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, 2001
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
BAXTER HEALTHCARE
CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000
--------------------------------------------------------------------------------
Page
Financial statements:
---------------------
Report of Independent Accountants ......................................... 1
Statement of Net Assets Available for
Benefits as of December 31, 2001 and 2000 ................................ 2
Statement of Changes in Net Assets
Available for Benefits for the years ended
December 31, 2001 and 2000 ............................................... 3
Notes to Financial Statements ............................................. 4-8
Supplemental Schedule:*
-----------------------
Exhibit I - Schedule of Assets Held
for Investment Purposes as of December 31, 2001 ........................... 9
* Other schedules required by Section 2520.103-10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
Report of Independent Accountants
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, 2001 and 2000, and the changes in net assets available for
benefits for the years then ended in conformity with accounting principles
generally accepted in the United States of America. 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 auditing standards
generally accepted in the United States of America, 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 our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets Held
for Investment Purposes is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is 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. This supplemental schedule is the responsibility of the Plan's management.
This supplemental schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PricewaterhouseCoopers LLP
San Juan, Puerto Rico
May 31, 2002
1
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Statement of Net Assets Available for Benefits
As of December 31, 2001 and 2000
--------------------------------------------------------------------------------
2001 2000
Assets:
Investments, at fair value:
Investments $18,565,544 $16,799,918
Participants' loans 1,514,979 172,045
Cash 14,237 3,750
Receivables:
Employer's contribution 79,026 -
Participants' contribution 161,470 -
Other - loan repayments not yet paid by paricipants 54,284 -
----------- -----------
Total assets 20,389,540 16,975,713
Liabilities:
Refunds and forfeitures due to employer 688 4,165
----------- -----------
Net assets available for benefits $20,388,852 $16,971,548
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Statement of Changes in Net Assets Available for Benefits
Years Ended December 31, 2001 and 2000
--------------------------------------------------------------------------------
2001 2000
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of assets $ 217,365 $ 46,053
Interest and dividends 106,161 28,033
----------- -----------
323,526 74,086
----------- -----------
Contributions:
Employer's contributions 1,423,016 1,455,140
Participants' contributions 2,938,943 2,997,136
----------- -----------
4,361,959 4,452,276
----------- -----------
Total additions 4,685,485 4,526,362
----------- -----------
Deductions from net assets attributed to:
Benefits paid 1,033,214 1,800,376
Transfers to other plans - 3,783,061
Administrative expenses 234,967 170,304
----------- -----------
Total deductions 1,268,181 5,753,741
----------- -----------
Net increase (decrease) 3,417,304 (1,227,379)
Net assets available for benefits:
Beginning of year 16,971,548 18,198,927
----------- -----------
End of year $20,388,852 $16,971,548
=========== ===========
The accompanying notes are an integral part of these financial statements.
3
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
--------------------------------------------------------------------------------
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 and
Baxter Pharmacy Services Corporation (collectively, the "Company") who have
one month 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 Income 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:
Years of Service Vesting %
1 20
2 40
3 60
4 80
5 or more 100
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.
4
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
--------------------------------------------------------------------------------
Participants' Loans
Effective January 1, 2001, participants may borrow from their vested
accounts a minimum of $500 up to a maximum equal to the lesser of $50,000
or 50% of their account balance, whichever is less. The loans are secured
by the balance in the participant's account and bear interest at prime
rate, at the last day of the month prior to loan request, plus one percent.
Principal and interest are paid through monthly payroll deductions.
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 years ended December
31, 2001 and 2000 amounted to $15,112 and $19,254, respectively.
Investment Options
The Plan has the following investment funds:
Fund: Description:
Stable Income Fund The Fund invests in fixed income securities
with a book value guarantee.
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.
Small Cap Fund The fund invests in small U.S. Companies that
are considered to have growth potential.
International EAFE The Fund invests in equities of large companies
Equity Index Fund in Europe, Australia and the Far East.
Baxter Common Stock Fund The primary investment of this fund is in
Baxter International Inc. Common Stock.
Edwards Lifesciences The primary investment of this fund is in
Common Stock Fund Edwards Lifesciences Corporation Common Stock.
Participants may change their investment options quarterly.
5
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
--------------------------------------------------------------------------------
Participants are allowed to make investment election changes quarterly to
transfer balances out of Edwards Lifesciences Common Stock Fund into other
funds, but are not allowed to transfer existing account balances or to make
contributions into the Edwards Lifesciences Common Stock Fund.
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 paid from assets of the Plan.
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
Shares of registered investment companies are valued at quoted market
prices which represent their net asset value at year end. Baxter common
stock and Edwards common stock are valued at its quoted market price.
Participant loans are valued at cost which approximates fair value.
6
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
--------------------------------------------------------------------------------
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 presents the Plan's investments that represent five percent
or more of the Plan's net assets at December 31:
2001 2000
# of # of
Shares Amount Shares Amount
Fund options:
Stable income 991,825 $3,578,274 845,499 $2,866,466
Composite 325,214 1,894,025 422,321 2,405,485
General Equity 197,434 1,653,452 260,344 2,250,576
S&P 500 Equity Index 1,421,966 3,442,148 2,212,930 6,135,409
Common stock - Baxter International Inc. 818,258 7,155,189 292,735 2,086,689
International EAFE Equity Index Fund 520,859 576,340 625,734 888,270
During 2001 and 2000, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value by $217,365 and $46,053, respectively, as follows:
2001 2000
Common stock $ 967,750 $ 514,881
Mutual funds (750,385) (468,828)
---------- ----------
$ 217,365 $ 46,053
========== ==========
7
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
--------------------------------------------------------------------------------
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 Treasury Department has determined and informed the Company
that the Plan and the related trust are designed in accordance with
applicable sections entitling exemption from income taxes. The Company
obtained a favorable determination letter from the Internal Revenue Service
stating that the Plan is in compliance with the Internal Revenue Code
regulations. The Plan has been amended since receiving the determination
letters. However, the Plan administrator believes that the Plan is designed
and is currently being operated in compliance with the applicable tax
requirements. Therefore, no provision for income taxes has been included in
the Plan's financial statements.
The Plan participants are not taxed on the income and contributions made to
their accounts until such time as the participant or the participant's
beneficiary receives distributions from the Plan.
6. Transfer of Assets
Included in total transfers to other plans for the year ended December 31,
2000, are net assets of $3,783,061, which were transferred to Edwards
Lifesciences Savings and Investment Plan due to the spin-off of Baxter's
Cardiovascular division into Edwards Lifesciences Corporation.
7. Related Parties
At December 31, 2001 and 2000, 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
Trustees. These transactions are allowable party-in-interest transactions
under ERISA and the regulations promulgated thereunder.
8. Risks and Uncertainties
The Plan's investments are exposed to various risks, such as interest rate,
market and credit risks. Due to the level of risk associated with certain
investments and level of uncertainty related to changes in the values of
investments, it is at least reasonably possible that changes in risks in
near term would materially affect participants' account balances and the
amounts reported in the statement of net assets available for benefits and
the statement of changes in net assets available for benefits.
8
SUPPLEMENTAL SCHEDULE
EXHIBIT I
BAXTER HEALTHCARE CORPORATION OF PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Schedule of Assets Held for Investment Purposes as of December 31, 2001
(Schedule H, Part IV, Line 4i on Form 5500)
--------------------------------------------------------------------------------
Identity of issuer Description of Current Value
Investment
* State Street Bank and Trust Company:
Stable Income Fund 991,825.14 units $ 3,578,274
Composite Fund 325,214.028 units 1,894,025
General Equity Fund 197,433.935 units 1,653,452
S&P 500 Equity Index Fund 1,421,966.386 units 3,442,148
International EAFE Equity Index Fund 520,859.31 units 576,340
Small Cap Fund 19,171.891 units 199,462
* Baxter Common Stock Common stock - 818,257.567 7,155,189
Edwards Lifesciences Common Stock Common stock - 3,342.10 66,654
* Participants' Loans Maturing - 1/1/02 to 2012
7% to 11% 1,514,979
* Banco Popular de Puerto Rico Bank account 14,237
-------------
$ 20,094,760
=============
* Party in-interest
9
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 26, 2002 By: /S/ Brian P. Anderson
---------------------
Brian P. Anderson
Senior Vice President and
Chief Financial Officer
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 2-82667, 2-86993, 2-97607, 33-8812, 33-8813,
33-15523, 33-15787, 33-28428, 33-33750, 33-54069, 333-43563, 333-47019,
333-71553, 333-80403, 333-88257, 333-48906 and 333-62820) of Baxter
International Inc. of our report dated May 31, 2002 relating to the financial
statements of Baxter Healthcare Corporation of Puerto Rico Savings and
Investment Plan, which appears in this Form 11-K.
PricewaterhouseCoopers LLP
San Juan, Puerto Rico
June 26, 2002