Item 1. Business.
(a) General Development of Business.
Baxter International Inc. was incorporated under Delaware law in 1931. As used in this report, except as otherwise indicated in information incorporated by reference, "Baxter International" means Baxter International Inc. and "Baxter" or the "company" means Baxter International and its subsidiaries.
Baxter engages in the worldwide development, manufacture and distribution of a diversified line of products, systems and services used primarily in the health care field. We manufacture products in 28 countries and sell them in over 100 countries. Health care is concerned with the preservation of health and with the diagnosis, cure, mitigation and treatment of disease and body defects and deficiencies. Our products are used by hospitals, clinical and medical research laboratories, blood and blood dialysis centers, rehabilitation centers, nursing homes, doctors' offices and by patients, at home, under physician supervision.
For information regarding significant acquisitions, see our Annual Report to Stockholders for the year ended December 31, 2001 (Annual Report), pages 45--47, section entitled "Notes to Consolidated Financial Statements--Acquisitions" which is incorporated by reference.
(b) Financial Information About Segments.
Incorporated by reference from the Annual Report, pages 57--58, section entitled "Notes to Consolidated Financial Statements--Segment Information."
(c) Narrative Description of Business.
Company Overview
Baxter operates as a global leader in critical therapies for life-threatening conditions. Our continuing operations are comprised of three segments: Medication Delivery, which provides a range of intravenous solutions and specialty products that are used in combination for fluid replenishment, nutrition therapy, pain management, antibiotic therapy and chemotherapy; BioScience, which develops biopharmaceuticals, biosurgery products, vaccines and blood collection, processing and storage products and technologies; and Renal, which develops products and provides services to treat end-stage kidney disease. Our three businesses enjoy leading positions in the medical products and services fields. Unless otherwise indicated, each of the factors discussed in this Part I do not materially differ in their impact across each of our three segments.
Information about operating results is incorporated by reference from Annual Report pages 27--36, section entitled "Management's Discussion and Analysis" and pages 57--58, section entitled "Notes to Consolidated Financial Statements--Segment Information."
Medication Delivery
Business Description. Baxter was founded in 1931 as the first commercial manufacturer of intravenous (IV) solutions in glass bottles. Forty years later, the company set a new standard for IV therapy with the
introduction of the first plastic IV containers. Today, Baxter manufactures a range of products that deliver fluids, therapies and medications to patients. IV solutions represent only 20 percent of Baxter's Medication Delivery sales, while 80 percent of the revenue comes from specialty products that include anesthetic agents, premixed drugs and drug-reconstitution systems, nutrition products and delivery devices. These products are used in combination for fluid replenishment, nutrition therapy, pain management, antibiotic therapy and chemotherapy.
Growth Strategy. Baxter continues to participate in the consolidation of the global marketplace for medication-delivery products, particularly in developing markets. Baxter expects to accelerate growth through expansion of its higher-margin specialty products outside the United States, building on its strong base in IV solutions. The company continues to broaden its portfolio of new products and technologies for medication delivery through internal development, acquisitions and alliances. Baxter also leverages its strengths in anesthesia, drug delivery and infusion systems to provide customers with innovative solutions at all points of care. In 2001, Baxter's oncology business was expanded with the acquisition of ASTA Medica Oncology, a German-based manufacturer of chemotherapy drugs.
Product Development. Baxter is developing a next-generation volumetric infusion system with enhanced features and continues to expand its line of drug-delivery platforms. In 2001, Baxter acquired Cook Pharmaceutical Solutions, adding the capability to formulate and package injectable drugs in vials and syringes, and licensed RTP Pharma's proprietary Nanoedge technology to develop injectable formulations of insoluble medications. Baxter signed 18 new agreements with pharmaceutical companies in 2001 to package their drugs in Baxter's systems, and launched generic propofol, an injectable anesthetic, in the United Kingdom. The company also has several nutraceuticals in the pipeline and continues to pursue new film technologies for manufacturing IV containers and sets without polyvinyl chloride.
BioScience
Business Description. Baxter introduced the first commercially produced Factor VIII concentrate to treat hemophilia in 1966. Today, Baxter is a leading producer of both plasma-based and recombinant clotting factors for hemophilia, as well as biopharmaceuticals used to treat immune deficiencies, cancer and other disorders. The business also develops biosurgery products, used for hemostasis, tissue-sealing and tissue-regeneration, and vaccines. Baxter also is a leading manufacturer of manual and automated blood-collection, processing and storage systems, used by hospitals, blood banks and plasma-collection centers to collect and process blood components for therapeutic use. Therapeutic blood components are used in surgery, cancer therapy and other critical therapies.
Growth Strategy. Baxter's strategy for increasing growth in its BioScience business includes: expanding manufacturing capacity to meet current and future demand, which today for most products far exceeds supply; penetrating new markets outside North America and Europe, which currently account for more than 80 percent of sales; making acquisitions and forming other alliances and partnerships to bring new and complementary technologies and product platforms to Baxter; expanding the use of current products through additional indications and establishing new standards of care; and introducing new products to encompass additional therapies. In transfusion therapies, the focus remains on increasing production and blood safety through advanced automation, leukoreduction and pathogen inactivation.
Product Development. In 2001, Baxter received European licensure for Ceprotin, a new protein C concentrate used to treat congenital protein C deficiency. Recombinant proteins in development include a protein-free-method recombinant Factor VIII, alpha-1-antitrypsin to treat emphysema and asthma, and recombinant hemoglobin. Baxter also began clinical trials on a Factor VIII gene therapy last year with its partner GenStar. In the area of vaccines, Baxter received additional approvals for its NeisVac-C vaccine for meningitis C in 2001. The company also is developing cell-culture-derived vaccines for influenza, smallpox and other diseases. Also in 2001, Baxter applied for FDA approval on its ALYX automated blood component collection system and filed in Europe for approval of the INTERCEPT Blood System for platelets.
Renal
Business Description. Baxter is a leading provider worldwide of products and services for the treatment of kidney disease. In 1956, the company pioneered hemodialysis (HD) with the introduction of the first widely available artificial kidney machine. Nearly 20 years later, Baxter introduced products and services for peritoneal dialysis (PD), a home-based therapy. Today, Baxter is the world's leading manufacturer of PD products, which include dialysis solutions, container systems and automated cyclers. Baxter also manufactures HD instruments and dialyzers. In addition, the company owns and operates dialysis clinics in partnership with local physicians outside the United States. In the United States, Baxter works with payers to provide disease-management services and with nephrologists to operate interventional outpatient centers.
Growth Strategy. Baxter is growing its presence in renal care by addressing the needs of kidney-disease patients over their lifetime of care--from initial diagnosis through dialysis and organ replacement. Baxter's "integrated care" strategy looks at that spectrum of care and considers where it makes sense for Baxter to participate. For example, in 2001, Baxter acquired the assets and exclusive rights to a proprietary recombinant drug for the treatment of anemia. The company also conducted a landmark clinical trial with evidence suggesting broader applicability for PD therapy, which could yield a shift in practice patterns that could expand use of PD over time. Other growth will come through continued product innovation, e-health initiatives, additional acquisitions and alliances, and further expansion in developing markets.
Product Development. Innovation remains key to Baxter's continued leadership and growth in renal care, with several new product launches planned in 2002. These include Baxter's first synthetic HD dialyzer, called Syntra, and new HD instruments for self-care centers, the home and the acute-care setting. Also in 2002, the company plans to introduce new and improved approaches to PD that provide unique patient benefits. Baxter expects to receive approval from the U.S. Food and Drug Administration for Extraneal PD solution. Baxter also will be launching HomeChoice Pediatric, an updated automated PD machine designed for patients who require lower volumes of fluid, particularly children. The system offers new safety features and makes the dialysis process even more convenient for pediatric patients and their parents.
United States Markets
The health care marketplace continues to be highly competitive. There has been consolidation in the company's customer base, and by its competitors, which has resulted in pricing and market share pressures. These industry trends are expected to continue. The company intends to continue to manage these issues by developing new products and services, leveraging its cost structure, making acquisitions and entering alliances.
International Markets
Baxter generates close to 50 percent of its revenues outside the United States. While health care cost containment continues to be a focus around the world, demand for health care products and services continues to be strong worldwide, particularly in developing markets. The company's strategies emphasize global expansion and technological innovation to advance medical care worldwide.
Joint Ventures and Affiliations
Baxter's joint venture with Gambro A.B., named Tandem Healthcare LLC, manufactures dialyzers from a Baxter production facility in Mountain Home, Arkansas. Baxter manages the day-to-day operations on behalf of the joint venture. Gambro is an international medical technology and health care company based in Sweden. The company conducts a non-material amount of business through joint ventures.
In March 2000, Baxter teamed with other experienced companies in the health care industry to form the Global Healthcare Exchange (GHX). GHX provides business-to-business procurement for the health care
industry. Utilizing Internet-based technology, GHX integrates hospitals and suppliers, in an attempt to improve efficiencies and add value throughout the supply chain. GHX now is comprised of more than 100 supplier members and nearly 600 hospital members. In November 2001, GHX and HealthNexis combined their operations into a single, comprehensive Internet-based exchange operating under the Global Healthcare Exchange name.
Baxter also owns minority positions in certain other publicly-traded companies, including Cerus Corporation, with which it is jointly developing a pathogen inactivation system for platelets, plasma and red blood cells for transfusion, and Acambis, a British vaccine developer with which Baxter is producing smallpox vaccine for the U.S. government.
Methods of Distribution
Baxter conducts its selling efforts through its subsidiaries and divisions. Many subsidiaries and divisions have their own sales forces and direct their own sales efforts. In addition, sales are made to and through independent distributors and drug wholesalers acting as sales agents. In the United States, Allegiance Healthcare Corporation warehouses and ships a significant portion of the company's products through its distribution centers. These distribution centers are generally stocked with adequate inventories to facilitate prompt customer service. Sales and distribution methods include frequent contact by sales representatives, automated communications via various electronic purchasing systems, circulation of catalogs and merchandising bulletins, direct-mail campaigns, trade publications and advertising. Customers may return defective merchandise for credit or replacement. In recent years, such returns have been immaterial.
International sales are made and products are distributed in over 100 countries either on a direct basis or through independent local distributors. International subsidiaries employ their own field sales forces in Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, China, Colombia, the Czech Republic, Denmark, Ecuador, Finland, France, Germany, Greece, Guatemala, Hungary, India, Ireland, Italy, Japan, Korea, Mexico, The Netherlands, New Zealand, Norway, Panama, Peru, the Philippines, Portugal, Russia, Singapore, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, the United Kingdom and Venezuela. In other countries, sales are made through independent distributors or sales agents.
Raw Materials
Raw materials essential to the company's business are purchased worldwide in the ordinary course of business from numerous suppliers. Although the vast majority of these materials are generally available, the company has experienced occasional shortages in supply of source plasma and of bulk recombinant factor VIII used by Baxter in its BioScience business. In addition, certain raw materials used in producing some of the company's products are available only from a small number of suppliers. Baxter works closely with its suppliers to assure continuity of supply while maintaining high quality and reliability. The company also continues to develop new sources of supply and does not believe that periodic shortages in supply of raw materials will have a material adverse effect on the company's business.
In some of these situations, the company has long-term supply contracts with its suppliers, although it does not consider its obligations under such contracts to be material. Baxter does not always recover cost increases through customer pricing due to contractual limits and market pressure on such price increases. See "Contractual Arrangements."
Patents and Trademarks
Products manufactured by Baxter are sold primarily under its own trademarks and trade names. Some products purchased and resold by the company are sold under the company's trade names while others are sold under trade names owned by its suppliers.
Baxter owns a number of patents and trademarks throughout the world and is licensed under patents owned by others. Baxter's policy is to protect its products and technology through patents and trademarks on a worldwide basis. This protection is sought in a manner that balances the cost of such protection against obtaining the greatest value for the company. The company also recognizes the need to promote the enforcement of its patents and trademarks. Over the past few years, Baxter has increased its enforcement activities by aggressively taking action in various countries to protect its patents and trademarks. Baxter will continue taking all commercially reasonable steps to enforce its patents and trademarks around the world against potential infringers. However, there can be no assurance that any action will result in favorable decisions. While the protection of its patents and trademarks is important to Baxter's business strategy, Baxter believes that its overall business position is not materially dependent upon any single patent or trademark.
Competition
Historically, competition in the health care industry has been characterized by the search for technological and therapeutic innovations in the prevention, diagnosis and treatment of disease. The company believes that it has benefited from the technological advantages of certain of its products. While competitors will continue to introduce new products that compete with those sold by Baxter, the company believes that its research and development efforts will permit it to remain competitive in all presently material product areas. Although no single company competes with Baxter in all of its businesses, Baxter is faced with substantial competition in all of its markets.
The changing health care environment in recent years has led to increasingly intense competition among United States and certain European health care suppliers. Competition is focused on price, service and product performance. Pressure in these areas is expected to continue.
The company continues to increase its efforts to minimize costs and meet price competition. The company believes that its cost position will continue to benefit from improvements in manufacturing technology and increased economies of scale. The company intends to continue to develop new products and services, invest in human resources and capital to upgrade and expand facilities, leverage its cost structure and make selected acquisitions.
Credit and Working Capital Practices
As of March 1, 2002, Baxter's debt ratings on senior debt were A3 by Moody's, A by Standard & Poor's and A by Fitch. The company's credit practices and related working capital needs are comparable to those of other market participants. Collection periods tend to be longer for sales outside the United States.
Quality Management
Baxter places significant emphasis on providing quality products and services to its customers. A major portion of the company's quality systems relate to the design and development manufacturing, packaging, sterilization, handling, distribution and labeling of the products by the company. These quality systems, including control procedures that are developed and implemented by technically trained professionals, result in rigid specifications for product design, raw materials, components, packaging materials, labels, sterilization procedures and overall manufacturing process control. The quality systems integrate the efforts of suppliers of raw materials, components and finished goods to ensure we meet customer and regulatory requirements. These systems are designed to ensure that all appropriate standards and requirements are met before goods are released. In addition to other quality processes, Baxter initiated a Six Sigma Quality process several years ago to train all appropriate individuals in statistical process control and related subjects to ensure continuous improvement.
Research and Development
Baxter is actively engaged in research and development programs to develop innovative products, systems and manufacturing methods. These activities are performed at research and development centers located around the world and include facilities in Australia, Austria, Belgium, France, Germany, Italy, Japan, Malta, Sweden, the United States and Venezuela. Expenditures for Baxter-sponsored research and development activities were $427 million in 2001, $379 million in 2000 and $332 million in 1999.
Principal areas of strategic focus for research and development include recombinant therapeutics, plasma-based therapeutics, vaccines, small molecule drugs, pathogen inactivation, drug formulation technologies, medication delivery systems and kidney dialysis. The company's research efforts emphasize self-manufactured product development, and portions of that research relate to multiple product lines. For example, many product categories benefit from the company's research effort as applied to the human body's immune and circulatory systems. In addition, research relating to the performance and purity of plastic materials has resulted in advances that are applicable to a large number of the company's products.
Government Regulation
Most products manufactured or sold by the company are subject to regulation by numerous governmental agencies, both within and outside the United States. In the United States, the federal agencies that regulate the company's facilities, operations, personnel and products (their manufacture, sale, import and export) include the Food and Drug Administration (FDA), the Environmental Protection Agency, the Occupational Health & Safety Administration, the Customs Service, the Department of Commerce, the Treasury Department and others. State agencies also regulate the facilities, operations, products and personnel of the company within their respective states. Government agencies outside the United States also regulate public health, product manufacturing, environmental conditions, employment, export, customs and other aspects of the company's global operations.
With regard to the company's facilities and products, various governmental agencies, including the FDA in the United States, regulate manufacturing, labeling, promotion and advertising. In addition, the agencies have the authority to halt the distribution of medical products, detain or seize adulterated or misbranded medical products, or order the company to take other steps to correct issues surrounding the products. The agencies may also require notification of health professionals and others with regard to medical products that present risks of substantial harm to the public health. From time to time, the company has removed products from the market that were found not to meet acceptable standards.
Environmental policies of the company mandate compliance with all applicable regulatory requirements concerning environmental quality and contemplate, among other things, appropriate capital expenditures for environmental protection. Various non-material capital expenditures for environmental protection were made by Baxter during 2001 and similar expenditures are planned for 2002. See Item 3.--"Legal Proceedings."
Employees
As of December 31, 2001, Baxter employed approximately 48,000 people.
Contractual Arrangements
A substantial portion of the company's products are sold through contracts with customers, both within and outside the United States. Some of these contracts have terms of more than one year and limits on price increases. In the case of hospitals, clinical laboratories and other facilities, these contracts may specify minimum quantities of a particular product or categories of products to be purchased by the customer. In keeping with the increased emphasis on cost-effectiveness in health care delivery, the current trend among hospitals and other customers of medical products manufacturers is to consolidate into larger purchasing groups to enhance purchasing power. The medical products industry has also experienced some consolidation, partly in order to offer a broader range of products to large purchasers. As a result, transactions with customers are larger, more complex and tend to involve more long-term contracts than in the past. The enhanced purchasing power of these larger customers may also increase the pressure on product pricing, although management is unable to estimate the potential impact at this time.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995
Statements throughout this report that are not historical facts are forward-looking statements. These statements are based on the company's current expectations and involve numerous risks and uncertainties. Some of these risks and uncertainties are factors that affect all international businesses, while some are specific to the company and the health care arenas in which it operates.
Many factors could affect the company's actual results, causing results to differ, and possibly differ materially, from those expressed in any such forward-looking statements. These factors include, but are not limited to, interest rates; technological advances in the medical field; economic conditions; demand and market acceptance risks for new and existing products, technologies and health care services; the impact of competitive products and pricing; manufacturing capacity; new plant start-ups; global regulatory, trade and tax policies; regulatory, legal or other developments relating to the company's Series A, AF and AX dialyzers; continued price competition; product development risks, including technological difficulties; ability to enforce patents; actions of regulatory bodies and other government authorities; reimbursement policies of government agencies; commercialization factors; results of product testing; and other factors described elsewhere in this report or in the company's other filings with the Securities and Exchange Commission. Additionally, as discussed in Item 3.-- "Legal Proceedings," upon the resolution of certain legal matters, the company may incur charges in excess of presently established reserves. Any such charge could have a material adverse effect on the company's results of operations or cash flows in the period in which it is recorded.
Currency fluctuations are also a significant variable for global companies, especially fluctuations in local currencies where hedging opportunities are unreasonably expensive or unavailable. If the United States dollar strengthens significantly against most foreign currencies, the company's ability to realize projected growth rates in its sales and net earnings outside the United States could be negatively impacted.
The company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, but there can be no assurance that the actual results or performance of the company will conform to any future results or performance expressed or implied by such forward-looking statements.
(d) Financial Information About Foreign and Domestic Operations and Export Sales.
International operations are subject to certain additional risks inherent in conducting business outside the United States, such as changes in currency exchange rates, price and currency exchange controls, import restrictions, nationalization, expropriation and other governmental action.
Financial information is incorporated by reference from the Annual Report, pages 57--58, section entitled "Notes to Consolidated Financial Statements--Segment Information."
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Item 2.
Item 2. Properties.
Baxter owns or has long-term leases on substantially all of its major manufacturing facilities. With respect to its current operations, the company maintains 25 manufacturing facilities in the United States and its territories, including five in Puerto Rico. The company also manufactures in Australia, Austria, Belgium, Brazil, Canada, Chile, China, Colombia, Costa Rica, the Dominican Republic, France, Germany, India, Ireland, Italy, Japan, Malta, Mexico, New Zealand, the Philippines, Poland, Singapore, Spain, Switzerland, Tunisia, Turkey and the United Kingdom. While the majority of these facilities are shared by more than one of the company's business segments, ten domestic facilities and sixteen international facilities exclusively manufacture for the Medication Delivery operations; eleven domestic and eighteen international facilities exclusively manufacture for BioScience operations; and the Renal business is the exclusive operator of five international facilities. The
company also owns or operates shared distribution facilities throughout the world, including ten in the United States and Puerto Rico and 115 located in 34 foreign countries.
The company maintains a continuing program for improving its properties, including the retirement or improvement of older facilities and the construction of new facilities. This program includes improvement of manufacturing facilities to enable production and quality control programs to conform to the current state of technology and government regulations. Capital expenditures relating to continuing operations were $669 million in 2001, $547 million in 2000 and $529 million in 1999. Additions to the installed base of equipment leased to customers were $118 million in 2001, $101 million in 2000 and $102 million in 1999.
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Item 3.
Item 3. Legal Proceedings.
Baxter International and certain of its subsidiaries are named as defendants in a number of lawsuits, claims and proceedings, including product liability claims involving products now or formerly manufactured or sold by the company or by companies that were acquired by the company. These cases and claims raise difficult and complex factual and legal issues and are subject to many uncertainties and complexities, including, but not limited to, the facts and circumstances of each particular case or claim, the jurisdiction in which each suit is brought, and differences in applicable law. Accordingly, in many cases, Baxter International is not able to estimate the amount of its liabilities with respect to such matters.
Upon resolution of any of the legal matters discussed below, Baxter International may incur charges in excess of presently established reserves. While such a future charge could have a material adverse impact on the company's net income and net cash flows in the period in which it is recorded or paid, management believes that no such charge would have a material adverse effect on Baxter International's consolidated financial position.
Mammary Implant Litigation
Baxter International, together with certain of its subsidiaries, is currently a defendant in various courts in a number of lawsuits brought by individuals, all seeking damages for injuries of various types allegedly caused by silicone mammary implants previously manufactured by the Heyer-Schulte division (Heyer-Schulte) of American Hospital Supply Corporation (AHSC). AHSC, which was acquired by Baxter in 1985, divested its Heyer-Schulte division in 1984.
In December 1998, a panel of independent medical experts appointed by a federal judge announced its findings that reported medical studies contained no clear evidence of a connection between silicone mammary implants and traditional or atypical systemic diseases. In June 1999, a similar conclusion was announced by a committee of independent medical experts from the Institute of Medicine, a part of the National Academy of Sciences.
As of December 31, 2001, Baxter International, together with certain of its subsidiaries, was named as a defendant or co-defendant in 303 lawsuits and two claims relating to mammary implants, brought by approximately 618 plaintiffs, of which 503 are implant plaintiffs and the remainder are consortium or second generation plaintiffs. Of those plaintiffs, 15 currently are included in the Lindsey class action Revised Settlement described below, which accounts for 14 of the pending lawsuits against the company. Additionally, 392 plaintiffs have opted out of the Revised Settlement (representing 243 pending lawsuits), and the status of the remaining plaintiffs with pending lawsuits is unknown. Some of the opt-out plaintiffs filed their cases naming multiple defendants and without product identification; thus, not all of the opt-out plaintiffs will have viable claims against the company. As of December 31, 2001, 232 of the opt-out plaintiffs had confirmed Heyer-Schulte mammary implant product identification. Furthermore, during 2001, Baxter obtained dismissals, or agreements for dismissals, with respect to 802 plaintiffs.
In addition to the individual suits against the company, a class action on behalf of all women with silicone mammary implants was filed on March 23, 1994 and is pending in the United States District Court (U.S.D.C.) for
the Northern District of Alabama involving most manufacturers of such implants, including Baxter, as successor to AHSC (Lindsey, et al., v. Dow Corning, et al., U.S.D.C., N. Dist. Ala., CV 94-P-11558-S). The class action was certified for settlement purposes only by the court on September 1, 1994, and the settlement terms were subsequently revised and approved on December 22, 1995 (Revised Settlement). The monetary provisions of the Revised Settlement provide compensation for all present and future plaintiffs and claimants through a series of specific funds and a disease-compensation program involving certain specified medical conditions. All appeals directly challenging the Revised Settlement have been dismissed.
On January 16, 1996, Baxter, Bristol-Myers Squibb Company and Minnesota Mining and Manufacturing Company each paid $125 million into the court-established fund as an initial fund to pay claims under the Revised Settlement. Union Carbide Corporation and McGhan Medical Corporation also are parties to the Revised Settlement.
In addition to the Lindsey class action, the company also has been named in three other purported class actions in various state and provincial courts, only one of which is certified: Harrington v. Dow Corning Corp., et al., Supreme Court, British Columbia, C954330. The class action in British Columbia has been certified solely with respect to the issue of whether silicone gel breast implants are reasonably fit for their intended purpose.
On March 31, 2000, the United States Department of Justice filed an action in the federal district court in Birmingham, Alabama against Baxter and other manufacturers of breast implants, as well as the escrow agent for the revised settlement fund, seeking reimbursement under various federal statutes for medical care provided to various women with mammary implants. On September 26, 2001 the district court granted the motion of all defendants, including Baxter, to dismiss the action. The federal government has appealed the dismissal.
Baxter believes that a substantial portion of its liability and defense costs for mammary implant litigation will be covered by insurance, subject to self-insurance retentions, exclusions, conditions, coverage gaps, policy limits and insurer solvency. The company has entered into "coverage-in-place" agreements with almost all of its insurers, each of which issued or subscribed to policies of insurance between 1974 and 1985. These agreements resolve the signatory insurers' coverage defenses and specify rules and procedures for allocation and payment of defense and indemnity costs pursuant to which signatory insurers will reimburse Baxter for mammary implant losses. Five of the company's claims-made insurers, which issued policies subsequent to 1985, have agreed to pay under their policies with respect to mammary implant claims. The combined total of the amount thus far paid by insurers, committed for payment, and projected by Baxter to be paid by insurers under these agreements is in excess of $800 million, based on the company's current estimate of mammary implant expenditures.
Plasma-Based Therapies Litigation
Baxter currently is a defendant in a number of claims and lawsuits brought by individuals who have hemophilia, all seeking damages for injuries allegedly caused by anti-hemophilic factor concentrates VIII or IX derived from human blood plasma (factor concentrates) processed by the company from the late 1970s to the mid-1980s. The typical case or claim alleges that the individual was infected with the HIV virus by factor concentrates, which contained the HIV virus. None of these cases involves factor concentrates currently processed by the company.
As of December 31, 2001, Baxter was named in 49 lawsuits and 98 claims in the United States, France, Ireland, Italy, Japan, Spain, Taiwan and The Netherlands. All U.S. federal court factor concentrate cases were transferred to the U.S.D.C. for the Northern District of Illinois for case management under Multi District Litigation (MDL) rules (MDL Docket No. MDL-986), and were remanded in 2000 to the courts in which they were filed.
In most states, Baxter's potential liability is limited by "blood shield" laws that provide that the sale of blood or blood derivatives, including factor concentrates, is not covered by the doctrine of strict liability. As a result, each claimant must prove that his or her injuries were caused by the company's negligence.
On May 6, 1997, the U.S.D.C. approved a class action settlement submitted by the plaintiffs' steering committee for the MDL, Baxter, Alpha Therapeutic Corporation, Armour Pharmaceutical and Bayer Corporation. The essential terms of the settlement provide payments of $100,000 to each HIV-positive person with hemophilia in the United States who can demonstrate use of factor concentrates produced by one of the settling defendants between 1978 and 1985. Additionally, the defendants have established a $40 million fund for payment of attorneys' fees, costs and court-administration expenses. Baxter's agreed contribution to the proposed settlement is 20 percent of the total settlement proceeds.
Baxter and the other defendants have reached agreements to settle potential subrogation and reimbursement claims with most private insurers, the federal government and all 50 states, the District of Columbia and Puerto Rico. As of December 31, 2001, approximately 6,500 claimant groups had been found eligible to participate in the settlement, and approximately 350 claimants had opted out of the settlement. Approximately 6,233 claimant groups had received payments as of December 31, 2001, and seven claimant groups remain as of that date.
In Japan, Baxter is a defendant, along with the Japanese government and four other co-defendants, in factor concentrates cases in Osaka, Tokyo, Nagoya, Tohoku, Fukuoka, Sapporo and Kumamoto. As of December 31, 2001, the cases involved 1,348 plaintiffs, of whom 1,338 have settled their claims. Based upon the Osaka and Tokyo courts' recommendations, the parties have agreed to a settlement of all pending and future factor concentrate cases. In general, the settlement provides for payment of an up-front, lump-sum amount of approximately $360,000 per plaintiff to be funded 40 percent by the Japanese government and 60 percent by the corporate defendants. The share of the settlement to be paid by each corporate defendant was determined based upon its market share, resulting in a contribution by Baxter of 15.36 percent. The portion of the settlement to be funded by the corporate defendants will include credits for certain prior payments made by the corporate defendants under a separate Japanese government-administered program, which pays monthly amounts to HIV-positive and AIDS-manifested people with hemophilia and their survivors. Additionally, monthly payments will be made to each plaintiff according to a set schedule.
In addition, Immuno International AG (Immuno), acquired by Baxter in 1996, has unsettled claims for damages for injuries allegedly caused by its plasma-based therapies. The typical claim alleges that the individual with hemophilia was infected with HIV by factor concentrates containing the HIV virus. Additionally, Immuno faces multiple claims stemming from its vaccines and other biologically-derived therapies. A portion of the liability and defense costs related to these claims will be covered by insurance, subject to exclusions, conditions, policy limits and other factors. Pursuant to the stock purchase agreement between the company and Immuno, as revised in April 1999 in consideration for payment by the company of 29 million Swiss francs to Immuno as additional purchase price, approximately 26 million Swiss francs of the purchase price is being withheld to cover these contingent liabilities.
Baxter is also currently a defendant in a number of claims and lawsuits brought by individuals who infused the company's Gammagard(R) IVIG (intravenous immuno-globulin), all of whom are seeking damages for Hepatitis C infections allegedly caused by infusing Gammagard(R) IVIG. As of December 31, 2001, Baxter was a defendant in 21 lawsuits and 13 claims in the United States, Denmark, France, Germany, Italy, Spain and the United Kingdom. One class action in the United States has been certified. All U.S. federal court Gammagard(R) IVIG cases have been transferred to the U.S.D.C. for the Central District of California for case management under MDL rules. On February 21, 1996, the court certified a nationwide class of persons who had infused Gammagard(R) IVIG (Geary, et al., v. Baxter Healthcare Corporation, U.S.D.C., C.D., CA, ML-95-160-R). On September 18, 2000, the U.S.D.C. for the Central District of California approved a settlement of the class action that would provide financial compensation for U.S. individuals who used Gammagard(R) IVIG between January 1993 and February 1994.
Baxter has entered into coverage in place agreements covering factor concentrates lawsuits with substantially all of its insurers that issued or subscribed to pertinent policies of insurance between 1978 and 1985.
These agreements resolve the signatory insurers' coverage defenses and specify rules and procedures for allocation and payment of defense and indemnity costs pursuant to which the signatory insurers will reimburse the company for factor concentrates losses. The company believes that a substantial portion of the liability and defense costs related to all of its plasma-based therapies litigation will be covered by insurance, subject to self-insurance retentions, exclusions, conditions, coverage gaps, policy limits and insurer solvency.
Net Litigation Charges
Baxter began accruing for its estimated liability resulting from the settlement of the mammary implant related class action and to litigate or settle cases and claims involving opt-outs in 1993. In 1998, the company accrued an additional $250 million for its estimated liability resulting from the class action settlement and remaining opt-out cases and claims, and recorded a receivable for related estimated insurance recoveries of $121 million, resulting in an additional net charge of $129 million.
Baxter began accruing for its estimated worldwide liability for litigation and settlement costs involving plasma-based therapies cases in 1993. The company revised its estimate of liabilities and insurance recoveries in 1998, and accrued an additional $180 million for its estimated liability for plasma-based therapies litigation and other litigation and recorded a receivable for related estimated insurance recoveries of $131 million, for a net charge of $49 million.
Other
As of December 31, 2001, Baxter International and certain of its subsidiaries were named as defendants in two civil lawsuits, one of which is a purported class action, seeking damages on behalf of persons who allegedly died or were injured as a result of exposure to Baxter's A, AF and AX series dialyzers. The cases, which were filed in November 2001, are pending in the U.S.D.C. for the Middle District of Louisiana and the U.S.D.C. for the Northern District of Illinois. The company has reached settlements with a number of the families of patients who died in Spain and Croatia after undergoing hemodialysis on Baxter Althane series dialyzers. Government criminal investigations concerning the patient deaths are pending in Spain and Croatia. Other lawsuits and claims may be filed in the United States and elsewhere.
As of December 31, 2001, Baxter International and certain of its subsidiaries were named as defendants, along with others, in four lawsuits pending in U.S. federal courts on behalf of various classes of purchasers of Medicare and Medicaid eligible drugs alleged to have been injured by Baxter and other defendants as a result of pricing practices for such drugs, which are alleged to be artificially inflated. These cases, which were filed in the fourth quarter of 2001, are pending in the U.S. District Courts for the Central District of California, Northern District of Illinois, Eastern District of Texas and District of Massachusetts. Claimants seek damages and declaratory and injunctive relief under various state and/or federal statutes. In addition, in January 2002, the Attorney General of Nevada filed a civil suit in the Second Judicial District Court of Washoe County, Nevada naming a subsidiary of Baxter International as a defendant. The lawsuit, which seeks damages, injunctive relief, civil penalties and restitution, alleges that prices for Medicare and Medicaid eligible drugs were artificially inflated in violation of various state laws. Various state and federal agencies are conducting civil investigations into the marketing and pricing practices of Baxter and others with respect to Medicare and Medicaid reimbursement.
As of September 30, 1996, the date of the spin-off of Allegiance Corporation ("Allegiance") from Baxter International, Allegiance assumed the defense of litigation involving claims related to Allegiance's businesses, including certain claims of alleged personal injuries as a result of exposure to natural rubber latex gloves. Allegiance has not been named in most of this litigation but will be defending and indemnifying Baxter pursuant to certain contractual obligations for all expenses and potential liabilities associated with claims pertaining to latex gloves. As of December 31, 2001, the company was named as a defendant in 557 lawsuits, including the following purported class action: Swartz v. Baxter Healthcare Corporation, et al., Court of Common Pleas,
Jefferson County, PA, 656-1997 C.D. On February 26, 1997, all federal cases involving latex gloves were ordered to be transferred to the U.S.D.C. for the Eastern District of Pennsylvania for case management under the MDL rules (MDL Docket No. 1148).
Baxter has been named a potentially responsible party (PRP) for environmental clean-up costs at a number of hazardous-waste sites. Under the United States Superfund statute and many state laws, generators of hazardous waste that is sent to a disposal or recycling site are liable for clean-up of the site if contaminants from that property later leak into the environment. The laws generally provide that a PRP may be held jointly and severally liable for the costs of investigating and remediating the site. Allegiance has assumed responsibility for all but six of these sites. The estimated exposure for Baxter's remaining six sites is approximately $2 million, which has been accrued (and not discounted) in the company's financial statements.
In addition to the cases discussed above, Baxter is a defendant in a number of other claims, investigations and lawsuits. Based on the advice of counsel, management does not believe that, individually or in the aggregate, these other claims, investigations and lawsuits will have a material adverse effect on the company's results of operations, cash flows or consolidated financial position.
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Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
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PART II
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Item 5.
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters.
Incorporated by reference from the Annual Report, page 59, section entitled "Notes to Consolidated Financial Statements--Quarterly Financial Results and Market for the Company's Stock (Unaudited)."
On December 7, 2001, pursuant to the exemption from registration under Section 4(2) of the Securities Act, Baxter International issued 9,656,237 shares of its common stock to a financial institution in order to fund the company's acquisition of ASTA Medica Onkologie GmbH & CoKG. The shares are subject to transfer restrictions.
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Item 6.
Item 6. Selected Financial Data.
Incorporated by reference from the Annual Report, page 62, section entitled "Five-Year Summary of Selected Financial Data."
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Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Incorporated by reference from the Annual Report, pages 27-36, section entitled "Management's Discussion and Analysis."
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Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Incorporated by reference from the Annual Report, pages 34-36, section entitled "Financial Instrument Market Risk."
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Item 8.
Item 8. Financial Statements and Supplementary Data.
Incorporated by reference from the Annual Report, pages 37-59, sections entitled "Report of Independent Accountants," "Consolidated Balance Sheets," "Consolidated Statements of Income," "Consolidated Statements of Cash Flows," "Consolidated Statements of Stockholders' Equity and Comprehensive Income" and "Notes to Consolidated Financial Statements."
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Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
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PART III
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Item 10.
Item 10. Directors and Executive Officers of the Registrant.
(a) Identification of Directors
Incorporated by reference from Baxter's proxy statement for use in connection with its annual meeting of stockholders to be held on May 7, 2002 (Proxy Statement), page 4, section entitled "Election of Directors--Proposal 1 on the Proxy Card," and pages 9-11, section entitled "Board of Directors--Director Biographies."
(b) Identification of Executive Officers
Following are the names and ages, as of March 1, 2002, of the executive officers of Baxter International, and one or both of its two principal operating subsidiaries, Baxter Healthcare Corporation and Baxter World Trade Corporation, their positions and summaries of their backgrounds and business experience. All executive officers of Baxter International are elected or appointed by the board of directors and hold office until the next annual meeting of directors and until their respective successors are elected and qualified. The annual meeting of directors is held on the date of the annual meeting of stockholders. All executive officers of Baxter Healthcare Corporation and Baxter World Trade Corporation are elected or appointed by the boards of directors of the applicable subsidiary and hold office until their respective successors are elected and qualified. As permitted by applicable law, actions by these boards (and their sole stockholder, Baxter International) may be taken by written consent in lieu of a meeting.
(1) Baxter International Inc. Executive Officers
Harry M. Jansen Kraemer, Jr., age 47, has been a director of Baxter International since 1995 and chairman of the board since January 1, 2000. Mr. Kraemer has been president of Baxter International since 1997 and chief executive officer since January 1, 1999. From 1993 to 1997, he served as senior vice president and chief financial officer of Baxter International. Mr. Kraemer also serves as a director of Comdisco Inc. and Science Applications International Corporation.
Brian P. Anderson, age 51, is senior vice president and chief financial officer of Baxter International, having served in those capacities since February 1998. Mr. Anderson previously was corporate vice president of finance of Baxter International beginning in May 1997, and was the corporate controller from 1993 to 1997.
Timothy B. Anderson, age 55, is senior vice president, corporate strategy and development, of Baxter International, having served in that capacity since May 2001. He was group vice president, corporate strategy and development, from November 1999 to May 2001. Prior to that Mr. Anderson served as group vice president of Baxter Healthcare Corporation and Baxter World Trade Corporation.
J. Robert Hurley, age 52, is a corporate vice president, integration management, of Baxter International. Prior to that from 1993 to 2000, he was a corporate vice president of Baxter World Trade Corporation and president--Japan.
Neville J. Jeharajah, age 48, is a corporate vice president, investor relations and financial planning, of Baxter International, having served in that capacity since February 2001. Prior to that since 1982, Mr. Jeharajah held various finance positions with the company, the most recent of which was vice president, financial planning and investor relations.
Karen J. May, age 43, is a corporate vice president, human resources, of Baxter International, having served in that capacity since February 2001. Prior to her current appointment she was vice president, human resources
from 2000 until 2001, vice president, global planning and staffing from 1998 to 2000, vice president, international finance from 1997 to 1998 and vice president, corporate audit from 1994 to 1997.
Steven J. Meyer, age 45, is treasurer of Baxter International, having served in that capacity since February 1997.
John L. Quick, age 57, is a corporate vice president, quality/regulatory, of Baxter International, having served in that capacity since 1996.
Jan Stern Reed, age 42, is corporate secretary and associate general counsel of Baxter International, having served in those capacities since February 1998. Prior to that she was assistant corporate secretary and assistant general counsel from February 1997 to February 1998.
Norbert G. Reidel, age 44, is a corporate vice president and chief scientific officer of Baxter International, having served in those capacities since May 2001. From 1998 to 2001 he served as president of the recombinant business unit of the BioScience division of Baxter Healthcare Corporation. Prior to joining Baxter in 1998 he was head of worldwide biotechnology and worldwide core research functions at Hoechst Marion Roussel.
Thomas J. Sabatino, Jr., age 43, is a senior vice president and general counsel of Baxter International, having served as a senior vice president since May 2001 and as general counsel since December 1997. He was a corporate vice president from December 1997 to May 2001 and assistant secretary from February 1997 to December 1997. From 1995 to December 1997, Mr. Sabatino was an associate general counsel of Baxter Healthcare Corporation.
Michael J. Tucker, age 49, is a senior vice president of Baxter International, responsible for human resources, communications and Europe. He has served as senior vice president, human resources since September 1995, of communications since May 2000 and of Europe since February 2001.
(2) Baxter Healthcare Corporation and Baxter World Trade Corporation Executive Officers
Eric A. Beard, age 50, is a corporate vice president of Baxter World Trade Corporation and president--Baxter Europe, Africa and Middle East, having served in those capacities since October 1998. Prior to that, Mr. Beard was president of a division of a subsidiary of Baxter World Trade Corporation.
Carlos del Salto, age 59, is a senior vice president Intercontinental/Asia of Baxter World Trade Corporation, having served in that capacity since 1996, and president--Latin America.
David F. Drohan, age 63, is a senior vice president of Baxter Healthcare Corporation and president--Medication Delivery, having served as a senior vice president since May 2001 and as president--Medication Delivery since 1996. He was a corporate vice president from 1996 to May 2001.
James M. Gatling, age 52, is a corporate vice president, manufacturing operations, of Baxter Healthcare Corporation, having served in that capacity since December 1996.
Thomas H. Glanzmann, age 43, is a senior vice president of Baxter World Trade Corporation and Baxter Healthcare Corporation, and president--BioScience. He has served as a senior vice president since May 2001 and was a corporate vice president from October 1998 to May 2001. Prior to that, Mr. Glanzmann was president of a division of a subsidiary of Baxter World Trade Corporation.
Alan L. Heller, age 48, is a senior vice president of Baxter Healthcare Corporation and Baxter World Trade Corporation, and president--Renal, having served as a senior vice president since May 2001 and as president--Renal since he joined the Company in October 2000. He was a group vice president from October 2000 to May 2001. Prior to that, Mr. Heller was co-president and chief operating officer of G.D. Searle & Co.
David C. McKee, age 54, is a corporate vice president and deputy general counsel of Baxter Healthcare Corporation and Baxter World Trade Corporation, having served as corporate vice president since 1997 and 1996, respectively, and as deputy general counsel of both entities since 1996. Mr. McKee has held various positions with Baxter International, including vice president from 1996 to 1997, corporate vice president from 1997 to 1999, deputy general counsel from 1996 to 1999, and corporate secretary from February 1997 to February 1998.
Gregory P. Young, age 48, is a corporate vice president of Baxter Healthcare Corporation and president of the Fenwal division. He has served as a corporate vice president since February 2001 and as president of the Fenwal division since 1999. Prior to that from 1985 to 1999, Mr. Young served in roles of increasing responsibility within the Medication Delivery division of Baxter Healthcare Corporation.
(c) Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Incorporated by reference from the Proxy Statement, page 25, section entitled "Section 16(a) Beneficial Ownership Reporting Compliance."
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Item 11.
Item 11. Executive Compensation.
Incorporated by reference from the Proxy Statement, pages 13-14, section entitled "Board of Directors--Compensation of Directors" and pages 19-23, section entitled "Executive Compensation."
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Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Incorporated by reference from the Proxy Statement, pages 24-25, section entitled "Ownership of Baxter Stock."
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Item 13.
Item 13. Certain Relationships and Related Transactions.
None.
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PART IV
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Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
The following documents are filed as a part of this report:
All other schedules have been omitted because they are not applicable or not required.
(b) Reports on Form 8-K
On November 5, 2001, Baxter International filed a current report on Form 8-K under Item 5, ''Other Events,'' which reported that a Baxter International subsidiary announced that preliminary tests lead the company to believe that a processing fluid used in the manufacturing operation in its Ronneby, Sweden facility may have played a role in hemodialysis patient deaths.
On November 28, 2001, Baxter International filed a current report on Form 8-K under Item 5, "Other Events," which reported that a Baxter International subsidiary reached a settlement of certain claims in connection with its Althane dialyzers.
On November 29, 2001, Baxter International filed a current report on Form 8-K under Item 5, "Other Events," relating to Baxter Healthcare Corporation's participation in the production of smallpox vaccine with Acambis at the request of the U.S. government.
(c) Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index, which is incorporated herein by reference. Exhibits in the Exhibit Index marked with a "C" in the left margin constitute management contracts or compensatory plans or arrangements contemplated by Item 14(a) of Form 10-K. The list of exhibits so designated is incorporated by reference in this Part IV, Item 14.
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Baxter International Inc.
Our audits of the consolidated financial statements referred to in our report dated February 14, 2002 appearing in the 2001 Annual Report to Stockholders of Baxter International Inc. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 14(a) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Chicago, Illinois February 14, 2002
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SCHEDULE II
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Valuation and Qualifying Accounts
(in million of dollars)
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(a) Valuation accounts of acquired or divested companies and foreign currency translation adjustments. Reserves are deducted from assets to which they apply.
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BAXTER INTERNATIONAL INC.
By: /s/ HARRY M. JANSEN KRAEMER, JR. -------------------------------- Harry M. Jansen Kraemer, Jr. Chairman and Chief Executive Officer
DATE: March 13, 2002
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Harry M. Jansen Kraemer, Jr. and Jan Stern Reed, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, in any and all capacities, to sign any or all amendments to this Form 10-K, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 13, 2002.
Signature Title --------- -----
/s/ HARRY M. JANSEN KRAEMER, JR. Chairman of the Board of Directors and Chief - -------------------------------- Executive Officer (principal executive Harry M. Jansen Kraemer, Jr. officer)
/s/ BRIAN P. ANDERSON Senior Vice President and Chief Financial - -------------------------------- Officer (principal financial officer and Brian P. Anderson principal accounting officer)
/s/ WALTER E. BOOMER Director - ------------------------------- Walter E. Boomer
/s/ PEI-YUAN CHIA Director - ------------------------------- Pei-yuan Chia
/s/ JOHN W. COLLOTON Director - ------------------------------- John W. Colloton
/s/ SUSAN CROWN Director - ------------------------------- Susan Crown
/s/ BRIAN D. FINN Director - ------------------------------- Brian D. Finn
Signature Title --------- -----
/s/ GAIL D. FOSLER Director - ---------------------------------- Gail D. Fosler
/s/ MARTHA R. INGRAM Director - ---------------------------------- Martha R. Ingram
/s/ JOSEPH B. MARTIN, M.D., PH.D. Director - ---------------------------------- Joseph B. Martin, M.D., Ph.D.
/s/ THOMAS T. STALLKAMP Director - ---------------------------------- Thomas T. Stallkamp
/s/ MONROE E. TROUT, M.D. Director - ---------------------------------- Monroe E. Trout, M.D.
/s/ FRED L. TURNER Director - ---------------------------------- Fred L. Turner
EXHIBITS FILED WITH SECURITIES AND EXCHANGE COMMISSION
- -------- * Incorporated herein by reference. C Exhibit contemplated by Item 14(a)(3) of Form 10-K.
Copies of the above exhibits are available at a charge of 35 cents per page upon written request to the Stockholder Services Department, Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015. Copies are also available at a charge of at least 24 cents per page from the Public Reference Room of the Securities and Exchange Commission, Washington, D.C., 20549.