<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
- ------------- EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1996
- ------------- TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number _______________
a. Full title of the plan and the address of the plan, if different from
that of the insurer named below:
BAXTER INTERNATIONAL INC. AND SUBSIDIARIES
INCENTIVE INVESTMENT PLAN
b. Name of the issuer of the securities held pursuant to the plan and
the address of its principal executive office:
BAXTER INTERNATIONAL INC.
ONE BAXTER PARKWAY
DEERFIELD, ILLINOIS 60015
(847) 948-2000
<PAGE>
BAXTER INTERNATIONAL INC.
AND SUBSIDIARIES
INCENTIVE INVESTMENT PLAN
FINANCIAL STATEMENTS AND
ADDITIONAL INFORMATION
DECEMBER 31, 1996 AND 1995
<PAGE>
BAXTER INTERNATIONAL INC. AND SUBSIDIARIES
INCENTIVE INVESTMENT PLAN
INDEX TO FINANCIAL STATEMENTS
AND ADDITIONAL INFORMATION
PAGE
Financial Statements:
Report of Independent Accountants 1
Statement of Net Assets Available for
Benefits with Fund Information as of
December 31, 1996 and 1995 2-3
Statement of Changes in Net Assets Available
for Benefits with Fund Information for the
years ended December 31, 1996 and 1995 4-5
Notes to Financial Statements 6-9
Additional Information:*
Schedule I: Schedule of Assets Held for Investment Purposes as of
December 31, 1996
Schedule II: Series of Transactions Involving an Amount in Excess of Five
Percent of the Current Value of Assets for the year ended
December 31, 1996
*Other Schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been omitted
because they are not applicable.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
June 26, 1997
To the Administrative Committee of
the Baxter International Inc. and
Subsidiaries Incentive Investment Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Baxter International Inc. and Subsidiaries Incentive Investment Plan (the
"Plan") at December 31, 1996 and 1995, and the changes in net assets available
for benefits for the years then ended, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
Schedules I and II are presented for the purpose of additional analysis and are
not a required part of the basic financial statements but is additional
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The Fund Information in the statement of net assets available for
benefits and the statement of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the net
assets available for plan benefits and changes in net assets available from plan
benefits of each fund. The supplemental schedules and Fund Information have
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
<PAGE>
<TABLE>
<CAPTION>
Baxter International Inc. and Subsidiaries
Incentive Investment Plan
Statement of Net Assets Available for Benefits with Fund Information
As of December 31, 1996
Fund
_________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Baxter
Stable Common General Allegiance S&P 500 Daily
ASSETS Income Stock Composite Equity Stock Flagship Fund EAFE Loan Total
- ------ ------- ------ --------- ---------- --------- ------------- ------ ---- -----
Investments,
at fair value:
Cash and cash
equivalents $9,128,614 $2,795,702 $ 9,267,521 $11,117,827 $516,207 - - - $ 32,825,871
Common stock - 85,583,564 126,630,114 169,719,322 10,569,878 - - - 392,502,878
Fixed income
securities - - 37,048,567 7,075,801 - - - - 44,124,368
Commingled fund - - - - - $48,130,052 $9,280,569 - 57,410,621
Participant loans - - - - - - - $30,733,352 30,733,352
---------- ---------- ----------- ----------- ---------- ----------- ---------- ----------- -----------
9,128,614 88,379,266 172,946,202 187,912,950 11,086,085 48,130,052 9,280,569 30,733,352 557,597,090
---------- ---------- ----------- ----------- ---------- ----------- ---------- ----------- -----------
Guaranteed
investment
contracts,
at cost plus
accrued interest 403,850,382 - - - - - - - 403,850,382
----------- ---------- ----------- ----------- ---------- ---------- --------- ---------- -----------
412,978,996 88,379,266 172,946,202 187,912,950 11,086,085 48,130,052 9,280,569 30,733,352 961,447,472
----------- ---------- ----------- ----------- ---------- ---------- --------- ---------- ----------
Receivables:
Dividend and
interest 40,327 635,494 852,503 411,074 40,971 - - - 1,980,369
Due from brokers
for securities sold - - 209,945 281,371 36,195 - - - 527,511
----------- ---------- ----------- ----------- ---------- ----------- ---------- ----------- -----------
413,019,323 89,014,760 174,008,650 188,605,395 11,163,251 48,130,052 9,280,569 30,733,352 963,955,352
----------- ---------- ----------- ----------- ---------- ----------- ---------- ----------- -----------
LIABILITIES
- -----------
Accounts payable 1,648,013 - 244,475 346,742 - 12,834 7,903 - 2,259,967
Due to brokers for
securities purchased - - 496,923 665,982 - - - - 1,162,905
----------- ---------- ----------- ----------- ---------- ----------- ---------- ----------- -----------
Net assets
available for
benefits $411,371,310 $89,014,760 $173,267,252 $187,592,671 $11,163,251 $48,117,218 $9,272,666 $30,733,352 $960,532,480
----------- ---------- ----------- ----------- ---------- ----------- ---------- ----------- -----------
----------- ---------- ----------- ----------- ---------- ----------- ---------- ----------- -----------
The accompanying notes are an intergral part of these financial statements.
-2-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Baxter International Inc. and Subsidiaries
Incentive Investment Plan
Statement of Net Assets Available for Benefits with Fund Information
As of December 31, 1995
Fund
-------------------------------------------------------------------------------------------------
S&P 500
Stable Baxter General Caremark Flagship
ASSETS Income Common Stock Composite Equity Stock Fund Daily EAFE Loan Total
- ------ ------------ ------------ ------------ ------------ ----------- ----------- ---------- ----------- --------------
Investments,
at fair value:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and cash
equivalents $9,726,210 $2,154,159 $13,758,150 $15,075,714 -- -- -- -- $40,714,233
Common stock -- 115,139,877 151,459,373 189,435,007 -- -- -- -- 456,034,257
Fixed income
securities -- -- 47,760,314 6,342,110 -- -- -- -- 54,102,424
Commingled fund -- -- -- -- -- $28,811,720 $5,950,250 -- 34,761,970
Participant loans -- -- -- -- -- -- -- $43,132,347 43,132,347
------------ ------------ ------------ ------------ ----------- ----------- ---------- ----------- --------------
9,726,210 117,294,036 212,977,837 210,852,831 -- 28,811,720 5,950,250 43,132,347 628,745,231
------------ ------------ ------------ ------------ ----------- ----------- ---------- ----------- --------------
Guaranteed investment
contracts, at
cost plus accrued
interest 505,840,508 -- -- -- -- -- -- -- 505,840,508
------------ ------------ ------------ ------------ ----------- ----------- ---------- ----------- --------------
515,566,718 117,294,036 212,977,837 210,852,831 -- 28,811,720 5,950,250 43,132,347 1,134,585,739
------------ ------------ ------------ ------------ ----------- ----------- ---------- ----------- --------------
Receivables:
Dividend and
interest 9,691,002 821,788 979,270 514,760 -- -- -- -- 12,006,820
------------ ------------ ------------ ------------ ----------- ----------- ---------- ----------- --------------
525,257,720 118,115,824 213,957,107 211,367,591 -- 28,811,720 5,950,250 43,132,347 1,146,592,559
------------ ------------ ------------ ------------ ----------- ----------- ---------- ----------- --------------
LIABILITIES
- -----------
Accounts payable 635,580 94,698 294,439 306,454 -- 23,758 5,869 -- 1,360,798
Due to brokers
for securities
purchased -- -- 655,446 819,642 -- -- -- -- 1,475,088
------------ ------------ ------------ ------------ ----------- ----------- ---------- ----------- --------------
Net assets
available
for benefits $524,622,140 $118,021,126 $213,007,222 $210,241,495 -- $28,787,962 $5,944,381 $43,132,347 $1,143,756,673
------------ ------------ ------------ ------------ ----------- ----------- ---------- ----------- --------------
------------ ------------ ------------ ------------ ----------- ----------- ---------- ----------- --------------
The accompanying notes are an integral part of these financial statements.
-3-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Baxter International Inc. and Subsidiaries
Incentive Investment Plan
Statement of Changes in Net Assets Available for Benefits with Fund Information
For the year ended December 31, 1996
Fund
---------------------------------------------------------------------------------------------------------
S&P 500
Stable Baxter General Allegiance Flagship
Income Common Stock Composite Equity Stock Fund Daily EAFE Loan Total
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to
net assets attributed to:
Investment
income:
Interest $33,958,845 $102,622 $4,014,081 $1,514,701 $ 6,451 $2,278 $694 $3,952,088 $43,551,760
Dividends -- 2,889,156 2,612,632 3,200,197 38,652 -- -- -- 8,740,637
Net appreciation
(depreciation)
in fair value
of assets (18,000) (19,034,110) 20,213,479 29,160,527 11,251,301 6,880,137 359,585 -- 48,812,919
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
33,940,845 (16,042,332) 26,840,192 33,875,425 11,296,404 6,882,415 360,279 3,952,088 101,105,316
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
Contributions:
Loan repayment 8,958,416 4,184,487 3,190,237 1,066,684 -- 703,512 121,749 (18,225,085) --
Employer
contribution 8,362,213 5,450,393 4,970,296 1,129,326 -- 1,310,452 301,668 -- 21,524,348
Employee
contributions 18,304,100 2,604,822 8,746,406 14,510,088 -- 4,400,661 1,042,372 -- 49,608,449
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
35,624,729 12,239,702 16,906,939 16,706,098 -- 6,414,625 1,465,789 (18,225,085) 71,132,797
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
Total
additions 69,565,574 (3,802,630) 43,747,131 50,581,523 11,296,404 13,297,040 1,826,068 (14,272,997) 172,238,113
------------------------------------------------------------------------------------------------------------------------
Deductions from
net assets attributed to:
Benefits
paid 42,989,870 6,223,522 11,557,822 16,685,269 155,668 2,492,141 758,885 1,981,730 82,844,907
Loans issued 10,798,524 5,340,510 4,169,569 1,872,314 47,439 875,094 126,102 (23,229,552) --
Plan expenses 2,561,596 235,584 973,998 1,104,861 2,717 91,280 28,086 -- 4,998,122
Transfer
to/from
other plans,
net 98,886,872 21,682,677 61,311,506 47,340,204 -- 15,511,724 3,343,106 19,543,188 267,619,277
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
Total
deductions 155,236,862 33,482,293 78,012,895 67,002,648 205,824 18,970,239 4,256,179 (1,704,634) 355,462,306
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
Interfund
transfers (27,579,542) 8,278,557 (5,474,206) (6,227,699) 72,671 25,002,455 5,758,396 169,368 --
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
Net increase
(decrease) ($113,250,830) ($29,006,366) ($39,739,970) ($22,648,824) $11,163,251 $19,329,256 $3,328,285 ($12,398,995) ($183,224,193)
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
The accompanying notes are an integral part of these financial statements.
-4-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Baxter International Inc. and Subsidiaries
Incentive Investment Plan
Statement of Changes in Net Assets Available for Benefits with Fund Information
For the year ended December 31, 1995
Fund
---------------------------------------------------------------------------------------------------------
S&P 500
Stable Baxter General Caremark Flagship
Income Common Stock Composite Equity Stock Fund Daily EAFE Loan Total
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to
net assets attributed to:
Investment
income:
Interest $37,816,664 $221,654 $4,156,234 $1,111,197 -- -- -- -- $43,305,749
Dividends -- 3,036,662 3,044,260 3,720,761 -- -- -- -- 9,801,683
Net appreciation
(depreciation)
in fair value
of assets -- 37,341,017 45,713,741 50,857,408 -- $2,438,385 $249,817 -- 136,600,368
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
37,816,664 40,599,333 52,914,235 55,689,366 -- 2,438,385 249,817 -- 189,707,800
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
Contributions:
Loan
repayment 5,561,103 2,335,493 1,813,235 487,673 -- 95,063 31,483 ($10,324,050) --
Employer
contribution 11,630,681 5,664,344 6,707,655 278,370 -- 273,603 93,127 -- 24,647,780
Employee
contributions 25,521,420 816,327 9,531,512 15,905,384 -- 1,123,585 418,264 -- 53,316,492
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
42,713,204 8,816,164 18,052,402 16,671,427 -- 1,492,251 542,874 (10,324,050) 77,964,272
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
Total
additions 80,529,868 49,415,497 70,966,637 72,360,793 -- 3,930,636 792,691 (10,324,050) 267,672,072
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
Deductions from
net assets attributed to:
Benefits
paid 31,063,856 4,787,506 10,473,218 9,601,009 -- 350,094 19,900 -- 56,295,583
Loans
issued 19,626,534 7,012,591 4,547,161 904,506 -- 101,304 -- (32,192,096) --
Plan
expenses 2,348,814 317,671 1,708,954 945,786 -- 44,632 12,056 -- 5,377,913
Transfer to
other plans 32,459,623 5,889,624 20,416,688 15,196,206 -- -- -- 2,581,942 76,544,083
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
Total
deductions 85,498,827 18,007,392 37,146,021 26,647,507 -- 496,030 31,956 (29,610,154) 138,217,579
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
Interfund
transfers (22,247,909) 6,657,077 (11,695,962) (3,174,728) ($75,480) 25,353,356 5,183,646 -- --
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
Net increase
(decrease) ($27,216,868) $38,065,182 $22,124,654 $42,538,558 ($75,480) $28,787,962 $5,944,381 $19,286,104 $129,454,493
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
-------------- ------------- ------------- ------------- ----------- ----------- ---------- ------------- --------------
The accompanying notes are an integral part of these financial statements.
-5-
</TABLE>
<PAGE>
BAXTER INTERNATIONAL INC. AND SUBSIDIARIES
INCENTIVE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - GENERAL DESCRIPTION OF THE PLAN
The following brief description of the Baxter International Inc. and
Subsidiaries Incentive Investment Plan (the "Plan") is provided for general
information purposes only. Participants should refer to the Plan agreement for
more complete information.
The Plan is a contributory defined contribution plan covering substantially
all U.S. employees of Baxter International Inc. ("Baxter"). The Plan is
subject to the provisions of the Employee Retirement Income Security Act of
1974 ("ERISA").
The Plan allows tax deferred contributions in compliance with Section 401(k)
of the Internal Revenue Code. Eligible participants may make pre-tax
contributions up to 12% of their eligible annual compensation within certain
limitations. The Plan sponsor matches contributions of their respective
employees up to a maximum of 3% of compensation. Participant contributions
are fully vested at all times. Matching contributions made by the Plan
sponsors vest over five years with annual increases of 20%.
Upon enrollment in the Plan, a participant may direct contributions in any of
six investment options: Stable Income, Baxter Common Stock, Composite,
General Equity, S&P 500 Flagship and Daily EAFE. The Allegiance Common Stock
fund was added in 1996 to allow participants to receive a stock dividend that
consisted of one Allegiance Healthcare Corporation ("Allegiance") share for
every five shares of Baxter stock owned as of September 26, 1996.
Participants are not able to make contributions to this fund.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the Plan have been prepared on the
accrual basis of accounting. Accordingly, investment income is recognized when
earned and expenses are recognized when incurred. Plan investments, other than
guaranteed insurance contracts, are stated at estimated fair value determined as
follows:
Short term investments Value based on cost
U.S. government and government Value based on the last reported
agency issues sale price from a national security
exchange on the valuation date
-6-
<PAGE>
Corporate and other bonds Value based on the last reported
sale price from a national security
exchange on the valuation date
Common Stock:
Traded on national exchanges Value based on composite pricing of all
national closing sales prices
on the valuation date
Traded on over-the-counter Value based on last reported sale price
market defaulting to bid quotations
Commingled Investments Value based on closing prices
of the underlying securities on
the valuation date
Guaranteed Investment Contracts Value based on cost plus accrued
interest
Loan Fund Participant note receivables are valued
at cost which approximates fair value.
Plan investment return includes dividend and interest income, gains and losses
on sales of investments and unrealized appreciation or depreciation of
investments. The financial statements reflect the net appreciation in the fair
value of the plan's investments. This net appreciation consists of realized
gains and losses calculated as the difference between proceeds from a sales
transaction and cost determined on a moving average basis, and unrealized gains
and losses calculated as the change in the fair value between beginning of the
year (or purchase date if later) and the end of the year.
Employee contributions and matching contributions are recorded in the period in
which they are earned by participants.
Accounts receivable from or payable to broker consists of the net cash value of
security trades which settled after December 31, 1996 and December 31, 1995 with
various brokers.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and related notes to the
financial statements. Changes in such estimates may affect amounts reported in
future periods.
NOTE 3 - ELIGIBILITY REQUIREMENTS
Employees become eligible to participate in the Plan as of the first day of
the month following one calendar month of employment. Eligible employees are
those who meet the following requirements:
1. U.S. employees of Baxter or its subsidiaries which have adopted the
Plan.
2. The employee is not covered by a collective bargaining agreement
unless the agreement provides for coverage under the Plan.
3. The employee is not a leased employee.
-7-
<PAGE>
NOTE 4 - ADMINISTRATION OF THE PLAN
State Street Bank and Trust Company serves as trustee for the Plan under an
agreement dated September 1, 1991.
The Administrative Committee administers the Plan. The Investment Committee has
authority, responsibility and control over the management of the assets of the
Plan. Members of both committees are appointed by the Board of Directors of
Baxter and are employees of Baxter.
All investment manager, trustee and administrative fees incurred in the
administration of the Plan were paid for from the assets of the Plan.
NOTE 5 - INVESTMENTS
Investments representing five percent or more of the Plan's assets at December
31, 1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
------------------------- -----------------------
Fair Fair
Value Cost Value Cost
------------ ---- ----------- ----
<S> <C> <C> <C> <C>
Baxter Common Stock, 2,087,404 shares and
2,749,609 shares at December 31, 1996 and
and 1995, respectively $85,583,564 $50,620,588 $115,139,877 $52,116,349
S&P 500 Flagship 48,130,052 40,095,685 28,811,720 26,405,326
Bernstein Managed GIC 77,670,225 77,670,225 103,646,260 103,646,260
Loomis Managed GIC 78,783,217 78,783,217 105,295,273 105,295,273
PIMCO Managed GIC 48,545,046 48,545,046 -- --
Investments are segregated into various investment funds as follows:
December 31, 1996 December 31, 1995
----------------- -----------------
Fair Fair
Value Cost Value Cost
------------ ---- ----------- ----
Stable Income Fund $412,978,996 $412,978,996 $ 515,566,718 $515,566,718
Baxter Common Stock Fund 88,379,266 53,416,290 117,294,036 54,270,508
Composite Fund 172,946,202 139,647,020 212,977,837 177,530,631
General Equity Fund 187,912,950 143,546,464 210,852,831 168,636,687
Allegiance Stock Fund 11,086,085 1,192,176 -- --
S&P 500 Flagship Fund 48,130,052 40,095,685 28,811,720 26,405,326
Daily EAFE Fund 9,280,569 8,817,304 5,950,250 5,693,851
Loan Fund 30,733,352 30,733,352 43,132,347 43,132,347
------------ ------------ -------------- ------------
$961,447,472 $830,427,287 $1,134,585,739 $991,236,068
------------ ------------ -------------- ------------
------------ ------------ -------------- ------------
-8-
</TABLE>
<PAGE>
During 1996 and 1995, the change in unrealized appreciation/(depreciation) of
the investments was $60,942,050 and $107,886,664, respectively. The realized
gain/(loss) of sale of investments during 1996 and 1995 was ($12,129,131) and
$28,713,704, respectively.
The net appreciation/(depreciation) in fair value for each significant class of
investment, which includes realized and unrealized gains and losses, is as
follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
U.S. government and government
agency issues ($ 1,894,708) $ 4,049,421
Corporate and other bonds (595,024) 1,744,212
Commingled investments 7,239,722 2,688,202
Common stock 44,062,929 128,118,533
------------ ------------
$ 48,812,919 $136,600,368
------------ ------------
------------ ------------
</TABLE>
NOTE 6 - TRANSFER OF ASSETS
During 1996, net assets of $279,190,957 associated with participants of
Allegiance were transferred from the Plan to the Allegiance Corporation
Retirement Plan due to the spin-off of Allegiance. Also during 1996,
net assets of $5,242,326 and $6,329,354 were transferred into the plan
from the Clintec 401(k) Savings Plan and PSICOR, Inc. Employee Stock
Ownership Plan and Trust, respectively.
During 1995, net assets of $76,644,083 associated with participants of Dade
International, Inc. ("Dade") were transferred from the Plan to the Dade
International, Inc. Savings Investment Plan due to the sale of Dade.
NOTE 7 - DISTRIBUTION PRIORITIES UPON TERMINATION OF THE PLAN
Upon termination of the Plan, the account balance of each participant will
become 100% vested and all assets, net of expenses, will be distributed to
the participants or beneficiaries.
NOTE 8 - TAX STATUS OF THE PLAN
The Internal Revenue Service has determined and informed the Company by a
letter dated March 29, 1996 that the Plan is designed in accordance with
applicable sections of the Internal Revenue Code ("IRC"). The Plan has been
amended since receiving the determination letter. However, the Plan
administrator believes the Plan is designed and currently being operated in
compliance with applicable requirements of the IRC.
NOTE 9 - TRANSACTIONS WITH PARTIES-IN-INTEREST
At December 31, 1996 and 1995, the Plan held units of participation in
certain common/collective trust funds and short term investment funds of
State Street Bank and Trust Company, the Plan Trustee, and held shares of
Baxter Common Stock, the Plan Sponsor. These transactions are allowable
party-in-interest transactions under ERISA and the regulations promulgated
thereunder.
-9-
<PAGE>
Baxter International Inc. and Subsidiaries
Incentive Investment Plan Schedule I
Item 27a Form 5500 - Schedule of Assets Held for Page 1 of 6
Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
IDENTITY OF DESCRIPTION OF SHARES, UNITS, COST OF CURRENT
ISSUE INVESTMENT PRINCIPAL AMOUNT ASSET VALUE
----------- -------------- ---------------- ------- -------
<S> <C> <C> <C> <C>
Cash & cash equivalents
* State Street Bank
and Trust Co. Short Term Inv. Fund 32,825,871 $32,825,871 $32,825,871
----------- -----------
Common stocks
Partnerre Limited 72,800 $1,485,815 $2,475,200
AMR Corp. Del. 9,900 741,530 872,438
AT&T Corp. 34,000 1,409,446 1,479,000
Aetna Inc. 50,000 2,519,423 4,000,000
Ahmanson H.F & Co. 36,400 666,659 1,183,000
Airtouch Commun. Inc. 86,800 2,607,675 2,191,700
Albany Int'l. Corp. New Class A 53,000 1,087,210 1,225,625
Alcan Alum. Ltd. 100,900 2,155,174 3,392,763
Allegiance Corp. 382,620 675,969 10,569,878
Allmerica Finl. Corp. 30,100 632,100 1,008,350
Allstate Corp. 57,200 1,502,235 3,310,450
Alumax Inc. 26,200 804,340 874,425
Aluminum Co. Amer. 15,300 891,284 975,375
AMBAC Inc. 18,000 726,060 1,194,750
Amerada Hess Corp. 30,100 1,582,896 1,742,038
American Elec. PWR Inc. 50,700 2,032,942 2,085,038
American Gen. Corp. 29,400 1,067,357 1,201,725
Amgen Inc. 29,500 1,458,795 1,604,063
Amphenol Corp. CL A 114,500 2,359,305 2,547,625
Analog Devices Inc. 22,000 573,408 745,250
Anheuser Busch Cos Inc. 28,200 693,573 1,128,000
Apache Med Sys Inc. 3,900 46,800 41,681
Apria Healthcare Group Inc. 88,600 1,585,837 1,661,250
Applied Materials Inc. 33,300 738,001 1,196,719
Atmel Corp. 39,900 990,004 1,321,688
Avnet Inc. 20,000 1,017,934 1,165,000
BCE Inc. 42,000 1,439,024 2,005,500
Banc One Corp. 42,300 1,194,991 1,818,900
Bard CR Inc. 3,000 74,573 84,000
* Baxter Int'l. Inc. 2,087,404 50,620,588 85,583,564
Beverly Enterprises Inc. 173,500 1,881,982 2,212,125
Biogen Inc. 50,600 1,415,388 1,960,750
Birmingham Stl. Corp. 54,600 959,959 1,037,400
Boeing Co. 13,900 927,547 1,478,613
Borg Warner Auto. Inc. 41,500 1,409,516 1,597,750
Browning Ferris Inds. Inc. 33,500 1,013,960 879,375
Brunswick Corp. 64,700 1,017,961 1,552,800
Cigna Corp. 30,000 1,681,628 4,098,750
CVS Corp. 30,700 1,201,856 1,270,213
Canadian Pac Ltd. New 172,500 2,934,286 4,571,250
</TABLE>
* Party-in-Interest
<PAGE>
Baxter International Inc. and Subsidiaries
Incentive Investment Plan Schedule I
Item 27a Form 5500 - Schedule of Assets Held for Page 2 of 6
Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
IDENTITY OF DESCRIPTION OF SHARES, UNITS, COST OF CURRENT
ISSUE INVESTMENT PRINCIPAL AMOUNT ASSET VALUE
----------- -------------- ---------------- ------- -------
<S> <C> <C> <C> <C>
Carnival Corp. CL A 38,000 1,037,589 1,254,000
Centex Corp. 18,100 524,955 681,013
Chase Manhattan Corp. New 17,300 528,799 1,544,025
Chevron Corp. 9,700 413,644 630,500
Chubb Corp. 37,200 1,667,146 1,999,500
Cincinnati Bell Inc. 24,600 1,234,612 1,515,975
Cisco Sys. Inc. 71,500 1,026,408 4,549,188
Columbia/HCA Healthcare Corp. 56,700 1,984,355 2,310,525
Compaq Computer Corp. 92,800 3,749,140 6,890,400
Compuware Corp. 56,000 1,447,500 2,807,000
Consolidated Stores Corp. 34,875 1,158,296 1,120,359
Cox Communication Inc. New Class A 104,000 1,839,102 2,405,000
Cummins Engine Inc. 35,500 1,417,479 1,633,000
Dean Witter Discover & Co. 33,600 1,777,800 2,226,000
Delta Air Lines Inc. De 16,700 1,004,759 1,183,613
De Luxe Corp. 17,200 581,269 563,300
Department 56 Inc. 34,000 739,459 841,500
Dillard Dept. Stores Inc. 17,800 561,561 549,575
Dole Food Inc. 28,600 1,182,592 968,825
Dow Jones & Co. Inc. 22,100 739,287 748,638
EMC Corp. Mass 23,600 439,691 781,750
Echlin Inc. 24,500 767,401 774,813
Electronic Data Sys Corp. New 17,400 825,690 752,550
Enron Corp. 54,100 1,711,043 2,333,063
FMC Corp. 16,000 912,335 1,122,000
Federal Express Corp. 55,400 1,162,097 2,465,300
Federal Home Ln Mtg. Corp. 16,000 892,436 1,762,000
Federal Nat'l. Mtg. Assn 276,100 5,916,646 10,284,725
First Data Corp. 75,000 2,073,431 2,737,500
First USA Inc. 61,000 1,551,126 2,112,125
Fleet Finl Group Inc. 36,400 811,328 1,815,450
Fleming Cos Inc. 17,800 568,672 307,050
Fluor Corp. 42,500 2,143,887 2,666,875
Ford Mtr. Co. Del. 100,200 2,316,607 3,193,875
Foundation Health Corp. 21,200 658,077 673,100
Foundation Health Sys. Inc. 132,100 3,424,348 3,269,475
Fruit of the Loom Inc. 35,200 889,239 1,333,200
Gateway 2000 Inc. 30,200 1,040,807 1,617,588
General Mtrs. Corp. 20,500 1,137,499 1,153,125
Golden West Finl Corp. Del. 15,700 646,179 991,063
Goodrich BF Co. 47,600 1,461,901 1,927,800
Guidant Corp. 13,600 570,316 775,200
Harrahs Entmt. Inc. 47,700 1,050,124 948,038
Hasbro Inc. 56,000 1,902,220 2,177,000
Helig Meyers Co. 132,900 2,001,112 2,159,625
Home Depot 38,033 1,605,918 1,906,404
Illinois Tool Works Inc. 24,300 1,652,095 1,940,963
</TABLE>
<PAGE>
Baxter International Inc. and Subsidiaries
Incentive Investment Plan Schedule I
Item 27a Form 5500 - Schedule of Assets Held for Page 3 of 6
Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
IDENTITY OF DESCRIPTION OF SHARES, UNITS, COST OF CURRENT
ISSUE INVESTMENT PRINCIPAL AMOUNT ASSET VALUE
----------- -------------- ---------------- ------- -------
<S> <C> <C> <C> <C>
Integrated Health Svcs. Inc. 65,800 1,543,198 1,603,875
Intel Corp. 17,600 681,658 2,304,500
Int'l. Business Machines 56,200 6,040,658 8,486,200
Interstate Bakeries Corp. 24,500 380,829 1,203,563
John Alden Finl Corp. 116,500 2,319,986 2,155,250
Kaufman & Broad Home Corp. 110,000 1,397,012 1,416,250
Komag Inc. 14,400 400,566 390,600
Learning Co. Inc. 28,200 583,551 405,375
Leggett & Platt Inc. 38,300 1,005,604 1,326,138
Limited Inc. 41,700 776,664 766,238
Lincoln Nat'l. Corp. IN 6,800 281,710 357,000
Linear Technology Corp. 16,800 591,709 737,100
Loews Corp. 35,500 2,011,356 3,345,875
Lubrizol Corp. 40,700 1,169,895 1,261,700
MBIA Inc. Rts Call thru 12/12/01 48,600 3,027,584 4,920,750
MCI Communications Corp. 159,300 4,051,864 5,207,119
Magna Int'l. Inc. Class A 40,300 1,523,758 2,246,725
Manpower Inc. WIS 53,100 1,514,920 1,725,750
Mapco Inc. 29,600 857,498 1,006,400
Marriot Int'l. Inc. 34,100 1,672,098 1,884,025
Masco Corp. 37,800 852,768 1,360,800
Maytag Corp. 31,400 607,060 620,150
Mellon BK Corp. 39,900 1,432,820 2,832,900
Merck & Co. Inc. 40,200 1,612,096 3,185,850
Mercury Fin Co. 50,400 613,015 617,400
Meredith Corp. 23,000 1,129,735 1,213,250
Meyer Fred Inc. Del. 51,100 1,706,556 1,814,050
Mobil Corp. 8,000 648,567 978,000
Nationsbank Corp. 34,500 1,874,572 3,372,375
Nellcor Puritan Bennett Inc. 29,300 577,796 640,938
New England Elec Sys 16,800 547,512 585,900
Newell Co. 38,800 1,159,228 1,222,200
Old Rep Int'l. Corp. 26,300 388,183 703,525
Outboard Marine Corp. 3,700 93,765 61,050
Owens Corning 28,900 1,135,574 1,231,863
PG&E Corp. 11,200 224,476 235,200
PNC BK Corp. 28,500 708,065 1,072,313
PP&L Res Inc. 24,850 574,035 571,550
Pacific Telesis Group 32,800 879,196 1,205,400
Pacificorp 21,600 446,608 442,800
Penney JC Inc. 40,030 2,009,731 1,951,463
Perkin Elmer Corp.. 20,100 1,136,956 1,183,388
Pharmacia & Upjohn Inc. 18,000 682,193 713,250
Philip Morris Cos Inc. 93,200 5,710,936 10,496,650
Polaris Inds Inc. 53,500 1,343,647 1,270,625
Praxair Inc. 33,300 804,316 1,535,963
Puget Sound Pwr & Lt. Co. Rts Call thru 1/25/01 20,400 404,697 489,600
Quantum Corp. 21,400 617,937 612,575
</TABLE>
<PAGE>
Baxter International Inc. and Subsidiaries
Incentive Investment Plan Schedule I
Item 27a Form 5500 - Schedule of Assets Held for Page 4 of 6
Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
IDENTITY OF DESCRIPTION OF SHARES, UNITS, COST OF CURRENT
ISSUE INVESTMENT PRINCIPAL AMOUNT ASSET VALUE
----------- -------------- ---------------- ------- -------
<S> <C> <C> <C> <C>
RJR Nabisco Hldgs Corp. 103,700 3,090,336 3,525,800
Republic NY Corp. 36,915 1,474,949 3,013,187
Reynolds Metals Co. 5,214 269,535 293,939
Royal Dutch Pete Co. NY Registry Sh Par Nlg5 15,300 1,679,678 2,612,475
Ryder Sys Inc. 63,500 1,714,716 1,785,938
Sabre Group Hldgs Inc. Class A 6,500 175,500 181,188
St Paul Cos Inc. 38,200 2,040,303 2,239,475
Scientific Atlanta Inc. 80,600 1,436,198 1,209,000
Seagate Technology 90,200 2,305,588 3,562,900
Shaw Inds Inc. 149,900 2,207,346 1,761,325
Silicon Graphics Inc. 68,400 1,404,085 1,744,200
Smithkline Beecham P L C Adr Ord A 63,600 1,791,108 4,324,800
Solectron Corp. 46,000 1,127,435 2,455,250
Southwest Airls Co. 82,900 1,891,121 1,834,163
Sprint Corp. 25,700 683,241 1,024,788
Sun Microsystems Inc. 51,800 647,500 1,330,613
Supervalu Inc. 25,500 802,557 723,563
Tele Communications Inc. New Liberty Media Group Ser A 70,125 1,788,234 2,002,945
Texaco Inc. 13,500 827,686 1,324,688
Texas Instrs. Inc. 20,000 994,186 1,275,000
3Com Corp. 27,300 1,026,518 2,003,138
Transcanada Pipelines Ltd. 2,500 31,699 43,750
Ust Inc. Com Usdo.50 46,300 1,494,762 1,498,963
Union Carbide Corp. 30,167 1,346,213 1,233,076
Union Tex Pete Hldgs. Inc. 100,100 2,006,046 2,239,738
United Healthcare Corp. 63,900 2,991,224 2,875,500
USLife Corp. 15,100 397,032 502,075
V F Corp. 13,900 630,237 938,250
Value Health Inc. 67,200 1,567,645 1,310,400
Wal Mart Stores Inc. 68,000 1,622,508 1,555,500
Westcoast Energy Inc. 116,000 1,666,066 1,943,000
Worldcom Inc. GA 54,300 1,189,799 1,415,176
------------ ------------
$270,648,217 $392,502,878
------------ ------------
Fixed Income:
Federal Home Ln Ser 1229 CL 1229 J 250,000 $248,164 $259,765
Federal Home Ln Ser 1308 CL 1308 J 350,000 353,008 381,063
Federal Home Ln 274,144 278,213 280,055
Federal Home Ln 234,546 238,944 231,907
Federal Home Ln 400,760 405,519 396,251
Federal Home Ln 154,697 155,325 160,352
Federal Nat'l. Mtg. Assn Remic Remic TR 1992 47 CL J 250,000 246,475 260,155
Federal Nat'l. Mtg. Assn Remic Remic TR 1992 152 CL 152 M 350,000 351,750 368,375
Federal Nat'l. Mtg. Assn Remic Remic TR 1993 47C 350,000 353,938 345,076
FNMA Pool 1,736 1,721 1,805
FNMA Pool 23,021 22,820 23,939
FNMA Pool 21,929 21,737 22,780
</TABLE>
<PAGE>
Baxter International Inc. and Subsidiaries
Incentive Investment Plan Schedule I
Item 27a Form 5500 - Schedule of Assets Held for Page 5 of 6
Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
IDENTITY OF DESCRIPTION OF SHARES, UNITS, COST OF CURRENT
ISSUE INVESTMENT PRINCIPAL AMOUNT ASSET VALUE
----------- -------------- ---------------- ------- -------
<S> <C> <C> <C> <C>
FNMA Pool 563,724 568,921 557,292
FNMA Pool 628,023 632,537 616,637
FNMA Pool 57,306 56,688 60,887
FNMA Pool 103,785 103,801 108,471
FNMA Pool 466,585 470,012 448,057
FNMA Pool 979,127 1,001,464 961,376
FNMA Pool 143,091 146,355 140,497
FNMA Pool 264,556 262,654 268,937
FNMA Pool 482,478 490,469 496,798
GNMA Pool 320,652 317,446 315,041
GNMA Pool 2,272 2,285 2,599
U.S. Treasury Bonds 7.25PCT BND 15Aug22 5,100,000 5,511,330 5,394,831
U.S. Treasury Notes 7.5PCT 15Nov01 2,025,000 2,086,959 2,131,637
U.S. Treasury Notes 5.875PCT 2/15/2004 350,000 342,158 340,757
U.S. Treasury Notes 6.5PCT 4/30/1999 3,100,000 3,155,680 3,137,789
U.S. Treasury Notes 7.25PCT 5/15/2004 10,360,000 10,169,200 10,900,688
U.S. Treasury Notes 6.25PCT 5/31/2000 2,975,000 3,025,313 2,987,080
U.S. Treasury Notes 7.00PCT 7/15/2006 1,400,000 1,491,328 1,454,474
Int'l. Business Machines 275,000 299,684 284,389
Lehman Brothers Hldgs. Inc. Tranche TR 00111 275,000 275,000 279,920
MBNA Master CR Card TR Ser 1992 2A 250,000 249,609 250,078
Standard CR Card Master TR I Ser 1993 CL 3 A 225,000 224,674 222,397
American Airlines CL A 1 191,540 191,540 214,826
AON Corp. 275,000 263,368 277,024
BCH Cayman Is. Ltd. Guar Sub NT 350,000 346,224 331,748
Caterpillar Inc. 150,000 150,000 152,192
Commonwealth Edison Co. MTN Term Note TR 00021 275,000 273,092 289,402
Discover Card MT 1 350,000 349,388 360,388
International Business Machs. 350,000 363,111 351,264
Jet Equipment TR SR NT CL A 1995 B 144A 278,168 278,168 286,332
La Quinta Inns Inc. SR NT 275,000 268,604 269,187
MBNA Master CR Card TR Ser 1993 3 Asset Backe CTF 350,000 353,719 345,842
Marriott Int'l. Inc. SR NT Ser A 275,000 273,023 267,264
Medpartners Inc. SR NT 300,000 297,468 301,050
Merry LD & Invt. Inc. NT 350,000 348,467 342,402
Paine Webber Group Inc. MTN MED TRM NTS 275,000 275,000 277,822
Peoples Bank Bridgeport CT SUB NT 350,000 348,789 342,181
Praxair Inc. DEB 375,000 375,000 394,358
Railcar TR NO NO 1992 1 TR NT 456,233 455,682 480,043
Simon Debartolo Group LP NT 350,000 348,817 341,033
Standard CR Card Master TR I 350,000 347,758 348,576
Tele Communications Inc. 325,000 320,249 304,717
360 Communications SR NT 275,000 266,151 272,775
Time Warner Entmt. Co. L P SR DEB 350,000 364,697 354,855
Wells Fargo & Co. 275,000 273,171 274,447
</TABLE>
<PAGE>
Baxter International Inc. and Subsidiaries
Incentive Investment Plan Schedule I
Item 27a Form 5500 - Schedule of Assets Held for Page 6 of 6
Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
IDENTITY OF DESCRIPTION OF SHARES, UNITS, COST OF CURRENT
ISSUE INVESTMENT PRINCIPAL AMOUNT ASSET VALUE
----------- -------------- ---------------- ------- -------
<S> <C> <C> <C> <C>
World Finl. Network CR Card TR ADCH Ser 96 CL A 275,000 274,484 277,578
Airlanes passthru trust SER 1 CL C 350,000 364,547 366,297
Banc One Cr Card Mater TR Asset Backed CTF SER 95 A CL 275,000 274,570 273,367
FNBC 1993 A Pass Thru TR Pass Thru CTF SER 1993 A 350,000 350,000 371,842
Green Tree Finl Corp SER 1995 7 CL A5 350,000 349,863 351,092
Residential Accredit Ins Inc MTG CTF SER 95 QS1 Cl A2 450,000 448,776 450,984
United Air Lines Paa Thru CTF SER 1991 A1 428,484 428,114 467,360
World Savings & Loan Assn. 275,000 273,455 293,965
----------- -----------
$43,456,476 $44,124,368
----------- -----------
Common/Collective Trusts:
* State Street Bank & Trust Co. EAFE Daily Fund 737,314 $8,817,304 $9,280,569
* State Streeet Bank & Trust Co. Flagship S&P 500 Index Fund 403,086 40,095,685 48,130,052
----------- -----------
$48,912,989 $57,410,621
----------- -----------
* Participant Loans 30,733,35 $30,733,352 $30,733,352
----------- -----------
Guaranteed Investment Contracts:
Aetna Life Ins. 23,919,193 $23,919,193 $23,919,193
Bernstein Managed GIC 77,670,225 77,670,225 77,670,225
Brundage Managed GIC 41,196,845 41,196,845 41,196,845
Deutsche Morgan Grenfell GIC Wrapper 994,015 994,015 994,015
Loomis Managed GIC 78,783,217 78,783,217 78,783,217
Bankers Trust Co. GIC Wrapper 689,191 689,191 689,191
Met Life GAC 13807 13,448,041 13,448,041 13,448,041
New York Life GAC 06997 8,965,674 8,965,674 8,965,674
New York Life GA 06997 002 13,392,340 13,392,340 13,392,340
PIMCO Managed GIC 48,545,046 48,545,046 48,545,046
Provident Life & Acc. Inc. Co. 8,921,695 8,921,695 8,921,695
Standish Ayer Wood Managed GIC 45,977,244 45,977,244 45,977,244
Standish Ayer Wood II Managed GIC 41,347,655 41,347,656 41,347,656
------------ ------------
$403,850,382 $403,850,382
------------ ------------
$830,427,287 $961,447,472
------------ ------------
------------ ------------
</TABLE>
* Party-in-interest
<PAGE>
<TABLE>
<CAPTION>
Schedule II
BAXTER INTERNATIONAL INC, AND SUBSIDIARIES
INCENTIVE INVESTMENT PLAN
SERIES OF TRANSACTIONS INVOLVING AN AMOUNT IN EXCESS OF FIVE
PERCENT OF THE CURRENT VALUE OF ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996 (Line 27d of Form 5500)
Description Current
of asset Value Net
Identity (include interest Expense of Asset on Gain
of Party rate and maturity Number of Purchase Selling Lease incurred with Transaction or
Involved in case of loan) Transactions Price Price Rental Transaction Cost of asset Date (Loss)
- ----------- ----------------- ------------ ------------ -------- ------ ------------ -------------- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
State Street
Bank and Trust Short Term
Company Investment Fund 666 $330,287,935 -- -- -- $330,287,935 $330,287,935 --
State Street
Bank and Trust Short Term
Company Investment Fund 675 -- $338,150,663 -- -- 338,150,663 338,150,663 --
PIMCO Managed
GIC Fund 17 60,996,520 -- -- -- 60,996,520 60,996,520 --
</TABLE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Plan Administrator has duly caused this annual report to be signed on its
behalf by the undersigned thereunto duly authorized.
BAXTER INTERNATIONAL INC. AND SUBSIDIARIES
INCENTIVE INVESTMENT PLAN
(Name of Plan)
Date: June 26, 1997 By: /s/ Brian P. Anderson
__________________________
Brian P. Anderson
Corporate Vice President -
Finance
