<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, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
----- SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number 1-4448
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Baxter Healthcare Corporation of
Puerto Rico Savings and Investment Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Baxter International Inc.
One Baxter Parkway
Deerfield, IL 60015
(847) 948-2000
<PAGE>
BAXTER HEALTHCARE
CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Financial Statements and Supplemental Schedules
December 31, 1998
<PAGE>
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Financial Statements and Supplemental Schedules
December 31, 1998
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
<S> <C>
Financial Statements:
- ---------------------
Report of Independent Accountants........................ 1
Statement of Net Assets Available for
Benefits with Fund Information as of December 31, 1998.. 2
Statement of Changes in Net Assets
Available for Benefits with Fund Information
for the year ended December 31, 1998.................... 3
Notes to Financial Statements............................ 4-8
Supplemental Schedules:*
- -----------------------
Exhibit I - Schedule of Assets Held
for Investment Purposes as of December 31, 1998......... 9
Exhibit II - Schedule of Reportable Transactions
for the year ended December 31, 1998.................... 10
</TABLE>
* 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
May 28, 1999
To the Participants and Administrative Committee of the
Baxter Healthcare Corporation of Puerto Rico
Savings and Investment Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Baxter Healthcare Corporation of Puerto Rico Savings and Investment Plan
at December 31, 1998, and the changes in net assets available for benefits for
the year 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 audit. We conducted our audit 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 audit provides a reasonable basis for the opinion expressed
above.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets
Held for Investment Purposes as of December 31, 1998 and of Reportable
Transactions for the year ended December 31, 1998 are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements but are supplementary 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 for benefits of each fund. These supplemental schedules and
fund information are the responsibility of the Plan's management. The
supplemental schedules and fund information have been subjected to the auditing
procedures applied in the audit 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>
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Information
-----------------------------------------------------------------------------------------
International
Stable General S&P 500 EAFE Baxter
Income Composite Equity Equity Index Equity Index Common Stock
Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value:
Shares of investment funds $2,425,116 $1,911,781 $1,893,003 $3,940,955 $295,559 -
Common stock - - - - - $729,991
Participant loans - - - - - -
Cash 2 13 13 17 - 7
---------- ---------- ---------- ---------- -------- --------
Total assets 2,425,118 1,911,794 1,893,016 3,940,972 295,559 729,998
Liabilities:
Refunds and forfeitures
due to employer 1,852 1,273 987 1,630 177 351
---------- ---------- ---------- ---------- -------- --------
Net assets available for
benefits $2,423,266 $1,910,521 $1,892,029 $3,939,342 $295,382 $729,647
========== ========== ========== ========== ======== ========
Fund Information
----------------------------------------------
Loan Other Total
Fund
<S> <C> <C> <C>
Assets:
Investments, at fair value:
Shares of investment funds - - $10,466,414
Common stock - - 729,991
Participant loans $723,657 - 723,657
Cash - $ 41 93
-------- ----- -----------
Total assets 723,657 41 11,920,155
Liabilities:
Refunds and forfeitures
due to employer - - 6,270
-------- ----- -----------
Net assets available for
benefits $723,657 $ 41 $11,913,885
======== ===== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information
For the Year Ended December 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Information
--------------------------------------------------------------------------------------------------
International
Stable General S&P 500 EAFE Baxter
Income Composite Equity Equity Index Equity Index Common Stock
Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Interest and dividends $ 8,739 $ 5,044 $ 6,173 $ 9,732 $ 930 $ 1,245
Net appreciation in fair
value of assets 71,997 110,437 114,987 436,430 22,967 97,399
---------- ---------- ---------- ---------- -------- --------
80,736 115,481 121,160 446,162 23,897 98,644
---------- ---------- ---------- ---------- -------- --------
Contributions:
Loan repayments 60,973 49,158 58,219 127,054 1,745 21,772
Employer contributions 391,427 398,498 365,269 473,595 84,701 148,226
Employee contributions 843,344 902,078 820,118 1,041,602 186,810 338,328
---------- ---------- ---------- ---------- -------- --------
1,295,744 1,349,734 1,243,608 1,642,251 273,256 508,326
---------- ---------- ---------- ---------- -------- --------
Transfers from other plans 973,518 663,003 660,960 1,825,545 5,865 231,658
---------- ---------- ---------- ---------- -------- --------
Total additions 2,349,998 2,128,218 2,025,726 3,913,958 303,018 838,628
Deductions from net assets
attributed to:
Benefits paid 96,078 53,082 65,919 132,653 8,763 12,864
---------- ---------- ---------- ---------- -------- --------
Net increase prior to
interfund transfers 2,253,920 2,075,136 1,959,807 3,781,305 294,255 825,764
Interfund transfers 169,346 (164,615) (67,778) 158,037 1,127 (96,117)
---------- ---------- ---------- ---------- -------- --------
Net increase and net assets
available for benefits
at end of year $2,423,266 $1,910,521 $1,892,029 $3,939,342 $295,382 $729,647
========== ========== ========== ========== ======== ========
Fund Information
------------------------------------------------
Loan Other Total
Fund
<S> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Interest and dividends $ 57,072 $41 $ 88,976
Net appreciation in fair
value of assets - - 854,217
--------- --- -----------
57,072 41 943,193
--------- --- -----------
Contributions:
Loan repayments (318,921) - -
Employer contributions - - 1,861,716
Employee contributions - - 4,132,280
--------- --- -----------
(318,921) - 5,993,996
--------- --- -----------
Transfers from other plans 985,506 - 5,346,055
--------- --- -----------
Total additions 723,657 41 12,283,244
Deductions from net assets
attributed to:
Benefits paid - - 369,359
--------- --- -----------
Net increase prior to
interfund transfers 723,657 41 11,913,885
Interfund transfers - - -
--------- --- -----------
Net increase and net assets
available for benefits
at end of year $ 723,657 $41 $11,913,885
========= === ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 1998
- --------------------------------------------------------------------------------
1. General Description of the Plan
The following brief description of Baxter Healthcare Corporation of Puerto
Rico Savings and Investment Plan (the "Plan") is provided for general
information purposes only. Participants should refer to the Plan agreement
for more complete information.
General
The Plan is a defined contribution plan which became effective on January
1, 1998. The Plan covers substantially all employees of Baxter Healthcare
Corporation of Puerto Rico, Baxter Sales and Distribution Corporation,
Baxter Pharmacy Services Corporation, Perfusion Services of Baxter
Healthcare Corporation (for its Puerto Rico employees) and Baxter Caribe
Inc. (collectively, the "Company") who have one year of service . Baxter
Healthcare Corporation of Puerto Rico is the sponsor of the Plan. The Plan
was created for the purpose of providing retirement benefits to employees
and to encourage and assist employees in adopting a regular savings program
by means of payroll deductions through a plan that qualifies under the
applicable laws of the Commonwealth of Puerto Rico and the United States
Internal Revenue Code ("IRS"). The Plan is subject to the provisions of the
Employee Retirement Security Act of 1974 ("ERISA").
Contributions
Plan participants may authorize the Company to make payroll deductions
under the Plan ranging from 1% to 10% of their pre-tax monthly
compensation, limited to a maximum of $8,000 a year. The Company matches a
participant's savings contributions at the rate of 50 cents for each dollar
of a participant's pre-tax contribution, up to a maximum of 6% of a
participant's compensation. The Company may make additional distributions
in such amounts as the Company may determine.
Participant Accounts
Each participant's account is credited with the participant's contribution
and allocations of (a) the Company's contribution, and (b) Plan earnings.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit that
can be provided from the participant's vested account. The net income of
the Plan is posted to the participant's accounts on a quarterly basis.
Vesting
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company's matching and discretionary
contributions portion of their accounts plus actual earnings thereon is
based on years of service. The contributions vest in accordance with the
following vesting schedule:
<TABLE>
<CAPTION>
Years of Service Vesting %
<S> <C>
1 20
2 40
3 60
4 80
5 or more 100
</TABLE>
4
<PAGE>
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 1998
- --------------------------------------------------------------------------------
Employees are fully vested in the Company's matching contributions account,
regardless of years of service with the Company, upon attaining age 65 or
becoming disabled in accordance with the provisions of the Plan or die
while employed by the Company.
Forfeitures
The portion of any participant's matching contribution account which is not
vested will become a forfeiture upon such participant's termination of
employment and will be applied to reduce future Company's matching
contributions on a periodic basis. Forfeitures for the year ended December
31, 1998 amounted to $5,998.
Investment Options
Upon enrollment in the Plan, a participant may elect to have his/her
contributions invested in one or more of the following investment funds:
Fund: Description:
Stable Income Fund The Fund invests primarily in guaranteed
investment contracts from insurance
companies and other fixed income
securities.
Composite Fund The Fund invests in stocks of U.S.
companies and government and corporate
bonds.
General Equity Fund The Fund invests in stocks from U.S.
companies that are considered to have
growth potential.
S&P 500 Equity Index Fund The Fund attempts to duplicate the
performance of the Standard and Poor's
500 Index, which consists of the stocks
of 500 of the largest companies in the
U.S.
International EAFE Equity The Fund invests in equities of large
Index Fund companies in Europe, Australia and the
Far East.
Baxter Common Stock Fund The primary investment of this fund is in
Baxter International Inc. Common Stock.
Participants may change their investment options quarterly.
5
<PAGE>
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 1998
- -------------------------------------------------------------------------------
Payments of Benefits
Plan participants can not request withdrawals from the Plan unless they are
59 1/2 years old or incur a financial hardship. If a participant suffers
financial hardship, as defined in the Plan agreement, the participant may
request a withdrawal only from his or her contributions. On termination of
service due to disability, retirement or other reasons, a participant may
elect to receive either a lump sum amount equal to their entire account
balance or installment payments. On termination of service due to other
reasons, participants are entitled to receive their vested account balance.
In the case of a participant termination because of death, the entire
vested amount is paid to the person or persons legally entitled thereto.
Plan Expenses and Administration
Banco Popular de Puerto Rico and State Street Bank and Trust Company serve
as trustees for the Plan.
The Administrative Committee is responsible for the general administration
of the Plan and for carrying out the provisions thereof. 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 International Inc. ("Baxter"), the Company's
parent.
All expenses of the Plan are curently borne by the Company.
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method
of accounting.
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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Investments Valuation and Income Recognition
The Plan's investments are stated at fair value. Shares of registered
investment companies are valued at quoted market prices which represent
their net asset value at year end. Baxter common stock is valued at its
quoted market price. Participant loans are valued at cost which
approximates fair value.
6
<PAGE>
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 1998
- -------------------------------------------------------------------------------
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.
Purchases and sales of securities are recorded on the trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on
the declaration date.
Contributions
Employee and Company matching contributions are recorded in the plan year
period in which the Company makes the payroll deductions from the
participant's earnings.
Transfer of Assets to Other Plans
Company employees or retirees may elect to transfer their savings to other
plans qualified by the Puerto Rico Department of the Treasury or by the
IRS.
Payment of Benefits
Benefits are recorded when paid.
3. Investments
The following table presents the Plan's investments that represent five
percent or more of the Plan's net assets at December 31, 1998:
<TABLE>
<CAPTION>
# of
Units Value
<S> <C> <C>
Mutual Funds:
Stable Income 791,799 $2,425,116
Composite 371,603 1,911,781
General Equity 232,057 1,893,003
S&P 500 Equity Index 1,583,146 3,940,955
Common stock--Baxter International Inc. 137,659 729,991
Loans - 723,657
</TABLE>
During 1998, the realized gain on sale of investments was approximately
$19,400.
7
<PAGE>
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 1998
- -------------------------------------------------------------------------------
4. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to reduce, suspend or discontinue its contributions at
any time and to terminate the Plan subject to the provisions of ERISA. In
the event the Plan terminates, the interest of each participating employee
in the Plan shall be fully vested and such termination shall not reduce the
interest of any participating employee or their beneficiaries accrued under
the Plan up to the date of such termination.
5. Tax Status
The Puerto Rico Department of Treasury has determined and informed the
Company by a letter dated January 1, 1998, that the Plan is designed in
accordance with Section 1165(e) of the Puerto Rico Internal Revenue Code of
1994, as amended, and is, therefore, exempt from income taxes.
The Company is in the process of obtaining a favorable determination letter
from the Internal Revenue Service ("IRS"). The Plan sponsor and the Plan's
tax counsel believe that the Plan is designed and currently being operated
in compliance with applicable provisions of the IRS.
6. Transfer of Assets
Included in total transfers from other plans, are net assets of $5,346,055,
which were transferred from the BOC Group, Inc. Savings Investment Plan
(the "BOC Plan") due to the acquisition of Baxter Caribe, Inc. by Baxter.
Loans are limited to those outstanding at the time the BOC Plan's assets
were transferred.
7. Related Parties
At December 31, 1998, the Plan held shares of common stock of Baxter, the
Company's parent and units of participation in certain investment funds of
State Street Bank and Trust Company, one of the Plan's Trustee. These
transactions are allowable party-in-interest transactions under ERISA and
the regulations promulgated thereunder.
8
<PAGE>
SUPPLEMENTAL SCHEDULE
EXHIBIT I
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Schedule of Assets Held for Investment Purposes Form 5500, Item 27(a)
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Identity of issue Description of Investment Cost Current Value
<S> <C> <C> <C>
State Street Bank and Trust Company*:
Stable Income Fund 791,799.018 units $ 2,306,382 $ 2,425,116
Composite Fund 371,603.221 units 1,812,873 1,911,781
General Equity Fund 232,056.664 units 1,773,425 1,893,003
S&P 500 Equity Index Fund 1,583,145.787 units 3,555,841 3,940,955
International EAFE Equity Index Fund 227,672.395 units 274,339 295,559
Baxter Common Stock* Common Stock -- 137,658.873 units 638,794 729,991
Participant loans* Maturing 1/14/99 -- 4/15/2010;
8% to 11% 723,657 723,657
Banco Popular de Puerto Rico* Bank account 93 93
----------- -----------
$11,085,404 $11,920,155
=========== ===========
</TABLE>
*Party-in-interest
9
<PAGE>
SUPPLEMENTAL SCHEDULE
EXHIBIT II
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Schedule of Reportable Transactions* Form 5500, Item 27(d)
Year Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Current Value
of Asset on
Identity Description Number of Purchase Selling Lease Expense Cost of Transaction Net Gain
of Party of Asset Transactions Price Price Rental Incurred Asset Date or (Loss)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
State Street Bank
and Trust Company Stable Income
Fund 25 $2,567,444 N/A N/A N/A $2,567,444 $2,567,444 N/A
State Street Bank
and Trust Company Composite Fund 24 2,023,702 N/A N/A N/A 2,023,702 2,023,702 N/A
State Street Bank
and Trust Company S&P 500 Equity
Index Fund 25 3,833,522 N/A N/A N/A 3,833,522 3,833,522 N/A
State Street Bank
and Trust Company General Equity
Fund 26 1,968,772 N/A N/A N/A 1,968,772 1,968,772 N/A
Baxter International Inc Baxter Common
Stock 24 744,531 N/A N/A N/A 744,531 744,531 N/A
</TABLE>
* Transactions or series of transactions in excess of 5 percent of the current
value of the Plan's assets as of December 31, 1998 as defined in Section
2520-103-6 of the Department of Labor Rules and Regulations and Disclosure
under ERISA.
10
<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 HEALTHCARE CORPORATION OF
PUERTO RICO SAVINGS AND INVESTMENT PLAN
Date: June 29, 1999 By: /s/ Brian P. Anderson
--------------------------
Brian P. Anderson
Senior Vice President and
Chief Financial Officer
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-47019) of Baxter International Inc. of our report
dated May 28, 1999 relating to the financial statements of the Baxter Healthcare
Corporation of Puerto Rico Savings and Investment Plan, which appears in this
Form 11-K.
PricewaterhouseCoopers LLP
San Juan, Puerto Rico
June 29, 1999
