the debentures are
convertible, the designated institution will submit to the conversion agent a
non-binding offer to
accept debentures surrendered for conversion. In order to accept debentures
surrendered for conversion, the designated institution must agree to exchange
for such debentures a number of shares of Baxter common stock equal to the
number of such shares the holder of such debentures would receive upon
conversion, plus cash for any fractional shares. If the institution accepts any
such debentures, it will deliver the appropriate number of share of Baxter
common stock to the conversion agent and the conversion agent will deliver those
shares to the holder who surrendered the debentures. The designation of an
institution to which debentures may be submitted for exchange does not require
the institution to accept any debentures from the conversion agent. If the
designated institution declines to accept any debentures in whole or in part,
those debentures or parts of debentures will be converted into shares of Baxter
common stock as the close of business on the business day following the business
day on which the debentures are surrendered for conversion. If the designated
institution agrees to accept any debentures for exchange but does not timely
deliver the related common shares, the debentures will be converted and the
shares of Baxter common stock will be delivered. Any debentures accepted for
exchange by the designated institution will remain outstanding.
We anticipate that we will initially designate Credit Suisse First Boston
Corporation as the institution to which offers described above will be made,
although we may change this designation at any time.
Redemption of Debentures at the Option of Baxter
Prior to June 5, 2006, we cannot redeem the debentures at our option.
Beginning on June 5, 2006, we may redeem the debentures, in whole at any time,
or in part from time to time for cash at a price equal to 100% of the principal
amount of the debentures plus accrued interest up to but not including the date
of redemption. We will give not less than 20 days nor more than 60 days notice
of redemption by mail to holders of debentures.
Holders may convert debentures or portions of debentures called for redemption
even if the market price contingency described under "--Conversion Rights" has
not occurred, until the close of business on the day that is two business days
prior to the redemption date.
If we redeem less than all of the outstanding debentures, the Trustee shall
select the debentures to be redeemed on a pro rata basis in principal amounts of
$1,000 or integral multiples of $1,000. If a portion of a holder's debentures is
selected for partial redemption and the holder converts a portion of the
debentures, the converted portion shall be deemed to be the portion selected for
redemption.
Purchase of Debentures at the Option of the Holder
On June 1, 2002, June 1, 2006, June 1, 2011 and June 1, 2016, each holder may
require us to purchase any outstanding debentures for which such holder has
properly delivered and not withdrawn a written purchase notice, subject to
certain additional conditions. Holders may submit their debentures for purchase
to the paying agent at any time from the opening of business on the date that is
20 business days prior to the purchase date until the close of business on the
fifth business day prior to the purchase date.
We will purchase each outstanding debenture for which such holder has properly
delivered and not withdrawn a written purchase notice at a purchase price equal
to 100% of the principal amount of such debenture, together with accrued and
unpaid interest up to but not including the redemption date, if any. If the
purchase date is on or after an interest record date but on or prior to the
related interest payment date, interest will be paid to the record holder on the
relevant record date.
For a discussion of the tax treatment of a holder receiving cash on the
repurchase of debentures, see "CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES--U.S. Holders--Sale, Exchange, Conversion or Redemption."
Required Notices and Procedure
On a date not less than 20 business days prior to each purchase date, we
will be required to give notice to all holders at their addresses shown in the
register of the registrar, and to beneficial owners as required by applicable
law, stating, among other things, the procedures that holders must follow to
require us to purchase their debentures.
The purchase notice given by each holder electing to require us to purchase
debentures must be given so as to be received by the paying agent no later than
the close of business on the fifth business day prior to the purchase date and
must state:
. the certificate numbers of the holder's debentures to be delivered for
purchase;
. the aggregate principal amount of debentures to be purchased; and
. that the debentures are to be purchased by us pursuant to the
applicable provisions of the debentures.
A holder may withdraw any purchase notice by delivering a written notice of
withdrawal to the paying agent prior to the close of business on the second
business day prior to the purchase date. The notice of withdrawal shall state:
. the certificate numbers of the debentures being withdrawn;
. the aggregate principal amount of the debentures being withdrawn; and
. the aggregate principal amount, if any, of the debentures that remain
subject to the purchase notice.
In connection with any purchase offer, we will:
. comply in all material respects with the provisions of Rule 13e-4,
Rule 14e-1 and any other tender offer rules under the Securities
Exchange Act of 1934 which may then apply; and file a Schedule to, if
required, or any other required schedule under the Exchange Act.
Our obligation to pay the purchase price for a debenture as to which a
purchase notice has been delivered and not validly withdrawn is conditioned upon
the holder delivering the debenture, together with necessary endorsements, to
the paying agent at any time after delivery of the purchase notice. We will
cause the purchase price for the debenture to be paid promptly following the
later of the purchase date or the time of delivery of the debenture.
If the paying agent holds money or securities sufficient to pay the
purchase price of the debenture on the business day following the purchase date
in accordance with the terms of the Indenture, then, immediately after the
purchase date, the debenture will cease to be outstanding and interest on such
debenture will cease to accrue, whether or not the debenture is delivered to the
paying agent. After the debenture ceases to be outstanding, all other rights of
the holder shall terminate, other than the right to receive the purchase price
upon delivery of the debenture.
The terms of our then-existing borrowing agreements may limit our ability
to purchase debentures.
We may not purchase any debentures at the option of holders if an event of
default with respect to the debentures, other than a default in the payment of
the purchase price with respect to such debentures, has occurred and is
continuing.
Repurchase at Option of Holder Upon a Change of Control
If a change of control (as defined below) occurs, each holder of debentures
shall have the right, at the holder's option, to require us to repurchase all of
such holder's debentures, or any portion thereof that is an integral multiple of
$1,000, on the date (the "Repurchase Date'') selected by us that is not less
than 10 nor more than 30 days after the Final Surrender Date (as defined below),
at a price equal to 100% of the principal amount of the debentures, plus accrued
interest to the Repurchase Date.
Unless we shall previously have called for redemption of all of the
debentures, within 30 days after the occurrence of a change of control, we are
obligated to deliver to the Trustee and mail (or cause the Trustee to mail) to
all holders of record of the debentures a notice (the "Company Notice'')
describing, among other things, the occurrence of such change of control and of
the repurchase right arising as a result thereof. We must cause a copy of the
Company Notice to be published in a newspaper of general circulation in the
Borough of Manhattan, The City of New York. To exercise the repurchase right, a
holder of debentures must, on or before the date which is subject to any
contrary requirements of applicable law, 60 days after the date of mailing of
the Company Notice (the "Final Surrender Date''), give irrevocable written
notice of the holder's exercise of such right and surrender the debentures (if
such debenture is represented by a global debenture, by book-entry transfer to
the conversion agent through the facilities of DTC) with respect to which the
right is being exercised, duly endorsed for transfer to us, at any place where
principal is payable. The submission of such notice together with such
debentures pursuant to the exercise of a repurchase right will be irrevocable on
the part of the holder (unless we fail to repurchase the debentures on the
repurchase date) and the right to convert the debentures will expire upon such
submission.
The term "change of control'' shall mean any of the following:
. any person, including our affiliates and associates, other than us,
our subsidiaries or their employee benefit plans, files a Schedule 13D
or Schedule TO, or any successor schedule, form or report, under the
Exchange Act, disclosing that such person has become the beneficial
owner of 50% or more of the voting power of our common stock or other
capital stock into which our common stock is reclassified or changed,
with certain exceptions; or
. any share exchange, consolidation or merger is consummated pursuant to
which our common stock would be converted into cash, securities or
other property, in each case other than any share exchange,
consolidation or merger of our company in which the holders of our
common stock immediately prior to the share exchange, consolidation or
merger have, directly or indirectly, at least a majority of the total
voting power in the aggregate of all classes of capital stock of the
continuing or surviving corporation immediately after the share
exchange, consolidation or merger.
The right to require us to repurchase the debentures as a result of the
occurrence of a change of control could create an event of default under our
future senior indebtedness. Failure by us to repurchase the debentures when
required will result in an Event of Default (as defined below) with respect to
the debentures.
The holders' repurchase right upon the occurrence of a change of control
could, in certain circumstances, make more difficult or discourage a potential
takeover of us and, thus, removal of incumbent management. The change of control
repurchase right, however, is not the result of management's knowledge of any
specific effort to accumulate shares of Baxter common stock or to obtain control
of us by means of a merger, tender offer, solicitation or otherwise. Instead,
the change of control purchase feature is a standard term contained in other
similar debt offerings and the terms of such feature have resulted from
negotiations between us and the initial purchasers.
We could in the future enter into certain transactions including highly
leveraged recapitalizations, that would not constitute a change of control and
would, therefore, not provide the holders with the protection of requiring us to
repurchase the debentures.
Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to holders of
the debentures. We will comply with this rule to the extent applicable at that
time.
Events of Default and Notice Thereof
The following are Events of Default: (a) a default in the payment of any
interest on any debenture continues for 30 days or more after such payment is
due, (b) a default in the payment of principal of or premium, if any, on any
debenture or of the repurchase price in respect of any debenture when due, (c) a
default in the performance of any other of our covenants or agreements in the
Indenture that continues for 60 days after written notice to us by the Trustee
or the holders of at least 25% in principal amount of outstanding debentures,
(d) failure by us to make any payment when due, including any applicable grace
period, in respect of our indebtedness for borrowed money, which payment is in
an amount in excess of $50 million, (e) default by us with respect to any of our
indebtedness for borrowed money, which default results in acceleration of any
such indebtedness which is in an amount in excess of $50 million, and (f)
certain events of bankruptcy, insolvency or reorganization.
If an Event of Default shall occur and be continuing and if it is known to
the Trustee, the Trustee is required to mail to each holder of the debentures a
notice of the Event of Default within 90 days after such default occurs. Except
in the case of a default in payment of the principal of or premium, if any, or
interest on any debenture, the Trustee may withhold the notice if and so long as
the Trustee in good faith determines that withholding the notice is in the
interests of the holders of the debentures.
If an Event of Default shall occur and be continuing, the Trustee or the
holders of not less than 25% in principal amount of outstanding debentures may
declare the principal of, and accrued interest on, all the debentures to be due
and payable immediately. If the Event of Default relates to bankruptcy,
insolvency or reorganization, the debentures shall automatically become due and
payable immediately, subject to applicable law.
Holders of the debentures may not enforce the Indenture or debentures
except as provided in the Indenture. Subject to the provisions of the Indenture
relating to the duties of the Trustee in case an Event of Default shall occur
and be continuing, the Trustee will be under no obligation to exercise any of
the rights or powers under the Indenture at the request or direction of any
holders of the debentures, unless the holders shall have offered the Trustee
indemnity reasonably satisfactory to it. Subject to the indemnification
provisions and certain limitations contained in the Indenture, the holders of a
majority in principal amount of the debentures at the time outstanding will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
on the Trustee. Those holders may, in certain cases, waive any default except a
default in payment of principal of, or premium, if any, or interest on, any
debenture or a failure to comply with certain provisions of the Indenture
relating to conversion of the debentures.
We are required to furnish the Trustee annually with a certificate as to
its compliance with the conditions and covenants provided for in the Indenture.
Definitions
The following terms are defined in the Indenture.
The term Consolidated Net Tangible Assets is defined to mean the total
amount of assets which would be included on a consolidated balance sheet of the
Company and its Subsidiaries under generally accepted accounting principles
(less applicable reserves and other properly deductible items) after deducting
therefrom: (i) all short-term liabilities and liability items, except for
indebtedness payable by its terms more than one year from the date of incurrence
thereof (or renewable or extendible at the option of the obligor for a period
ending more than one year after such date of incurrence thereof (or renewable or
extendible at the option of the obligor for a period ending more
than one year after such date of incurrence) and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount, unamortized expense incurred in
the issuance of debt, and other like intangibles (except prepaid royalties).
The term Principal Facility is defined to include any manufacturing plant,
warehouse, office building or parcel of real property owned by the Company, or
any Restricted Subsidiary, that has a gross book value of in excess of 2% of
Consolidated Net Tangible Assets other than any such property which, in the
opinion of the Board of Directors, is not of material importance to the business
conducted by the Company and its Subsidiaries taken as a whole.
The term Restricted Subsidiary is defined to include any corporation in
which the Company owns voting securities entitling it to elect a majority of the
directors and which either is designated a Restricted Subsidiary in accordance
with the Indenture or (i) existed as such on the date of the Indenture or is the
successor to, or owns, any equity interest in, a corporation which so existed,
(ii) has its principal business and assets in the United States (including
Puerto Rico and other territories and possessions), (iii) such business is other
than the obtaining of financing in capital markets outside the United States or
the financing of the acquisition or disposition of real or personal property or
dealing in real property for residential or office building purposes, and (iv)
does not have assets substantially all of which consist of the securities of one
or more corporations which are not Restricted Subsidiaries.
The term Sale and Leaseback Transaction is defined to include a sale or
transfer made by the Company or a Restricted Subsidiary of any Principal
Facility which has been in operation, use or commercial production (or in the
case of a parcel of real property, has been owned) by the Company or any
Restricted Subsidiary for more than 120 days prior to such sale or transfer if
such sale or transfer is made with the intention of leasing such Principal
Facility to the Company or a Restricted Subsidiary, except (i) a lease for a
period of not exceeding 36 months and (ii) a lease that secures or relates to
certain governmental obligations issued in connection with the financing of the
cost of construction or acquisition of much Principal Facility.
The term Secured Debt is defined to include any indebtedness for borrowed
money of the Company or any Restricted Subsidiary which is secured by (i) a
Security Interest in any Principal Facility or portion thereof or (ii) a
Security Interest in shares of stock owned by the Company in Restricted
Subsidiary or in indebtedness for money borrowed by a Restricted Subsidiary from
the Company or another Restricted Subsidiary. The securing in the foregoing
manner of any debt which immediately prior thereto was not Secured Debt shall be
deemed to be the creation of Secured Debt at the time such security is given.
The term Superior Indebtedness is defined to include any obligation of the
Company or any Restricted Subsidiary which (i) as of the date of it. creation,
was or may be payable by its terms more than one year from the date of
incurrence thereof, (ii) under generally accepted accounting principles should
be shown as a liability on a consolidated balance sheet of the Company, and
(iii) in the case of such an obligation of the Company, is not subordinate and
junior in right of payment to the prior payment of the debentures.
Restriction on Secured Debt
The Indenture provides that the Company will not, and will not cause or
permit a Restricted Subsidiary to, create, incur, assume or guarantee any
Secured Debt unless the debentures will be secured equally and ratably with (or
prior to) such Secured Debt, with certain exceptions. Among permitted Secured
Debt is indebtedness secured by (i) certain Security Interests to secure payment
of the cost of acquisition, construction, development or improvement of
property, (ii) Security Interests on property at the time of its acquisition by
the Company or a Restricted Subsidiary, which Security Interests secure
obligations assumed by the Company or a Restricted Subsidiary, or on the
property or on the outstanding shares of indebtedness of a corporation at the
time it becomes a Restricted Subsidiary or is merged into the Company or a
Restricted Subsidiary or the Company or a Restricted Subsidiary acquires the
properties of such corporation substantially as an entirety, (iii) Security
Interests arising from conditional sales agreements or title retention
agreements, with respect to property acquired by the Company or any Restricted
Subsidiary, (iv) Security Interests securing governmental obligations issued in
connection with the financing of the cost of construction or acquisition of a
Principal Facility, (v) Security Interests securing
indebtedness of a Restricted Subsidiary owing to the Company or to another
Restricted Subsidiary, (vi) mechanics' and other statutory liens in respect of
obligations not due or being contested, (vii) liens for taxes not yet delinquent
or being contested in good faith, (viii) judgment liens arising in connection
with legal proceedings so long as such proceedings are being contested and
execution is stayed, (ix) certain landlords' liens on fixtures, (x) the
extension of existing Security Interests on Principal Facilities to additions,
extensions or improvements, (xi) certain Security Interests in favor, or made at
the request, of governmental bodies, and (xii) Security Interests by reason of
deposits to qualify the Company or a Restricted Subsidiary to conduct business
or to maintain self-insurance. Additionally, such permitted Secured Debt
includes any extension, renewal or refunding, in whole or in part, of any
Secured Debt permitted at the time of the original incurrence thereof.
In addition to the foregoing, the Company and its Restricted Subsidiaries
may create, incur, assume or guarantee Secured Debt, without equally and ratably
securing the debentures, if the sum of (i) the amount of Secured Debt entered
into after the date at the Indenture and otherwise prohibited by the Indenture
plus (ii) the aggregate present value of Sale and Leaseback Transactions entered
into after the data of the Indenture and otherwise prohibited by the Indenture
does not exceed 5% of Consolidated Net Tangible Assets.
Restrictions on Sale and Leaseback Transactions
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, enter into any Sales and Leaseback Transaction, unless
(i) the Company or such Restricted Subsidiary would be entitled to incur Secured
Debt permitted by the Indenture only by reason of the provision described in the
preceding paragraph equal in amount to the value of the Sale and Leaseback
Transaction without equally and ratably securing the debentures or (ii) the
Company or a Restricted Subsidiary applies or commits to apply an amount equal
to the net proceeds of the property sold pursuant to the Sales and Leaseback
Transaction (a) to the acquisition, construction or improvement of a Principal
Facility or (b) to the redemption of debentures or to the repayment of other
Superior Indebtedness of the Company or of any Restricted Subsidiary. In lieu of
applying all or any part of such amount to the redemption of debentures, the
Company may deliver to the Trustee debentures for cancellation and thereby
reduce the amount to be applied to the redemption of debentures by an amount
equivalent to the aggregate principal amount of debentures delivered.
Restrictions on Transfers of Principal Facilities
The Indenture provides that the Company will not itself, or permit any
Restricted Subsidiary to, transfer any Principal Facility to any Subsidiary
which is not a Restricted Subsidiary unless it applies or commits to apply an
amount equal to the fair value of such Principal Facility at the time of such
transfer (i) to the acquisition or improvement of a Principal Facility or (ii)
to the optional redemption of debentures or to the repayment of other Superior
Indebtedness of the Company or of any Restricted Subsidiary. In lieu of applying
all or any part of such amount to the redemption debentures, the Company may
deliver to the Trustee debentures for cancellation and thereby reduce the amount
to be applied to the redemption of debentures by the principal amount of the
debentures so delivered.
Discharge
The Indenture provides that we may terminate our obligations under the
Indenture at any time by delivering all outstanding debentures to the Trustee
for cancellation if we have paid all sums payable by us under the Indenture. At
any time within one year before the maturity of the debentures or the redemption
of all the debentures, we may terminate our substantive obligations under the
Indenture, other than our obligations to pay the principal of, and interest on,
the debentures, by depositing with the Trustee money or U.S. Government
obligations sufficient to pay all remaining indebtedness on the debentures when
due.
Merger and Consolidation
We may not consolidate or merge with or into, or sell, lease, convey or
otherwise dispose of all or substantially all of our assets to, another
corporation, person or entity unless (i) we are the surviving person or the
successor or transferee is a corporation organized under the laws of the United
States, any state thereof or the District of Columbia, or a corporation or
comparable legal entity organized under the laws of a foreign jurisdiction and
whose equity securities are listed on a national securities exchange in the
United States or authorized for quotation on the Nasdaq National Market, (ii)
the successor assumes all our obligations under the debentures and the Indenture
(except under certain circumstances, conversion obligations) and enters into a
supplemental indenture and (iii) after such transaction no Event of Default
exists.
Modification and Waiver
Subject to certain exceptions, supplements of and amendments to the
Indenture or the debentures may be made by us and the Trustee with the consent
of the holders of not less than a majority in aggregate principal amount of the
outstanding debentures and any existing default or compliance with any
provisions may be waived with the consent of the holders of a majority in
aggregate principal amount of the outstanding debentures. Without the consent of
any holders of the debentures, we and the Trustee may amend or supplement the
Indenture or the debentures to cure any ambiguity, defect or inconsistency, to
provide for the assumption of our obligations to holders of the debentures and
to make certain changes with respect to conversion rights in case of a merger or
acquisition otherwise in compliance with the Indenture or to make any change
that does not materially adversely affect the rights of any holder of the
debentures. Without the consent of the holders of each debenture affected
thereby, an amendment, supplement or waiver may not (a) change the stated
maturity date of the principal of, or interest on, any debenture, or adversely
affect the right to convert any debenture, (b) reduce the principal amount or
repurchase price of, or interest or premium, if any, on, any debenture, (c)
change the currency for payment of principal of, or interest on, any debenture,
(d) impair the right to institute suit for the enforcement of any payment on or
with respect to any debenture, (e) reduce the above stated percentage of
outstanding debentures necessary to amend or supplement the Indenture or waive
defaults or compliance or (f) modify (with certain exceptions) any provisions of
the Indenture relating to modification and amendment of the Indenture or waiver
of compliance with conditions and defaults thereunder.
Concerning the Trustee
Bank One Trust Company, N.A., the Trustee under the Indenture, has been
appointed by us as the initial paying agent, conversion agent and registrar
("Registrar'') with regard to the debentures. We and our subsidiaries may
maintain deposit accounts and conduct other banking transactions with the
Trustee or its affiliates in the ordinary course of business, and the Trustee
and its affiliates may from time to time in the future provide us with banking
and financial services in the ordinary course of their business.
In case an Event of Default shall occur (and shall not be cured) and
holders of the debentures have notified the Trustee, the Trustee will be
required to exercise its powers with the degree of care and skill that a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs. Subject to such provisions, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
of the holders of debentures, unless the holders shall have offered to the
Trustee indemnity reasonably satisfactory to it.
Governing Law
The Indenture and debentures will be governed by and construed in
accordance with the laws of the State of New York, without giving effect to such
State's conflicts of law principles.
Book-Entry, Delivery and Form
We initially issued the debentures in the form of one or more global
securities. The global security was deposited with the trustee as custodian for
DTC and registered in the name of a nominee of DTC. Except as set forth below,
the global security may be transferred, in whole and not in part, only to DTC or
another nominee of DTC. You may hold your beneficial interests in the global
security directly through DTC if you have an account with DTC or indirectly
through organizations which have accounts with DTC. Debentures in definitive
certificated form (called "certificated securities") will be issued only in
certain limited circumstances described below.
DTC has advised us that it is:
. a limited purpose trust company organized under the laws of the State of
New York;
. a member of the Federal Reserve System;
. a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
. a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
DTC was created to hold securities of institutions that have accounts with
DTC (called "participants") and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, which may include the
initial purchasers, banks, trust companies, clearing corporations and certain
other organizations. Access to DTC's book-entry system is also available to
others such as banks, brokers, dealers and trust companies (called "indirect
participants") that clear through or maintain a custodial relationship with a
participant, whether directly or indirectly.
We expect that pursuant to procedures established by DTC, upon the deposit
of the global security with DTC, DTC will credit on its book-entry registration
and transfer system the principal amount of debentures represented by such
global security to the accounts of participants. The accounts to be credited
shall be designated by the initial purchasers. Ownership of beneficial interests
in the global security will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests in the global
security will be shown on, and the transfer of those ownership interests will be
effected only through, records maintained by DTC (with respect to participants'
interests), the participants and the indirect participants. The laws of some
jurisdictions may require that certain purchasers of securities take physical
delivery of such securities in definitive form. These limits and laws may impair
the ability to transfer or pledge beneficial interests in the global security.
Beneficial owners of interests in global securities who desire to convert
their interests into common stock should contact their brokers or other
participants or indirect participants through whom they hold such beneficial
interests to obtain information on procedures, including proper forms and cut-
off times, for submitting requests for conversion.
So long as DTC, or its nominee, is the registered owner or holder of a
global security, DTC or its nominee, as the case may be, will be considered the
sole owner or holder of the debentures represented by the global security for
all purposes under the Indenture and the debentures. In addition, no beneficial
owner of an interest in a global security will be able to transfer that interest
except in accordance with the applicable procedures of DTC. Except as set forth
below, as an owner of a beneficial interest in the global security you will not
be entitled to have the debentures represented by the global security registered
in your name, will not receive or be entitled to receive physical delivery of
certificated securities and will not be considered to be the owner or holder of
any debentures under the global security. We understand that under existing
industry practice if an owner of a beneficial interest in the global security
desires to take any action that DTC, as the holder of the global security, is
entitled to take, DTC
would authorize the participants to take such action and the participants would
authorize beneficial owners owning through such participants to take such action
or would otherwise act upon the instructions of beneficial owners owning through
them.
We will make payments of principal of premium, if any, and interest on the
debentures represented by the global security registered in the name of and held
by DTC or its nominee to DTC or its nominee, as the case may be, as the
registered owner and holder of the global security. Neither we, the Trustee, nor
any paying agent will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the global security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of principal
of, premium, if any, or interest on the global security, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global security
as shown on the records of DTC or its nominee. We also expect that payments by
participants or indirect participants to owners of beneficial interests in the
global security held through such participants or indirect participants will be
governed by standing instructions and customary practices and will be the
responsibility of such participants or indirect participants. We will not have
any responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the global
security for any debenture or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests or for any other aspect
of the relationship between DTC and its participants or indirect participants or
the relationship between such participants or indirect participants and the
owners of beneficial interests in the global security owning through such
participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds.
DTC has advised us that it will take any action permitted to be taken by a
holder of debentures only at the direction of one or more participants to whose
account the DTC interests in the global security is credited and only in respect
of such portion of the aggregate principal amount of debentures as to which such
participant or participants has or have given such direction. However, if DTC
notifies us that they are unwilling to be a depository for the global security
or ceases to be a clearing agency or there is an event of default under the
debentures, DTC will exchange the global security for certificated securities
which it will distribute to its participants and which will be legended, if
required, as set forth under the heading "Transfer Restrictions."
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in the global security among participants of
DTC, they are under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither we nor
the trustee will have any responsibility or liability for the performance by DTC
or the participants or indirect participants of their respective obligations
under the rules and procedures governing their respective operations.
DESCRIPTION OF BAXTER COMMON STOCK AND PREFERRED STOCK
The following description of material terms of our common stock and
preferred stock does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, our Restated Certificate of
Incorporation, as amended to date and our Amended and Restated Bylaws. A copy of
each of these documents is available upon request to us.
Our Restated Certificate of Incorporation authorizes the issuance of
1,000,000,000 shares of common stock, of which 590,234,911 were outstanding on
October 26, 2001.
Common Stock
Voting Rights, Dividends, Liquidation Rights and Preemptive Rights
The holders of common stock are entitled to one vote per share. Holders of
common stock do not have cumulative voting rights and may not take action
without a meeting. Subject to the preferential rights of the holders of any
preferred stock, holders of common stock are entitled to receive such dividends
as may be declared from time to time by our board of directors in its discretion
and to the extent permitted by law. In the event of our liquidation, and after
distribution in full of any preferential amount to be distributed to the holders
of share of any outstanding shares of preferred stock, holders of common stock
are entitled to receive pro rata all of our remaining assets of whatever kind
available for distribution to stockholders. The common stock has no preemptive
or other subscription rights, and there are no conversion rights or redemption
provisions with respect to the common stock.
Stockholder Nominations and Proposals
Our bylaws provide that stockholders must follow an advance notification
procedure for stockholder nominations of candidates for the board of directors
and for other stockholder business to be conducted at an annual meeting. For
business a stockholder wishes to bring before an annual meeting of stockholders
or for nominations of persons for election to the board of directors at an
annual meeting, a stockholder must deliver notice to us not less than 60 nor
more than 90 days prior to the date of the anniversary of the previous year's
annual meeting unless the annual meeting is advanced or delayed by more than 30
days, in which case the stockholder must deliver the notice not more than 10
days after we mailed notice of such meeting or public disclosure of the date of
the annual meeting was made. These advance notification provisions in our bylaws
could preclude the conduct of business at a meeting or a nomination for the
election of directors if the proper procedures are not followed. Such provisions
could operate to delay, defer or prevent a change in our control.
Staggered Board
Our board is divided into three classes, as nearly equal in number as
possible. At each annual meeting of stockholders, directors elected to succeed
in the class whose terms then expire are elected for three-year terms, so that
the term of office of one class of directors expires each year. These staggered
terms for directors will likely extend the time required to elect a majority of
directors from one to two years. It would be impossible, assuming no
resignations or removals of directors, for our stockholders to change a majority
of the board at any annual meeting should they consider such a change desirable,
unless the holders of at least two thirds of the voting stock vote to amend the
certificate of incorporation.
Vacancies
A majority of the directors then in office may fill board vacancies and
newly created directorships resulting from any increase in the size of our board
of directors. This is true even if those directors do not constitute a quorum or
if only one director is left in office. These provisions could prevent
stockholders, including parties who want to take over or acquire us, from
removing incumbent directors and filing the resulting vacancies with their own
nominees.
Special Meetings of Stockholders
Our bylaws provide that special meetings of our stockholders may be called
only by resolution of the directors or by the chairman of the board, the chief
executive officer or the corporate secretary and shall be called upon the
request of a majority of the directors. This provision may render it more
difficult for stockholders to take action opposed by the board of directors.
Listing, Transfer Agent
The common stock is listed on the New York Stock Exchange. The transfer
agent and registrar for the common stock is First Chicago Trust Company of New
York, a division of Equiserve.
Preferred Stock and Preferred Stock Purchase Rights
Preferred Stock
Our Restated Certificate of Incorporation provides that the board of
directors may issue an aggregate of 100,000,000 shares of preferred stock from
time to time in one or more series.
Our board of directors is authorized to determine, among other things, with
respect to each additional series which may be issued:
. the dividend rate, conditions and preferences, if any;
. voting right, if any;
. whether and upon what terms a series will be convertible into or
exchangeable for shares of any other class of capital stock or other
series of preferred stock;
. redemption rights;
. whether a sinking fund will be provided for the redemption of a series
and, if so, the terms and conditions of the sinking fund; and
. liquidation preferences, if any.
With regard to dividends, redemption and liquidation preference, any
particular series of preferred stock may rank junior to, on a parity with, or
senior to any other series of preferred stock and common stock. The board of
directors, without stockholder approval, may issue preferred stock with voting
and conversion rights which could adversely affect the voting power of the
holders of common stock. The issuance of preferred stock under certain
circumstances could have the effect of delaying or preventing a change of
control or other corporate action.
Preferred Stock Purchase Rights
We have entered into a rights agreement with First Chicago Trust Company of
New York, as rights agent. The rights agreement creates and specifies the terms
of the preferred stock purchase rights described below. Prior to the redemption
or expiration of the rights, each share of common stock issued and outstanding
prior to the distribution date (as defined below) will automatically include a
right (subject to adjustment). Each right entitles the registered holder to
purchase from us one one-hundredth of a share of series B junior participating
preferred stock at a price of $275.00 per one one-hundredth of a share, subject
to adjustment. See "Series B Preferred Stock" below for a description of the
material terms of the series B preferred stock.
Until the distribution date (or earlier redemption or expiration of the
rights), the rights will be transferred with and only with the common stock. The
distribution date is defined as the earlier to occur of:
. 10 days following a public announcement that a person or group of
affiliated or associated persons (an "acquiring person") has acquired
beneficial ownership of 15% or more of our outstanding common stock, or
. 10 business days (or such later date as determined by our board of
directors prior to the time that any person or group of affiliated
persons becomes an acquiring person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by a
person or group of 15% or more of our outstanding common stock.
Until the distribution date (or earlier redemption or expiration of the rights),
the surrender for transfer of any common stock certificate will also constitute
the transfer of the rights associated with the common stock represented by the
certificate. As soon as practicable following the distribution date, separate
certificates evidencing the rights will be mailed to holders of record of the
common stock as of the close of business on the distribution date and such
separate right certificates alone will evidence the rights.
The rights are not exercisable until the distribution date. The rights will
expire on March 23, 2009, unless that date is extended or unless the rights are
earlier redeemed or exchanged by us, in each case, as described below.
If we are acquired in a merger or other business combination transaction or
50% or more of our consolidated assets or earning power are sold after a person
or group has become an acquiring person, proper provision will be made so that
each holder of a right will have the right to receive, upon exercise, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of the
right. If any person or group of affiliated or associated persons becomes an
acquiring person, proper provision shall be made so that each holder of a right,
other than rights beneficially owned by the acquiring person (which will
thereafter be void), will thereafter have the right to receive upon exercise
that number of shares of common stock having a market value of two times the
exercise price of the right.
At any time after any person or group becomes an acquiring person and prior
to the acquisition by such person or group of 50% or more of the outstanding
share of common stock, our board of directors may exchange the rights (other
than rights owned by such person or group which will have become void), in whole
or in part, at an exchange ratio of one share of common stock, or one one-
hundredth of a share of series B preferred stock (or of a share of a class or
series of our preferred stock having equivalent rights, preferences and
privileges), per right (subject to adjustment).
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
shares of common stock, our board of directors may redeem the rights in whole,
but not in part, at a price of $.01 per right. The redemption of the rights may
be made effective at such time on such basis with such conditions as our board
of directors in its sole discretion may establish. Immediately upon any
redemption of the rights, the right to exercise the rights will terminate and
the only right of the holders of rights will be to receive the $.01 per right.
The terms of the rights may be amended by our board of directors without
the consent of the holders of the rights, including an amendment to lower the
threshold for exercisability of the rights. After the distribution date, the
provisions of the rights agreement may be amended by our board in order to cure
any ambiguity, to make changes which do not adversely affect the interests of
holders of rights, or to shorten or lengthen any time period under the rights
agreement. However, no amendment to lengthen any time period (including the time
period relating to when the rights may be redeemed at a time when the rights are
not redeemable may be made) unless such change is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
rights.
Until a right is exercised, the holder thereof, as such, will have no
rights as our stockholder, including, without limitation, the right to vote or
to receive dividends.
Series B Junior Participating Preferred Stock
Series B junior participating preferred stock purchasable upon exercise of
the existing rights will be, with respect to the payment of dividends and the
distribution of assets, junior to all series of any other class of our preferred
stock. Each share of the series B preferred stock will be nonredeemable and will
be entitled to receive a minimum preferential quarterly dividend of $5.00 per
share, but will be entitled to receive an aggregate dividend of 100 times the
quarterly dividend declared per share of common stock. If a liquidation occurs,
the holders of the series B preferred stock will be entitled to receive minimum
liquidation payment of $100 per share, but will be entitled to receive an
aggregate liquidation payment equal to 100 times the payment made per share of
common stock. Each share of the series B preferred stock will have 100 votes,
voting together with the common stock. If any merger, consolidation or other
transaction in which shares of common stock are exchanged occurs, each share of
the series B preferred stock will be entitled to receive 100 times the amount
and type of consideration received per share of common stock. These dividend,
liquidation, voting and exchange rights are protected by customary antidilution
provisions. Because of the nature of the dividend, liquidation and voting rights
of the series B preferred stock, the value of the one one-hundredth interest in
a share of series B preferred stock purchasable upon exercise of each right
should approximate the value of one share of common stock.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is intended to be a general summary of some of the
United States federal income tax consequences of the ownership and disposition
of debentures and Baxter common stock into which the debentures have been
converted. Due to the complexity of the tax laws of the United States and other
taxing jurisdictions, the uncertainty, in some instances, as to the manner in
which such laws apply to holders, and possible changes in law, it is
particularly important that each holder consult with its own tax advisor
regarding the tax treatment of the ownership and disposition of debentures and
common stock into which the debentures have been converted under the laws of any
federal, state, local or other taxing jurisdiction.
The discussion set forth below applies only to initial purchasers that
purchase debentures at their "issue price." The "issue price" of the debentures
will equal the first price at which a substantial amount of the debentures is
sold for cash to the public, not including sales to bond houses, brokers or
similar persons or organizations acting in the capacity of underwriters,
placement agents or wholesalers. This summary is based upon laws, regulations,
rulings and decisions currently in effect, all of which are subject to change or
differing interpretations at any time, possibly with retroactive effect. There
can be no assurance that the Internal Revenue Service will not challenge one or
more of the conclusions described herein, and we have not obtained, nor do we
intend to obtain, a ruling from the Internal Revenue Service with respect to the
United States federal income tax consequences of acquiring or holding debentures
or common stock. Moreover, this summary deals only with purchasers who hold
debentures or common stock into which debentures have been converted as "capital
assets" within the meaning of Section 1221 of the Internal Revenue Code of 1986,
as amended, (the "Code"), and does not purport to deal with persons in special
tax situations, such as financial institutions, insurance companies, S
corporations, regulated investment companies, tax exempt investors, dealers in
securities and currencies, U.S. expatriates, persons holding debentures as a
position in a "straddle," "hedge," "conversion transaction," "constructive sale"
or other integrated transaction for tax purposes, persons who own, directly or
indirectly, 10% or more of our voting power, or U.S. holders, as defined below,
whose functional currency is not the U.S. dollar. Further, this discussion does
not address the consequences under United States alternative minimum tax rules,
United States federal estate or gift tax laws (except as specifically described
below with respect to non-U.S. holders), the laws of any U.S. state or locality,
or any foreign tax laws.
Prospective purchasers of the debentures are urged to consult their own tax
advisors concerning the consequences, in their particular circumstances, of
ownership and disposition of the debentures, and common stock into which the
debentures have been converted, under the U.S. federal tax laws and the laws of
any relevant state, local or non-United States taxing jurisdiction.
As used herein, the term "U.S. holder" means a beneficial owner of
debentures or common stock into which debentures have been converted that is,
for United States federal income tax purposes:
. a citizen or individual resident of the United States;
. a corporation, or other entity that has elected to be treated as a
corporation, created or organized in or under the laws of the United
States, any state thereof or the District of Columbia;
. an estate, the income of which is subject to United States federal
income tax regardless of its source; or
. a trust if, in general, a court within the United States is able to
exercise primary supervision over its administration and one or more
U.S. persons have authority to control all of its substantial
decisions.
As used herein, the term "non-U.S. holder" means a beneficial owner, other
than a partnership, of debentures or common stock into which debentures have
been converted that is not a U.S. holder for United States federal income tax
purposes.
If a partnership, including for this purpose any entity treated as a
partnership for United States tax purposes, is a beneficial owner of debentures
or common stock into which debentures have been converted, the treatment of a
partner in the partnership will generally depend upon the status of the partner
and upon the activities of the partnership. A holder of debentures that is a
partnership, and partners in such a partnership, should consult their tax
advisors about the United States federal income tax consequences of holding and
disposing of debentures and common stock into which debentures have been
converted.
Classification of the Debentures
We will treat the debentures as indebtedness subject to the Treasury
regulations governing contingent payment debt instruments ("CPDI") for U.S.
federal income tax purposes. Pursuant to the terms of the Indenture, we and each
holder of the debentures agree, for United States federal income tax purposes,
to treat the debentures in such a manner and to be bound by our application of
those regulations to the debentures, including our determination of the rate at
which interest will be deemed to accrue on the debentures for United States
federal income tax purposes. The remainder of this discussion assumes that the
debentures will be treated in accordance with that agreement and our
determinations. However, the proper United States federal income tax treatment
of a holder of a debenture is uncertain in various respects, and no assurance
can be given that the IRS will not assert that the debentures should be treated
differently. Such treatment could affect the amount, timing and character of
income, gain or loss in respect of an investment in debentures. In particular,
it might be determined that a holder should have accrued interest income at a
lower rate, should not have recognized income or gain upon the conversion, and
should have recognized capital gain or loss upon a taxable disposition of its
debenture.
U.S. Holders
Accrual of Interest on the Debentures
Under the rules governing CPDIs, a United States person generally will be
required to accrue interest income on the debentures, in the amounts described
below, regardless of whether the U.S. holder uses the cash or accrual method of
tax accounting. Accordingly, U.S. holders will be required to include interest
in taxable income in each year in excess of the accruals on the debentures and
in excess of any interest payments actually received in that year.
The CPDI regulations provide that a U.S. holder must accrue an amount of
ordinary interest income, as original issue discount for United States federal
income tax purposes, for each accrual period prior to and including the maturity
date of the debentures that equals:
(1) the product of (i) the adjusted issue price (as defined below) of the
debentures as of the beginning of the actual period; and (ii) the
comparable yield to maturity (as defined below) of the debentures,
adjusted for the length of the accrual period;
(2) divided by the number of days in the accrual period; and
(3) multiplied by the number of days during the accrual period that the
U.S. holder held the debentures.
A debenture's issue price is the first price at which a substantial amount
of the debentures is sold to the public, excluding sales to bond houses, brokers
or similar persons or organizations acting in the capacity of underwriters,
placement agents or wholesalers. The adjusted issue price of a debenture is its
issue price increased by any interest income previously accrued, determined
without regard to any adjustments to interest accruals described below, and
decreased by the projected amount of any payments previously made with respect
to the debentures.
Under the rules governing contingent payment debt obligations, we are
required to establish the "comparable yield," and we have determined that the
comparable yield for the debentures is the annual yield we would incur, as
of the initial issue date, on a fixed rate nonconvertible debt security with no
contingent payments, but with terms and conditions otherwise comparable to those
of the debentures. Accordingly, we have determined the comparable yield to be
6.1% compounded semiannually.
We are required to provide to U.S. holders, solely for United States
federal income tax purposes, a schedule of the projected amounts of payments on
the debentures. This schedule must produce the comparable yield. The projected
payment schedule for the debentures includes estimates for payments of interest
and an estimate for a payment at maturity taking into account the conversion
feature. U.S. holders may obtain the projected payment schedule by submitting a
written request for such information to: Baxter International Inc., One Baxter
Parkway, Deerfield, Illinois 60015, Attention: Investor Relations.
For United States federal income tax purposes, each U.S. holder has agreed
to use the comparable yield and the schedule of projected payments in
determining its interest accruals, and the adjustments thereto described below,
in respect of the debentures.
THE COMPARABLE YIELD AND THE SCHEDULE OF PROJECTED PAYMENTS ARE NOT
DETERMINED FOR ANY OTHER PURPOSE OTHER THAN FOR THE DETERMINATION OF A U.S.
HOLDER'S INTEREST ACCRUALS AND ADJUSTMENTS THEREOF IN RESPECT OF THE
DEBENTURES FOR UNITED STATES FEDERAL INCOME TAX PURPOSES AND DO NOT
CONSTITUTE A PROJECTION OR REPRESENTATION REGARDING THE ACTUAL AMOUNTS
PAYABLE WITH RESPECT TO THE DEBENTURES.
Amounts treated as interest under the CPDI regulations are treated as
original issue discount for all purposes of the Code.
Adjustments to Interest Accruals on the Debentures
If, by reason of a resetting of the interest rate on the debentures, a U.S.
holder is to receive payments with respect to the debentures that exceed the
total amount of projected payments for the related period, the U.S. holder will
incur a "net positive adjustment" under the CPDI regulations. Although it is not
entirely clear, it is likely that the net positive adjustment will equal the
present value of the remaining payments in excess of the present value of the
projected payments (determined without taking into account adjustments for
payments made after all remaining contingent payments on the Debentures become
fixed), discounting at the comparable yield. This adjustment will be treated as
additional interest in the tax year to which it relates. Conversely, if by
reason of a resetting of the interest rate on the debentures, a U.S. holder is
to receive payments with respect to the debentures that are less than the total
amount of projected payments for the related period, the U.S. holder will incur
a "net negative adjustment" under the CPDI regulations. Although it is not
entirely clear, it is likely that the net negative adjustment will equal present
value of the projected payments in excess of the present value of the
redetermined payments (determined without taking into account adjustments for
payments made after all remaining contingent payments on the Debentures become
fixed), discounting at the comparable yield. This adjustment will (a) reduce the
U.S. holder's interest income on the debentures for that taxable year, and (b)
to the extent of any excess after the application of (a), give rise to an
ordinary loss to the extent of the U.S. holder's interest income on the
debentures during the prior taxable years, reduced to the extent such interest
was offset by prior net negative adjustments. The CPDI regulations require that
adjustments for payments made after all remaining contingent payments on the
debentures become fixed be taken into account in a reasonable manner over the
relevant period as an additional net positive or negative adjustment as the case
may be.
Sales, Exchange, Conversion or Redemption
Generally, the sale, exchange, redemption or other disposition of a
debenture will result in taxable gain or loss to a U.S. holder. In addition, as
described above, our calculation of the comparable yield and the schedule of
projected payments for the debentures includes the receipt of common stock upon
conversion as a contingent payment with respect to the debentures. Accordingly,
we intend to treat the receipt of our common stock by a U.S. holder upon the
conversion of a debenture as a contingent payment under the CPDI regulations. As
described above, holders are generally bound by our determination of the
comparable yield and the schedule of projected payments. Under this treatment, a
conversion will also result in taxable gain or loss to the U.S. holder. The
amount of gain or loss on a taxable sale, exchange, conversion, redemption or
other disposition will be equal to the difference between (a) the amount of cash
plus the fair market value of any other property received by the U.S. holder,
including the fair market value of any of our common stock received, and (b) the
U.S. holder's adjusted tax basis in the debenture. A U.S. holder's adjusted tax
basis in a debenture should generally be equal to the U.S. holder's original
purchase price for the debenture, increased by any interest income previously
accrued by the U.S. holder and any net positive adjustment to interest accruals
described above, and decreased by the amount of any projected payments
previously made on the debentures to the U.S. holder and any net negative
adjustment to interest accruals described above. Gain recognized upon a sale,
exchange, conversion, redemption or other disposition of a debenture will
generally be treated as ordinary interest income; any loss will be ordinary loss
to the extent of interest previously included in income, and thereafter, capital
loss (which will be long-term if the debenture is held for more than one year).
The deductibility of net capital losses by individuals and corporations is
subject to limitations. All holders should consult their tax advisors regarding
the treatment of capital gains and losses.
A U.S. holder's tax basis in our common stock received upon a conversion of
a debenture will equal the then current fair market value of such common stock.
The U.S. holder's holding period for the common stock received will commence on
the day immediately following the date of conversion.
Dividends on Common Stock
If a U.S. holder converts debentures into common stock, in general,
distributions on the common stock that are paid out of our current or
accumulated earnings and profits, as defined for United States federal income
tax purposes, will constitute dividends and will be includible in income by a
holder and taxable as ordinary income when received or accrued, in accordance
with that holder's method of accounting for United States federal income tax
purposes. If a distribution exceeds our current and accumulated earnings and
profits, the excess will be treated first as a tax-free return of the U.S.
holder's investment, up to the holder's basis in the common stock. Any remaining
excess will be treated as capital gain.
Constructive Dividends
The conversion price of the debentures is subject to adjustment under
certain circumstances. Under Section 305 of the Code and the Treasury
Regulations issued thereunder, an adjustment in the conversion price, or the
failure to make such an adjustment, may under particular circumstances be
treated as a constructive taxable dividend to U.S. holders of our debentures or
common stock to the extent of our current or accumulated earnings and profits.
Adjustments to the conversion price made pursuant to a bona fide reasonable
adjustment formula which has the effect of preventing the dilution of the
proportionate interest of a U.S. holder of debentures in our earnings and
profits generally should not result in a constructive distribution where the
adjustment does not compensate the U.S. holder of debentures for taxable
distributions to our stockholders. However, in other circumstances, adjustments
(or the failure to make adjustments) may result in a constructive distribution
to U.S. holders of debentures or common stock, taxable to the holders even
though they did not receive any cash or property. For example, if at any time we
make a distribution of property to our stockholders that would be taxable to the
stockholders as a dividend for United States federal income tax purposes and, in
accordance with the anti-dilution provisions of the debentures, the conversion
rate of the debentures is increased, such increase may be deemed to be the
payment of a taxable dividend to holders of the debentures. Conversely, if an
event occurs that dilutes the interests of holders of our debentures and the
conversion price is not adjusted, the resulting increase in the proportionate
interests of holders of common stock could be treated as a taxable stock
dividend to the holders of our common stock.
Backup Withholding and Information Reporting
Non-exempt U.S. holders may be subject to information reporting with
respect to certain "reportable payments," including payments of principal and
interest on debentures, dividends on common stock and the proceeds of the sale
or other disposition of the debentures or common stock. Non-exempt U.S. holders
that are subject to information reporting and that do not provide appropriate
information when requested may be subject to backup withholding at a 31% rate.
U.S. holders should consult their tax advisors regarding the applicability of
backup withholding.
We will report to the U.S. holders of debentures and common stock and to
the IRS the amount of any "reportable payments" for each calendar year and the
amount of tax withheld, if any, with respect to such payments.
Special rules applicable to Non-U.S. Holders
Although the following discussion applies specifically to non-U.S. holders,
it is not exhaustive. The discussion preceding this section may also apply to
non-U.S. holders. Non-U.S. holders should consult their own tax advisors
concerning the applicability of the United States federal tax laws and the laws
of any relevant state, local or non-United States taxing jurisdiction.
Payment of Interest
Generally, payments of interest to nonresident persons or entities are
subject to a United States withholding tax at a rate of 30%, except where an
applicable tax treaty provides for the reduction or elimination of such
withholding tax and the recipient of the interest payments complies with all
certification requirements necessary to qualify for the treaty benefit. However,
payments to a non-U.S. holder of interest income that is not effectively
connected with a United States trade or business will not be subject to a United
States withholding tax under the "portfolio interest exemption" provided that:
. the non-U.S. holder does not actually or constructively own (pursuant
to the conversion feature of the debentures or otherwise) 10% or more
of the combined voting power of all of our classes of stock entitled
to vote;
. the non-U.S. holder is not a "controlled foreign corporation" related
to us actually or constructively through stock ownership; and
. the non-U.S. holder is not a bank which acquired the debentures in
consideration for an extension of credit made pursuant to a loan
agreement entered into in the ordinary course of business.
The portfolio interest exemption and several of the special rules for non-
U.S. holders described below apply only if the non-U.S. holder certifies its
nonresident status. A non-U.S. holder can meet this certification requirement by
providing a Form W-8BEN or appropriate substitute form to us, or our paying
agent. If a non-U.S. holder holds the debenture through a financial institution
or other agent acting on the holder's behalf, the non-U.S. holder will be
required to provide appropriate documentation to the agent. The agent will then
be required to provide certification to us or our paying agent, either directly
or through other intermediaries. For payments made to a foreign partnership, the
certification requirements will generally apply to the partners rather than the
partnership.
We may be required to report annually to the IRS and to each non-U.S.
holder the amount of interest paid to, and the tax withheld, if any, with
respect to, each non-U.S. holder.
Except to the extent that an applicable treaty otherwise provides,
generally a non-U.S. holder will be taxed in the same manner as a U.S. holder
with respect to interest if the interest income is effectively connected with
the non-U.S. holder's conduct of a United States trade or business. A corporate
non-U.S. holder may also, under certain circumstances, be subject to an
additional "branch profits tax" at a 30% rate (or, if applicable, a lower
treaty rate). Even though such effectively connected interest is subject to
income tax, and may be subject to the branch profits tax, it may not be subject
to withholding tax if the non-U.S. holder delivers proper certification to the
payor.
Conversion of Debentures
In general, a non-U.S. holder will not be subject to United States federal
income tax or withholding tax upon the conversion of a debenture into common
stock. However, cash (if any) received in lieu of a fractional share will be
subject to United States federal income tax if it is U.S. trade or business
income. Cash received in lieu of a fractional share may give rise to gain that
would be subject to the rules described above under "Sale, Exchange, Conversion
or Redemption."
In general, a non-U.S. holder will not be subject to United States federal
income or withholding tax with respect to gain upon the disposition of
debentures or common stock, unless:
. the income or gain is "U.S. trade or business income," which means
income or gain that is effectively connected with the conduct by the
non-U.S. holder of a trade or business, or, in the case of a treaty
resident, attributable to a permanent establishment or a fixed base,
in the United States;
. such non-U.S. holder is an individual who is present in the United
States for 183 days or more in the taxable year of disposition and
certain other conditions are met;
. such non-U.S. holder is subject to tax pursuant to the provisions of
the Code applicable to certain United States expatriates; or
. we are, or have been at any time, within the shorter of the five year
period preceding such sale or other disposition and the period the
non-U.S. holder held the debenture, a United States real property
holding corporation within the meaning of Section 897 of the Code. We
do not believe that we are currently a "United States real property
holding corporation" within the meaning of Section 897 of the Code and
do not expect that we will become one in the future.
U.S. trade or business income of a non-U.S. holder will generally be
subject to regular United States income tax in the same manner as if it were
realized by a U.S. holder. Non-U.S. holders that realize U.S. trade or business
income with respect to the debentures or common stock should consult their tax
advisers as to the treatment of such income or gain. In addition, U.S. trade or
business income of a non-U.S. holder that is a non-U.S. corporation may be
subject to a branch profits tax at a rate of 30%, or such lower rate provided by
an applicable income tax treaty.
Dividends
A non-U.S. holder of our common stock will generally be subject to United
States federal withholding tax at a 30% rate (or lower rate provided under any
applicable income tax treaty) on distributions by us with respect to our common
stock that are treated as dividends paid (and on dividends deemed paid on the
debentures or common stock, as described above under "Constructive Dividends").
Except to the extent that an applicable tax treaty otherwise provides, generally
a non-U.S. holder will be taxed in the same manner as a U.S. holder on dividends
paid (or deemed paid) that are effectively connected with the non-U.S. holder's
conduct of a trade or business in the United States, and a corporate non-U.S.
holder may also be subject to a United States branch profits tax at a 30% rate
or such lower rate as may be specified in an applicable income tax treaty.
Death of a Non-U.S. Holder
An individual who is not a citizen or resident of the United States and who
holds a debenture at the time of death will not be required to include the
debenture in the individual's gross estate for United States estate tax
purposes, provided that interest payments with respect to such debenture would
have qualified for the portfolio interest exemption described above. However, if
such an individual holds our common stock, actually or beneficially, at the time
of the individual's death (or previously transferred the common stock subject to
certain retained rights or powers), the common stock will be included in the
individual's gross estate and subject to United States federal estate tax unless
otherwise provided by an applicable estate tax treaty.
Backup Withholding and Information Reporting
Generally, information reporting and backup withholding do not apply to
payments that are subject to the 30% withholding tax on dividends or interest
paid to non-U.S. holders, or to interest or dividends that are exempt from that
tax by application of a tax treaty or special exception. Also, generally, if
payments are made to a non-U.S. holder by a broker upon a sale of debentures or
common stock, the payments will not be subject to information reporting or
backup withholding. In order to avoid backup withholding, a non-U.S. holder may
be required to certify the holder's foreign status. Non-U.S. holders of
debentures or common stock should consult their tax advisors regarding the
application of information reporting and backup withholding in their particular
situations, the availability of exemptions and the procedure for obtaining any
available exemption.
THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. THE PROPER
TAX TREATMENT OF A HOLDER OF DEBENTURES IS UNCERTAIN IN VARIOUS RESPECTS.
ACCORDINGLY, EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR AS TO PARTICULAR
TAX CONSEQUENCES TO IT OF PURCHASING, HOLDING AND DISPOSING OF THE DEBENTURES
AND SHARES OF OUR COMMON STOCK, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE
LAWS.
SELLING SECURITYHOLDERS
All of the debentures, and any shares of our common stock issued upon
conversion of the debentures, are being offered by the selling securityholders
listed in the table below or referred to in a prospectus supplement. We issued
and sold the debentures in a private placement in May 2001 to Credit Suisse
First Boston Corporation, Deutsche Banc Alex. Brown Inc. and Salomon Smith
Barney and the debentures were simultaneously sold by Credit Suisse First Boston
Corporation, Deutsche Banc Alex. Brown Inc. and Salomon Smith Barney to the
selling securityholders in exempt transactions under the Securities Act.
No offer or sale under this prospectus may be made by a holder of the
securities unless listed in the table in this prospectus or until that holder
has notified us and a supplement to this prospectus has been filed or an
amendment to the related registration statement has become effective, or unless
it is with respect to common stock issued by us as described in the immediately
preceding paragraph. We will supplement or amend this prospectus to include
additional selling securityholders upon request and upon provision of all
required information to us.
The selling securityholders may offer and sell, from time to time, any or
all of their debentures or common stock issued upon conversion of those
debentures.
The following table sets forth the name, principal amount of debentures and
number of shares beneficially owned by the selling securityholders intending to
sell the debentures or common stock and the principal amount at maturity of
debentures or shares of common stock to be offered. Based on information
provided to us by the selling securityholders, no selling securityholder selling
in connection with the prospectus or prospectus supplement has held any position
or office with, been employed by or otherwise has had a material relationship
with us or any of our affiliates during the three years prior to the date of the
prospectus or prospectus supplement.
PRINCIPAL AMOUNT NUMBER OF
AT MATURITY OF PERCENTAGE SHARES OF
DEBENTURES OF COMMON STOCK
BENEFICIALLY OWNED DEBENTURES THAT MAY BE
THAT MAY BE SOLD OUTSTANDING SOLD HEREBY
HEREBY (2) (1) (2)
AIG SoundShore Holdings Ltd. $ 2,500,000 0.3% 38,353
AIG SoundShore Opportunity Holding Fund LTD. $ 2,682,000 0.3% 41,145
AIG SoundShore Strategic Holding Fund LTD. $ 1,818,000 0.2% 27,890
Allstate Insurance Company $ 1,700,000 0.2% 26,080
Allstate Insurance Company $ 6,000,000 0.7% 92,047
Allstate Life Insurance Company $ 5,500,000 0.7% 84,376
Allstate Life Insurance Company $ 2,700,000 0.3% 41,421
Artesia Ireland $ 4,000,000 0.5% 61,364
Banca Di Roma International $10,000,000 1.2% 153,411
BTES Convertible ARB $ 1,500,000 0.2% 23,012
Chrysler Corporation Master Retirement Trust $ 6,985,000 0.9% 105,777
Cowes (SG) Securities $25,000,000 3.1% 383,527
Delta Air Lines Master Trust $ 1,815,000 0.2% 27,844
Delta Pilots D&S Trust $ 945,000 0.1% 14,497
Enhances Cash Fund $10,000,000 1.2% 153,411
Excellent Health Plan, Inc. $ 2,500,000 0.3% 38,353
GLG Global Convertible Fund $ 6,765,000 0.8% 103,783
GLG Global Convertible Ucats Fund $ 1,235,000 0.1% 18,946
GLG Market Neutral Fund $10,000,000 1.2% 153,411
LibertyView Global Volatility Fund L.P. $15,000,000 1.9% 230,117
Lincoln National Convertible Securities Fund $ 2,500,000 0.3% 38,353
Lipper Convertibles L.P. $ 9,000,000 1.1% 138,070
Lipper Offshore Convertibles L.P. #2 $ 1,000,000 0.1% 15,341
Lutheran Brotherhood $ 2,500,000 0.3% 38,535
McCabe (B.C.) Foundation $ 300,000 * 4,602
MLQA Convertible Securities Arbitrage LTD. $30,000,000 3.8% 460,233
Microsoft Corporation $ 1,020,000 0.1% 15,648
Motion Picture Industry Health Plan (Active) $ 640,000 * 9,818
Motion Picture Industry Health Plan (Retirees) $ 275,000 * 4,219
National Fuel Gas Company Retirement Plan $ 150,000 * 2,301
Nomura Securities International Inc. $30,000,000 3.8% 460,233
Nomura Securities International Inc. $ 440,812 * 16
OCM Convertible Trust $ 4,300,000 0.5% 65,967
Oxford, Lord, Abbot $ 1,400,000 0.2% 21,477
Partner Reinsurance company Ltd. $ 1,125,000 0.1% 17,259
RAM Trading LTD $ 7,000,000 0.9% 107,388
Radian Asset Guaranty $ 1,000,000 0.1% 15,341
Radian Asset Guaranty $ 200,000 * 3,086
Radian Guaranty Inc. $ 2,500,000 0.3% 38,353
Radian Guaranty Inc. $ 150,000 * 2,301
Spear, Leeds & Kellogg L.P. $ 2,000,000 0.2% 30,682
State of Connecticut Combined Investment Funds $ 5,880,000 0.8% 90,206
State Employees' Retirement Fund of Delaware $ 2,765,000 0.3% 42,418
TD Securities (USA) Inc. $30,000,000 3.8% 460,233
Total Fina Elf Finance USA Inc. $ 150,000 * 2,301
UBS O'Connor LLC $ 1,500,000 0.2% 23,012
1. Assumes conversion of all of the holder's debentures at a conversion price of
15.341 shares of our common stock per $1,000 principal amount at maturity of
the debentures. This conversion price, however, will be subject to
adjustment as described under "Description of the Debentures -- conversion
rights." As a result, the number of shares of our common stock issuable upon
conversion of the debentures may increase or decrease in the future.
2. Information about any other selling security holders may be set forth in one
or more prospectus supplements, if required, and assumes that any other
holders of debentures, or any future transferees, pledges, donees or
successors of or from any such other holders of debentures, do not
beneficially own any common stock, other than the common stock issuable upon
conversion of the debentures at the initial conversion rate. In calculating
these amounts, we treated as outstanding the number of shares of common stock
issuable upon conversion of all of that particular holder's debentures.
However, we did not assume the conversion of any other holders' debentures.
Based upon such assumptions, no holder will own more than 1% of our common
stock.
We prepared this table based on the information supplied to us by the
selling securityholders named in the table, and we have not sought to verify
such information.
The selling securityholders listed in the above table may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of their debentures or shares of our common stock
since the date on which the information in the above table was provided to us.
Information about the selling securityholders may change over time.
Because the selling securityholders may offer all or some of their
debentures or the shares of our common stock issuable upon conversion of the
debentures from time to time, we cannot estimate the amount of the debentures or
number of shares of our common stock that will be held by the selling
securityholders upon the termination of any particular offering by such selling
securityholder. See "Plan of Distribution."
PLAN OF DISTRIBUTION
The selling securityholders intend to distribute the debentures and the
shares of our common stock issuable upon conversion of the debentures from time
to time only as follows (if at all) (i) to or through underwriters, brokers or
dealers, (ii) directly to one or more other purchasers, (iii) through agents on
a best-efforts basis; or (iv) otherwise through a combination of any such
methods of sale.
If a selling securityholder sells the debentures or shares of our common
stock issuable upon conversion of the debentures through underwriters, dealers,
brokers or agents, such underwriters, dealers, brokers or agents may receive
compensation in the form of discounts, concessions or commissions from the
selling securityholder and/or the purchasers of the debentures or shares of our
common stock.
The debentures and the shares of our common stock issuable upon conversion
of the debentures may be sold from time to time (i) in one or more transactions
at a fixed price or prices, which may be changed; (ii) at market prices
prevailing at the time of sale; (iii) at prices related to such prevailing
market prices; (iv) at varying prices determined at the time of sale; or (v) at
negotiated prices.
Such sales may be effected in transactions (i) on any national securities
exchange or quotation service on which the debentures or our common stock may be
listed or quoted at the time of sale; (ii) in the over-the-counter market; (iii)
in block transactions in which the broker or dealer so engaged will attempt to
sell the debentures or shares of our common stock issuable upon conversion
thereof as agent but may position and resell a portion of the block as principal
to facilitate the transaction, or in crosses, in which the same broker acts as
an agent on both sides of the trade; (iv) transactions otherwise than on such
exchanges or services or the over-the-counter market; (v) through the writing of
options; or (vi) through other types of transactions.
In connection with sales of the debentures or our common stock or
otherwise, the selling securityholder may enter into hedging transactions with
brokers-dealers or others, which may in turn engage in short sales of the
debentures or our common stock in the course of hedging the positions they
assume. The selling securityholder may also sell debentures or our common stock
short and deliver debentures or our common stock to close out such short
positions, or loan or pledge debentures or our common stock to brokers-dealers
or others that in turn may sell such securities. The selling securityholder may
pledge or grant a security interest in some or all of the debentures or our
common stock issued upon conversion of the debentures owned by it and, if it
defaults in the performance of its secured obligations, the pledgees or secured
parties may offer and sell the debentures or our common stock from time to time
pursuant to this prospectus. The selling securityholder also may transfer and
donate debentures or shares of our common stock issuable upon conversion of the
debentures in other circumstances in which case the transferees, donees,
pledgees or other successors in interest will be the selling securityholder for
purposes of the prospectus. The selling securityholder may sell short our common
stock and may deliver this prospectus in connection with such short sales and
use the shares of our common stock covered by the prospectus to cover such short
sales. In addition, any debentures or shares of our common stock covered by this
prospectus that qualify for sale pursuant to Rule 144, Rule 144A or any other
available exemption from registration under the Securities Act may be sold under
Rule 144, Rule 144A or such other available exemption.
At the time a particular offering of debentures or shares of our common
stock issuable upon conversion thereof is made, a prospectus supplement, if
required, will be distributed which will set forth the aggregate amount of
debentures or number of shares of our common stock being offered and the terms
of the offering, including the name or names of any underwriters, dealers,
brokers or agents, if any, and any discounts, commissions or concessions allowed
or reallowed to be paid to brokers or dealers.
Selling securityholders and any underwriters, dealers, brokers or agents
who participate in the distribution of the debentures or shares of our common
stock may be deemed to be "underwriters" within the meaning of the Securities
Act and any profits on the sale of the debentures or shares of our common stock
by them and any discounts, commissions or concessions received by any such
underwriters, dealers, brokers or agents may be deemed to be underwriting
discounts and commissions under the Securities Act.
The selling securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M which may limit the timing of purchases and sales of the debentures and shares
of our common stock by the selling securityholders and any other such person.
Furthermore, Regulation M under the Exchange Act may restrict the ability of any
person engaged in a distribution of the debentures or shares of our common stock
to engage in market-making activities with respect to the debentures and shares
of our common stock being distributed for a period of up to five business days
prior to the commencement of such distribution. All of the foregoing may affect
the marketability of the debentures and shares of our common stock and the
ability of any person or entity to engage in market-making activities with
respect to the debentures and shares of our common stock.
Pursuant to the registration rights agreement entered into in connection
with the offer and sale of the debentures by us, each of us on the one hand and
the selling securityholders on the other hand will be indemnified by the other
against certain liabilities, including certain liabilities under the Securities
Act, or will be entitled to contribution in connection therewith.
We will pay the expenses of the shelf registration statement, provided that
each selling securityholder will pay all fees and expenses of its own counsel
and any broker's commission, agency fee or underwriter's discount or commission.
VALIDITY OF SECURITIES
The validity of the debentures and the Baxter common stock issuable upon
conversion will be passed upon for us by our general counsel, Thomas J.
Sabatino, Jr.
INDEPENDENT ACCOUNTANTS
The financial statements of Baxter International Inc. incorporated in this
prospectus by reference to Baxter's Annual Report on Form 10-K for the year
ended December 31, 2000, have been audited by PricewaterhouseCoopers LLP,
independent accountants, as stated in their report appearing therein. However,
it should be noted that these statements do not reflect the two-for-one stock
split, which was declared effective on May 30, 2001.
With respect to the unaudited financial information of Baxter International
Inc. for the three-month, six-month and nine-month periods ended March 31, 2001
and 2000, June 30, 2001 and 2000 and September 30, 2001 and 2000, respectively,
incorporated by reference in this Prospectus, PricewaterhouseCoopers LLP
reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their separate
reports dated May 15, 2001, August 9, 2001 and November 1, 2001, incorporated by
reference herein, state that they did not audit and they do not express an
opinion on that unaudited financial information. Accordingly, the degree of
reliance on their report on such information should be restricted in light of
the limited nature of the review procedures applied. PricewaterhouseCoopers LLP
is not subject to the liability provisions of Section 11 of the Securities Act
of 1933 for their report on the unaudited financial information because that
report is not a "report" or a "part" of the registration statement prepared or
certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11
of the Act.
PROSPECTUS
$800,000,000
[LOGO]
Baxter International Inc.
1 1/4% Convertible Debentures due June 1, 2021
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distributions.*
Securities and Exchange Commission registration fee... $200,000
Accounting fees....................................... 5,000
Legal fees and expenses............................... 5,000
Miscellaneous......................................... 1,000
--------
Total............................................. $211,000
========
*All amounts are estimated except for the Securities and Exchange Commission
registration fee. None of these expenses will be borne by the selling
securityholders.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides for
the indemnification of officers, directors, employees and other corporate agents
in terms sufficiently broad to indemnify such persons under certain
circumstances for liabilities (including reimbursement for expenses incurred)
arising under the Securities Act of 1933 (the "Act"). The Registrant's Restated
Certificate of Incorporation (Exhibit 4.1 hereto) provides for indemnification
of the Registrant's directors, officers, employees and other agents to the
extent and under the circumstances permitted by the DGCL. The Registrant has
also entered into agreements with its directors and officers that will require
the Registrant, among other things, to indemnify them against certain
liabilities that may arise by reason of their status or service as directors or
officers to the fullest extent permitted by law.
Item 16. Exhibits.
Exhibits marked with an asterisk (*) are incorporated by reference to
documents previously filed by the Registrant with the Securities and Exchange
Commission, as indicated. All other documents are filed with to the Registration
Statement amendment.
Number Description
------ -----------
*4.1 Provisions of the Restated Certificate of Incorporation of
the Registrant defining the rights of holders of Common
Stock of the Registrant, filed as exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992, (file no. 1-4448).
*4.1A Certificate of Elimination of Series A Jr. Participating
Participating Preferred Stock of the Registrant filed as
Exhibit 4.1A to the Registrant's Registration Statement on
Form S-3 (No. 333-94889).
*4.2 Certificate of Designation of Series A Jr. Participating
Preferred Stock, filed as exhibit 4.3 to the Registrant's
Registration Statement on Form S-8 (No. 33-28428).
*4.3 Certificate of Designation of Series B Jr. Participating
Preferred Stock, filed as exhibit 3.4 to the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1998 (file no. 1-4448).
*4.4 Provisions of the Amended and Restated By-laws of the
Registrant defining the rights of the holders of Common
Stock of the Registrant, filed as exhibit 3.3 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 2000 (file no. 1-4448).
*4.5 Rights Agreement dated as of December 9, 1998 between the
Registrant and First Chicago Trust Company of New York,
filed as exhibit 1 to the Registrant's Registration
Statement on Form 8-A dated February 2, 1999, (file no.
1-4448).
4.6 Indenture dated as of May 21, 2001 by and among Baxter and
Bank One Trust Company, N.A. as trustee.
4.7 Form of Debenture (included in Exhibit 4.6).
4.8 Registration Rights Agreement dated May 16, 2001 by and
among Baxter and the initial purchasers of the Debentures.
5 Opinion of Thomas J. Sabatino, Jr., Senior Vice President
and General Counsel of Registrant.
15 Independent Accountants' Awareness Letter
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Thomas J. Sabatino, Jr. (included in Exh. 5).
24 Powers of Attorney (contained in the signature page to this
Registration Statement).
25 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Bank One Trust Company, N.A. as
trustee under the Indenture.
Item 17. Undertakings.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of the
securities registered hereby, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement; provided,
however, that the undertakings set forth in paragraphs (i) and (ii) above do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
II-2
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this amended Registration Statement amendment on
Form S-3 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Deerfield,
State of Illinois, as of August 16, 2001.
BAXTER INTERNATIONAL INC.
By: /s/ Harry M. Jansen Kraemer, Jr.
---------------------------------
Name: Harry M. Jansen Kraemer, Jr.
Title Chief Executive Officer
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Harry M. Jansen Kraemer, Jr. and Thomas J. Sabatino,
Jr., and each of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, in any and all capacities,
to sign any or all amendments (including post-effective amendments) to this
Registration Statement, including any filings under Rule 462 promulgated under
the Securities Act of 1933, as amended, and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated as of November 14, 2001.
Signature Title
--------- -----
/s/ Harry M. Jansen Kraemer, Jr. Chairman of the Board of Directors and Chief
- -------------------------------- Executive Officer
Harry M. Jansen Kraemer, Jr. (principal executive officer)
/s/ Brian P. Anderson Senior Vice President and Chief Financial Officer
- --------------------- (principal financial officer and principal
Brian P. Anderson accounting officer)
/s/ Walter E. Boomer Director
- --------------------
Walter E. Boomer
/s/ Pei-yuan Chia Director
- -----------------
Pei-yuan Chia
/s/ John W. Colloton Director
- --------------------
John W. Colloton
/s/ Susan Crown Director
- ---------------
Susan Crown
II-4
Signature Title
--------- -----
/s/ Brian D. Finn Director
- -----------------
Brian D. Finn
/s/ Gail D. Fosler Director
- ------------------
Gail D. Fosler
/s/ Martha R. Ingram Director
- --------------------
Martha R. Ingram
/s/ Arnold J. Levine Director
- --------------------
Arnold J. Levine
/s/ Thomas T. Stallkamp Director
- -----------------------
Thomas T. Stallkamp
/s/ Monroe E. Trout Director
- -------------------
Monroe E. Trout, M.D.
/s/ Fred L. Turner Director
- ------------------
Fred L. Turner
II-5
EXHIBIT INDEX
TO REGISTRATION STATEMENT
ON FORM S-3
BAXTER INTERNATIONAL INC.
Exhibits marked with an asterisk (*) are incorporated by reference to documents
previously filed by the Registrant with the Securities and Exchange Commission,
as indicated. All other documents are filed by this amendment to the
Registration Statement.
Number Description
- ------ -----------
*4.1 Provisions of the Restated Certificate of Incorporation of the
Registrant defining the rights of holders of Common Stock of the
Registrant, filed as exhibit 3.1 to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1992, (file no. 1-4448).
*4.1A Certificate of Elimination of Series A Junior Participating Preferred
Stock of the Registrant filed as Exhibit 4.1A to the Registrant's
Registration Statement on Form S-3 (No. 333-94889).
*4.2 Certificate of Designation of Series A Junior Participating Preferred
Stock, filed as exhibit 4.3 to the Registrant's Registration Statement
on Form S-8 (No. 33-28428).
*4.3 Certificate of Designation of Series B Junior Participating Preferred
Stock, filed as exhibit 3.4 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1998, (file no. 1-4448).
*4.4 Provisions of the Amended and Restated By-laws of the Registrant
defining the rights of the holders of Common Stock of the Registrant,
filed as exhibit 3.3 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 2000, (file no. 1-4448).
*4.5 Rights Agreement dated as of December 9, 1998 between the Registrant
and First Chicago Trust Company of New York, filed as exhibit 1 to the
Registrant's Registration Statement on Form 8-A dated February 2, 1999,
(file no. 1-4448).
4.6 Indenture dated as of May 21, 2001 by and among Baxter and Bank One
Trust Company, N.A. as trustee.
4.7 Form of Debenture (included in Exhibit 4.6).
4.8 Registration Rights Agreement dated May 16, 2001 by and among Baxter
and the initial purchasers of the Debentures.
5 Opinion of Thomas J. Sabatino, Jr., Senior Vice President and General
Counsel of Registrant.
15 Independent Accountants' Awareness Letter.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Thomas J. Sabatino, Jr. (included in Exhibit 5).
24 Powers of Attorney (contained in the signature page to this
Registration Statement).
25 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Bank One Trust Company, N.A. as trustee under the
Indenture.