<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 20, 1997
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY , 1997
$450,000,000
[LOGO]
Baxter International Inc.
$250,000,000 % NOTES DUE , 2007
$200,000,000 % DEBENTURES DUE , 2027
--------------
Interest on the Notes and Debentures is payable on and
of each year, commencing
, 1997. The Notes and Debentures are redeemable, in whole or in
part, at the option of the Company at any time at the redemption prices
described herein. See "Description of Notes and Debentures--Optional
Redemption."
The Notes and Debentures will be represented by one or more global Notes and
Debentures registered in the name of the nominee of The Depository Trust
Company. Beneficial interests in the global Notes and Debentures will be shown
on, and transfers thereof will be effected only through, records maintained by
DTC and its participants. Except as described herein, Notes and Debentures in
definitive form will not be issued. The Notes and Debentures will be issued only
in registered form in denominations of $1,000 and integral multiples thereof.
See "Description of Notes and Debentures."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC
OFFERING UNDERWRITING PROCEEDS TO
PRICE(1) DISCOUNT(2) COMPANY(1)(3)
---------------- -------------- ---------------
<S> <C> <C> <C>
Per Note........................................................ 100% 0. % %
Total........................................................... $ ,000,000 $ ,000 $ ,000
Per Debenture................................................... 100% 0. % %
Total........................................................... $ ,000,000 $ ,000 $ ,000
</TABLE>
- ---------------------
(1) Plus accrued interest, if any, from , 1997.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deduction of expenses payable by the Company estimated at $ ,000.
---------------------
The Notes and Debentures offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that the Notes and Debentures will be ready for delivery in book-entry form only
through the facilities of DTC in New York, New York, on or about ,
1997, against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN & CO.
BANCAMERICA SECURITIES, INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
------------
The date of this Prospectus Supplement is , 1997.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AND
DEBENTURES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
-------------------
THE COMPANY
Baxter International Inc. ("Baxter"), through its subsidiaries (the
"Company") is a global medical-products company with a leading position in
technologies related to the blood and circulatory system. It has market-leading
positions in four global businesses; BIOTECHNOLOGY, which develops therapies and
products in transfusion medicine; CARDIOVASCULAR MEDICINE, which develops
products and expands services to treat late-stage cardiovascular disease; RENAL,
which develops products and services to improve therapies to fight kidney
disease; and INTRAVENOUS SYSTEMS AND MEDICAL PRODUCTS, which develops
technologies and systems to improve intravenous medication delivery, and
distributes disposable medical products overseas.
RECENT DEVELOPMENTS
SPIN-OFF OF HEALTH CARE COST MANAGEMENT BUSINESS
On September 30, 1996 the Company distributed to its stockholders all of the
oustanding stock of Allegiance Corporation, its health care cost management
business, in a tax-free spin-off transaction. As a result of the spin-off, the
Company was separated into two independent companies which will enable the
Company and Allegiance to devote management time, attention and investments
directly to the core strategies of each business.
For additional information on the effects of the spin-off on the Company,
see its Quarterly Report on Form 10-Q for the quarterly period ended September
30, 1996, which is incorporated herein by reference.
IMMUNO INTERNATIONAL ALLIANCE
On August 29, 1996, the Company announced its intention to form a strategic
alliance with Immuno International AG ("Immuno"), a European manufacturer of
biopharmaceutical products and services for transfusion medicine. The
transaction is valued at approximately $623 million, using an assumed exchange
rate of $1 for each 1.31 Swiss francs, such assumed exchange rate being subject
to fluctuation prior to the completion of the transaction. The transaction has
cleared review by the Commision of the European Communities and anti-trust
authorities in the United States. It is expected that the transaction will be
completed by June 30, 1997.
RESEARCH MEDICAL, INC. MERGER
On December 4, 1996 the Company announced its intention to acquire Research
Medical, Inc. ("RMI"), a public company engaged in the development, manufacture
and distribution of a diversified line of health care products, focusing on
specalized cardiovascular, vascular and blood management surgical devices and
specialty pharmaceuticals, in a tax-free merger valued at approximately $236
million. On January 13, 1997, the transaction cleared review by the United
States anti-trust authorities, and is expected to close in the first quarter of
1997, subject to a vote by the shareholders of RMI to approve the merger.
S-2
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial information
of the Company on an historical basis. This information should be read in
conjunction with the consolidated financial statements and notes thereto
incorporated by reference into the Prospectus Selected unaudited historical
financial information for the nine months ended September 30, 1995 and 1996
includes all adjustments necessary for a fair presentation of the interim
periods. Results for the interim periods are not necessarily indicative of
results for the full year.
BAXTER INTERNATIONAL INC.
(in millions, except per share data)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
YEAR ENDED DECEMBER 31, (UNAUDITED)
----------------------------------------------------- --------------------
1991 1992 1993(1) 1994 1995(2) 1995(2) 1996
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales................................... $ 3,635 $ 3,857 $ 4,116 $ 4,479 $ 5,048 $ 3,695 $ 3,944
Income (loss) from continuing operations.... 302 373 (193) 406 371 223 417
Net income (loss)........................... 591 441 (198) 596 649 473 511
Per common share data
Income (loss) from continuing
operations............................... 1.08 1.34 (0.70) 1.45 1.34 0.80 1.53
Net income (loss)......................... 2.03 1.56 (0.72) 2.13 2.35 1.70 1.88
Cash dividends declared per common share.... 0.74 0.86 1.00 1.025 1.11 0.83 0.89
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- --------------------
1991 1992 1993(1) 1994 1995(2) 1996
--------- --------- --------- --------- --------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................. $ 539 $ 347 $ 546 $ 502 $ 757 $1,279
Capital expenditures (3).................... 306 362 332 380 399 255
Net property, plant and equipment........... 1,337 1,469 1,434 1,642 1,749 1,771
Total assets................................ 8,428 8,310 9,211 9,039 9,437 7,546
Net debt (4)................................ 2,338 2,902 3,139 2,404 2,115 1,190
Long-term obligations....................... 2,246 2,433 2,800 2,341 2,372 1,692
Stockholders' equity........................ 4,373 3,795 3,185 3,720 3,704 2,577
Total capitalization........................ 6,619 6,228 5,985 6,061 6,076 4,269
</TABLE>
- -------------------
(1) Results include a restructuring charge of a pretax amount of $216 million
and a net special charge for litigation of a pretax amount of $330 million.
(2) Results include a restructuring charge of a pretax amount of $103 million
and a net special charge for litigation of a pretax amount of $96 million.
(3) Includes additions to the pool of equipment leased or rented to customers.
(4) Total debt and lease obligations net of cash and equivalents.
S-3
<PAGE>
DESCRIPTION OF NOTES AND DEBENTURES
The % Notes due , 2007 (the "Notes") and the % Debentures due
2027 (the "Debentures") are each an issue of the Company's Debt
Securities (as described in the accompanying Prospectus, to which this
Prospectus Supplement relates, as "Offered Securities"). The following
description of the terms of the Notes and Debentures supplements the description
of the Debt Securities contained in the Prospectus and is qualified in its
entirety by reference to the terms and provisions of the Notes and Debentures.
GENERAL
The Notes and Debentures will be issued under an amended and restated
indenture dated as of November 15, 1985, as supplemented (the "Indenture"),
between the Company and First Trust National Association, as trustee (the
"Trustee"), and will be limited to $250,000,000, and $200,000,000 in aggregate
principal amounts, respectively. Each Note will mature on , 2007; each
Debenture will mature on , 2027. The Notes and Debentures will be
issued in denominations of $1,000 and integral multiples of $1,000. The Notes
and Debentures will not be entitled to the benefit of any sinking fund.
The Notes and Debentures will bear interest from , 1997, payable
semi-annually on and of each year, commencing , 1997,
to the persons in whose names the Notes and Debentures are registered at the
close of business on the or , respectively, preceding the
interest payment date. Unless other arrangements are made, interest will be paid
by check mailed to such registered holders.
OPTIONAL REDEMPTION
The Notes and Debentures will be redeemable, in whole or in part, at the
option of the Company at any time at a redemption price equal to the greater of
(i) 100% of the principal amount of such Notes and/or Debentures or (ii) as
determined by an Independent Investment Banker (as defined), the sum of the
present values of the remaining scheduled payments of principal and interest
thereon discounted to the redemption date on a semiannual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate,
plus, in each case, accrued interest thereon to the date of redemption.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 0.05%.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes and Debentures to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Notes and Debentures. "Independent
Investment Banker" means one of the Reference Treasury Dealers appointed by the
Trustee after consultation with the Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the
Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the
average of all such Quotations. "Reference Treasury Dealer Quotations" means,
with respect to each Reference Treasury Dealer and any redemption date, the
average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Treasury Reference
Dealer at 5:00 p.m. on the third Business Day preceding such redemption date.
S-4
<PAGE>
"Reference Treasury Dealer" means each of Goldman, Sachs & Co., Credit
Suisse First Boston Corporation, J.P. Morgan Securities Inc., BancAmerica
Securities, Inc. and First Chicago Capital Markets, Inc. and their respective
successors; provided, however, that if any of the foregoing shall cease to be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of the Notes and/or Debentures
to be redeemed.
Unless the Company defaults in payment of the redemption price, on and after
the redemption date, interest will cease to accrue on the Notes and Debentures
or portions thereof called for redemption.
DEFEASANCE
The Company may terminate all of its obligations under certain restrictive
covenants in the Indenture, as described in the Prospectus, by irrevocably
depositing in trust with the Trustee, money or U.S. Government Obligations, or
any combination of the two, sufficient to pay principal of and interest on the
Notes and/or Debentures to maturity. See "Prospectus-Description of
Securities-Defeasance and Termination of Obligations."
TRUSTEE
The Company may from time to time borrow money from the Trustee or its
affiliates, maintain deposit accounts with the Trustee or its affiliates and
conduct other banking transactions with it in the ordinary course of business.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to each of the Underwriters named below (the
"Underwriters"), and each of the Underwriters has severally agreed to purchase,
the respective principal amounts of the Notes and Debentures set forth opposite
its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT PRINCIPAL AMOUNT
UNDERWRITER OF NOTES OF DEBENTURES
- ----------------------------------------------------------------------------- ----------------- ----------------
<S> <C> <C>
Goldman, Sachs & Co.......................................................... $ ,000,000 $ ,000,000
Credit Suisse First Boston Corporation....................................... ,000,000 ,000,000
J.P. Morgan Securities Inc................................................... ,000,000 ,000,000
BancAmerica Securities, Inc.................................................. ,000,000 ,000,000
First Chicago Capital Markets, Inc........................................... ,000,000 ,000,000
----------------- ----------------
Total.............................................................. $ ,000,000 $ ,000,000
----------------- ----------------
----------------- ----------------
</TABLE>
Under the terms and conditions of the Underwriting Agreement, each of the
Underwriters is obliged to purchase all of its Notes and Debentures, if any
Notes and Debentures are purchased.
The Company has been advised that the Underwriters propose initially to
offer the Notes and Debentures to the public at the public offering price set
forth on the cover page of this Prospectus Supplement, and to certain dealers at
such price less a concession not in excess of % of the principal amount of
the Notes and Debentures. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of % of such principal amount to certain
other dealers. After the initial offering, the offering price and other selling
terms may be changed.
The Notes and Debentures are a new issue of securities with no established
trading market. The Underwriters have informed the Company that they intend to
make a market in the Notes and Debentures, but are under no obligation to do so
and such market making may be terminated at any time.
S-5
<PAGE>
Therefore, no assurance can be given as to the existence or the liquidity of a
trading market in the Notes and Debentures in the future. The Notes and
Debentures will not be listed on any national securities exchange.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
From time to time, the Underwriters have provided various investment
banking, commercial banking and other services to the Company for which each
received customary compensation.
S-6
<PAGE>
PROSPECTUS
[LOGO]
Baxter International Inc.
One Baxter Parkway
Deerfield, Illinois 60015
847.948.2000
DEBT SECURITIES
Baxter International Inc. (the "Company") intends to offer from time to time
up to $700,000,000 aggregate principal amount (or the equivalent in foreign
denominated currency or European Currency Units ("ECU")) of its senior,
unsecured debt securities (the "Securities") on terms to be determined when an
agreement to sell is made. The specific designation, aggregate principal amount,
rate or method of calculation of any interest, the time of payment of any
interest, maturity, authorized denominations, any initial public offering price,
any redemption terms or prepayment rights, repurchase rights, other specific
terms, currency of payment, and any listing on a securities exchange for each
issue of Securities in respect of which this Prospectus is being delivered (the
"Offered Securities") are set forth in the accompanying prospectus supplement
(the "Prospectus Supplement"), together with the terms of the offering of the
Offered Securities, the net proceeds to the Company from their sale, and the
ratio of earnings to fixed charges for appropriate periods.
The Securities may be sold directly, through agents, or through underwriters
or dealers. If any agents of the Company or any underwriters are involved in the
sale of the Offered Securities in respect of which this Prospectus is being
delivered, the names of such agents or underwriters and any applicable
commissions and discounts are set forth in the Prospectus Supplement.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-------------------
The date of this Prospectus is January , 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities of
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the Commission's regional offices at Room 1400, 75 Park Place, New York, New
York 10007 and 500 West Madison Street, 14th Floor, Chicago, Illinois 60661.
Copies of such material can be obtained at prescribed rates from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, electronic copies of all such reports are available on the
World Wide Web at http://www.sec.gov/ edgarhp.htm. Such reports, proxy
statements and other information concerning the Company can also be inspected at
the offices of the stock exchanges on which the Company's common stock is
listed: New York Stock Exchange, 20 Broad Street, New York, New York 10005;
Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois 60605; and
Pacific Stock Exchange, 301 Pine Street, San Francisco, California 94104.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company under the 1934 Act with the
Commission are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended December 31,
1995;
(2) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30, and September 30, 1996; and
(3) The Company's Current Reports on Form 8-K dated February 2 and 29, April
19, August 29, October 1, and December 4, 1996.
All documents filed by the Company pursuant to sections 13(a), 13(c), 14 or
15(d) of the 1934 Act after the date of this Prospectus and prior to termination
of the offering of the Securities shall be deemed to be incorporated in this
Prospectus by reference and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein or in the Prospectus Supplement modifies or
supersedes such 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 or the Prospectus Supplement.
The Company will provide without charge to each person to whom a copy of
this Prospectus and the Prospectus Supplement have been delivered, on the
written or oral request of such person, a copy of any or all of the documents
referred to above which have been or may be incorporated in this Prospectus and
the Prospectus Supplement by reference, other than exhibits to such documents.
Requests for such copies should be directed to: Stockholder Services Department,
Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015,
Telephone: 847.948-4913.
No person has been authorized to give any information or to make any
representation not contained in this Prospectus or, with respect to particular
Offered Securities, the Prospectus Supplement relating thereto, and, if given or
made, such information or representation must not be relied upon as having been
authorized by the Company or any agent, underwriter or dealer. This Prospectus
and any Prospectus Supplement do not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction. Neither the delivery of this Prospectus or, with respect to
particular Offered Securities, the
2
<PAGE>
Prospectus Supplement relating thereto, nor any sale made under this Prospectus
and any Prospectus Supplement shall, under any circumstances, create an
implication that there has been no change in the affairs of the Company since
the date hereof.
THE COMPANY
Baxter International Inc. ("Baxter"), through its subsidiaries (the
"Company") is a global medical-products company with a leading position in
technologies related to the blood and circulatory system. It has market-leading
positions in four global businesses: BIOTECHNOLOGY, which develops therapies and
products in transfusion medicine; CARDIOVASCULAR MEDICINE, which develops
products and expands services to treat late-stage cardiovascular disease; RENAL,
which develops products and services to improve therapies to fight kidney
disease; and INTRAVENOUS SYSTEMS AND MEDICAL PRODUCTS, which develops
technologies and systems to improve intravenous medication delivery, and
distributes disposable medical products overseas. Baxter was incorporated in
Delaware in 1931.
The Company's principal executive offices are located at One Baxter Parkway,
Deerfield, Illinois 60015, Telephone: 847.948-2000.
USE OF PROCEEDS
Except as otherwise set forth in the Prospectus Supplement relating to the
Offered Securities, net proceeds from the sale of the Securities will be used
for working capital purposes, to repay existing debt, for capital expenditures
and for general corporate purposes.
DESCRIPTION OF SECURITIES
The Securities are to be issued under an indenture, as supplemented (the
"Indenture"), a copy of which is an exhibit to the Registration Statement. The
following summary does not purport to be complete, and where particular
provisions of the Indenture are referred to, such provisions, including
definitions of certain terms, are incorporated by reference as a part of such
summary of terms, which is qualified in its entirety by such reference.
GENERAL
The Securities will be senior unsecured obligations of the Company, ranking
prior to any subordinated debt of the Company.
The Indenture does not limit the amount of Securities which can be issued
thereunder and provides that Securities may be issued in one or more series up
to the aggregate principal amount which may be authorized from time to time by
the Company. The Indenture does not restrict the amount of additional unsecured
debt (whether senior or subordinated) which the Company may incur nor does the
Indenture limit the amount which the Company may apply to the payment of
dividends or the redemption or purchase of shares of its stock. Except as
otherwise described in this Prospectus (see "Description of
Securities--Restrictions on Mergers, Consolidations and Transfers of Assets"),
the Prospectus Supplement, the Indenture and the Securities do not contain any
covenants which restrict the Company's incurring additional indebtedness which
might be deemed a highly-leveraged transaction, or which might result in a
change in ratings of the Securities. If such covenants are included in the terms
of any Offered Securities, they will be described in the related Prospectus
Supplement.
Reference is made to the Prospectus Supplement for the following terms of
the Offered Securities: (i) the designation, aggregate principal amount,
currency and authorized denominations of the Offered Securities; (ii) the
percentage of their principal amount at which the Offered Securities will be
offered; (iii) the date or dates on which the Offered Securities will mature;
(iv) the rate or rates per annum, if any, at which the Offered Securities will
bear interest; (v) the times at which any such interest will be payable; and
(vi) any redemption terms and other special terms.
3
<PAGE>
Except as otherwise provided in the Prospectus Supplement, the principal of
and any interest on the Securities will be payable at the office or agency of
the Company designated in the form of Security and described in the Prospectus
Supplement. Interest may be paid at the option of the Company by check mailed to
the address of the registered owner of the Securities. The Company will also
maintain an office where Securities of a particular series may be presented for
registration of transfer or for exchange for Securities of like series of
different denominations. (Sections 2.01, 2.03, 2.06)
Except as otherwise provided in the Prospectus Supplement, the Securities
will be issued only in fully registered form without coupons. The Registrar or
co-Registrar need not exchange or register the transfer of any Security selected
for redemption. Also, it need not exchange or register the transfer of any
Securities of a series for a period of 15 days before a selection of Securities
of that series to be redeemed. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Securities. (Section 2.06)
DEFINITIONS
The following terms are defined in the Indenture. (Section 4.01)
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) 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 such 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 a Restricted
Subsidiary or in
4
<PAGE>
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 its 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 Securities.
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 Securities 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 Securities, if the sum of (i) the amount of Secured Debt entered
into after the date of the Indenture and otherwise prohibited by the Indenture
plus (ii) the aggregate present value of Sale and Leaseback Transactions entered
into after the date of the Indenture and otherwise prohibited by the Indenture
does not exceed 5% of Consolidated Net Tangible Assets. (Section 4.04)
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 Sale 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 Securities 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 Sale and Leaseback
Transaction (a) to the acquisition, construction or improvement of a Principal
Facility or (b) to the redemption of Securities or to the repayment of other
Superior Indebtedness of the
5
<PAGE>
Company or of any Restricted Subsidiary. In lieu of applying all or any part of
such amount to the redemption of Securities, the Company may deliver to the
Trustee Securities for cancellation and thereby reduce the amount to be applied
to the redemption of Securities by an amount equivalent to the aggregate
principal amount of Securities delivered. Securities so redeemed or delivered
will not be used as credits against any mandatory sinking fund payments.
(Section 4.05)
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 Securities 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 Securities, the Company may
deliver to the Trustee Securities for cancellation and thereby reduce the amount
to be applied to the redemption of Securities by the principal amount of the
Securities so delivered. Securities so redeemed or delivered will not be used as
credits against any mandatory sinking fund payments. (Section 4.06)
RESTRICTIONS ON MERGERS, CONSOLIDATIONS AND TRANSFERS OF ASSETS
The Indenture provides that the Company will not consolidate or merge into
or transfer or lease all or substantially all of its assets to another person
unless (i) the person is a corporation organized under the laws of the United
States of America or any state thereof which assumes by supplemental indenture
all the obligations of the Company relating to the Securities and the Indenture
and (ii) immediately after the transaction no Default exists. Upon any such
consolidation, merger or transfer, the successor corporation will be substituted
for the Company under the Indenture. The successor corporation may then exercise
every power and right of the Company under the Indenture, and the Company will
be released from all of its liabilities and obligations in respect of the
Securities and the Indenture. In the event the Company leases all or
substantially all of its assets, the lessee corporation will be the successor to
the Company and may exercise every power and right of the Company under the
Indenture but the Company will not be released from its obligations to pay the
principal of and interest on the Securities. (Article 5)
WAIVERS AND MODIFICATION OF THE INDENTURE
Certain amendments of the Indenture and waivers of its terms may be made by
the Company and the Trustee without the consent of any of the holders of
Securities while others may be made only with the consent of the holders of a
majority in principal amount of the outstanding Securities of each series issued
under the Indenture which is affected by the amendment or waiver, provided that
no such amendment or waiver may, without the consent of the Securityholder
affected: (i) reduce the principal of or change the fixed maturity of any such
Security or reduce the amount of or change the time for payment of any mandatory
sinking fund or like payment; (ii) reduce the rate of or change the time for
payment of any interest on any Security; (iii) change the currency of payment of
any Security; (iv) impair the right to institute suit for the enforcement of any
payment of the principal of, or interest on, any Security; or (v) reduce the
amount of Securities whose holders must consent to an amendment or waive any
terms of the Indenture with respect to the series (Section 9.01, 9.02). The
Company is authorized to fix a record date for the purpose of determining
Securityholders whose consents will be sought and the Trustee is authorized to
accept such consents if received within 60 days of the record date. (Section
9.07)
DEFAULTS AND REMEDIES
The Indenture defines an Event of Default with respect to any series of
Securities as: (i) default for 30 days in the payment of any interest on such
series; (ii) default for five days in any payment of principal on
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<PAGE>
such series when due; (iii) default for 60 days after appropriate notice in
performance of any other agreement in the Indenture with respect to such series
or in the Securities of such series; (iv) uncured or unwaived default on any
other obligation for borrowed money of the Company (including default by the
Company on any guaranty of an obligation for borrowed money of a Restricted
Subsidiary) beyond any period of grace with respect thereto if (a) the aggregate
principal amount of such obligation in respect of which principal or interest is
and remains in default is in excess of $50,000,000, (b) either the default has
resulted in acceleration of the time of payment of principal or the default is a
nonpayment of principal or interest which, under the terms of the obligation,
could result in the immediate acceleration of the time of payment, and (c) the
default is not being contested by the Company in good faith and by appropriate
proceedings; or (v) certain events of bankruptcy. No Event of Default with
respect to a particular series of Securities necessarily constitutes an Event of
Default with respect to any other series of Securities issued under the
Indenture, other than under preceding clauses (iv) or (v). In case an Event of
Default shall occur and be continuing with respect to any series of Securities,
the Trustee or the holders of not less than 25% in principal amount of the
Securities then outstanding of the series may declare the principal of such
series (or such portion of the principal as may be specified as due upon
acceleration at that time in the terms of that series) to be due and payable.
Any Event of Default with respect to a particular series of Securities may be
waived by the holders of a majority in principal amount of the outstanding
Securities of such series, except a failure to pay the principal of, or interest
on, such Security. (Sections 6.01, 6.02, 6.04)
The Indenture requires the Company to file annually with the Trustee an
Officer's Certificate as to the absence of Defaults under the terms of the
Indenture. The Indenture provides that the Trustee may withhold notice to the
holders of the Securities of any Default (except in payment of principal or
interest) if it considers it in the interest of the holders of the Securities to
do so. (Sections 4.07, 7.05)
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 Indenture
provides that the Trustee shall be under no obligation to exercise any of its
rights or powers under the Indenture at the request of the Securityholders
unless the Trustee receives satisfactory Indemnity. Subject to such provisions
for indemnification and certain other rights of the Trustee, the Indenture
provides that the holders of a majority in principal amount of the outstanding
Securities of any series affected may direct the time, method and place of
conducting any proceeding for any remedy for that series which is available to
the Trustee or exercising any trust or power conferred on the Trustee for the
benefit of such series. (Sections 6.05, 7.01)
DEFEASANCE AND TERMINATION OF OBLIGATIONS
By irrevocably depositing in trust with the Trustee an amount of money or
the equivalent in U.S. Government Obligations or, in the case of Securities
denominated in a foreign currency, Foreign Government Obligations which is
sufficient to pay the principal of, interest and any mandatory sinking fund
payments on, a series of Securities to maturity or redemption, (a) the Company
may be relieved of all of its obligations under the Indenture and under such
series of Securities (except certain administrative obligations and obligations
to compensate, reimburse and indemnify the Trustee), if the series of Securities
matures or is to be called for redemption within one year, (b) the Company may
be relieved of all of its obligations under the Indenture and under such series
of Securities (except certain administrative obligations and obligations to
compensate, reimburse and indemnify the Trustee), if such series of Securities
so provides; and (c) the Company may terminate all of its obligations under
restrictive covenants relating to creation of secured debt (Section 4.04), sale
and leaseback transactions (Section 4.05), and transfers of principal facilities
(Section 4.06) and failure to comply with these provisions will not be an Event
of Default with respect to a series of Securities which so provides. (Section
8.01)
In cases (a) and (b), holders of such a series of Securities would be able
to look only to the trust fund for payment of principal of, interest and any
mandatory sinking fund payments on, such series of Securities until maturity.
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<PAGE>
In case (c), if a series of Securities were declared due and payable because
of the occurrence of any Event of Default other than for failure to comply with
the restrictive covenants described in case (c), the amount of money and U.S.
Government Obligations or Foreign Government Obligations, as the case may be, on
deposit with the Trustee would be sufficient to pay amounts due on the
Securities of such series at the time of their stated maturity but might not be
sufficient to pay amounts due on the Securities of the series at the time of the
acceleration resulting from such Event of Default. The Company, however, would
remain liable for such payment.
In cases (a) and (b), the deposit of money or U.S. Government Obligations or
Foreign Government Obligations, as the case may be, is likely to be treated as a
taxable exchange of the series of Securities for an issue of obligations of the
trust or a direct interest in the cash and U.S. Government Obligations or
Foreign Government Obligations, as the case may be, held in the trust fund. In
that case holders of the Securities would recognize gain or loss as if the trust
obligations or the cash or U.S. Government Obligations or Foreign Government
Obligations deposited, as the case may be, had actually been received by them in
exchange for their Securities. Such holders thereafter might be required to
include in income a different amount than would be includable in the absence of
the defeasance. Prospective investors are urged to consult their own tax
advisors as to the specific consequences of the defeasance.
THE TRUSTEE
The Trustee for the Offered Securities will be named and any relationship
between the Trustee and the Company or its affiliates will be described in the
Prospectus Supplement.
PLAN OF DISTRIBUTION
The Company may sell Securities through underwriters or agents or directly
to other purchasers, including broker-dealers as principals. The Prospectus
Supplement with respect to the Offered Securities sets forth the terms of the
offering of the Offered Securities, including the name or names of any
underwriters and the respective amount of the Securities underwritten, the names
of any agents involved in the offer or sale of the Offered Securities, the
purchase price of the Offered Securities and the proceeds to the Company from
such sale, any underwriting discounts and other items constituting underwriters'
compensation, any commissions payable to agents, any initial public offering
price, and any discounts or concessions allowed or reallowed or paid to dealers.
Any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If the Offered Securities are sold through underwriters, they will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Securities may be offered to the public either (i) through underwriting
syndicates or (ii) directly by one or more firms acting as underwriters. The
underwriter or underwriters with respect to a particular underwritten offering
of Offered Securities are named in the Prospectus Supplement relating to such
offering, and if an underwriting syndicate is used, the managing underwriter or
underwriters are set forth on the cover of such Prospectus Supplement. Unless
otherwise set forth in the Prospectus Supplement, the obligations of the
underwriters to purchase the Offered Securities will be subject to certain
conditions precedent and the underwriters will be obligated to purchase all the
Offered Securities if any are purchased.
If broker-dealers are used in the sale, the Company will sell the Securities
to the dealers as principals. The dealers may then resell the Securities to the
public at varying prices to be determined by such dealers at the time of resale.
The Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Unless otherwise indicated in the
Prospectus Supplement, any such agent is acting on a best efforts basis for the
period of its appointment. As one of the means of direct issuance of the
8
<PAGE>
Securities, the Company may, through an agent, conduct an electronic "dutch
auction" of the Securities among potential purchasers who are eligible to
participate in such auction, as more fully described in the Prospectus
Supplement.
In the event that the Offered Securities are not listed on a national
securities exchange, certain broker-dealers may make a market in the Offered
Securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given that any broker-
dealer will make a market in the Offered Securities or as to the liquidity of
the trading market for the Offered Securities, whether or not the Offered
Securities are listed on a national securities exchange. The Prospectus
Supplement with respect to the Offered Securities will state, if known, whether
or not any broker-dealer intends to make a market in such Offered Securities. If
no such determination has been made, the Prospectus Supplement will so state.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or broker-dealers to solicit offers from certain types of
institutions to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future.
Agents, underwriters and broker-dealers may be entitled under agreements
entered into with the Company to indemnification by the Company against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribution with respect to payments which the agents,
underwriters or broker-dealers may be required to make in respect thereof.
Agents, underwriters and broker-dealers may be customers of, engage in
transactions with, or perform services for the Company in the ordinary course of
business.
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed upon
for the Company by J. Patrick Fitzsimmons, Corporate Counsel of the Company, and
for the Underwriters by Sidley & Austin, One First National Plaza, Chicago,
Illinois 60603. Mr. Fitzsimmons is a full-time employee of the Company and as of
the date of this Prospectus, owns and holds options to acquire shares of the
Company's common stock. Sidley & Austin acts as special counsel for the Company
and certain subsidiaries of the Company on various matters.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of the Company for the year ended
December 31, 1995 have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
With respect to the unaudited consolidated financial information of Baxter
for the three-month periods ended March 31, 1996 and 1995, the six-month periods
ended June 30, 1996 and 1995, and the nine-month periods ended September 30,
1996 and 1995, incorporated by reference in this Proxy Statement/Prospectus,
Price Waterhouse 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 14, 1996, August 13, 1996 and November
11, 1996, incorporated by reference herein, state that they did not audit and
they do not express an opinion on that unaudited consolidated financial
information. Price Waterhouse LLP has not carried out any significant or
additional audit tests beyond those which would have been necessary if their
report had not been included. 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. Price Waterhouse LLP is not subject to the
liability provisions of section 11 of the Securities Act of 1933 for their
report on the unaudited consolidated financial information because that report
is not a "report" or a "part" of the registration statement prepared or
certified by Price Waterhouse LLP within the meaning of sections 7 and 11 of the
Act.
9
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
The Company.................................... S-2
Recent Developments............................ S-2
Selected Financial Data........................ S-3
Description of Notes and Debentures............ S-4
Underwriting................................... S-5
PROSPECTUS
Available Information.......................... 2
Documents Incorporated by Reference............ 2
The Company.................................... 3
Use of Proceeds................................ 3
Description of Securities...................... 3
Plan of Distribution........................... 8
Legal Matters.................................. 9
Experts........................................ 9
</TABLE>
$450,000,000
[LOGO]
Baxter International Inc.
$250,000,000 % NOTES
DUE , 2007
$200,000,000 % DEBENTURES
DUE , 2017
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PROSPECTUS SUPPLEMENT
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GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN & CO.
BANCAMERICA SECURITIES, INC.
FIRST CHICAGO
CAPITAL MARKETS, INC.
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