Edgar Filing: BAXTER INTERNATIONAL INC

Filed Pursuant to Rule 424(b)(2)
Registration Nos. 333-101122 and 333-101779

Prospectus Supplement
(To Prospectus dated November 20, 2002)

13,000,000 Shares

[LOGO] Baxter

Baxter International Inc.

Common Stock

---------------------

We are selling 13,000,000 shares of our common stock by this prospectus
supplement.

Our common stock is traded on the New York Stock Exchange under the symbol
"BAX." The last reported sale price of our common stock on December 11, 2002
was $28.78 per share.

Concurrently with this offering, we are offering, by means of a separate
prospectus supplement, 22,000,000 7% Equity Units (or 25,000,000, if the
underwriters exercise in full their over-allotment option). Each Equity Unit
will have a stated amount of $50 and will consist of a contract to purchase
shares of our common stock and, initially, a 3.6% senior note due February 16,
2008. Pursuant to the purchase contracts, we will have an obligation to
deliver, on or prior to February 16, 2006, a maximum of 38,220,600 shares of
our common stock (43,432,500 shares if the underwriters exercise in full their
over-allotment option), subject to anti-dilution adjustments as provided in the
purchase contracts. Neither offering is contingent upon the other.

Per Share Total
--------- ------------

Public offering price................. $28.7800 $374,140,000
Underwriting discounts and commissions $ 1.1052 $ 14,367,600
Proceeds, before expenses, to Baxter.. $27.6748 $359,772,400

The underwriters may also purchase up to an additional 1,950,000 shares of
our common stock at the public offering price less the underwriting discounts
and commissions until 30 days after the date of this prospectus supplement in
order to cover over-allotments, if any.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.

The shares will be ready for delivery in book-entry form only through The
Depository Trust Company on or about December 17, 2002.

Joint Book-Running Managers

Banc of America Securities LLC
Credit Suisse First Boston
UBS Warburg

---------------------

Deutsche Bank Securities

JPMorgan

Salomon Smith Barney

The date of this prospectus supplement is December 11, 2002.

TABLE OF CONTENTS

Prospectus Supplement

About This Prospectus Supplement............ S-1
Forward-Looking Statements.................. S-1
Prospectus Supplement Summary............... S-3
Use of Proceeds............................. S-6
Common Stock Price Range and Dividends...... S-6
Selected Financial Information.............. S-7
Material U.S. Federal Tax Considerations For
Non-U.S. Holders of Common Stock.......... S-9
Underwriting................................ S-11
Notice to Canadian Residents................ S-13
Validity of the Common Stock................ S-14
Independent Accountants..................... S-14
Incorporation by Reference.................. S-15

Prospectus

Notice to Investors.......................... 2
Where You Can Find More Information.......... 2
Caution Regarding Forward-Looking
Statements................................. 3
About the Company............................ 3
Use of Proceeds.............................. 4
Common Stock................................. 4
Preferred Stock.............................. 5
Convertible Preferred Stock.................. 5
Stock and Debt Warrants...................... 6
Convertible Debt Securities.................. 6
Equity Purchase Contracts and Equity Purchase
Units...................................... 7
Debt Securities.............................. 7
Plan of Distribution......................... 21
Legal Matters................................ 23
Independent Accountants...................... 23

---------------------

You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with information other than that
contained or incorporated by reference in this prospectus supplement or the
accompanying prospectus. The information in this prospectus supplement and the
accompanying prospectus may be accurate only as of their respective dates.

We are offering to sell, and are seeking offers to buy, the common stock
only in jurisdictions where offers and sales are permitted. The distribution of
this prospectus supplement and the accompanying prospectus and the offering of
the common stock in certain jurisdictions may be restricted by law. Persons
outside the United States who come into possession of this prospectus
supplement and the accompanying prospectus must inform themselves about and
observe any restrictions relating to the offering of the common stock and the
distribution of this prospectus supplement and the accompanying prospectus
outside the United States. This prospectus supplement and the accompanying
prospectus do not constitute, and may not be used in connection with, an offer
to sell, or a solicitation of an offer to buy, any securities offered by this
prospectus supplement and the accompanying prospectus by any person in any
jurisdiction in which it is unlawful for such person to make such an offer or
solicitation.

ABOUT THIS PROSPECTUS SUPPLEMENT

This document is in two parts. The first part is this prospectus supplement,
which describes the specific terms of this common stock offering and also adds
to and updates information contained in the accompanying prospectus and the
documents incorporated by reference into the prospectus. The second part, the
accompanying prospectus, gives more general information, some of which does not
apply to this offering.

If the description of the offering varies between this prospectus supplement
and the accompanying prospectus, you should rely on the information contained
in or incorporated by reference into this prospectus supplement.

Unless we have indicated otherwise, or the context otherwise requires,
references in this prospectus supplement and the accompanying prospectus to
"Baxter," "company," "we," "us" and "our" or similar terms are to Baxter
International Inc. and its subsidiaries.

FORWARD-LOOKING STATEMENTS

The matters discussed in this prospectus supplement and the accompanying
prospectus that are not historical facts include forward-looking statements.
These statements are based on our 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 us and the
health-care arenas in which we operate. Many factors could affect our 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 in this prospectus supplement or in other filings
with the Securities and Exchange Commission.

S-1

Additionally, upon the resolution of certain legal matters, we may incur
charges in excess of presently established reserves. Any such charge could have
a material adverse effect on our results of operations or cash flows in the
period in which it is recorded or paid.

We believe that our expectations with respect to forward-looking statements
are based upon reasonable assumptions within the bounds of our knowledge of our
business and operations, but there can be no assurance that our actual results
or performance will conform to any future results or performance expressed or
implied by such forward-looking statements.

S-2

PROSPECTUS SUPPLEMENT SUMMARY

This summary contains basic information about us and this offering. Because
it is a summary, it does not contain all of the information that you should
consider before investing. You should read this entire prospectus supplement
carefully, including our financial statements and the notes thereto, before
making an investment decision. Except as otherwise noted, all information in
this prospectus supplement assumes no exercise of the underwriters'
over-allotment option.

BAXTER INTERNATIONAL INC.

We were incorporated under Delaware law in 1931. We engage 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.

Company Overview

We operate 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 summary do not materially differ in their impact across each of our
three segments.

Medication Delivery

Business Description. Baxter was founded in 1931 as the first commercial
manufacturer of intravenous (IV) solutions in glass bottles. Forty years later,
we set a new standard for IV therapy with the introduction of the first plastic
IV containers. Today, we manufacture a range of products that deliver fluids,
therapies and medications to patients. IV solutions represent only 20 percent
of our Medication Delivery sales, while 80 percent of our Medication Delivery
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. We continue to participate in the consolidation of the
global marketplace for medication-delivery products, particularly in developing
markets. We expect to accelerate growth through expansion of our higher-margin
specialty products outside the United States, building on our strong base in IV
solutions. We continue to broaden our portfolio of new products and
technologies for medication delivery through internal development, acquisitions
and alliances. We also leverage our strengths in anesthesia, drug delivery and
infusion systems to provide customers with innovative solutions at all points
of care. In 2001, our oncology business was expanded with the acquisition of
ASTA Medica Oncology, a German-based manufacturer of chemotherapy drugs.

Product Development. We are developing a next-generation volumetric infusion
system with enhanced features and continue to expand our line of drug-delivery
platforms. In November 2002, in a private transaction, we acquired Epic
Therapeutics, Inc., a privately-held drug delivery company that specializes in
the formulation of various types of drugs for injection or inhalation,
including controlled-release protein therapeutics. In

S-3

June 2002, we signed a definitive agreement with Wyeth to acquire the majority
of ESI Lederle (ESI), a division of Wyeth, for approximately $305 million. ESI
is a leading manufacturer and distributor of injectable drugs used in the U.S.
hospital market, offering a complete range of sterile injectable manufacturing
capabilities, including ampules and vials. ESI primarily manufactures
injectable generic drugs, which leverages our injectable expertise, channel
strength, manufacturing processes, customer relationships and research and
development. In 2001, we 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. We also have several nutraceuticals in
the pipeline.

BioScience

Business Description. We introduced the first commercially produced Factor
VIII concentrate to treat hemophilia in 1966. Today, we are 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. We also develop biosurgery products, used for
hemostasis, tissue-sealing and tissue-regeneration, and vaccines. We also are 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. Our strategy for increasing growth in our 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 May 2002, we acquired Fusion Medical Technologies,
Inc. (Fusion) for $161 million. The acquisition of Fusion, a business that
develops and commercializes proprietary products used to control bleeding
during surgery, supports our strategic initiative to expand and enhance our
portfolio of innovative therapeutic solutions for biosurgery and tissue
regeneration. Fusion's expertise in collagen- and gelatin-based products
complements our fibrin-based technologies. With the acquisition of Fusion, we
offer surgeons a broader array of solutions to seal tissue, enhance wound
healing and manage hemostasis, including active bleeding. The purchase price
was paid in 2,806,660 shares of our common stock. In 2001, we 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. We also began clinical trials
on a Factor VIII gene therapy in 2000 under our relationship with GenStar. In
the area of vaccines, we received additional approvals for our NeisVac-C
vaccine for meningitis C in 2001. We are also developing cell-culture-derived
vaccines for influenza, smallpox and other diseases. During the second quarter
of 2002, we launched our BAXJECT needle-less transfer device, which eases the
preparation of hemophilia medication for patients and their caregivers, and
submitted a Biologics License Application with the U.S. Food and Drug
Administration for marketing approval of the company's new Antihemophilic
Factor (Recombinant), Plasma/Albumin Free Method (rAHF-PFM). Via our
relationship with Cerus Corporation, we received CE mark approval for the
INTERCEPT Blood System disposable set for inactivating pathogens in platelets.

Renal

Business Description. We are 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, we introduced products and
services for peritoneal

S-4

dialysis (PD), a home-based therapy. Today, we are 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 the United States, we work with payers to provide
disease-management services and with nephrologists to operate interventional
outpatient centers.

Growth Strategy. We are growing our 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. Our "integrated care"
strategy looks at that spectrum of care and we consider where it makes sense to
participate. Our 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 our continued leadership and
growth in renal care, with several new product launches. These include our
first synthetic HD dialyzer, called Syntra, and new HD instruments for
self-care centers, the home and the acute-care setting. In November 2002, we
received clearance from the U.S. Food and Drug Administration to market the
Accura Hemofiltration System, our new instrument that delivers continuous renal
replacement (CRRT) and plasma therapies in critical care settings. This system
is primarily used for patients suffering from acute renal failure, however, it
is flexible enough to deliver other critical therapies such as therapeutic
plasma exchange, which is used to treat a variety of autoimmune and other
serious disorders. We plan to introduce new and improved approaches to PD that
provide unique patient benefits. We also expect to receive approval from the
U.S. Food and Drug Administration for Extraneal PD solution in the near term.
We also recently launched 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.

RECENT DEVELOPMENTS

On December 3, 2002, we announced our intent to divest the majority of the
services component of our Renal business and focus our Renal business primarily
on products used in the treatment of kidney disease. Our renal services
portfolio includes U.S.-based RMS Disease Management and RMS Lifeline, as well
as Renal Therapy Services (RTS) dialysis centers, which are located outside the
United States. We intend to retain certain RTS centers that are integral to our
renal products business in particular markets. The majority of the RTS centers
we plan to sell are located in Latin America and Europe. The total service
operations we intend to divest accounted for approximately 13 percent of our
Renal business' 2001 sales of $1.9 billion. We expect to record an after-tax
charge of approximately $250 million, or $.40 per diluted common share, against
fourth-quarter earnings related to the divestiture of these businesses.
Approximately 90 percent of the charge will be non-cash. In addition, the Renal
services component to be divested will be accounted for as discontinued
operations.

On November 18, 2002, we declared a regular annual dividend of $0.582 per
share of our common stock. The dividend is payable on January 6, 2003 to
stockholders of record as of the close of business on December 13, 2002.
Because we will issue the shares of our common stock to be sold in this
offering after December 13, 2002, investors in this offering will not be
entitled to the dividend payment on January 6, 2003.

In June 2002, we signed a definitive agreement to acquire the majority of
ESI Lederle (ESI), a division of Wyeth, for approximately $305 million in cash.
ESI is a leading manufacturer and distributor of injectable drugs used in the
U.S. hospital market, and it offers a complete range of sterile injectable
manufacturing capabilities, including ampules and vials. Under the agreement,
we will acquire ESI's generic injectable products and patent-expired branded
products to expand our anesthesia and critical care portfolio. We also will
acquire a 330,000-square-foot facility for manufacturing injectable,
small-volume drugs located in Cherry Hill, New Jersey. The addition of ESI
leverages our injectable expertise, channel strength, manufacturing processes,
customer relationships and research and development. The acquisition, which
will be included in the Medication Delivery segment and is subject to approval
by regulatory authorities, is expected to close during the fourth quarter of
2002. It is anticipated that a portion of the proceeds of this offering will be
used to fund this acquisition.

S-5

USE OF PROCEEDS

Our net proceeds, after deducting underwriting discounts and commissions,
from the sale of 13,000,000 shares of common stock will be approximately $360
million ($414 million if the underwriters' over-allotment option is exercised
in full). In addition, we expect to receive net proceeds of approximately
$1.067 billion from our concurrent Equity Units offering, after deducting
underwriting discounts and commissions ($1.213 billion if the underwriters'
over-allotment option is exercised in full). We intend to use approximately
$400 million of the total net proceeds to fund already-announced acquisitions,
including the pending acquisition of ESI Lederle, the remaining net proceeds
primarily to settle certain forward purchase agreements related to our common
stock and the remainder to retire a portion of our existing indebtedness.
Certain of the counterparties to the forward purchase agreements are
underwriters for this offering.

COMMON STOCK PRICE RANGE AND DIVIDENDS

Our common stock is traded on the New York Stock Exchange under the symbol
"BAX." The following table sets forth the reported high and low sales prices
for our common stock as quoted by the New York Stock Exchange and the dividends
declared per share of common stock for the periods indicated as adjusted for
our stock split in May 2001:

Price Range Dividend
--------------- Cash Per
High Low Share
------- ------- --------

2000
First Quarter............................. $33.780 $25.910 $0.000
Second Quarter............................ 36.000 28.220 0.000
Third Quarter............................. 42.380 34.750 0.000
Fourth Quarter............................ 44.310 37.880 0.582
2001
First Quarter............................. $47.600 $40.750 $0.000
Second Quarter............................ 54.000 43.950 0.000
Third Quarter............................. 55.050 47.500 0.000
Fourth Quarter............................ 55.500 45.950 0.582
2002
First Quarter............................. $59.600 $51.430 $0.000
Second Quarter............................ 59.480 44.090 0.000
Third Quarter............................. 43.410 30.550 0.000
Fourth Quarter (through December 11, 2002) 32.090 24.070 *

The last reported sale price for our common stock on the New York Stock
Exchange on December 11, 2002 was $28.78 per share.

* On November 18, 2002 our board of directors declared a dividend of $0.582
per share, payable on January 6, 2003 to holders of record as of the close of
business on December 13, 2002. Because we will issue the shares of our common
stock to be sold in this offering after December 13, 2002, investors in this
offering will not be entitled to the dividend payment on January 6, 2003. Our
dividend decisions are based on and affected by a number of factors, including
our operating requirements and the impact of regulatory restrictions.

S-6

SELECTED FINANCIAL INFORMATION

The selected financial data for each of the years during the five year
period ended December 31, 2001 were derived from our audited consolidated
financial statements which have been examined and reported upon by
PricewaterhouseCoopers LLP, independent public accountants. The selected
financial data at and for the nine months ended September 30, 2002 and 2001
were derived from our unaudited consolidated financial statements which have
been reviewed by PricewaterhouseCoopers LLP, independent public accountants,
and include all adjustments, consisting of normal recurring accruals, which we
consider necessary for a fair presentation of our financial position and
results of operations as of that date and for that period.

The table below reflects our consolidated financial position and results of
operations. All material intercompany transactions and balances have been
eliminated. Our board of directors declared a two-for-one stock split effected
in the form of a 100% stock dividend distributed on May 30, 2001 to
stockholders of record as of May 9, 2001. All share and per share data have
been adjusted and restated to reflect the effect of the split.

You should read the following amounts in conjunction with our consolidated
financial statements and the related notes that are incorporated in this
prospectus supplement by reference.

Nine Months
Ended
September 30, Year Ended December 31,
-------------- -----------------------------------------
2002(1) 2001 2001(2) 2000(3),(4) 1999 1998(5) 1997(6)
------- ----- ------- ----------- ----- ------- -------

Operating Results (in millions)
Net sales.................................................... $ 6,074 5,527 7,663 6,896 6,380 5,706 5,259
Income from continuing operations before cumulative effect of
accounting change........................................... $ 769 739 664 738 779 275 371
Depreciation and amortization................................ $ 332 328 441 405 372 344 318
Research and development expenses(7)......................... $ 360 312 427 379 332 323 339
Balance Sheet and Cash Flow Information (in millions)
Capital expenditures......................................... $ 578 493 787 648 631 556 454
Total assets................................................. $11,167 9,663 10,343 8,733 9,644 9,873 8,511
Long-term debt and lease obligations......................... $ 2,935 2,576 2,486 1,726 2,601 3,096 2,635
Cash flows from continuing operations........................ $ 417 361 1,149 1,233 977 837 472
Cash flows from discontinued operation....................... $ -- -- -- (19) 106 102 86
Cash flows from investing activities......................... $ (666) (750) (1,592) (1,053) (735) (872) (1,083)
Cash flows from financing activities......................... $ (84) 274 469 (120) (445) 173 265
Common Stock Information(8)
Average number of common shares outstanding
(in millions)(9)............................................ 602 589 590 585 579 567 555
Income from continuing operations per common share
Basic..................................................... $ 1.28 1.25 1.13 1.26 1.34 0.49 0.67
Diluted................................................... $ 1.24 1.22 1.09 1.24 1.32 0.48 0.66
Cash dividends declared per common share..................... $ -- -- 0.582 0.582 0.582 0.582 0.569
Other Information
Net-debt-to-capital ratio(10)................................ 39.6% 42.7% 35.9% 40.1% 40.2% 48.4% 46.9%
"Operational cash flow" from continuing operations
(in millions)(11)........................................... $ (146) (81) 503 588 588 379 153

--------
(1)Income from continuing operations includes a charge for in-process research
and development expense of $51 million.
(2)Income from continuing operations includes charges for in-process research
and development and acquisition-related costs and the company's A, AF and AX
series dialyzers of $280 million and $189 million, respectively.
(3)Income from continuing operations includes a charge for in-process research
and development and acquisition-related costs of $286 million.
(4)Certain balance sheet and other data are affected by the spin-off of Edwards
Lifesciences Corporation in 2000.
(5)Income from continuing operations includes charges for in-process research
and development, net litigation, and exit and other reorganization costs of
$116 million, $178 million and $122 million, respectively.
(6)Income from continuing operations includes a charge for in-process research
and development of $220 million.
(7)Excludes charges for in-process research and development, as noted above.
(8)All share and per share data have been restated for our two-for-one stock
split.

S-7

(9)Excludes common stock equivalents.
(10)The net-debt-to-capital ratio represents net debt (short-term and long-term
debt and lease obligations, net of cash and equivalents) divided by capital
(the total of net debt and stockholders' equity). Management uses this
ratio to assess and optimize the company's capital structure. The
net-debt-to-capital ratio, as defined, is not a measurement of capital
structure under generally accepted accounting principles (GAAP).
(11)Management assesses the company's liquidity in terms of its overall ability
to mobilize cash to support ongoing business levels and to fund its growth.
Management uses an internal performance measure called "operational cash
flow" that evaluates each operating business and geographic region on all
aspects of cash flow under its direct control. Operational cash flow
represents cash flows from continuing operations plus capital expenditures,
after-tax net interest, and other items (including mammary implant
litigation). Operational cash flow is not a measurement of liquidity under
GAAP and should not be considered an alternative to cash flows from
continuing operations, as determined in accordance with GAAP, as a
measurement of our liquidity. Operational cash flows are not necessarily
comparable with similarly titled measures for other companies.

The following table reconciles cash flow provided by operations, as
determined by GAAP, to operational cash flow, which is not a measure defined
by GAAP.

Nine Months Ended
September 30, Year Ended December 31,
---------------- -----------------------------------
2002 2001 2001 2000 1999 1998 1997
----- ----- ------ ------ ----- ----- -----

(in millions)
Cash flows from operations per the company's condensed
consolidated statements of cash flows................ $ 417 $ 361 $1,149 $1,233 $ 977 $ 837 $ 472
Capital expenditures.................................. (578) (493) (787) (648) (631) (556) (454)
Net interest after tax................................ 32 33 54 51 52 74 78
Other, including mammary implant litigation........... (17) 18 87 (48) 190 24 57
Operational cash flow from continuing operations...... $(146) $ (81) $ 503 $ 588 $ 588 $ 379 $ 153

S-8

MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR
NON-U.S. HOLDERS OF COMMON STOCK

The following is a general discussion of the material U.S. federal income
and estate tax consequences of the ownership and disposition of common stock by
a beneficial owner that is a "non-U.S. holder" and that does not own, and is
not deemed to own, more than 5% of our common stock. A "non-U.S. holder" is a
person or entity that, for U.S. federal income tax purposes, is a:

. non-resident alien individual, other than certain former citizens and
residents of the United States subject to tax as expatriates,

. foreign corporation or

. foreign estate or trust.

A "non-U.S. holder" does not include an individual who is present in the
United States for 183 days or more in the taxable year of disposition and is
not otherwise a resident of the United States for U.S. federal income tax
purposes. Such an individual is urged to consult his or her own tax advisor
regarding the U.S. federal income tax consequences of the sale, exchange or
other disposition of common stock.

This discussion is based on the Internal Revenue Code of 1986, as amended
(the "Code"), and administrative pronouncements, judicial decisions and final,
temporary and proposed Treasury Regulations, changes to any of which subsequent
to the date of this prospectus may affect the tax consequences described
herein. This discussion does not address all aspects of U.S. federal income and
estate taxation that may be relevant to non-U.S. holders in light of their
particular circumstances and does not address any tax consequences arising
under the laws of any state, local or foreign jurisdiction. Prospective holders
are urged to consult their tax advisors with respect to the particular tax
consequences to them of owning and disposing of common stock, including the
consequences under the laws of any state, local or foreign jurisdiction.

Dividends

Dividends paid to a non-U.S. holder of common stock generally will be
subject to withholding tax at a 30% rate or a reduced rate specified by an
applicable income tax treaty. In order to obtain a reduced rate of withholding,
a non-U.S. holder will be required to provide an Internal Revenue Service Form
W-8BEN certifying its entitlement to benefits under a treaty.

The withholding tax does not apply to dividends paid to a non-U.S. holder
who provides a Form W-8ECI, certifying that the dividends are effectively
connected with the non-U.S. holder's conduct of a trade or business within the
United States. Instead, the effectively connected dividends will be subject to
regular U.S. income tax as if the non-U.S. holder were a U.S. resident. A
non-U.S. corporation receiving effectively connected dividends may also be
subject to an additional "branch profits tax" imposed at a rate of 30% (or a
lower treaty rate).

Gain on Disposition of Common Stock

A non-U.S. holder generally will not be subject to U.S. federal income tax
on gain realized on a sale or other disposition of common stock unless:

. the gain is effectively connected with a trade or business of the non-U.S.
holder in the United States, subject to an applicable treaty providing
otherwise, or

. Baxter is or has been a U.S. real property holding corporation, as defined
below, at any time within the five-year period preceding the disposition
or the non-U.S. holder's holding period, whichever period is shorter, and
its common stock has ceased to be traded on an established securities
market prior to the beginning of the calendar year in which the sale or
disposition occurs.

S-9

We believe that we are not, and we do not anticipate becoming, a U.S. real
property holding corporation. Generally, a corporation is a U.S. real property
holding corporation if the fair market value of its U.S. real property
interests, as defined in the Code and applicable regulations, equals or exceeds
50% of the aggregate fair market value of its worldwide real property interests
and its other assets used or held for use in a trade or business.

Information Reporting Requirements and Backup Withholding

Information returns will be filed with the Internal Revenue Service in
connection with payments of dividends and the proceeds from a sale or other
disposition of common stock. You may have to comply with certification
procedures to establish that you are not a United States person in order to
avoid information reporting and backup withholding tax requirements. The
certification procedures required to claim a reduced rate of withholding under
a treaty will satisfy the certification requirements necessary to avoid the
backup withholding tax as well. The amount of any backup withholding from a
payment to you will be allowed as a credit against your United States federal
income tax liability and may entitle you to a refund, provided that the
required information is furnished to the Internal Revenue Service.

Federal Estate Tax

An individual non-U.S. holder who is treated as the owner of, or has made
certain lifetime transfers of, an interest in the common stock will be required
to include the value of the stock in his gross estate for U.S. federal estate
tax purposes, and may be subject to U.S. federal estate tax, unless an
applicable estate tax treaty provides otherwise.

S-10

UNDERWRITING

We are offering the shares described in this prospectus supplement through a
number of underwriters. Banc of America Securities LLC, Credit Suisse First
Boston Corporation and UBS Warburg LLC are acting as joint book-running
managers and as representatives of the underwriters. We have entered into an
underwriting agreement with the underwriters. Subject to the terms and
conditions of the underwriting agreement, we have agreed to sell to the
underwriters, and each of the underwriters has severally agreed to purchase
from us, the number of shares listed next to its name in the following table:

Number of
Underwriters Shares
------------ ----------

Banc of America Securities LLC........ 3,791,668
Credit Suisse First Boston Corporation 3,791,667
UBS Warburg LLC....................... 3,791,667
Deutsche Bank Securities Inc.......... 541,666
J.P. Morgan Securities Inc............ 541,666
Salomon Smith Barney Inc.............. 541,666
----------
Total.............................. 13,000,000
==========

The underwriting agreement is subject to a number of terms and conditions
and provides that the underwriters must buy all of the shares if they buy any
of them. The underwriters will sell the shares to the public when and if the
underwriters buy the shares from us.

The underwriters will initially offer the shares to the public at the price
specified on the cover page of this prospectus supplement. The underwriters may
allow to selected dealers a concession of not more than $0.6632 per share. The
underwriters may also allow, and any dealers may reallow, a concession of not
more than $0.10 per share to selected other dealers. If all the shares are not
sold at the public offering price, the underwriters may change the public
offering price and the other selling terms. The shares are offered subject to a
number of conditions, including:

. receipt and acceptance of the shares by the underwriters, and

. the underwriters' right to reject orders in whole or in part.

We have granted the underwriters an option to purchase up to 1,950,000
additional shares at the public offering price less the underwriting discounts
and commissions, which purchase must be completed within 30 days from the date
of original issuance of the shares. The underwriters may exercise this option
solely for the purpose of covering any over-allotments made in connection with
this offering. If the underwriters exercise this option, they will each
purchase additional shares approximately in proportion to the amounts specified
in the table above.

Our common stock is traded on the New York Stock Exchange under the symbol
"BAX."

The following table shows, on a per share and total basis, the public
offering price, underwriting discounts and commissions to be paid to the
underwriters and proceeds before expenses to us, assuming both no exercise and
full exercise of the underwriters' option to purchase additional shares.

Per Share Without Option With Option
--------- -------------- ------------

Public offering price................. $28.7800 $374,140,000 $430,261,000
Underwriting discounts and commissions $ 1.1052 $ 14,367,600 $ 16,522,740
Proceeds, before expenses, to Baxter.. $27.6748 $359,772,400 $413,738,260

We estimate that the expenses of this offering, not including the
underwriting discounts and commissions, will be approximately $50,000. These
expenses are payable by us.

S-11

We and certain of our executive officers have entered into a lock-up
agreement with the underwriters. Under this agreement, we and these executive
officers may not, without the prior written approval of the representatives,
offer, sell, contract to sell or otherwise dispose of or hedge our common stock
or securities convertible into or exchangeable for our common stock (other than
the shares in this offering, the Equity Units to be issued to the underwriters
in our concurrent Equity Units offering or issuances of common stock pursuant
to the conversion or exchange of convertible securities or the exercise of
warrants or options, grants of employee stock options or issuance of common
stock pursuant to the exercise of such options). These restrictions will be in
effect for a period of 90 days after the date of this prospectus supplement. At
any time and without notice, the representatives may, in their sole discretion,
release all or some of the securities from this lock-up agreement.

We will indemnify the underwriters against various liabilities, including
liabilities under the Securities Act. If we are unable to provide this
indemnification, we will contribute to payments the underwriters may be
required to make in respect of those liabilities.

In connection with this offering, the underwriters may engage in activities
that stabilize, maintain or otherwise affect the price of the shares, including:

. stabilizing transactions;

. short sales;

. syndicate covering transactions;

. imposition of penalty bids; and

. purchases to cover positions created by short sales.

Stabilizing transactions consist of bids or purchases made for the purpose
of preventing or retarding a decline in the market price of the shares while
this offering is in progress. Stabilizing transactions may include making short
sales of the shares, which involves the sale by the underwriters of a greater
number of shares than they are required to purchase in this offering, and
purchasing shares from us or in the open market to cover positions created by
short sales. Short sales may be "covered" shorts, which are short positions in
an amount not greater than the underwriters' over-allotment option referred to
above, or may be "naked" shorts, which are short positions in excess of that
amount.

The underwriters may close out any covered short position either by
exercising their over-allotment option, in whole or in part, or by purchasing
shares in the open market. In making this determination, the underwriters will
consider, among other things, the price of the shares available for purchase in
the open market compared to the price at which the underwriters may purchase
shares pursuant to the over-allotment option.

A naked short position is more likely to be created if the underwriters are
concerned that there may be downward pressure on the price of the shares in the
open market that could adversely affect investors who purchased in this
offering. To the extent that the underwriters create a naked short position,
they will purchase shares in the open market to cover the position.

The representatives may also impose a penalty bid on underwriters and
selling group members. This means that if the representatives purchase shares
in the open market in stabilizing transactions or to cover short sales, the
representatives can require the underwriters or selling group members that sold
those shares as part of this offering to repay the concession received by them.

As a result of these activities, the price of the shares may be higher than
the price that otherwise might exist in the open market. If the underwriters
commence these activities, they may discontinue them at any time. The
underwriters may carry out these transactions on the New York Stock Exchange,
in the over-the-counter market or otherwise.

S-12

The underwriters and their affiliates have provided certain commercial
banking, financial advisory and investment banking services to us and our
affiliates for which they have received customary fees. Certain affiliates of
Banc of America Securities LLC and UBS Warburg LLC are counterparties under
forward purchase contracts pursuant to which we have agreed to purchase shares
of our common stock. We expect to use a portion of the proceeds from this
offering to pay outstanding obligations under these forward purchase contracts
and other forward purchase contracts with unrelated counterparties. After use
of the proceeds, some of the underwriters may continue to have forward purchase
contracts outstanding with us. All of the underwriters are underwriters in our
concurrent offering of Equity Units. The underwriters and their affiliates may
from time to time engage in future transactions with us and our affiliates and
provide services to us and our affiliates in the ordinary course of their
business.

In connection with this offering, certain of the underwriters or securities
dealers may distribute prospectuses electronically.

Because it is expected that more than 10% of the net proceeds of this
offering may be paid to affiliates of the underwriters, the offering is being
conducted in accordance with Rule 2710(c)(8) of the Conduct Rules of the
National Association of Securities Dealers, Inc.

NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are made. Any resale of the common stock in Canada must
be made under applicable securities laws which will vary depending on the
relevant jurisdiction, and which may require resales to be made under available
statutory exemptions or under a discretionary exemption granted by the
applicable Canadian securities regulatory authority. Purchasers are advised to
seek legal advice prior to any resale of the common stock.

Representations of Purchasers

By purchasing common stock in Canada and accepting a purchase confirmation a
purchaser is representing to us and the dealer from whom the purchase
confirmation is received that

. the purchaser is entitled under applicable provincial securities laws to
purchase the common stock without the benefit of a prospectus qualified
under those securities laws,

. where required by law, that the purchaser is purchasing as principal and
not as agent, and

. the purchaser has reviewed the text above under Resale Restrictions.

Rights of Action--Ontario Purchasers Only

Under Ontario securities legislation, a purchaser who purchases a security
offered by this prospectus during the period of distribution will have a
statutory right of action for damages, or while still the owner of the shares,
for rescission against us in the event that this prospectus contains a
misrepresentation. A purchaser will be deemed to have relied on the
misrepresentation. The right of action for damages is exercisable not later
than the earlier of 180 days from the date the purchaser first had knowledge of
the facts giving rise to the cause of action and three years from the date on
which payment is made for the shares. The right of action for rescission is
exercisable not later than 180 days from the date on which payment is made for
the shares. If a purchaser elects to exercise the right of action for
rescission, the purchaser will have no right of action for damages against us.
In no case will the amount recoverable in any action exceed the price at which
the shares were offered to the purchaser and if the purchaser is shown to have
purchased the securities with knowledge of the misrepresentation, we will have
no liability. In the case of an action for damages, we will not be liable for
all or

S-13

any portion of the damages that are proven to not represent the depreciation in
value of the shares as a result of the misrepresentation relied upon. These
rights are in addition to, and without derogation from, any other rights or
remedies available at law to an Ontario purchaser. The foregoing is a summary
of the rights available to an Ontario purchaser. Ontario purchasers should
refer to the complete text of the relevant statutory provisions.

Enforcement of Legal Rights

All of our directors and officers as well as the experts named herein may be
located outside of Canada and, as a result, it may not be possible for Canadian
purchasers to effect service of process within Canada upon us or those persons.
All or a substantial portion of our assets and the assets of those persons may
be located outside of Canada and, as a result, it may not be possible to
satisfy a judgment against us or those persons in Canada or to enforce a
judgment obtained in Canadian courts against us or those persons outside of
Canada.

Taxation and Eligibility for Investment

Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the common
stock in their particular circumstances and about the eligibility of the common
stock for investment by the purchaser under relevant Canadian legislation.

Relationship with Affiliates of Certain Underwriters

We are in compliance with the terms of the indebtedness owed by us to
affiliates of the underwriters. The decision of the underwriters to distribute
our shares of common stock was not influenced by their respective affiliates
that are our lenders and those affiliates had no involvement in determining
whether or when to distribute our shares of common stock under this offering or
the terms of this offering. The underwriters will not receive any benefit from
this offering other than the underwriting discounts and commissions paid by us.

VALIDITY OF THE COMMON STOCK

The validity of the common stock will be passed upon for us by our Senior
Vice President and General Counsel, Thomas J. Sabatino, Jr., and for the
underwriters by Davis Polk & Wardwell, New York, New York. As of December 11,
2002, Mr. Sabatino owned 120,883 shares of our common stock and options to
purchase an additional 574,140 shares of our common stock, of which 277,140 are
exercisable within 90 days.

INDEPENDENT ACCOUNTANTS

The financial statements incorporated in this prospectus supplement, in the
accompanying prospectus and in the registration statement by reference to the
Annual Report on Form 10-K for the year ended December 31, 2001 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

With respect to the unaudited financial information of Baxter International
Inc. for the three-month periods ended March 31, 2002 and 2001, the six-month
periods ended June 30, 2002 and 2001 and the nine-month periods ended September
30, 2002 and 2001, incorporated by reference in this prospectus supplement and
the accompanying prospectus and in the registration statement,
PricewaterhouseCoopers LLP reported that they have applied limited procedures
in accordance with professional standards for a review of such information.
However, their separate reports dated April 30, 2002, July 31, 2002 and
November 4, 2002 incorporated by reference herein, state that they did not
audit and they do not express an opinion on that unaudited financial
information. Accordingly, the degree of reliance on their report on such
information should be restricted in light of the limited nature of the review
procedures applied. PricewaterhouseCoopers LLP is not subject to the liability
provisions of Section 11 of the Securities Act for their report on the
unaudited financial information because that report is not a "report" or a
"part" of the registration statement prepared or certified by
PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the
Securities Act.

S-14

INCORPORATION BY REFERENCE

We incorporate by reference in this prospectus supplement the following
documents filed by us with the SEC:

. our Annual Report on Form 10-K for the year ended December 31, 2001;

. our Quarterly Reports on Form 10-Q for the quarters ended March 31, June
30, and September 30, 2002;

. our Current Reports on Form 8-K dated August 7, September 16, and December
3, 2002;

. the description of our common stock in our registration filed with the SEC
under Section 12 of the Securities Exchange Act of 1934, including any
subsequent amendment or any report filed for the purpose of updating such
description; and

. the description of our Series B Junior Participating Preferred Stock
Purchase Rights (currently traded with our common stock), filed in our
Form 8-A dated May 30, 2001.

Any statement made in a document incorporated by reference or deemed
incorporated herein by reference is deemed to be modified or superseded for
purposes of this prospectus supplement if a statement contained in this
prospectus supplement or in any other subsequently filed document which also is
incorporated or deemed incorporated by reference herein modifies or supersedes
that statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus supplement. We also incorporate by reference all documents filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
after the date of this prospectus supplement until we or the underwriters sell
all of the offered securities.

Statements made in this prospectus supplement or in any document
incorporated by reference in this prospectus supplement as to the contents of
any contract or other document referred to herein or therein are not
necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the documents
incorporated by reference, each such statement being qualified in all material
respects by such reference.

You may request a copy of these filings at no cost, by writing or calling us
at the following address: Corporate Secretary, Baxter International Inc., One
Baxter Parkway, Deerfield, Illinois 60015 (Telephone: (847) 948-2000).

S-15

Prospectus

[LOGO] Baxter
Baxter International Inc.

Up to $2,500,000,000 of
Common Stock, $1 Par Value
Preferred Stock
Convertible Preferred Stock
Warrants to Purchase Common Stock or Debt Securities Convertible Debt Securities
Equity Purchase Contracts
Equity Purchase Units
Debt Securities

-----------------

Baxter International Inc. may offer from time to time up to $2,500,000,000
of any combination of the securities described in this prospectus. The terms of
each such offering will be determined when an agreement to sell is made.
Securities we may sell include:

. common stock . preferred stock

. convertible debt
securities . convertible preferred stock

. stock or debt
warrants . debt securities

. equity purchase
contracts . equity purchase units

Unless the context otherwise requires, the terms "Company," "we," "us," and
"our" in this prospectus refer to Baxter International Inc., a Delaware
corporation, together with its subsidiaries. Unless the context otherwise
indicates, "common stock" refers to the common stock, $1 par value per share,
of Baxter International Inc. and the associated Series B junior participating
preferred stock purchase rights (currently traded with our common stock). Any
or all of the above securities are referred to as "offered securities" in this
prospectus.

We will provide specific terms of the offered securities to be sold in
supplements to this prospectus. You should read this prospectus and any
supplement carefully before you invest. A supplement may also change or update
information contained in this prospectus. We will not use this prospectus to
confirm sales of any of our securities unless it is attached to a prospectus
supplement. Unless we state otherwise in a prospectus supplement, we will not
list any of these securities on any securities exchange.

Neither the Securities and Exchange Commission nor any state securities
commission has determined whether this prospectus is truthful or complete. They
have not made, nor will they make, any determination as to whether anyone
should buy these securities. Any representation to the contrary is a criminal
offense.

-----------------

The date of this prospectus is November 20, 2002

NOTICE TO INVESTORS

You should rely only on the information contained, or incorporated by
reference, in this prospectus. We have not authorized anyone to provide you
with different or additional information. you should not assume that the
information contained in this prospectus is accurate as of any date other than
the date on the front of this prospectus.

This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission (the "SEC") utilizing a universal "shelf"
registration process for a delayed, or continuous, or intermittent offering
process. Under this shelf registration process, we may issue and sell, from
time to time, the offered securities in one or more offerings.

This prospectus provides you with a general description of the securities
which may be offered by us. Each time we sell securities, we are required to
provide you with a prospectus and a prospectus supplement containing specific
information about us and the terms of that particular offering. That prospectus
supplement may include additional risk factors or other special considerations
applicable to those offered securities. Any prospectus supplement may also add,
update or change information in this prospectus. If there is any inconsistency
between the information in this prospectus and the applicable prospectus
supplement, you should rely on the information in that prospectus supplement.
You should read both this prospectus and the applicable prospectus supplement
together with additional information described under "Where You Can Find More
Information."

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You may obtain further information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC filings are also
available to the public over the Internet at the SEC's Web site at
http://www.sec.gov. Our SEC filings are also available at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.

We incorporate by reference in this prospectus the following documents filed
by us with the SEC:

. our Annual Report on Form 10-K for the year ended December 31, 2001;

. our Quarterly Reports on Form 10-Q for the quarters ended March 31, June
30, and September 30, 2002;

. our Current Reports on Form 8-K dated August 7, and September 16, 2002;

. the description of our Series B Junior Participating Preferred Stock
Purchase Rights (currently traded with our common stock), filed in our
Form 8-A dated May 30, 2001.

Any statement made in a document incorporated by reference or deemed
incorporated herein by reference is deemed to be modified or superseded for
purposes of this prospectus if a statement contained in this prospectus or in
any other subsequently filed document which also is incorporated or deemed
incorporated by reference herein modifies or supersedes that statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus. We also
incorporate by reference all documents filed pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act after the date of this prospectus
until we or the underwriters sell all of the offered securities.

Statements made in this prospectus or in any document incorporated by
reference in this prospectus as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in each

instance reference is made to the copy of such contract or other document filed
as an exhibit to the documents incorporated by reference, each such statement
being qualified in all material respects by such reference.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Statements throughout this prospectus that are not historical facts,
(including material incorporated herein by reference) are forward-looking
statements. These statements are based on our 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 us
and the health care arenas in which we operate.

Many factors could affect our 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 in this prospectus and in our other
filings with the SEC.

Additionally, as discussed in the "Legal Proceedings" section of our most
recently filed Quarterly Report on Form 10-Q, upon the resolution of certain
legal matters, we may incur charges in excess of presently established
reserves. Any such charge could have a material adverse effect on our results
of operations or cash flows in the period in which it is recorded or paid.

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
against most foreign currencies, growth rates in our sales and net earnings
could be negatively impacted. We believe that our expectations with respect to
forward-looking statements are based upon reasonable assumptions within the
bounds of our knowledge of our 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.

ABOUT THE COMPANY

Baxter International Inc. and our Subsidiaries

We were incorporated under Delaware law in 1931. Throughout the rest of this
section, except as otherwise indicated in information incorporated by
reference, "we" or "our" means Baxter International Inc., taken together with
its subsidiaries as a consolidated enterprise. We engage 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.

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.

USE OF PROCEEDS

Except as otherwise set forth in any Prospectus Supplement relating to the
Offered Securities, we will use the net proceeds from the sale of the Offered
Securities for working capital, to repay our existing debt, to fund
acquisitions, for our capital expenditures and for general corporate purposes.

We will include a more detailed description of the use of proceeds from any
specific offering of securities in the prospectus supplement relating to the
offering.

COMMON STOCK

In General

This description of our common stock is a summary. You should keep in mind,
however, that it is our certificate of incorporation and our bylaws, and not
this summary, which defines any rights you may acquire as a securityholder.
There may be other provisions in these documents which are also important to
you. You should read these documents for a full description of the terms of our
capital stock. Our certificate of incorporation and our bylaws are incorporated
by reference as exhibits to the registration statement that includes this
prospectus. See "Where You Can Find More Information" for information on how to
obtain copies of these documents.

Subject to any preferential rights of any preferred stock created by our
board of directors, as a holder of our common stock you are entitled to such
dividends as our board of directors may declare from time to time out of funds
that we can legally use to pay dividends. The holders of common stock possess
exclusive voting rights, except to the extent our board of directors specifies
voting power for any preferred stock that, in the future, may be issued.

As a holder of our common stock, you are entitled to one vote for each share
of common stock and do not have any right to cumulate votes in the election of
directors. In the event of our liquidation, dissolution or winding-up, you will
be entitled to receive on a proportionate basis any assets remaining after
provision for payment of creditors and after payment of any liquidation
preferences to holders of preferred stock. Our common stock is listed on the
New York Stock Exchange under the symbol "BAX".

Rights Plan

In November 1998, our board of directors declared a dividend distribution of
one right for each outstanding share of common stock. In February 2001, our
board of directors declared a two-for-one stock split in the form of a 100%
stock distribution to holders of our common stock.

As a result of the stock split, our rights plan was adjusted as of the end
of May 2001, so that each share of our common stock is now accompanied by
one-half of one right. Each full right entitles the holder to purchase from the
Company one one-hundredth of a share of series B junior participating preferred
stock at a price of $275 per one one-hundredth of a share, subject to
adjustment. Initially, the rights are attached to all certificates representing
our common stock and no separate rights certificates have been issued. The
rights will separate from our common stock upon the earlier of:

. ten business days following the public announcement that a person or group
has acquired or obtained the right to acquire beneficial ownership of 15%
or more of the outstanding shares of our common stock; or

. ten business days following the commencement of a tender or an exchange
offer that would result in a person or group owning 15% or more of the
outstanding shares of our common stock;

unless the person or group has offered to acquire all of the outstanding shares
of our common stock and our independent directors have determined that such
offer is in the best interests of the Company and its stockholders. The rights
are not exercisable until one of the two events listed above has occurred and
will expire on March 23, 2009.

Upon the happening of one of the events listed above, each right (other than
rights held by the acquiring person) will be exercisable for our common stock
having a value equal to two times the exercise price of the right. If the
Company is acquired or sells 50% or more of its assets, then each right will be
exercisable for common stock in the surviving or transferee corporation having
a value equal to two times the exercise price of the right.

At any time up to ten days after the happening of one of the events listed
above, Baxter may redeem the rights at a price of $.01 per right.

Other Charter and Bylaw Provisions

In addition, our restated certificate of incorporation (the "charter") may
have anti-takeover effects. Our charter provides, among other things, for a
classified board of directors divided into three classes and stockholder action
only at a stockholders' meeting and not by written consent. In addition, our
bylaws provide, among other things, that stockholders wishing to nominate a
director at an annual meeting or at a special meeting called for the purpose of
electing directors must comply with strict advance written notice provisions.
Our bylaws also provide that special meetings of stockholders may be called
only by the chairman of our board of directors, or certain of our officers, or
by resolution of our directors.

PREFERRED STOCK

We will describe the particular terms of any series of preferred stock in
the prospectus supplement relating to the offering of any such offered
securities.

We will fix or designate the rights, preferences, privileges and
restrictions, including any dividend rights, voting rights (if any), terms of
redemption, retirement and sinking fund provisions (if any) and liquidation
preferences (if any), of any series of preferred stock through a certificate of
designation adopted by our board of directors or a duly authorized committee of
our board of directors. We will describe the terms, if any, on which shares of
any series of preferred stock are redeemable, convertible or exchangeable into
common stock in the prospectus supplement relating to the offering. The
redemption, conversion or exchange may be mandatory, at your option, or at our
option. The applicable prospectus supplement will describe the manner in which
the shares of common stock that you will receive as a holder of preferred stock
would be converted or exchanged or redeemed.

CONVERTIBLE PREFERRED STOCK

We will describe the particular terms of any series of convertible preferred
stock in the prospectus supplement relating to the offering of any such offered
securities.

We will fix or designate the conversion rights, preferences, privileges and
restrictions, including any dividend rights, voting rights (if any), terms of
redemption, retirement and sinking fund provisions (if any) and liquidation
preferences (if any), of any series of convertible preferred stock through a
certificate of designation adopted by our board of directors or a duly
authorized committee of our board of directors. We will describe the

terms, if any, on which shares of any series of preferred stock are convertible
or exchangeable into our debt securities or common stock in the prospectus
supplement relating to the offering. The conversion, redemption or exchange may
be mandatory, at your option, or at our option. The applicable prospectus
supplement will describe the manner in which the shares of common stock that
you will receive as a holder of convertible preferred stock would be converted
or exchanged or redeemed.

STOCK AND DEBT WARRANTS

We may issue warrants, including warrants to purchase debt securities,
preferred stock, common stock or other securities issued by us. We may issue
warrants independently or together with any other securities, and they may be
attached to or separate from those securities. We will issue the warrants under
warrant agreements between us and a bank or trust company, as warrant agent,
that we will describe in the prospectus supplement relating to any warrants
that we offer.

We will also describe in the applicable prospectus supplement the amount of
securities called for by the warrants, any amount of warrants outstanding, and
any provisions for a change in the exercise price or the expiration date of the
warrants and the kind, frequency and timing of any notice to be given. Prior to
the exercise of your warrants, you will not have any of the rights of holders
of the preferred stock or common stock purchasable upon any such exercise and
will not be entitled to dividend payments, if any, or voting rights of the
preferred stock or common stock purchasable upon the exercise.

Exercise of Warrants

We will describe in the prospectus supplement relating to the warrants the
principal amount or the number of shares of our securities that you may
purchase for cash upon exercise of a warrant, and the exercise price. Exercise
a warrant may occur, as described in the applicable prospectus supplement
relating to the warrants, at any time up to the close of business on the
expiration date stated in the prospectus supplement. Unexercised warrants will
become void after the close of business on the expiration date, or any later
expiration date that we determine.

We will forward the securities deliverable upon the exercise of any warrant
reasonably promptly after receipt of payment and the properly completed and
executed warrant certificate at the corporate trust office of the warrant agent
or other office stated in the applicable prospectus supplement. If you exercise
less than all of the warrants represented by the warrant certificate, we will
issue you a new warrant certificate for the remaining warrants.

CONVERTIBLE DEBT SECURITIES

We will describe the particular terms of any series of convertible
debentures or other convertible debt issuable by us, in the prospectus
supplement relating to any such offered securities.

We will fix or designate the rights, preferences, privileges and
restrictions, including conversion rights, interest rate and other rights,
including terms of redemption, retirement and sinking fund provisions (if any)
and liquidation preferences, if any, of any series of convertible debt through
an instrument adopted by our board of directors or a duly authorized committee
of our board of directors. We will describe the terms, if any, on which such
instruments are convertible or exchangeable into common stock in the prospectus
supplement relating to the applicable offering. The conversion or exchange may
be mandatory, at your option, or at our option. The applicable prospectus
supplement will describe the manner in which the shares of common stock that
you will receive as a holder of the convertible debt would be converted or
exchanged or redeemed.

EQUITY PURCHASE CONTRACTS AND EQUITY PURCHASE UNITS

We may issue any form of equity purchase contracts, including contracts
obligating you to purchase from us, and for us to sell to you, a specific
number of shares of common stock or preferred stock, or other equity, at a
future date or dates. The price per share of preferred stock or common stock or
other equity may be fixed at the time the equity purchase contracts are issued
or may be determined by reference to a specific formula described in the equity
purchase contracts. We may issue the equity purchase contract separately or as
a part of units consisting of an equity purchase contract and debt securities,
trust preferred securities or debt obligations of third parties, including U.S.
Treasury securities, securing your obligations to purchase the preferred stock
or the common stock or other equity under the purchase contracts. The equity
purchase contracts may require us to make periodic payments to you or vice
versa and the payments may be unsecured or pre-funded on some basis. The equity
purchase contracts may require you to secure your obligations in a specified
manner. We will describe in the applicable prospectus supplement the terms of
any equity purchase contracts or equity purchase units.

DEBT SECURITIES

The debt securities will be our unsecured and unsubordinated obligations
issued in one or more series and will rank equally with each other and with all
of our other unsecured and unsubordinated indebtedness. The debt securities
will be issued under an indenture to be entered into between us and Bank One
Trust Company, N.A., as trustee. The terms of any series of debt securities
will be those specified in the indenture, as amended or supplemented from time
to time, and in the certificates evidencing that series of debt securities.

The following summary of selected provisions of the indenture and the debt
securities is not complete, and the summary of selected terms of a particular
series of debt securities included in the applicable prospectus supplement also
will not be complete. You should review the indenture and the form of
certificate evidencing the applicable debt securities, each of which have been
or will be filed as exhibits to the registration statement of which this
prospectus is a part or as exhibits to documents which have been or will be
incorporated by reference in this prospectus. To obtain a copy of the indenture
or the form of certificate for the debt securities, see "Where You Can Find
More Information" in this prospectus. The following summary and the summary in
the applicable prospectus supplement are qualified in their entirety by
reference to all of the provisions of the indenture and the certificates
evidencing the debt securities. The provisions of the indenture and the debt
certificates, including defined terms, are incorporated by reference in this
prospectus. Terms used in this section have the meanings assigned to those
terms in the indenture. When we refer to "we", "us" or "our" in this section or
when we otherwise refer to ourselves in this section, we mean Baxter
International Inc., excluding, unless otherwise expressly stated or the context
otherwise requires, our subsidiaries.

The following description of debt securities describes general terms and
provisions of the series of debt securities to which any prospectus supplement
may relate. When we offer to sell a series of debt securities, we will describe
the specific terms of the series in the applicable prospectus supplement. If
any particular terms of the debt securities described in a prospectus
supplement differ from any of the terms described in this prospectus, the terms
described in the applicable prospectus supplement will supersede the terms
described in this prospectus.

General

The debt securities may be issued from time to time in one or more series.
We can issue an unlimited amount of debt securities under the indenture. The
indenture provides that we may issue debt securities of any series in an amount
up to the aggregate principal amount which is authorized from time to time by
us. Please read the applicable prospectus supplement relating to the series of
debt securities being offered for specific terms including, where applicable:

. the title of the series of debt securities;

. any limit on the aggregate principal amount of debt securities of the
series;

. the price or prices at which we will issue debt securities of the series;

. the date or dates on which we will pay the principal of and premium, if
any, on debt securities of the series, or the method or methods, if any,
that will used to determine those dates;

. the rate or rates, which may be fixed or variable, at which debt
securities of the series will bear interest, if any, or the method or
methods, if any, that will be used to determine those rates;

. the basis used to calculate interest, if any, on the debt securities of
the series if other than a 360-day year of twelve 30-day months;

. the date or dates, if any, from which interest on the debt securities of
the series will accrue, or the method or methods, if any, that will be
used to determine those dates;

. the dates on which the interest, if any, on the debt securities of the
series will commence accruing and will be payable and the record dates for
the payment of interest;

. the place or places where amounts due on the debt securities of the series
will be payable and where the debt securities of the series may be
surrendered for registration of transfer and exchange;

. the terms and conditions, if any, upon which we may, at our option, redeem
debt securities of the series;

. the terms and conditions, if any, upon which we will repurchase debt
securities of the series at the option of the holders of debt securities
of the series;

. the terms of any sinking fund or analogous provision;

. if other than United States dollars, the currency to be used to purchase
the debt securities of the series and the currency to be used for payments
on debt securities of the series, and the ability or the ability of the
holders of debt securities of the series, if any, to have payments made in
any other currency;

. any addition to, or modification or deletion of, any covenant or event of
default with respect to debt securities of the series;

. whether the debt securities of the series are to be issuable in registered
or bearer form or both and, if in bearer form, whether we will issue any
debt securities of the series in temporary or permanent global form and,
if so, the identity of the depositary for the global debt security;

. whether and under what circumstances we will pay any additional amounts in
respect of certain taxes, assessments or other governmental charges
imposed on holders of the series of debt securities who are United States
Aliens ("additional amounts") and, if so, whether we will have the option
to redeem the series of debt securities rather than pay any additional
amounts;

. the person to whom any interest on any registered securities of the series
of debt securities will be payable, if different than the person in whose
name a registered security is registered at the close of business on the
regular record date for that payment;

. the manner in which, or the person to whom, any interest on any bearer
security of the series of debt securities will be payable, if different
than upon presentation and surrender of the coupons relating to the bearer
security;

. the extent to which, or the manner in which, any interest payable on a
temporary global debt security will be paid, if other than in the manner
provided in the indenture;

. the portion of the principal amount of the series of debt securities which
will be payable upon acceleration if other than the full principal amount;

. the authorized denominations in which the series of debt securities will
be issued, if other than denominations of $1,000 and any integral multiple
of $1,000, in the case of registered securities, or $5,000, in the case of
bearer securities;

. if the amount of payments on the series of debt securities may be
determined with reference to an index, formula or other method or methods
("indexed securities") and the manner used to determine those amounts; and

. any other terms of debt securities of the series.

As used in this prospectus and any prospectus supplement relating to the
offering of debt securities, references to the principal of and premium, if
any, and interest, if any, on the series of debt securities include the payment
of additional amounts, if any, required by the series of debt securities in
that context.

Debt securities may be issued as original issue discount securities to be
sold at a substantial discount below their principal amount. In the event of an
acceleration of the maturity of any original issue discount security, the
amount payable to the holder upon acceleration will be determined in the manner
described in the applicable prospectus supplement. Material federal income tax
and other considerations applicable to original issue discount securities will
be described in the applicable prospectus supplement.

If the purchase price of any debt securities is payable in a foreign
currency or currency unit or if the principal of, or premium, if any, or
interest, if any, on any of the debt securities is payable in a foreign
currency or currency unit, the specific terms of those debt securities and the
applicable foreign currency or currency unit will be specified in the
prospectus supplement relating to those debt securities.

The terms of the debt securities of any series may differ from the terms of
the debt securities of any other series, and the terms of particular debt
securities within any series may differ from each other. If expressly provided
in the applicable prospectus supplement, we may, without the consent of the
holders of the debt securities of any series, reopen an existing series of debt
securities and issue additional debt securities of that series or establish
additional or different terms of that series.

Registration, transfer, payment and paying agent

Unless otherwise indicated in the applicable prospectus supplement, each
series of debt securities will be issued in registered form only, without
coupons. The indenture, however, provides that we may also issue debt
securities in bearer form only, or in both registered and bearer form. Bearer
securities may not be offered, sold, resold or delivered in connection with
their original issuance in the United States or to any United States person, as
defined below, other than offices located outside the United States of
specified United States financial institutions. "United States person" means
any citizen or resident of the United States, any corporation, partnership or
other entity created or organized in or under the laws of the United States,
any estate the income of which is subject to United States federal income
taxation regardless of its source, or any trust whose administration is subject
to the primary supervision of a United States court and which has one or more
United States fiduciaries who have the authority to control all substantial
decisions of the trust. "United States" means the United States of America,
including the states thereof and the District of Columbia, its territories, its
possessions and other areas subject to its jurisdiction. Purchasers of bearer
securities will be subject to certification procedures and may be affected by
limitations under United States tax laws. The applicable procedures and
limitations will be described in the prospectus supplement relating to the
offering of the bearer securities.

Unless otherwise indicated in the applicable prospectus supplement, the debt
securities will be payable and may be surrendered for registration of transfer
or exchange and, if applicable, for conversion into or exchange for other types
of securities, at an office or agency maintained by the trustee in the Borough
of Manhattan, The City of New York. However, we, at our option, may make
payments of interest on any registered security by check mailed to the address
of the person entitled to receive that payment or by wire transfer to an
account maintained

by the payee with a bank located in the United States. No service charge will
be made for any registration of transfer or exchange, redemption or repayment
of debt securities, or for any conversion or exchange of debt securities for
other types of securities, but we may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with that transaction.

Unless otherwise indicated in the applicable prospectus supplement, payment
of principal, premium, if any, and interest, if any, on bearer securities will
be made, subject to any applicable laws and regulations, at an office or agency
outside the United States. Unless otherwise indicated in the applicable
prospectus supplement, payment of interest due on bearer securities on any
interest payment date will be made only against surrender of the coupon
relating to that interest payment date. Unless otherwise indicated in the
applicable prospectus supplement, no payment of principal, premium, if any, or
interest, if any, with respect to any bearer security will be made at any
office or agency in the United States or by check mailed to any address in the
United States or by wire transfer to an account maintained with a bank located
in the United States. However, if any bearer securities are payable in United
States dollars, payments on those bearer securities may be made at the
corporate trust office of the trustee or at any office or agency designated by
us in the Borough of Manhattan, The City of New York, if, but only if, payment
of the full amount due on the bearer securities for principal, premium, if any,
or interest, if any, at all offices outside of the United States maintained for
that purpose by us is illegal or effectively precluded by exchange controls or
similar restrictions.

Unless otherwise indicated in the applicable prospectus supplement, we will
not be required to:

. issue, register the transfer of or exchange debt securities of any series
during a period beginning at the opening of business 15 days before any
selection of debt securities of that series having the same terms to be
redeemed and ending at the close of business on the day of that selection;

. register the transfer of or exchange any registered security, or portion
of any registered security, selected for redemption, except the unredeemed
portion of any registered security being redeemed in part;

. exchange any bearer security selected for redemption, except to exchange a
bearer security for a registered security of that series having the same
terms that is simultaneously surrendered for redemption; or

. issue, register the transfer of or exchange a debt security which has been
surrendered for repayment at the option of the holder, except the portion,
if any, of the debt security not to be repaid.

Book-entry debt securities

The debt securities of a series may be issued in whole or in part in the
form of one or more global debt securities. Global debt securities will be
deposited with, or on behalf of, a depositary identified in the applicable
prospectus supplement relating to the series. Global debt securities may be
issued in either registered or bearer form and in either temporary or permanent
form. Unless and until it is exchanged in whole or in part for individual
certificates evidencing debt securities, a global debt security may not be
transferred except as a whole by the depositary to its nominee or by the
nominee to the depositary, or by the depositary or its nominee to a successor
depositary or to a nominee of the successor depositary.

We anticipate that global debt securities will be deposited with, or on
behalf of, The Depository Trust Company ("DTC"), New York, New York, and that
global debt securities will be registered in the name of DTC's nominee, Cede &
Co. We also anticipate that the following provisions will apply to the
depository arrangements with respect to global debt securities. Additional or
differing terms of the depository arrangements will be described in the
applicable prospectus supplement.

DTC has advised us that it is:

. a limited-purpose trust company organized under the New York Banking Law;

. a "banking organization" within the meaning of the New York Banking Law;

. a member of the Federal Reserve System;

. a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and

. a "clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act.

DTC holds securities that its participants deposit with DTC. DTC also
facilitates the settlement among its participants of securities transactions,
including transfers and pledges, in deposited securities through electronic
computerized book-entry changes in participants' accounts, which eliminates the
need for physical movement of securities certificates. Direct participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and other organizations. DTC is owned by a number of its direct
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, LLC. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others, sometimes referred to in this
prospectus as indirect participants, that clear transactions through or
maintain a custodial relationship with a direct participant either directly or
indirectly. Indirect participants include securities brokers and dealers, banks
and trust companies. The rules applicable to DTC and its participants are on
file with the SEC.

Purchases of debt securities within the DTC system must be made by or
through direct participants, which will receive a credit for the debt
securities on DTC's records. The ownership interest of the actual purchaser or
beneficial owner of a debt security is, in turn, recorded on the direct and
indirect participants' records. Beneficial owners will not receive written
confirmation from DTC of their purchases, but beneficial owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the direct or indirect participants
through which they purchased the debt securities. Transfers of ownership
interests in debt securities are to be accomplished by entries made on the
books of participants acting on behalf of beneficial owners. Beneficial owners
will not receive certificates representing their ownership interests in the
debt securities, except under the limited circumstances described below.

To facilitate subsequent transfers, all debt securities deposited by direct
participants with DTC will be registered in the name of DTC's nominee, Cede &
Co. The deposit of debt securities with DTC and their registration in the name
of Cede & Co. will not change the beneficial ownership of the debt securities.
DTC has no knowledge of the actual beneficial owners of the debt securities.
DTC's records reflect only the identity of the direct participants to whose
accounts the debt securities are credited. Those participants may or may not be
the beneficial owners. The direct and indirect participants are responsible for
keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct and
indirect participants to beneficial owners will be governed by arrangements
among them, subject to any legal requirements in effect from time to time.

Redemption notices will be sent to DTC or its nominee. If less than all of
the debt securities of a series are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each direct participant in the
debt securities to be redeemed.

In any case where a vote may be required with respect to the debt securities
of any series, neither DTC nor Cede & Co. will give consents for or vote the
global debt securities. Under its usual procedures, DTC will mail an omnibus
proxy to us as soon as possible after the record date. The omnibus proxy
assigns the consenting or voting rights of Cede & Co. to those direct
participants to whose accounts the debt securities are credited on the record
date identified in a listing attached to the omnibus proxy.

Principal and premium, if any, and interest, if any, on the global debt
securities will be paid to Cede & Co., as nominee of DTC. DTC's practice is to
credit direct participants' accounts on the relevant payment date unless

DTC has reason to believe that it will not receive payments on the payment
date. Payments by direct and indirect participants to beneficial owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the account of customers in bearer form or registered in
"street name." Those payments will be the responsibility of participants and
not of DTC or us, subject to any legal requirements in effect from time to
time. Payment of principal, premium, if any, and interest, if any, to Cede &
Co. is our responsibility, disbursement of payments to direct participants is
the responsibility of DTC, and disbursement of payments to the beneficial
owners is the responsibility of direct and indirect participants.

Except under the limited circumstances described in this prospectus,
beneficial owners of interests in a global debt security will not be entitled
to have debt securities registered in their names and will not receive physical
delivery of debt securities. Accordingly, each beneficial owner must rely on
the procedures of DTC to exercise any rights under the debt securities and the
indenture.

The laws of some jurisdictions may require that some purchasers of
securities take physical delivery of securities in definitive form. These laws
may impair the ability to transfer or pledge beneficial interests in global
debt securities.

DTC is under no obligation to provide its services as depositary for the
debt securities of any series and may discontinue providing its services at any
time by giving reasonable notice to use or the trustee. Neither we nor the
trustee will have any responsibility for the performance by DTC or its
participants or indirect participants under the rules and procedures governing
DTC. As noted above, beneficial owners of debt securities generally will not
receive certificates representing their ownership interests in the debt
securities. However, if

. DTC notifies us that it is unwilling or unable to continue as a depositary
for the global debt securities of any series or if DTC ceases to be a
clearing agency registered under the Securities Exchange Act and a
successor depositary for the debt securities of the series is not
appointed within 90 days of the notification or of our becoming aware of
DTC's ceasing to be so registered, as the case may be,

. we determine, in our sole discretion, not to have the debt securities of
any series represented by one or more global debt securities, or

. an event of default under the indenture has occurred and is continuing
with respect to the debt securities of any series,

we will prepare and deliver to the trustee certificates for the debt securities
of that series, which will deliver the certificates in exchange for beneficial
interests in the global debt securities. Any beneficial interest in a global
debt security that is exchangeable under the circumstances described in the
preceding sentence will be exchangeable for debt securities in definitive
certificated form registered in the names that DTC will direct. It is expected
that these directions will be based upon directions received by DTC from its
participants with respect to ownership of beneficial interests in the global
debt securities.

We obtained the information in this section and elsewhere in this prospectus
concerning DTC and DTC's book-entry system from sources that we believe to be
reliable, but we take no responsibility for the accuracy of this information.

Outstanding debt securities

In determining whether the holders of the requisite principal amount of
outstanding debt securities have given any request, demand, authorization,
direction, notice, consent or waiver under the indenture:

. the principal amount of an original issue discount security that will be
deemed to be outstanding for these purposes will be that portion of the
principal amount of the original issue discount security that could be
declared to be due and payable upon a declaration of acceleration of the
original issue discount security as of the date of the determination;

. the principal amount of any indexed security that will be deemed to be
outstanding for these purposes will be the principal face amount of the
indexed security determined on the date of its original issuance;

. the principal amount of a debt security denominated in a foreign currency
that will be deemed to be outstanding for these purposes will be the
United States dollar equivalent, determined on the date of original issue
of the debt security, of the principal amount of the debt security; and

. a debt security owned by us or any obligor on the debt security or any
affiliate of ours or the other obligor will not be deemed to be
outstanding.

Redemption and repurchase

The debt securities of any series may be redeemable at our option or may be
subject to mandatory redemption by us as required by a sinking fund or
otherwise. In addition, the debt securities of any series may be subject to
repurchase by us at the option of the holders. The applicable prospectus
supplement will describe the terms, the times and the prices regarding any
optional or mandatory redemption or option to repurchase any series of debt
securities.

Restrictive Covenants

Restrictions on the creation of secured debt. The indenture provides that we
will not, and will not cause or permit a restricted subsidiary to, create,
incur, assume or guarantee any indebtedness borrowed by us or our restricted
subsidiaries that is secured by a security interest in any of our principal
facilities or shares of stock owned directly or indirectly by us or a
restricted subsidiary or by indebtedness borrowed by one of our restricted
subsidiaries from us or another of our restricted subsidiaries ("secured debt")
unless the debt securities will be secured equally and ratably with or prior to
the secured debt, with exceptions as listed in the indenture. These
restrictions do not apply to indebtedness secured by:

. security interests on any property, which is a parcel of real property at
a manufacturing plant, a warehouse or an office building and which is
acquired, constructed, developed or improved by us or a restricted
subsidiary, which secures or provides for the payment of all or any part
of the acquisition cost of the property or the cost of the construction,
development or improvement of the property and which is created prior to,
at the same time or within 120 days after the completion of the
acquisition of the property or the later to occur of the completion,
development or improvement or the commencement or operation, use or
commercial production of the property;

. security interests on property at the time of its acquisition by us or a
restricted subsidiary which secure obligations assumed by us or a
restricted subsidiary;

. security interests arising from conditional sales agreements or title
retention agreements with respect to property acquired by us or any of our
restricted subsidiaries;

. security interests existing on the property or on the outstanding shares
or indebtedness of a corporation or firm at the time the corporation or
firm becomes a restricted subsidiary or is merged or consolidated with us
or a restricted subsidiary or or sells, leases or otherwise disposes of
substantially all of its property to us or one of our restricted
subsidiaries;

. security interests securing indebtedness of a restricted subsidiary owed
to us or to another restricted subsidiary;

. mechanics' and other statutory liens in respect of obligations not due or
being contested;

. security interests for taxes, assessments or governmental changes or
levies not yet delinquent or security interests for taxes, assessments or
governmental changes or levies already delinquent but which are being
contested;

. security interests arising in connection with legal proceedings, including
judgment liens, so long as the proceedings are being contested and, in the
case of judgment liens, the execution has been stayed;

. landlords' liens on fixtures;

. security interests arising in connection with contracts and subcontracts
with or made at the request of the United States, any state, or any
department, agency or instrumentality of the Unites States or any state;

. security interests that secure an obligation issued by the United States
of America or any state, territory or possession of the United States or
any of their political subdivisions or the District of Columbia, in
connection with the financing of the cost of construction or acquisition
of a principal facility or a part of a principal facility;

. security interests by reason of deposits to qualify us or a restricted
subsidiary to conduct business, to maintain self-insurance, or to comply
with law;

. the extension of any security interest existing on the date of the
indenture on a principal facility to additions, extensions or improvements
to the principal facility and not as a result of borrowing money or the
securing of indebtedness incurred after the date of the indenture; and

. any extension, renewal or refunding, or successive extensions, renewals or
refundings, in whole or in part of by secured debt secured by any security
interest listed to above, provided that the principal amount of the
secured debt does not exceed the principal amount outstanding immediately
prior to the extension, renewal or refunding and that the security
interest securing the secured debt is limited to the property which,
immediately prior to the extension, renewal or reducing, secured the
secured debt and additions to the property.

For purposes of the indenture, our "principal facilities" are our
manufacturing plants, warehouses, office buildings or parcels of real property
owned by us or any of our restricted subsidiaries, provided each plant,
warehouse, office building or parcel of real property has a gross book value,
without deduction for any depreciation reserves, in excess of 2% of
consolidated net tangible assets other than any facility which is determined by
our board of directors to not be of material importance. For purposes of the
indenture, our consolidated net tangible assets are the total amount of assets
which would be included on our consolidated balance sheet under generally
accepted accounting principles after deducting all short-term liabilities and
liability items, except for indebtedness payable more than one year from the
date of incurrence and all goodwill, trade names, trademarks, patents,
unamortized debt discount, unamortized expense incurred in the issuance of debt
and other like intangibles except for prepaid royalties.

In addition to the foregoing, we and our restricted subsidiaries may create,
incur, assume or guarantee secured debt, without equally and ratably securing
the debt securities, if and only to the extent that, the sum of

. the amount of secured debt entered into after the date of the indenture,
other than secured debt permitted as listed in the preceding paragraph,
plus

. the aggregate value of sale and leaseback transactions entered into after
the date of the indenture, other than sale and leaseback transactions
permitted under the second bullet point under "Restrictions on sale and
leaseback transactions,"

does not exceed 5% of our consolidated net tangible assets.

For purposes of the indenture, our "restricted subsidiaries" are those
corporations in which we own voting securities entitling us to elect a majority
of the directors and which are either designated as restricted subsidiaries in
accordance with the indenture or:

. existed as such on the date of the indenture or is the successor to, or
owns, any equity interest in, a corporation which so existed;

. has its principal business and assets in the United States;

. the business is other than the obtaining of financing in capital markets
outside the United States or the financing of the acquisition or
disposition of real or personal property or dealing in real property for
residential or office building purposes; and

. does not have assets substantially all of which consist of securities of
one or more corporations which are not restricted subsidiaries.

Restrictions on sale and leaseback transactions. The indenture provides that
we will not, and will not permit any restricted subsidiary to, enter into any
sale or transfer of any principal facility which has been in operation, use or
commercial production for more than 120 days prior to the sale or transfer, or
which, in the case of a principal facility which is a parcel of real property
other than a manufacturing plant, warehouse or office building, has been owned
by us or one of our restricted subsidiaries for more than 120 days prior to the
sale or transfer, if the sale or transfer is made with the intention of
leasing, or as part of an arrangement involving the lease, of the principal
facility to us or one of our restricted subsidiaries, except a lease for a
period not exceeding 36 months or that secures or relates to obligations issued
by the United States, or any state, in connection with the financing of the
cost of construction or acquisition of the principal facility ("sale and
leaseback transaction"), unless:

. we or our restricted subsidiary would be entitled to incur secured debt
permitted by the indenture only by reason of the provision described in
the second paragraph under the sub-heading "Restrictions on the creation
of secured debt" equal in amount to the value of the sale and leaseback
transaction without equally and ratably securing the debt securities; or

. we or our restricted subsidiary apply within one year, or commit to apply
within one year, an amount equal to the net proceeds of the property sold
pursuant to the sale and leaseback transaction to:

--the acquisition, construction or improvement of properties which are or will
be a principal facility, or

--the optional redemption of debt securities or to the repayment of other
superior indebtedness of us or of any restricted subsidiary.

For purposes of the indenture, "superior indebtedness" means any of our
obligations, or the obligations of any of our restricted subsidiaries, which:

. when created, are payable at least one year later;

. should be shown on our consolidated balance sheet in accordance with
generally accepted accounting principles; and

. are not subordinate and junior in right of payment to the prior payment of
our debt securities.

Instead of applying all or any part of the proceeds of a sale and leaseback
transaction to the redemption of debt securities, we may deliver to the
trustee, within one year of the transfer, debt securities for cancellation and
thereby reduce the amount to be applied to the redemption of debt securities by
an amount equivalent to the aggregate principal amount of the debt securities
delivered. Debt securities so redeemed or delivered will not be used as credits
against any mandatory sinking fund payments.

Restrictions on transfers of principal facilities. The indenture provides
that we will not, nor will we permit any restricted subsidiary to, transfer any
principal facility to any of our subsidiaries which is not a restricted
subsidiary unless we or it apply within one year, or commit to apply within one
year, an amount equal to the fair value of the principal facility at the time
of the transfer:

. to the acquisition, construction, development or improvement of a
principal facility or part of a principal facility; or

. to the optional redemption of debt securities or to the repayment of our
superior indebtedness or the superior indebtedness of any of our
restricted subsidiaries.

In lieu of applying all or any part of the amount to the redemption of
securities, we may deliver to the trustee securities for cancellation and
thereby reduce the amount to be applied to the redemption of securities by

the principal amount of the securities so delivered. Securities so redeemed or
delivered will not be used as credits against any mandatory sinking fund
payments.

Restrictions on mergers, consolidations and transfers of assets

The indenture provides that we will not consolidate or merge into or
transfer or lease all or substantially all of our assets to another person
unless:

. in the case of a merger, we are the surviving corporation in the merger; or

. the person into which we are merged or which acquires all or substantially
all of our assets is a corporation organized under the laws of the United
States, any state or the District of Columbia, and assumes all of our
obligations relating to the securities and the indenture, and immediately
after the transaction no default exists.

Upon any the consolidation, merger or transfer, the successor corporation
will be substituted for us under the indenture. The successor corporation may
then exercise all of our powers and rights under the indenture, and we will be
released from all of our liabilities and obligations in respect of the
securities and the indenture. In the event we lease all or substantially all of
our assets, the lessee corporation will be our successor and may exercise all
of our powers and rights under the indenture but we will not be released from
our obligations to pay the principal of and interest on the securities.

Events of default

Unless otherwise specified in the applicable prospectus supplement, an
"event of default" with respect to the debt securities of any series is defined
in the indenture as being:

. default in payment of any interest on, or any additional amounts payable
with respect to any interest on, any of the debt securities of that series
or any coupon relating to the debt securities when due, and continuance of
the default for a period of 30 days;

. default in payment of any principal of or premium, if any, on, or any
additional amounts payable with respect to any principal of or premium, if
any, on, any of the debt securities of that series when due, whether at
maturity, upon redemption, upon repayment or repurchase at the option of
the holder or otherwise;

. default in the deposit of any sinking fund payment or payment under any
analogous provision when due with respect to any of the debt securities of
that series;

. default by us in the performance, or breach, of any other covenant or
warranty in the indenture or in any debt security of that series, other
than a covenant or warranty included in the indenture solely for the
benefit of a series of debt securities other than that series, and
continuance of that default or breach, without that default or breach
having been cured or waived, for a period of 60 days after the trustee or
the holders of not less than 25% in aggregate principal amount of the debt
securities of that series then outstanding give notice to us, or in the
case of notice by the holders, to us and the trustee, specifying the
default or breach;

. our failure to make any payment when due, including any applicable grace
period, relating to our indebtedness which is in an amount in excess of
$50,000,000, or our default with respect to any of our indebtedness that
results in acceleration of indebtedness which is in an amount in excess of
$50,000,000;

. specified events of bankruptcy, insolvency or reorganization with respect
to us or any of our restricted subsidiaries; or

. any other event of default established for the debt securities of that
series.

No event of default with respect to any particular series of debt securities
necessarily constitutes an event of default with respect to any other series of
debt securities. The indenture provides that, within 90 days after the
occurrence of any default with respect to the debt securities of any series,
the trustee will mail to all holders of the debt securities of that series
notice of that default, unless that default has been cured or waived. However,
the indenture provides that the trustee may withhold notice of a default with
respect to the debt securities of that series, except a default in payment of
principal, premium, if any, interest, if any, additional amounts, if any, or
sinking fund payments, if any, if the trustee considers it in the best interest
of the holders to do so. In the case of a default in the performance or the
breach of any covenant or warranty in the indenture with respect to debt
securities or that series, no notice will be given until at least 30 days after
the occurrence of the default or breach. As used in this paragraph, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an event of default with respect to the debt securities of any
series.

The indenture provides that if an event of default, other than an event of
default relating to events of bankruptcy, insolvency or reorganization with
respect to any series of debt securities occurs and is continuing, either the
trustee or the holders of at least 25% in principal amount of the debt
securities of that series then outstanding may declare the principal of, or if
debt securities of that series are original issue discount securities, the
lesser amount as may be specified in the terms of that series of debt
securities, and accrued and unpaid interest, if any, on all the debt securities
of that series to be due and payable immediately. The indenture also provides
that if an event of default relating to events of bankruptcy, insolvency or
reorganization with respect to any series of debt securities occurs, the
principal of, or if debt securities of that series are original issue discount
securities, the lesser amount as may be specified in the terms of that series
of debt securities, and accrued and unpaid interest, if any, on all the debt
securities of that series will automatically become and be immediately due and
payable without any declaration or other action on the part of the trustee or
any holder of the debt securities of that series. However, upon specified
conditions, the holders of a majority in principal amount of the debt
securities of a series then outstanding may rescind and annul an acceleration
of the debt securities of that series and its consequences.

Subject to the provisions of the Trust Indenture Act requiring the trustee,
during the continuance of an event of default under the indenture, to act with
the requisite standard of care, the trustee is under no obligation to exercise
any of its rights or powers under the indenture at the request or direction of
any of the holders of debt securities of any series unless those holders have
offered the trustee reasonable indemnity.

Subject to this requirement, holders of a majority in principal amount of
the outstanding debt securities of any series issued under the indenture have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the trustee under the indenture with respect to that
series. The indenture requires the annual filing by us with the trustee of a
certificate which states whether we are in default under the terms of the
indenture.

Notwithstanding any other provision of the indenture, the holder of a debt
security will have the right, which is absolute and unconditional, to receive
payment of the principal of and premium, if any, and interest, if any, on that
debt security on the respective due dates for those payments and to institute
suit for the enforcement of those payments, and this right will not be impaired
without the consent of the holder.

Modification and waivers

The indenture permits us and the trustee, with the consent of the holders of
a majority in principal amount of the outstanding debt securities of each
series issued under the indenture and affected by a modification or amendment,
to modify or amend any of the provisions of the indenture or of the debt
securities of the applicable series or the rights of the holders of the debt
securities of that series under the indenture. However, no modification or
amendment may, without the consent of the holder of each outstanding debt
security issued under the indenture affected by the modification or amendment,
among other things:

. change the stated maturity of the principal of, or premium, if any, or any
installment of interest, if any, on or any additional amounts, if any,
with respect to any debt securities issued under the indenture;

. reduce the principal of or any premium on any debt securities or reduce
the rate of interest on or the redemption or repurchase price of any debt
security, or any additional amounts with respect to any debt securities,
or change our obligation to pay additional amounts;

. reduce the amount of principal of any original issue discount securities
that would be due and payable upon an acceleration of the maturity of the
debt security;

. adversely affect any right of repayment or repurchase at the option of any
holder;

. change any place where or the currency in which the principal of to, any
debt securities are payable;

. impair the holder's right to institute suit to enforce the payment of any
debt securities on or after their stated maturity or, in the case of
redemption, on or after the redemption date; or

. reduce the percentage of debt securities of any series issued under the
indenture whose holders must consent to any modification or amendment or
any waiver of compliance with specific provisions of the indenture or
specified defaults under the indenture and their consequences.

The indenture also contains provisions permitting us and the trustee,
without the consent of the holders of any debt securities issued under the
indenture, to modify or amend the indenture, among other things:

. to evidence the succession of another person to us under the indenture and
the assumption of our obligations contained in the indenture and the debt
securities;

. to add to our covenants for the benefit of the holders of all or any
series of debt securities issued under the indenture or to surrender any
right or power conferred upon us in the indenture with respect to all or
any series of debt securities issued under the indenture;

. to add to or change any provisions of the indenture to facilitate the
issuance of bearer securities;

. to establish the form or terms of debt securities of any series and any
related coupons, including, deletions from or additions or changes to the
indenture in connection with the modification or amendment, so long as
those deletions, additions and changes are not applicable to any other
series of debt securities then outstanding;

. to cure any ambiguity or correct or supplement any provision in the
indenture which may be defective or inconsistent with other provisions in
the indenture, or to make any other provisions with respect to matters or
questions arising under the indenture which will not adversely affect the
interests of the holders of the debt securities of any series then
outstanding;

. to add any additional events of default with respect to all or any series
of debt securities; or

. to amend or supplement any provision contained in the indenture, provided
that the amendment or supplement does not apply to any outstanding debt
securities issued before the date of the amendment or supplement that is
entitled to the benefits of that provision.

The holders of a majority in aggregate principal amount of the outstanding
debt securities of any series may waive our compliance with some of the
restrictive provisions of the indenture, which may include covenants, if any,
which are specified in the applicable prospectus supplement. The holders of a
majority in aggregate principal amount of the outstanding debt securities of
any series may, on behalf of all holders of debt securities of that series,
waive any past default under the indenture with respect to debt securities of
that series and its consequences, except a default in the payment of the
principal of, or premium, if any, or interest, if any, on debt securities of
that series or a default in respect of a covenant or provision which cannot be
modified or amended without the consent of the holder of each outstanding debt
security of the affected series.

Discharge, defeasance and covenant defeasance

Unless otherwise provided in the applicable prospectus supplement, upon our
direction, the indenture will cease to be of further effect with respect to any
series of debt securities issued under the indenture specified by us, subject
to the survival of specified provisions of the indenture, when:

. either

--all outstanding debt securities of that series and, in the case of bearer
securities, all related coupons, have been delivered to the trustee for
cancellation, subject to exceptions, or

--all debt securities of that series and, if applicable, any related coupons
have become due and payable or will become due and payable at their
stated maturity within one year or are to be called for redemption
within one year and we have deposited with the trustee, in trust, funds
in United States dollars, in the foreign currency in which the debt
securities of that series are payable, or direct or indirect obligations
of the United States or the government which issued the applicable
foreign currency ("government obligations") in an amount sufficient to
pay the entire indebtedness on the debt securities of that series in
respect of principal, premium, if any, and interest, if any, and, to the
extent that the debt securities of that series provide for the payment
of additional amounts and the amount of any additional amounts which are
or will be payable is at the time of deposit reasonably determinable by
us, in the exercise of our sole discretion, those additional amounts, to
the date of the deposit, if the debt securities of that series have
become due and payable, or to the maturity or redemption date of the
debt securities of that series, as the case may be;

. we have paid all other sums payable under the indenture with respect to
the debt securities of that series; and

. the trustee has received an officers' certificate and an opinion of
counsel called for by the indenture.

If the debt securities of any series provide for the payment of additional
amounts, we will remain obligated, following the deposit described above, to
pay additional amounts on those debt securities to the extent that they exceed
the amount deposited in respect of those additional amounts as described above.

Unless otherwise provided in the applicable prospectus supplement, we may
elect with respect to any series of debt securities either

. to defease and be discharged from all of our obligations with respect to
that series of debt securities ("defeasance"), except for, among other
things,

--the obligation to pay additional amounts with respect to payments on that
series of debt securities to the extent that those additional amounts
exceed the amount deposited in respect of those amounts as provided
below,

--the obligation to register the transfer or exchange of those debt securities,

--the obligation to replace temporary or mutilated, destroyed, lost or stolen
debt securities,

--the obligation to maintain an office or agency in respect of that series of
debt securities,

--the obligation to hold moneys for payment in trust, and

--the obligation, if applicable, to repurchase or repay debt securities of
that series at the option of the holders in accordance with their terms,
or

. to be released from our obligations with respect to the debt securities of
the series under specified covenants in the indenture including those
described under the heading "Restrict Covenants" and, if applicable, other
covenants as may be specified in the applicable prospectus supplement, and
any omission to comply with those obligations will not constitute a
default or an event of default with respect to that series of debt
securities ("covenant defeasance"),

in either case upon the irrevocable deposit with the trustee, or other
qualifying trustee, in trust for that purpose, of an amount in United States
dollars or in the foreign currency in which those debt securities are payable
at stated maturity or, if applicable, upon redemption, and/or government
obligations which, through the payment of principal and interest in accordance
with their terms, will provide money in an amount sufficient to pay the
principal of and any premium and any interest on, and, to the extent that the
debt securities of that series provide for the payment of additional amounts
and the amount of the additional amounts which are or will be payable is at the
time of deposit reasonably determinable by us, in the exercise of our sole
discretion, the additional amounts with respect to, that series of debt
securities, and any mandatory sinking fund or analogous payments on that series
of debt securities, on the due dates for those payments.

The defeasance or covenant defeasance described above will only be effective
if, among other things:

. it will not result in a breach or violation of, or constitute a default
under, the indenture or any other material agreement or instrument to
which we are a party or are bound;

. in the case of defeasance, we will have delivered to the trustee an
opinion of independent counsel confirming that

-- we have received from or there has been published by the Internal
Revenue Service a ruling, or

-- since the date of the indenture there has been a change in applicable
federal income tax law,

in either case to the effect that, and based on this ruling or change the
opinion of counsel will confirm that, the holders of the debt securities
of the applicable series will not recognize income, gain or loss for
federal income tax purposes as a result of the defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if the defeasance had not
occurred;

. in the case of covenant defeasance, we will have delivered to the trustee
an opinion of independent counsel to the effect that the holders of the
debt securities of that series will not recognize income, gain or loss for
federal income tax purposes as a result of the covenant defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if the covenant
defeasance had not occurred;

. if the cash and/or government obligations deposited are sufficient to pay
the principal of, and premium, if any, and interest and additional
amounts, if any, with respect to the debt securities of that series
provided those debt securities are redeemed on a particular redemption
date, we will have given the trustee irrevocable instructions to redeem
those debt securities on that date; and

. no event of default or event which with notice or lapse of time or both
would become an event of default with respect to debt securities of that
series will have occurred and be continuing on the date of the deposit
into trust; and, solely in the case of defeasance, no event of default
arising from specified events of bankruptcy, insolvency or reorganization
with respect to us or any restricted subsidiary or event which with notice
or lapse of time or both would become an event of default will have
occurred and be continuing during the period through and including the
91st day after the date of the deposit into trust.

Unless otherwise provided in the applicable prospectus supplement, if after
we have deposited funds and/or government obligations to effect defeasance or
covenant defeasance with respect to debt securities of any series,

. the holder of a debt security of that series is entitled to, and does,
elect under the indenture or the terms of that debt security to receive
payment in a currency other than the currency in which the deposit has
been made, or

. a conversion event, as defined below, occurs in respect of the foreign
currency in which the deposit has been made,

the indebtedness represented by that debt security will be deemed to have been,
and will be, fully discharged and satisfied through the payment of the
principal of and premium, if any, and interest, if any, on that debt security as

it becomes due out of the proceeds yielded by converting the amount deposited
in respect of that debt security into the currency in which that debt security
becomes payable as a result of the election or conversion event based on, in
the case of payments made under the first bullet above, the applicable market
exchange rate for the foreign currency in effect on the second business day
before the payment date, or, with respect to a conversion event, the applicable
market exchange rate for the foreign currency in effect, as nearly as feasible,
at the time of the conversion event.

For purposes of the indenture, a "conversion event" is the cessation of the
use of a foreign currency both by the government of the country or the
confederation which issued the foreign currency and for the settlement of
transactions by a central bank or other public institutions of or within the
international banking community, or any currency unit or composite currency for
the purposes for which it was established.

In the event we effect covenant defeasance with respect to debt securities
of any series and those debt securities are declared due and payable because of
the occurrence of any event of default other than an event of default with
respect to the covenants as to which covenant defeasance has been effected,
which would no longer be applicable to the debt securities of that series after
covenant defeasance, the amount of monies and/or government obligations
deposited with the trustee to effect covenant defeasance may not be sufficient
to pay amounts due on the debt securities of that series at the time of any
acceleration resulting from that event of default. However, we would remain
liable to make payment of those amounts due at the time of acceleration.

The applicable prospectus supplement may further describe the provisions, if
any, permitting or restricting defeasance or covenant defeasance with respect
to the debt securities of a particular series.

Regarding the trustee

We and our subsidiaries may maintain deposit accounts and conduct other
banking transactions with the trustee or its affiliates in the ordinary course
of business, and the trustee and its affiliates may from time to time in the
future provide us with banking and financial services in the ordinary course of
their business.

PLAN OF DISTRIBUTION

We may sell any or all of the offered securities through agents,
underwriters, dealers or directly to purchasers. Agents who we designate may
solicit offers to purchase the securities.

. We will name any agent involved in offering or selling securities, and any
commissions that we will pay to the agent, in our prospectus supplement.

. Unless we indicate otherwise in our prospectus supplement, our agents will
act on a best efforts basis for the period of their appointment.

. Our agents may be deemed to be underwriters under the Securities Act of
1933 of any of the securities that they offer or sell.

We may use an underwriter or underwriters in the offer or sale of our
securities.

. If we use an underwriter or underwriters, we will execute an underwriting
agreement with the underwriter or underwriters at the time that we reach
an agreement for the sale of the securities.

. We will include the names of the specific managing underwriter or
underwriters, as well as any other underwriters, and the terms of the
transactions, including the compensation the underwriters and dealers will
receive, in our prospectus supplement.

. The underwriters will use our prospectus supplement to sell the securities.

We may use a dealer to sell the securities.

. If we use a dealer, we, as principal, will sell the securities to the
dealer.

. The dealer will then sell the securities to the public at varying prices
that the dealer will determine at the time it sells our securities.

. We will include the name of the dealer and the terms of our transactions
with the dealer in our prospectus supplement.

We may solicit directly offers to purchase the securities, and we may
directly sell the securities to institutional or other investors. We will
describe the terms of our direct sales in our prospectus supplement.

We may indemnify agents, underwriters, and dealers against certain
liabilities, including liabilities under the Securities Act. Our agents,
underwriters, and dealers, or their affiliates, may be customers of, engage in
transactions with or perform services for us, in the ordinary course of
business.

We may authorize our agents and underwriters to solicit offers by certain
institutions to purchase the securities at the public offering price under
delayed delivery contracts.

. If we use delayed delivery contracts, we will disclose that we are using
them in the prospectus supplement and will tell you when we will demand
payment and delivery of the securities under the delayed delivery
contracts.

. These delayed delivery contracts will be subject only to the conditions
that we describe in the prospectus supplement.

. We will describe in our prospectus supplement the commission that
underwriters and agents soliciting purchases of the securities under
delayed contracts will be entitled to receive.

In addition, from time to time, underwriters may offer and sell our common
stock (or certain of the other offered securities) at a fixed price or prices,
which may be changed, at market prices prevailing at the time of sale, at
prices related to the prevailing market prices or at negotiated prices. We also
may, from time to time, authorize dealers or agents to offer and sell these
securities upon such terms and conditions as may be set forth in the applicable
prospectus supplement. In connection with the sale of any of these securities,
underwriters may also receive commissions from purchasers of the securities for
whom they may act as agent.

Shares of our common stock may also be sold in one or more of the following
transactions:

. block transactions (which may involve crosses) in which a broker-dealer
may sell all or a portion of the shares as agent but may position and
resell all or a portion of the block as principal to facilitate the
transaction;

. purchases by a broker-dealer as principal and resale by the broker-dealer
for its own account pursuant to a prospectus supplement;

. a special offering, an exchange distribution or a secondary distribution
in accordance with applicable stock exchange rules;

. ordinary brokerage transactions and transactions in which a broker-dealer
solicits purchasers;

. sales "at the market" to or through a market maker or into an existing
trading market, on an exchange or otherwise, for shares; and

. sales in other ways not involving market makers or established trading
markets, including direct sales to purchasers.

Broker-dealers may also receive compensation from purchasers of the shares
which is not expected to exceed that customary in the types of transactions
involved.

Offered securities may also be offered and sold, if so indicated in the
applicable prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their terms,
or otherwise, by one or more remarketing firms, acting as principals for their
own accounts or as agents for us. Any remarketing firm will be identified and
the terms of its agreements, if any, with us, and any related compensation
arrangements contemplated thereby will be described in the applicable
prospectus supplement.

In connection with the offering of the securities hereby, certain
underwriters, and selling group members and their respective affiliates, may
engage in transactions that stabilize, maintain or otherwise affect the market
price of the applicable securities. These transactions may include
stabilization transactions effected in accordance with Rule 104 of Regulation M
promulgated by the SEC pursuant to which these persons may bid for or purchase
securities for the purpose of stabilizing their market price.

The underwriters in an offering of securities may also create a "short
position" for their account by selling more securities in connection with the
offering than they are committed to purchase from us. In that case, the
underwriters could cover all or a portion of the short position by either
purchasing securities in the open market following completion of the offering
of these securities or by exercising any over-allotment option granted to them
by us. In addition, the managing underwriter may impose "penalty bids" under
contractual arrangements with other underwriters, which means that they can
reclaim from an underwriter (or any selling group member participating in the
offering) for the account of the other underwriters, the selling concession for
the securities that are distributed in the offering but subsequently purchased
for the account of the underwriters in the open market. Any of the transactions
described in this paragraph or comparable transactions that are described in
any accompanying prospectus supplement may result in the maintenance of the
price of the securities at a level above that which might otherwise prevail in
the open market. None of the transactions described in this paragraph or in an
accompanying prospectus supplement are required to be taken by any underwriters
and, if they are undertaken, may be discontinued at any time.

Each series of securities, except for our common stock, will be a new issue
of securities and will have no established trading market. Any underwriters to
whom we sell securities for public offering and sale may make a market in the
securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. The securities, other
than the common stock, may or may not be listed on a national securities
exchange.

LEGAL MATTERS

The validity of each of the offered securities when, and if issued hereunder
will be passed upon for us by our Senior Vice President and General Counsel,
Thomas J. Sabatino, Jr. Mr. Sabatino owns shares of, and options on, our common
stock, both directly, and as a participant in various stock and employee
benefit plans. See our most recent proxy statement for additional details.

INDEPENDENT ACCOUNTANTS

The financial statements of Baxter International Inc. incorporated in this
prospectus by reference to Baxter's Annual Report on Form 10-K for the year
ended December 31, 2001, have been audited by PricewaterhouseCoopers LLP,
independent accountants, as stated in their report appearing therein.

[LOGO] Baxter