SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
Commission File Number 1-1136
BRISTOL-MYERS SQUIBB COMPANY
(Exact name of registrant as specified in its charter)
Delaware 22-079-0350
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
345 Park Avenue, New York, N.Y. 10154
(Address of principal executive offices)
Telephone: (212) 546-4000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
At June 30, 1996, there were 501,592,892 shares outstanding of the
Registrant's $.10 par value Common Stock.
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BRISTOL-MYERS SQUIBB COMPANY
INDEX TO FORM 10-Q
June 30, 1996
Page No.
--------
Part I - Financial Information:
Condensed Financial Statements (Unaudited):
Consolidated Balance Sheet - June 30, 1996
and December 31, 1995 2 - 3
Consolidated Statement of Earnings for the three and
six months ended June 30, 1996 and 1995 4
Consolidated Statement of Cash Flows for the six
months ended June 30, 1996 and 1995 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 6 - 13
Part II - Other Information 14 - 15
Signatures 16
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BRISTOL-MYERS SQUIBB COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET - ASSETS
(Unaudited, in millions of dollars except share amounts)
June 30, December 31,
1996 1995
--------- ------------
Current Assets:
Cash and cash equivalents $ 1,124 $ 1,645
Time deposits and marketable securities 491 533
Receivables, net of allowances 2,468 2,356
Finished goods 971 892
Work in process 172 180
Raw and packaging materials 412 379
------- -------
Inventories 1,555 1,451
Prepaid expenses 1,091 1,033
------- -------
Total Current Assets 6,729 7,018
------- -------
Property, Plant and Equipment 6,422 6,264
Less: Accumulated depreciation 2,624 2,504
------- -------
3,798 3,760
------- -------
Insurance Recoverable 934 959
Excess of cost over net tangible assets
received in business acquisitions 1,430 1,219
Other Assets 859 973
------- -------
Total Assets $13,750 $13,929
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BRISTOL-MYERS SQUIBB COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET -
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited, in millions of dollars except share amounts)
June 30, December 31,
1996 1995
-------- ------------
Current Liabilities:
Short-term borrowings $ 496 $ 575
Accounts payable 896 848
Accrued expenses 1,995 1,939
U.S. and foreign income taxes payable 679 744
Product liability 700 700
------- -------
Total Current Liabilities 4,766 4,806
Product Liability 1,350 1,645
Other Liabilities 997 1,021
Long-Term Debt 572 635
------- -------
Total Liabilities 7,685 8,107
------- -------
Stockholders' Equity:
Preferred stock, $2 convertible series:
Authorized 10 million shares;
issued and outstanding
16,500 in 1996 and 19,023 in 1995,
liquidation value of $50 per share - -
Common stock, par value of $.10 per share:
Authorized 1.5 billion shares;
issued 540,216,271 in 1996
and 540,185,639 in 1995 54 54
Capital in excess of par value of stock 363 375
Cumulative translation adjustments (360) (327)
Retained earnings 8,542 7,917
------- -------
8,599 8,019
Less cost of treasury stock - 38,623,379
common shares in 1996
and 34,953,311 in 1995 2,534 2,197
------- -------
Total Stockholders' Equity 6,065 5,822
------- -------
Total Liabilities and Stockholders' Equity $13,750 $13,929
======= =======
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BRISTOL-MYERS SQUIBB COMPANY
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited, in millions of dollars except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1996 1995 1996 1995
------- -------- -------- -------
Net Sales $3,696 $3,445 $7,365 $6,746
------ ------ ------ ------
Expenses:
Cost of products sold 962 909 1,896 1,786
Marketing, selling,
administrative and other 1,015 979 1,999 1,807
Advertising and
product promotion 487 401 914 776
Research and development 309 294 611 583
------ ----- ------ ------
2,773 2,583 5,420 4,952
------ ----- ------ ------
Earnings Before Income Taxes 923 862 1,945 1,794
Provision for income taxes 268 254 564 530
------ ----- ------ ------
Net Earnings $ 655 $ 608 $1,381 $1,264
====== ====== ====== ======
Earnings Per Common Share $1.31 $1.20 $2.75 $2.49
====== ====== ====== ======
Average Common Shares
Outstanding (in millions) 501 507 503 507
====== ====== ====== ======
Effective Tax Rate 29.0% 29.5% 29.0% 29.5%
====== ====== ====== ======
Dividends Per Common Share $.75 $.74 $1.50 $1.48
====== ====== ====== ======
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BRISTOL-MYERS SQUIBB COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in millions of dollars)
Six Months Ended
June 30,
-------------------
1996 1995
------- -------
Cash Flows From Operating Activities:
Net earnings $1,381 $1,264
Depreciation and amortization 254 172
Other operating items (6) 32
Receivables (144) (112)
Inventories (119) (36)
Accounts payable 51 30
Accrued expenses 119 112
Product liability (295) (141)
Income taxes 38 (1)
Other assets and liabilities (38) (230)
------ ------
Net Cash Provided by Operating Activities 1,241 1,090
------ ------
Cash Flows From Investing Activities:
Proceeds from sales of time deposits
and marketable securities 308 221
Purchases of time deposits
and marketable securities (256) (23)
Additions to fixed assets (250) (210)
Acquisition of businesses (271) (262)
Other, net (72) (24)
------ ------
Net Cash Used in Investing Activities (541) (298)
------ ------
Cash Flows From Financing Activities:
Short-term borrowings (120) 59
Long-term debt 8 (2)
Issuances of common stock under stock plans 81 30
Purchases of treasury stock (430) (51)
Dividends paid (756) (751)
------ ------
Net Cash Used in Financing Activities (1,217) (715)
------ ------
Effect of Exchange Rates on Cash (4) -
------ ------
(Decrease) Increase in Cash and Cash Equivalents (521) 77
Cash and Cash Equivalents at Beginning of Period 1,645 1,642
------ ------
Cash and Cash Equivalents at End of Period $1,124 $1,719
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<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
Basis of Presentation
- ---------------------
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements include all adjustments (consisting only of normal
adjustments) necessary for a fair presentation of the financial position of
Bristol-Myers Squibb Company (the "Company") at June 30, 1996 and December 31,
1995, the results of operations for the three and six months ended June 30,
1996 and 1995, and cash flows for the six months ended June 30, 1996 and
1995. These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the related notes
included in the Company's 1995 Annual Report on Form 10-K.
In general, the business of the Company's industry segments is not seasonal.
Second Quarter Results of Operations
- ------------------------------------
Sales
- -----
Worldwide sales for the second quarter of 1996 were $3,696, an increase of 7%
over the second quarter of 1995. The consolidated sales growth resulted from
a 10% increase due to volume and a 3% decrease due to the unfavorable effect
of foreign exchange rate fluctuations. Changes in selling prices had no effect
on total sales growth. Domestic sales increased 6% and international sales
increased 8%. Excluding the unfavorable effect of foreign exchange rate
fluctuations, international sales increased 15% over the same period in 1995.
Worldwide sales for the second quarter of 1995 increased 16% compared to the
prior year, reflecting a 13% increase due to volume, a 3% increase due to the
favorable effect of foreign exchange rate fluctuations, with no effect due to
changes in selling prices. The acquisitions of Calgon Vestal Laboratories in
1995, and Matrix Essentials, Inc. and the UPSA Group, in 1994, accounted for
one-third of the Company's 1995 sales growth.
Industry Segments
- ----------------- Three Months Ended June 30,
------------------------------------
Net Sales % Change
---------------- --------------
1996 1995 1996 1995
------ ------ ---- ----
Pharmaceutical Products $2,092 $1,946 7 % 11%
Medical Devices 465 483 (4)% 17%
Nonprescription Health Products 669 598 12 % 26%
Toiletries and Beauty Aids 470 418 13 % 27%
------ ------
Total Company $3,696 $3,445 7 % 16%
====== ======
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BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
Sales in the pharmaceutical products segment, which is the largest segment at
57% of total Company sales, were $2,092, an increase of 7% over the second
quarter of 1995. Sales growth resulted from a 10% increase in volume offset by
a 3% decrease due to the unfavorable effect of foreign exchange rate
fluctuations. Changes in selling prices had no effect on sales growth.
Excluding the sales of CAPOTEN* (discussed below), pharmaceutical product
sales increased 19% in the quarter (22% before the effect of foreign exchange).
Sales of cardiovascular drugs, the largest product group in the segment,
decreased 10% to $685. Sales of PRAVACHOL*, a cholesterol-lowering agent,
increased 32% benefiting from a number of clinical studies, including the
landmark Pravastatin Primary Prevention Study, demonstrating its potential
benefits for a wide range of patients. Further, in July, the U.S. Food and
Drug Administration cleared PRAVACHOL* as the only cholesterol-lowering agent
to help prevent a first heart attack and reduce death from cardiovascular
disease in patients with elevated cholesterol who are at risk of a first heart
attack. MONOPRIL*, a second generation angiotensin converting enzyme (ACE)
inhibitor with once-a-day dosage, also contributed to the increase in
cardiovascular sales. Increases in sales of these products were offset by the
35% decline in sales of captopril, an ACE inhibitor sold primarily under the
trademark CAPOTEN*. This decrease is attributable to the loss of its patent
exclusivity in the U.S. in February 1996. Excluding the sales of CAPOTEN*,
cardiovascular sales increased 20%.
Sales of anti-cancer drugs increased 22% to $452. Sales of TAXOL*
(paclitaxel), the Company's leading anti-cancer agent, increased 51%. A study
conducted by the Gynecologic Oncology Group (GOG), showed a notable
improvement in survival for advanced ovarian cancer patients when they
received a first-line regimen combining TAXOL* and PLATINOL*, a
platinum-containing compound. Sales of PARAPLATIN* and PLATINOL* have
also increased. These increases were partially offset by decreases in sales
of VEPESID*. Bristol-Myers Squibb is the world's market leader in oncology
chemotherapy sales. To enhance its core oncology franchise, the Company
announced in August that it entered into an agreement to acquire Axion's
share of Oncology Therapeutics Network, a specialty distributor of anti-cancer
medicines and related products, which had been jointly owned by Axion and the
Company.
Anti-infective drug sales were $452, an increase of 10% over the prior year.
Strong gains were recorded for VIDEX* and ZERIT*, the Company's two
antiretroviral agents, both of which benefited from positive regulatory agency
actions in the U.S. and Europe, and from clinical trials showing the efficacy
of combination therapy. These actions are expanding markets for both products.
MAXIPIME*, a fourth generation injectable cephalosporin introduced in some
international markets in 1995, also contributed to the growth of
anti-infectives. Growth of these products was partially offset by a sales
decrease in DURICEF*, due to a weak 1996 flu season and increased generic
* Indicates brand names of products which are registered trademarks owned by
the Company.
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<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
competition. Sales of central nervous system drugs including SERZONE*, an
anti-depressant which offers a low incidence of side effects, and STADOL NS*,
a prescription nasal spray analgesic, continued to experience very good growth.
Glucophage, an oral medication for non-insulin dependent diabetes launched in
April 1995 in the U.S., continued to have exceptionally strong growth. Sales
of ESTRACE*, a low-dose estrogen replacement therapy, also performed well.
For the second quarter of 1995, sales of the pharmaceutical products segment
increased 11% primarily as a result of increases in sales of cardiovascular,
anti-cancer, anti-infective, central nervous system and dermatological drugs.
In the medical devices segment, sales were $465, a decrease of 4%. Excluding
the unfavorable effect of foreign exchange rate fluctuations, medical devices
segment sales increased 1%. Volume gains of 4% in the quarter were offset by
a 5% decrease due to the unfavorable effect of foreign exchange rate
fluctuations and a 3% decrease due to selling prices. The Company continues
to be the world market share leader in knee and hip replacements as well as
ostomy and modern wound care products and is developing a number of new product
enhancements in each of these categories. Sales of ostomy care products
decreased 2% for the second quarter. Excluding the unfavorable effect of
foreign exchange, sales increased 2%, primarily due to the volume growth of
the ACTIVE LIFE/COLODRESS* and the SURFIT/COMBIHESIVE/SECURE* product lines.
Prosthetic implant sales decreased 4%. Excluding the unfavorable effect of
foreign exchange, sales increased 2% due to the continued worldwide acceptance
of the NEXGEN* Complete Knee Solution. The Company expects to launch a major
new hip replacement device, the VERSYS* Hip System, later this year. For the
second quarter of 1995, medical devices segment sales increased 17% (10%
excluding the effect of the acquisition of Calgon Vestal Laboratories and the
sales of a divested business) due to increased sales of prosthetic implants,
ostomy and wound care products.
Sales of the nonprescription health products segment increased 12% to $669,
reflecting a 15% increase due to volume, a 2% decrease due to the unfavorable
effect of foreign exchange rate fluctuations, and a 1% decrease in selling
prices. Nutritional product sales increased 21%.
Sales of ENFAMIL*, the Company's largest selling infant formula, as well as
NUTRAMIGEN* and LACTOFREE*, special infant formulas, performed well in both the
U.S. and international markets. Contributing to infant formula sales in the
U.S. were several sole-source contracts awarded to the Company over the past
year under the Women, Infants and Children (WIC) Program. BOOST* and SUSTACAL*
nutritional beverages, launched directly to consumers in the fourth quarter
of 1995, also contributed to sales growth. For the second quarter of 1995,
the nonprescription health products segment sales increased 26% over the prior
year (an increase of 10% excluding the effect of the acquisition of the UPSA
Group in September, 1994), primarily due to increased sales of infant formulas
and analgesics.
Sales of the toiletries and beauty aids segment increased 13% over the prior
year to $470, reflecting a 15% increase due to volume, a 2% increase due to
selling prices, and a 4% decrease due to the unfavorable effect of foreign
exchange rate fluctuations. Hair care and haircoloring products experienced
strong market growth in the second quarter increasing 22% and 16%,
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BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
respectively, over the prior year. Among the products contributing to this
excellent performance were: HERBAL ESSENCES*, SYSTEME BIOLAGE* and
INFUSIUM 23* complete lines of shampoos and conditioners, as well as
NICE`N EASY*, NATURAL INSTINCTS* and salon haircolorings and the introduction,
in the second quarter, of CLAIROL HYDRIENCE*, a unique water-based permanent
haircolor. Skin care products sales increased, primarily due to strong
introductory sales of KERI* facial care products in Japan. For the second
quarter of 1995, sales of the toiletries and beauty aids segment increased 27%
over the prior year, (a 7% increase excluding the acquisition of Matrix
Essentials, Inc.) primarily due to increases in sales of haircoloring and
hair care products.
Cost of Products Sold and Other Operating Expenses
- --------------------------------------------------
Total costs and expenses for the quarters ended June 30, 1996 and 1995, as a
percentage of sales, remained constant at 75.0%. Cost of products sold
decreased to 26.0% of sales from 26.4%, in 1995 due to a favorable product mix
and improved manufacturing efficiencies related to pharmaceutical products.
Expenditures for advertising and promotion in support of new and existing
products increased 21% to $487 from $401 in 1995 and, as a percentage of
sales, were 13.2% compared to 11.6% in 1995. The increase is primarily due to
the incremental spending over the prior year in support of pharmaceutical
products and toiletries and beauty aids. Marketing, selling, administrative
and other expenses, as a percentage of sales, decreased to 27.5% in 1996 from
28.4%, in the second quarter of 1995. Research and development expenses
increased 5% to $309 from $294 in 1995 and, as a percentage of sales, were
8.4% compared to 8.5%. Pharmaceutical research and development spending
increased 4% over the prior year, and as a percentage of pharmaceutical sales,
was 12.4% compared to 12.9% in the second quarter of 1995.
Earnings
- --------
Earnings before income taxes for the second quarter were $923, an increase of
7% from $862 in 1995. Net earnings increased 8% to $655 from $608 and earnings
per share increased 9% to $1.31 from $1.20 in the second quarter of 1995. The
growth in earnings per share exceeded the growth in net earnings by 1% as a
result of the Company's share repurchase program. The effective tax rate on
earnings before income taxes decreased to 29.0% in the second quarter of 1996
from 29.5% in 1995, reflecting the benefit of increased earnings in lower tax
jurisdictions.
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BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
Year-to-Date Results of Operations
- ----------------------------------
Sales
- -----
Worldwide sales for the first six months of 1996 increased 9% over the prior
year to $7,365. The consolidated sales growth resulted from an 11% increase due
to volume offset by a 2% decrease due to the unfavorable effect of foreign
exchange rate fluctuations. Overall price changes had no effect on sales
growth for the six months. Domestic sales increased 8%, and international
sales increased 10% (14% excluding the unfavorable effect of foreign exchange
rate fluctuations). Worldwide sales for the first six months of 1995 increased
16% compared to the prior year, reflecting a 14% increase due to volume and a
2% increase due to the favorable effect of foreign exchange rate fluctuations.
Changes in selling prices had no effect on sales growth. The three
acquisitions made in 1995 and 1994, accounted for one-third of the Company's
1995 sales growth.
Industry Segments
- ----------------- Six Months Ended June 30,
------------------------------------
Net Sales % Change
---------------- ---------------
1996 1995 1996 1995
------ ------ ----- -----
Pharmaceutical Products $4,247 $3,841 11 % 12%
Medical Devices 904 936 (3)% 13%
Nonprescription Health Products 1,342 1,178 14 % 26%
Toiletries and Beauty Aids 872 791 10 % 30%
------ ------
Total Company $7,365 $6,746 9 % 16%
====== ======
Pharmaceutical products segment sales were $4,247, an increase of 11% over the
prior year, reflecting a 12% increase due to volume, a 1% decrease due to the
unfavorable effect of foreign exchange rate fluctuations and no effect due to
overall changes in selling prices. Domestic and international sales
experienced strong growth with increases of 10% and 11%, respectively.
Excluding the unfavorable effect of foreign exchange rate fluctuations,
international sales increased 15% for the six months. Excluding the sales of
CAPOTEN*, pharmaceutical sales increased 20% (22% before the effect of foreign
exchange). Sales of cardiovascular drugs decreased 1% to $1,424 (excluding the
effect of unfavorable foreign exchange, sales remained at prior year levels).
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BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
PRAVACHOL* and MONOPRIL* sales grew 39% and 38%, respectively. Increases in
sales of these products were offset by the 25% decline in sales of CAPOTEN*.
This decrease is primarily due to the loss of its patent exclusivity in the
U.S. in February 1996 and in Germany in February 1995. Excluding the sales
of CAPOTEN*, cardiovascular sales increased 27%. Sales of anti-cancer drugs
increased 17% to $903 due to strong sales of TAXOL* and PARAPLATIN*. These
increases were partially offset by decreases in sales of VEPESID*.
Anti-infective drug sales increased 5% to $882. Strong gains were
recorded for VIDEX*, ZERIT* and MAXIPIME*. Growth in these products was
partially offset by decreases in sales of DURICEF*. Sales of central nervous
system drugs including BUSPAR*, the Company's novel anti-anxiety agent,
SERZONE* and STADOL NS*, continued to experience very good growth.
Dermatological drug sales increased primarily due to strong sales of
DOVONEX*, a vitamin D3 analog for the treatment of moderate psoriasis.
Glucophage continued to have exceptionally strong growth. Sales of ESTRACE*
continued to perform well. For the first six months of 1995, sales of the
pharmaceutical products segment increased 12% over the prior year primarily
as a result of increases in sales of cardiovascular, anti-cancer and central
nervous system drugs.
Sales of the medical devices segment decreased 3% to $904. Domestic sales
decreased 4% and international sales decreased 3% (an increase of 2% excluding
the unfavorable effect of foreign exchange rate fluctuations). Volume gains
of 1% were more than offset by a 2% decrease due to the unfavorable effect of
foreign exchange and a 2% decrease in selling prices. Sales of ostomy care
products decreased 4% (3% excluding the unfavorable effect of foreign exchange
rate fluctuations). Prosthetic implant sales decreased 3% (an increase of
1% excluding the unfavorable effect of foreign exchange). Sales of knee
implants remained at prior year levels. Excluding the unfavorable effect of
foreign exchange, knee implant sales increased 2% led by sales of the NEXGEN*
Complete Knee Solution. For the first six months of 1995, medical devices
segment sales increased 13% over the prior year (8% excluding the acquisition
of Calgon Vestal Laboratories and the sales of a divested business) as a result
of sales growth in prosthetic implants, ostomy and wound care products.
In the nonprescription health products segment, sales increased 14% to $1,342
reflecting a 16% increase due to volume, a 2% decrease due to the unfavorable
effect of foreign exchange rate fluctuations and no effect due to selling
prices. Domestic sales increased 14% and international sales increased 13%
(18% excluding the unfavorable effect of foreign exchange rate fluctuations).
Nutritional product sales increased 18%, due to increased sales of ENFAMIL*,
NUTRAMIGEN*, LACTOFREE*, BOOST* and SUSTACAL*. Sales of analgesics, increased
primarily due to the strong performance of the UPSA Group, driven by sales of
EFFERALGAN*, DAFALGAN* and ASPIRINE UPSA* in Europe and volume growth of
BUFFERIN* in Japan. For the first six months of 1995, nonprescription health
products segment sales increased 26% (9% excluding the acquisition of the UPSA
Group) over the prior year, primarily due to increased sales of infant formulas
and analgesics.
Sales of the toiletries and beauty aids segment increased 10% to $872,
reflecting an 11% increase due to volume, a 2% increase in selling prices,
and a 3% decrease due to unfavorable foreign exchange rate fluctuations.
Domestic sales increased 9% and international sales increased 12% (19%
excluding the unfavorable effect of foreign exchange rate fluctuations).
Sales of hair care products increased due to strong market growth of
HERBAL ESSENCES*, SYSTEME BIOLAGE*, INFUSIUM 23* and VAVOOM!* complete lines
of shampoos and conditioners.
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<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
Haircoloring product sales experienced growth primarily due to sales of
NATURAL INSTINCTS*, NICE 'N EASY*, ULTRESS*, salon haircolorings and
introductory sales of CLAIROL HYDRIENCE*. For the first six months of 1995,
sales of the toiletries and beauty aids segment increased 30% over the prior
year. Excluding the acquisition of Matrix Essentials,Inc., sales increased 9%
primarily due to increased sales of haircoloring and hair care products.
Cost of Products Sold and Other Operating Expenses
- --------------------------------------------------
Total costs and expenses for the six months ended June 30, 1996 as a
percentage of sales increased to 73.6% from 73.4% for the same period of 1995.
Cost of products sold decreased to 25.7% of sales from 26.5% in 1995.
Marketing, selling, administrative and other expenses, as a percentage of
sales, were 27.1% compared to 26.8% in 1995. Expenditures for advertising and
promotion in support of new and existing products were $914 compared to $776
in the prior year, an increase of 18%. The increase is due to
the incremental spending over the prior year in support of pharmaceutical
products, nonprescription health products and toiletries and beauty aids.
Research and development increased 5% to $611 compared to $583 in the prior
year, and as a percentage of sales were 8.3% in 1996 compared to 8.6% in 1995.
Pharmaceutical research and development spending increased 3% over prior year
levels, and as a percentage of pharmaceutical sales, was 12.1% compared to
13.0% in 1995.
Earnings
- --------
Earnings before income taxes for the six months increased 8% to $1,945 from
$1,794 in 1995. Net earnings increased 9% to $1,381 from $1,264 and earnings
per share increased 10% to $2.75 from $2.49 in 1995. The growth in earnings
per share exceeded the growth in net earnings by 1% as a result of the
Company's share repurchase program. The effective tax rate on earnings before
income taxes decreased to 29.0% in 1996 from 29.5% in 1995, reflecting the
benefit of increased earnings in lower tax jurisdictions.
Financial Position
- ------------------
The balance sheet at June 30, 1996 and the statement of cash flows for the six
months then ended reflect the Company's strong financial position. The Company
continues to maintain a high level of working capital totaling approximately
$2 billion at June 30, 1996.
The decrease in short-term borrowings from December 1995 is attributable to
the payment of short-term obligations in Europe.
Internally generated funds continue to be the Company's primary source for
financing expenditures for new plant and equipment. Additions to fixed assets
for the six months ended June 30, 1996 were $250 compared to $210 during the
same period of 1995.
-12-
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
In January 1996, the Company acquired control of Pharmavit, one of Hungary's
leading manufacturers of over-the-counter medicines, nutritional products and
generic pharmaceuticals.
In March 1996, the Company acquired Argentia SA, one of Argentina's largest
manufacturers and marketers of ethical pharmaceuticals.
During the six months ended June 30, 1996, the Company purchased 5,083,400
shares of its common stock at a total cost of $430.
Reference is made to Part II, Item 1 - Legal Proceedings in which developments
are described for various lawsuits, claims and proceedings in which the Company
is involved.
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<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
PART II - OTHER INFORMATION
------------------------------
Item 1. Legal Proceedings
- --------------------------
Various lawsuits, claims and proceedings of a nature considered normal to its
business are pending against the Company and certain of its subsidiaries. The
most significant of these are reported in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, and material developments in
such matters are described in the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996, and below.
Infant Formula Matters
- ----------------------
As previously reported in the Company's Form 10-K and its Form 10-Q referred to
above, the Company, one of its subsidiaries, and others are defendants in a
number of antitrust actions in various states filed on behalf of purported
statewide classes of indirect purchasers of infant formula products and by the
Attorneys General of Louisiana, Minnesota and Mississippi alleging a price
fixing conspiracy and other violations of state antitrust or deceptive trade
practices laws and seeking damages and/or penalties and other relief. In the
only such trial conducted, the Company won a defense verdict in state court in
Wichita, Kansas on December 6, 1995. In June 1996, the Company and the
attorneys representing the plaintiffs in all but two of these cases reached an
agreement to settle all of their litigation against the Company. The Company
is now in the process of obtaining the necessary court approvals to settle
these cases, which would leave only two remaining cases not covered by this
settlement.
Pharmaceutical Pricing Litigation
- ---------------------------------
As previously reported in the Company's Form 10-K and its Form 10-Q referred to
above, the Company is a defendant in numerous antitrust actions brought by
retailers against the Company and other pharmaceutical manufacturers, drug
wholesalers and pharmacy benefit managers that have been coordinated for
pretrial purposes in the United States District Court for the Northern District
of Illinois. On May 16, 1996, the district court entered final judgment
dismissing all claims against the wholesalers in the class action case. On
June 21, 1996, the district court approved an amended settlement reached by
the Company and ten other manufacturer defendants with plaintiffs in the class
action. On July 3, 1996, the largest opt-out retailer plaintiffs purported
to quantify their conspiracy damage claims against the defendants, including
the Company, asserting damages before trebling aggregating approximately $2.4
billion. On July 8,1996, the Seventh Circuit Court of Appeals granted the
petition of the Company and other drug manufacturer defendants for leave to
appeal the district court's April 4, 1996, denial of their motion for summary
judgment on Sherman Act damage claims on all retailer plaintiffs' purchases
from wholesalers. A class of retail pharmacies has been certified in the
Wisconsin state court litigation. The conspiracy claims against the Company
and other defendants have been dismissed from the suit brought by retailers
in Minnesota state court. In the consumer case brought in Arizona state court,
a motion to dismiss made by the Company and other defendants was denied on
July 9, 1996.
-14-
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
PART II - OTHER INFORMATION
------------------------------
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits (listed by number corresponding to the Exhibit Table of Item 601
in Regulation S-K).
Exhibit Number and Description
- ------------------------------
27. Bristol-Myers Squibb Company Financial Data Schedule.
(b) Reports on Form 8-K.
The Registrant did not file any reports on Form 8-K during the quarter ended
June 30, 1996.
-15-
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
SIGNATURES
------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BRISTOL-MYERS SQUIBB COMPANY
----------------------------------
(Registrant)
Date: August 14, 1996 /s/ Harrison M. Bains, Jr.
---------------------------------
Harrison M. Bains, Jr.
Vice President and Treasurer
Date: August 14, 1996 /s/ Frederick S. Schiff
---------------------------------
Frederick S. Schiff
Vice President and Controller
-16-<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
Exhibit 27 for Bristol-Myers Squibb Company
</LEGEND>
<MULTIPLIER>1000000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Jun-30-1996<F1>
<CASH> 1,124
<SECURITIES> 491
<RECEIVABLES> 2,468<F2>
<ALLOWANCES> 0
<INVENTORY> 1,555
<CURRENT-ASSETS> 6,729
<PP&E> 6,422
<DEPRECIATION> 2,624
<TOTAL-ASSETS> 13,750
<CURRENT-LIABILITIES> 4,766
<BONDS> 572
0
0
<COMMON> 54
<OTHER-SE> 6,011
<TOTAL-LIABILITY-AND-EQUITY> 13,750
<SALES> 7,365
<TOTAL-REVENUES> 7,365
<CGS> 1,896
<TOTAL-COSTS> 1,896
<OTHER-EXPENSES> 1,525
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38
<INCOME-PRETAX> 1,945
<INCOME-TAX> 564
<INCOME-CONTINUING> 1,381
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,381
<EPS-PRIMARY> 2.75
<EPS-DILUTED> 0
<FN>
<F1>Items reported as "zero" are not applicable or are immaterial to the
consolidated financial position of the Company.
<F2>Receivables are reported net of allowances for doubtful accounts.
</TABLE>
