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 SEPTEMBER 30, 1999
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 September 30, 1999, there were 1,983,692,284 shares outstanding of the
Registrant's $.10 par value Common Stock.
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BRISTOL-MYERS SQUIBB COMPANY
INDEX TO FORM 10-Q
September 30, 1999
Part I - Financial Information: Page
Item 1.
Financial Statements (Unaudited):
Consolidated Balance Sheet - September 30, 1999 and December 2 - 3
31, 1998
Consolidated Statement of Earnings and Comprehensive Income
for the three and nine months ended September 30, 1999 and 4
1998
Consolidated Statement of Cash Flows for the nine months
ended September 30, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6 - 7
Report of Independent Accountants 8
Item 2.
Management's Discussion and Analysis of Financial 9 - 17
Condition and Results of Operations
Part II - Other Information
Item 1.
Legal Proceedings 18 - 19
Item 6.
Exhibits and Reports on Form 8-K 20
Signatures 21
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PART I FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
- -----------------------------
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEET - ASSETS
(Unaudited, in millions except share amounts)
September December
30, 1999 31, 1998
---------- ----------
Current Assets:
Cash and cash equivalents $2,455 $2,244
Time deposits and marketable securities 235 285
Receivables, net of allowances 3,306 3,190
Inventories 2,052 1,873
Prepaid expenses 909 1,190
--------- ---------
Total Current Assets 8,957 8,782
--------- ---------
Property, Plant and Equipment, net 4,489 4,429
Insurance Recoverable 466 523
Excess of cost over net tangible assets arising
from business acquisitions 1,550 1,587
Other Assets 1,150 951
--------- ---------
Total Assets $16,612 $16,272
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BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEET -
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited, in millions except share amounts)
September December
30, 1999 31, 1998
--------- ---------
Current Liabilities:
Short-term borrowings $ 512 $ 482
Accounts payable 1,506 1,380
Accrued expenses 2,309 2,302
Product liability 378 877
U.S. and foreign income taxes payable 696 750
------ --------
Total Current Liabilities 5,401 5,791
Other Liabilities 1,439 1,541
Long-Term Debt 1,331 1,364
------ --------
Total Liabilities 8,171 8,696
------ --------
Stockholders' Equity:
Preferred stock, $2 convertible series:
Authorized 10 million shares; issued and
outstanding 11,153 in 1999 and 11,684 in - -
1998, liquidation value of $50 per share
Common stock, par value of $.10 per share:
Authorized 4.5 billion shares; issued
2,190,910,985 in 1999 and 2,188,316,808 in 219 219
1998
Capital in excess of par value of stock 1,394 1,075
Other Comprehensive Income (796) (622)
Retained earnings 14,374 12,540
------ --------
15,191 13,212
Less cost of treasury stock - 207,218,701
common shares in 1999 and 199,550,532 in 1998 6,750 5,636
------ --------
Total Stockholders' Equity 8,441 7,576
------ --------
Total Liabilities and Stockholders' Equity $16,612 $16,272
======= =======
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BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF EARNINGS
AND COMPREHENSIVE INCOME
(Unaudited, in millions except per share amounts)
Three Months Nine Months
Ended Ended
September 30, September 30,
----------------- ----------------
EARNINGS 1999 1998 1999 1998
- -------- ------- ------- ------- -------
Net Sales $5,040 $4,523 $14,814 $13,399
------ ------ ------- -------
Expenses:
Cost of products sold 1,402 1,191 4,068 3,549
Marketing,selling, administrative 1,095 1,034 3,338 3,116
and other
Advertising and product promotion 573 554 1,768 1,767
Research and development 452 398 1,328 1,165
Provision for restructuring - - - 201
Gain on sale of businesses - - - (201)
------ ------ ------- -------
3,522 3,177 10,502 9,597
------ ------ ------- -------
Earnings Before Income Taxes 1,518 1,346 4,312 3,802
Provision for income taxes 421 380 1,197 1,074
------ ------ ------- -------
Net Earnings $1,097 $966 $3,115 $2,728
====== ====== ====== ======
Earnings Per Common Share
Basic $.55 $.49 $1.57 $1.37
Diluted $.54 $.47 $1.54 $1.34
Average Common Shares Oustanding
Basic 1,984 1,988 1,985 1,987
Diluted 2,028 2,030 2,027 2,032
Dividends Per Common Share $.215 $.195 $.645 $.585
COMPREHENSIVE INCOME
- --------------------
Net Earnings $1,097 $966 $3,115 $2,728
Other Comprehensive Income:
Foreign currency translation (18) (68) (187) (155)
Tax effect 5 6 13 11
------ ------ ------- -------
Total Other Comprehensive Income (13) (62) (174) (144)
------- ------- ------- -------
Comprehensive Income $1,084 $904 $2,941 $2,584
====== ====== ====== ======
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<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in millions)
Nine Months Ended
September 30,
-----------------
1999 1998
------ ------
Cash Flows From Operating Activities:
Net earnings $3,115 $2,728
Depreciation and amortization 489 457
Provision for restructuring - 201
Gain on sale of businesses - (201)
Other operating items (59) 27
Receivables (208) (262)
Inventories (245) (81)
Accounts payable (21) 89
Accrued expenses (53) (242)
Product liability (622) (493)
Insurance recoverable 57 89
Income taxes 478 468
Other assets and liabilities (79) (103)
--------- ---------
Net Cash Provided by Operating Activities 2,852 2,677
--------- ---------
Cash Flows From Investing Activities:
Proceeds from sales of time deposits and 51 225
marketable securities
Purchases of time deposits and marketable (1) (195)
securities
Additions to fixed assets (455) (537)
Proceeds from sale of business - 413
Acquisition of businesses - (67)
Other, net (9) 10
--------- ---------
Net Cash Used in Investing Activities (414) (151)
--------- ---------
Cash Flows From Financing Activities:
Short-term borrowings 27 (30)
Long-term debt (12) 69
Issuances of common stock under stock plans (7) 129
Purchases of treasury stock (915) (1,448)
Dividends paid (1,281) (1,163)
--------- ---------
Net Cash Used in Financing Activities (2,188) (2,443)
--------- ---------
Effect of Exchange Rates on Cash (39) (8)
--------- ---------
Increase in Cash and Cash Equivalents 211 75
Cash and Cash Equivalents at Beginning of 2,244 1,456
Period --------- ---------
Cash and Cash Equivalents at End of Period $2,455 $1,531
========= =========
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<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in millions except per share amounts)
Note 1: Basis of Presentation
- -------------------------------
In the opinion of management, the accompanying unaudited
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 September 30, 1999 and December 31,
1998, the results of operations for the three and nine months
ended September 30, 1999 and 1998, and cash flows for the nine
months ended September 30, 1999 and 1998. These consolidated
financial statements should be read in conjunction with the
consolidated financial statements and the related notes included
in the Company's 1998 Annual Report on Form 10-K.
PricewaterhouseCoopers LLP, the Company's independent auditors,
have performed a review of the unaudited consolidated financial
statements included herein, and their review report thereon
accompanies this filing.
Note 2: Accounting Policies
- -----------------------------
Basis of Consolidation - The consolidated financial statements
include the accounts of Bristol-Myers Squibb Company and all of
its subsidiaries.
Cash and Cash Equivalents - Cash and cash equivalents primarily
include securities with a maturity of three months or less at
the time of purchase, recorded at cost, which approximates
market.
Time Deposits and Marketable Securities - Time deposits and
marketable securities are available for sale and are recorded at
fair value, which approximates cost.
Inventory Valuation - Inventories are generally stated at
average cost, not in excess of market. As of September 30, 1999,
the amounts of finished goods, work in process, and raw and
packaging materials were $1,362, $340 and $350, respectively.
These amounts as of December 31, 1998 were $1,209, $236 and
$428, respectively.
Capital Assets and Depreciation - Expenditures for additions,
renewals and betterments are capitalized at cost. Depreciation
is generally computed by the straight-line method based on the
estimated useful lives of the related assets. The estimated
useful lives of the major classes of depreciable assets are 50
years for buildings and 3 to 40 years for machinery, equipment
and fixtures. Accumulated depreciation as of September 30, 1999
and December 31, 1998 amounted to $3,234 and $3,079,
respectively.
Excess of Cost over Net Tangible Assets - The excess of cost
over net tangible assets arising from business acquisitions is
amortized on a straight-line basis over periods ranging from 15
to 40 years. The excess of cost over net tangible assets is
periodically reviewed for impairment based on an assessment of
future operations (including cash flows) to ensure the excess of
cost over net tangible assets is appropriately valued.
-6-
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Product Liability - Accruals for product liability are
recorded, on an undiscounted basis, when it is probable that a
liability has been incurred and the amount of the liability can
be reasonably estimated, based on existing information. These
accruals are adjusted periodically as assessment efforts
progress or as additional information becomes available.
Receivables for related insurance or other third party
recoveries for product liabilities are recorded, on an
undiscounted basis, when it is probable that a recovery will be
realized. Insurance recoverable recorded on the balance sheet
has, in general, payment terms of three years or less.
Revenue Recognition - Revenue from product sales is recognized
upon shipment to customers.
Note 3: Earnings Per Share
- --------------------------
Basic earnings per common share are computed using the weighted
average number of shares outstanding during the year. Diluted
earnings per common share are computed using the weighted
average number of shares outstanding during the year, plus the
incremental shares outstanding assuming the exercise of dilutive
stock options. The computations for basic earnings per common
share and diluted earnings per common share are as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ------------------
1999 1998 1999 1998
------- ------- ------- -------
Earnings per Common Share -
Basic:
Net Earnings $1,097 $ 966 $3,115 $2,728
Average Common Shares 1,984 1,988 1,985 1,987
Outstanding
Earnings Per Common Share -
Basic $ 0.55 $ 0.49 $ 1.57 $ 1.37
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ------------------
1999 1998 1999 1998
------- ------- ------- -------
Earnings per Common Share -
Diluted:
Net Earnings $1,097 $ 966 $3,115 $2,728
Average Common Shares 1,984 1,988 1,985 1,987
Outstanding
Incremental Shares Outstanding
Assuming the Exercise of 44 42 42 45
Dilutive Stock Options
Average Common Shares 2,028 2,030 2,027 2,032
Outstanding
Earnings Per Common Share -
Diluted $ 0.54 $ 0.47 $ 1.54 $ 1.34
-7-
<PAGE>
Report of Independent Accountants
To the Board of Directors
and Stockholders of
Bristol-Myers Squibb Company
We have reviewed the accompanying consolidated balance sheet of
Bristol-Myers Squibb Company and its subsidiaries as of
September 30, 1999, and the related consolidated statement of
earnings and comprehensive income for each of the three-month
and nine-month periods ended September 30, 1999 and 1998 and the
consolidated statement of cash flows for the nine-month periods
ended September 30, 1999 and 1998. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying
consolidated interim financial statements for them to be in
conformity with generally accepted accounting principles.
We previously audited in accordance with generally accepted
auditing standards, the consolidated balance sheet as of
December 31, 1998, and the related consolidated statements of
earnings, comprehensive income and retained earnings and of cash
flows for the year then ended (not presented herein), and in our
report dated January 20, 1999 we expressed an unqualified
opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying
consolidated balance sheet as of December 31, 1998 is fairly
stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.
PricewaterhouseCoopers LLP
New York, New York
November 9, 1999
-8-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Third Quarter Results of Operations
- -----------------------------------
Worldwide sales for the third quarter of 1999 increased 11% over
the prior year to $5,040 million. The consolidated sales growth
resulted from a 10% increase due to volume, a 2% increase due to
changes in selling prices and a 1% decrease due to foreign
exchange rate fluctuations. U.S. sales increased 15% and
international sales increased 5% (7% excluding the effect of
foreign exchange).
Sales in the medicines products segment, which is the largest
segment at 70% of total Company sales, increased 14% over the
third quarter of 1998 to $3,548 million. Sales growth resulted
from a 13% increase in volume, a 3% increase in selling prices
and a 2% decrease due to foreign exchange rate fluctuations.
Worldwide pharmaceutical sales increased 15% with U.S.
pharmaceutical sales up 22% over the prior year.
Sales of cardiovascular drugs increased 12% to $871 million (14%
excluding foreign exchange). Sales of PRAVACHOL*, the Company's
largest selling product, decreased 1% to $386 million. Sales of
the anti-hypertensive MONOPRIL*, a second generation angiotensin
converting enzyme (ACE) inhibitor, increased 9% to $94 million.
PLAVIX(R), a platelet aggregation inhibitor for the reduction of
stroke, heart attack and vascular death in atherosclerotic
patients with recent stroke, heart attack or peripheral arterial
disease, had sales of $148 million compared to $45 million for
the same quarter last year. AVAPRO(r), an angiotensin II receptor
blocker for the treatment of hypertension, increased 55% to $62
million. AVAPRO(r) and PLAVIX(r) are cardiovascular products that
were launched from the Bristol-Myers Squibb and Sanofi S.A.
joint venture. Sales growth for these cardiovascular products
was partially offset by a 23% decline in CAPOTEN* sales due to
the loss of patent exclusivity in international markets.
Sales of anti-cancer drugs, the largest product group in the
segment, increased 16% to $898 million. Sales of TAXOL*
(paclitaxel), the Company's leading anti-cancer agent, increased
23% to $375 million as the product continues to benefit from
increased use in ovarian, breast and non-small cell lung cancer.
Sales from Oncology Therapeutics Network (OTN), a specialty
distributor of anti-cancer medicines and related products,
increased 38% to $236 million.
Anti-infective drug sales of $602 million increased 3% over the
prior year. Sales of ZERIT* and VIDEX*, the Company's two anti-
retroviral agents, increased 17% to $155 million and 14%
to $49 million, respectively. International sales of MAXIPIME*,
a fourth generation injectable cephalosporin, increased 35% to
$31 million in the quarter.
Central nervous system drug sales of $314 million increased 16%
with sales of BUSPAR*, an anti-anxiety agent, and SERZONE*, a
novel anti-depressant, increasing 12% to $155 million, and 41%
to $86 million, respectively.
* Indicates brand names of products which are trademarks of
the Company.
-9-
<PAGE>
GLUCOPHAGE(r), the leading branded oral medication for the
treatment of non-insulin dependent (type 2) diabetes, continued
its strong growth rate with sales increasing 57% to $349
million.
Analgesic sales increased 11% to $180 million. EXCEDRIN* sales
increased 5% to $61 million, BUFFERIN* sales increased 19% to
$32 million and sales of EFFERALGAN*, an effervescent analgesic
sold primarily in France, increased 3% to $33 million. In
October 1999, the U.S. Food and Drug Administration expanded the
EXCEDRIN* migraine indication from just the treatment of mild
to moderate migraine pain to encompass even the severe pain
and associated symptoms of the full migraine syndrome. Also
in October, the Company introduced THERAGRAN HEART RIGHT*, a
complete multivitamin with a formula specially created to help
support a healthy heart.
Earnings before taxes for the medicines products segment
increased 20% to $1,049 million in 1999. As a percentage of
sales, earnings before taxes for this segment improved to 29.6%
in 1999 from 28.2% in 1998. Advertising and promotion, sales
force and general administrative expenses improved, as a
percentage of sales, partially offset by increases in cost of
goods sold, as a percentage of sales.
Sales in the beauty care products segment increased 5% (4%
excluding the effect of foreign exchange) to $624 million.
Sales growth resulted from a 2% increase in volume, a 2%
increase in selling prices and a 1% increase due to foreign
exchange rate fluctuations. Clairol continues to be the number
one hair products company in the U.S. The introduction of a
demand management manufacturing system slowed shipments during
the quarter. HERBAL ESSENCES*, the number two brand in the U.S.
shampoo/conditioner category and number three in the body wash
category, continued its strong growth, increasing 6% to $163
million. AUSSIE* products contributed $32 million to third
quarter sales, an increase of 7%. Sales of DAILY DEFENSE*
increased 12% to $29 million, following its launch into
international markets. Haircolor sales increased 12% due to
increases in NICE 'N EASY* of 24% to $56 million and NATURAL
INSTINCTS* of 24% to $26 million. Earnings before taxes for the
beauty care products segment decreased to $92 million in 1999
from $96 million in 1998, primarily due to the introduction of a
demand management manufacturing system.
Sales in the nutritional products segment increased 6% to $466
million. Sales growth resulted from an 8% increase in volume, a
2% decrease in selling prices and no effect due to foreign
exchange rate fluctuations. The Company's Mead Johnson
subsidiary continues to build on its U.S. and worldwide
leadership position in the infant formula market. ENFAMIL*, the
Company's largest-selling infant formula, recorded sales of $176
million, an increase of 1% over the prior year. BOOST*, an adult
nutritional supplement, also contributed to sales growth,
increasing 38% to $33 million and sales of VIACTIV* Calcium
Chews reached $10 million. Earnings before taxes for the
nutritional segment increased to $96 million in 1999 from $91
million in 1998, and as a percentage of sales, remained at prior
year levels of approximately 20.6%. Sales force and general
administrative expenses improved as a percentage of sales,
offset by increases in cost of goods sold and advertising and
promotion expenses, as a percentage of sales.
-10-
<PAGE>
Medical device segment sales increased 4% to $402 million, due
to volume increases of 3% and increases due to changes in
selling prices of 1%. Fluctuations in foreign exchange had no
effect on medical devices sales. Zimmer sales increased 8% to
$226 million (5% excluding foreign exchange). Knee joint
replacement sales increased 13% to $88 million and hip
replacement sales increased 14% to $67 million. ConvaTec sales
remained at prior year levels at $176 million (a 1% increase
excluding foreign exchange). Sales of modern wound care
products increased 5% to $62 million while sales of ostomy
products decreased 11% to $100 million. Earnings before taxes
for the medical device segment increased 15% to $91 million in
1999 from $79 million in 1998 and, as a percentage of sales,
increased to 22.6% in 1999 from 20.5% in 1998, primarily due to
improved manufacturing processes.
Operating Expenses
- ------------------
Total expenses, as a percentage of sales, decreased to 69.9%
from 70.2% in 1998. Cost of products sold, as a percentage of
sales, increased to 27.8% from 26.3% in 1998 due to revenue
growth of Oncology Therapeutics Network (OTN) which carries
significantly lower margins. Excluding OTN, cost of products
sold, as a percentage of sales, increased to 24.5% in 1999 from
23.6% in 1998 due primarily to decreased sales of CAPOTEN* and a
product mix shift to lower margin pharmaceutical products.
Expenditures for advertising and promotion in support of new and
existing products increased 3% to $573 million from $554
million.
Marketing, selling administrative and other expenses, as a
percentage of sales, decreased to 21.7% in the third quarter of
1999 from 22.9% in the third quarter of 1998, primarily due to
sales force effectiveness and reductions in general
administrative expenses as a percentage of sales. Research and
development expenditures increased 14% to $452 million from $398
million in 1998. Pharmaceutical research and development
spending increased 13% over the prior year, and as a percentage
of pharmaceutical sales, was 12.5% in the third quarter of 1999
and 12.6% in the third quarter of 1998.
In research and development highlights this quarter, the Company
and Otsuka Pharmaceutical Co., Ltd., announced a development,
commercialization and collaboration agreement for aripiprazole,
a novel drug under study in Phase III trials as a treatment for
schizophrenia. This new compound has a unique mechanism of
action and has the potential to expand the options for safely
and effectively treating schizophrenia and, possibly, other
forms of mental illness. In October, the U.S. Food and Drug
Administration (FDA) approved the use of TAXOL* injection for
adjuvant treatment of node-positive breast cancer. In
September, the Oncologic Drugs Advisory Committee recommended
that the FDA approve UFT(r) capsules in combination with
leucovorin calcium tablets for treatment of metastatic
colorectal cancer. Also in September, ZERIT* and VIDEX* were
both approved by the FDA for use as a first-line component of a
combination antiretroviral therapy regimen for HIV-infected
patients.
The Company also submitted a regulatory application to the FDA
in September to gain marketing approval for a new oral
antidiabetic combination drug. The new drug, which is the first
fixed combination product of its kind to be developed in the
United States, leverages the benefits of two widely prescribed
oral antidiabetic medications, GLUCOPHAGE(r) (metformin) and
glyburide, a well established sulfonylurea antidiabetic. A
regulatory application was filed with the FDA in September to
gain marketing approval for VANIQA*, a topical treatment for
excessive facial hair in women.
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<PAGE>
The Company is awaiting marketing approval from the FDA for
TEQUIN* (gatifloxacin), a broad-spectrum quinolone antibiotic
for the treatment of multiple common infections, including those
of the respiratory tract. The Company also plans to file for
regulatory approval with the FDA for a new hypertension drug,
VANLEV*, by the end of the year with worldwide regulatory
filings to follow. A research agreement between the Company and
Exelixis Pharmaceuticals was recently announced to identify
novel, validated targets for new medicines using the genetics of
yeast, worms and fruit flies.
Earnings
- --------
Earnings before income taxes increased 13% to $1,518 million
from $1,346 million in 1998. The effective tax rate on earnings
before income taxes decreased to 27.7% in 1999 from 28.2% in
1998. The decrease in the effective tax rate is due to increased
earnings from lower tax rate jurisdictions. Net earnings
increased 14% to $1,097 million from $966 million in 1998. Basic
earnings per share increased 12% to $.55 from $.49 in 1998 and
diluted earnings per share increased 15% to $.54 from $.47 in
1998.
Nine Months Results of Operations
- ---------------------------------
Worldwide sales for the first nine months of 1999 increased 11%
over the prior year to $14,814 million. The consolidated sales
growth resulted from a 9% increase due to volume and a 2%
increase due to changes in selling prices. Foreign exchange had
no effect on sales for the nine months. U.S. sales increased
16% and international sales increased 3% (4% excluding the
effect of foreign exchange).
Sales in the medicines products segment increased 14% over the
prior year to $10,413 million. Sales growth for the nine months
resulted from a 13% increase in volume, a 2% increase in selling
prices and a 1% decrease due to foreign exchange rate
fluctuations. Worldwide pharmaceutical sales increased 15% with
U.S. pharmaceutical sales up 23% over the prior year.
Cardiovascular drug sales of $2,673 million increased 15% from
the prior year. PRAVACHOL* increased 5% to $1,252 million and
MONOPRIL* increased 10% to $316 million. PLAVIX(r) had sales of
$364 million for the nine months and AVAPRO(r) had sales of $176
million. Sales growth for these products was partially offset
by a 22% decline in CAPOTEN* sales, due to the loss of patent
exclusivity in international markets. Sales of anti-cancer
drugs increased 21% to $2,585 million due to strong sales of
TAXOL* and OTN which increased 24% to $1,067 million and 41% to
$656 million, respectively. Anti-infective drug sales increased
4% to $1,819 million as ZERIT* and VIDEX* recorded gains of 17%
to $458 million and 26% to $148 million, respectively.
International sales of MAXIPIME* increased 26% to $92 million
for the nine months and sales of CEFZIL* increased 11% to $329
million. Sales of central nervous system drugs increased 13% to
$888 million as BUSPAR* and SERZONE* increased 14% to $418
million and 19% to $233 million, respectively. GLUCOPHAGE(r)
continued its strong growth and increased 53% to $980 million.
Analgesic sales of $540 million increased 6% primarily due to
increases in EFFERALGAN* of 9% to $118 million and BUFFERIN* of
14% to $97 million. Sales of EXCEDRIN* decreased 1% to $173
million, coming off significant increases in 1998 due to the
launch of EXCEDRIN MIGRAINE*.
-12-
<PAGE>
Earnings before taxes for the medicines products segment
increased 17% to $2,943 million in 1999. As a percentage of
sales, earnings before taxes for this segment improved to 28.3%
in 1999 from 27.5% in 1998. Advertising and promotion, sales
force and general administrative expenses improved, as a
percentage of sales, partially offset by an increase in cost of
goods sold, as a percentage of sales.
Sales in the beauty care products segment increased 5% (6%
excluding the effect of foreign exchange) to $1,822 million.
Sales growth resulted from a 4% increase in volume, a 2%
increase in selling prices and a 1% decrease due to foreign
exchange rate fluctuations. HERBAL ESSENCES* continued its
strong growth, increasing 16% to $486 million. HERBAL ESSENCES
FACIAL CARE* contributed $15 million in nine month sales.
AUSSIE* products contributed $93 million, an increase of 15%,
and sales of DAILY DEFENSE* increased 60% to $93 million for the
nine months. Earnings before taxes for the beauty care segment
decreased to $202 million in 1999 from $257 million in 1998,
primarily due to the introduction of a demand management
manufacturing system.
Sales in the nutritional products segment increased 3% to $1,354
million (4% excluding the effect of foreign exchange). Sales
growth for the nine months resulted from a 4% increase in
volume, and a 1% decrease due to foreign exchange rate
fluctuations. Changes in selling prices had no effect on sales
for the nine months. Total infant formula sales of $896 million
were at prior year levels. ENFAMIL* recorded sales of $525
million, a 4% increase over the prior year. BOOST*, an adult
nutritional supplement, increased 29% to $84 million. Nine
month sales of VIACTIV* were $19 million. Earnings before taxes
for the nutritional products segment were $268 million in 1999
compared to $260 million in 1998 and, as a percentage of sales,
earnings before taxes were 19.8% in both 1999 and 1998.
Increases, as a percentage of sales, in cost of products sold
and advertising and promotion expenses were offset by decreases,
as a percentage of sales, in sales force and general and
administrative expenses.
Medical device segment sales increased 4% to $1,225 million,
excluding sales from a 1998 distribution agreement with the
acquirer of Zimmer's divested arthroscopy and powered surgical
instrument business. On this basis, medical device sales
increased 3% due to volume and 1% due to foreign exchange with
no effect from price changes. Zimmer sales on the same basis
increased 7% to $704 million. Knee joint replacement sales
increased 11% to $277 million and hip replacement sales
increased 9% to $209 million. ConvaTec remained at prior year
levels of $521 million as sales of ostomy products decreased 2%
to $324 million and wound care products increased 1% to $173
million. Earnings before taxes for the medical devices segment
increased 11% to $253 million in 1999 from $227 million in 1998
and, as a percentage of sales, improved to 20.7% in 1999 from
18.8% in 1998, resulting from a decrease, as a percentage of
sales, in cost of products sold.
-13-
<PAGE>
Operating Expenses
- ------------------
Total expenses for the nine months ended September 30, 1999, as
a percentage of sales, decreased to 70.9% from 71.6% in 1998.
Cost of products sold increased to 27.5% of sales from 26.5% in
1998 primarily due to revenue growth of OTN which carries
significantly lower margins. Excluding OTN, cost of products
sold, as a percentage of sales, increased to 24.3% in 1999 from
24.0% in 1998 due to decreased sales of CAPOTEN*. Expenditures
for advertising and promotion in support of new and existing
products remained at prior year levels of $1,768 million.
Marketing, selling, administrative and other expenses increased
7% to $3,338 million from $3,116 million in 1998. Research and
development expenditures increased 14% to $1,328 million from
$1,165 million in 1998. Pharmaceutical research and development
spending increased 14% over the prior year, and as a percentage
of pharmaceutical sales, was 12.4% compared to 12.6% in the same
period of 1998.
Earnings
- --------
Earnings before income taxes for the nine months increased 13%
to $4,312 million from $3,802 million in 1998. The effective tax
rate on earnings before income taxes decreased to 27.8% in 1999
from 28.2% in 1998. Net earnings increased 14% to $3,115 million
from $2,728 million in 1998. Basic earnings per share increased
15% to $1.57 from $1.37 in 1998 and diluted earnings per share
increased 15% to $1.54 from $1.34 in 1998.
Financial Position
- ------------------
The balance sheet at September 30, 1999 and the statement of
cash flows for the nine months then ended reflect the Company's
strong financial position. The Company continues to maintain a
high level of working capital, increasing to $3.6 billion at
September 30, 1999, from $3.0 billion at December 31, 1998.
Long-Term Debt decreased to $1,331 million from $1,364 million
at December 1998.
Internally generated funds continue to be the Company's primary
source for financing expenditures for new plant and equipment.
Net Cash Provided by Operating Activities increased 7% to $2,852
million in 1999. Additions to fixed assets for the nine months
ended September 30, 1999 were $455 million compared to $537
million during the same period of 1998.
During the nine months ended September 30, 1999, the Company
purchased 15.2 million shares of its common stock.
The Company is exposed to market risk, including changes in
currency exchange rates. To reduce these risks, the Company
enters into certain derivative financial instruments where
available on a cost-effective basis to hedge its underlying
economic exposure. These instruments also are managed on a
consolidated basis to efficiently net exposures and thus take
advantage of any natural offsets.
-14-
<PAGE>
It is the Company's policy to hedge certain underlying economic
exposures to reduce foreign exchange risk. Derivative financial
instruments are not used for trading purposes. Gains and losses
on hedging transactions are offset by gains and losses on the
underlying exposures being hedged. Foreign exchange option
contracts and, to a lesser extent, forward contracts are used to
hedge anticipated transactions.
During the first quarter of 1998, the Company divested its BANr
brand of anti-perspirants and deodorants for $165 million,
resulting in a gain of $125 million before taxes. During the
second quarter, the Company divested A/S GEA, a Denmark-based
generic drug business, and Hexachimie, a fine chemical
manufacturer based in France, resulting in a combined gain of
$76 million before taxes. The Company recorded provisions for
restructuring of $201 million before taxes in the first nine
months of 1998.
Business Segments
- -----------------
Three Months Ended September 30,
------------------------------------------
Earnings
Net Sales Before Taxes
-------------------- -------------------
1999 1998 1999 1998
--------- --------- --------- ---------
(in millions)
Medicines Products $3,548 $3,101 $1,049 $ 873
Beauty Care Products 624 597 92 96
Nutritional Products 466 440 96 91
Medical Devices 402 385 91 79
Other - - 190 207
--------- --------- --------- ---------
Total Company $5,040 $4,523 $1,518 $1,346
========= ========= ========= =========
Nine Months Ended September 30,
------------------------------------------
Earnings
Net Sales Before Taxes
-------------------- -------------------
1999 1998 1999 1998
--------- --------- --------- ---------
(in millions)
Medicines Products $10,413 $ 9,145 $2,943 $2,519
Beauty Care Products 1,822 1,733 202 257
Nutritional Products 1,354 1,311 268 260
Medical Devices 1,225 1,210 253 227
Other - - 646 539
-------- --------- --------- ---------
Total Company $14,814 $13,399 $4,312 $3,802
======== ========= ========= =========
-15-
<PAGE>
Included in earnings before taxes of each segment is a cost of
capital charge. The offset to the cost of capital charge is
included in Other. In addition, Other principally consists of
interest income, interest expense, certain administrative
expenses and allocations to the industry segments for certain
corporate programs. For the first nine months of 1998, Other
also includes the gain on sale of businesses of $201 million and
a provision for restructuring of $201 million. In addition, the
segment information reflects certain internal organizational
changes made in 1999. Prior year data have been restated
accordingly.
Year 2000
- ---------
The Company has reviewed its information, manufacturing, and
research and development systems for Year 2000 compliance. The
Year 2000 problem arises because many computer systems use only
two digits to represent the year. These programs may not
process dates beyond 1999, which may cause miscalculations or
system failures.
The Company has completed a comprehensive compliance program
used to assess the Year 2000 problem in the processing of data
in the Company's information technology (IT) and non-IT systems,
including manufacturing, and research and development systems.
This program was executed in five phases which included:
Assessment, Planning, Execution, Testing and Certification, and
Implementation.
In connection with this compliance program, the Company also has
asked critically important vendors, customers, suppliers,
governmental regulatory authorities and financial institutions,
whose incomplete or untimely resolution of the Year 2000 problem
could potentially have a significant impact on the Company's
operations, to assess their Year 2000 readiness. This assessment
has been completed. The follow-up phase of this work (which
includes ongoing monitoring of Year 2000 readiness of the third
parties and developing contingency plans relating to those third
parties whose responses raise issues or who did not respond) is
being undertaken by the business continuity and contingency
planning committees referred to below.
Contingency plans are in place to minimize any significant
exposures from the failures of third parties to be Year 2000
compliant. The contingency plans include backup procedures,
identification of alternate suppliers, and increases in
inventory levels where appropriate. The contingency plans are
complete and will continue to be tested during the rest of the
year. In addition, the Company has formed business steering
committees to monitor contingency planning activities at various
business-unit and corporate levels. These committees proactively
monitor critical internal systems as well as the external
environment. The Company has set up procedures to receive
relevant information regarding any Year 2000 related events from
all of the markets during the year-end change. This information
will be collected by these committees, who will initiate the
implementation of contingency plans in a timely manner, as
necessary.
-16-
<PAGE>
As a result of the comprehensive compliance program, information
received from critically important third parties regarding their
Year 2000 readiness, and the contingency plans in place, the
Company does not expect the Year 2000 problem, as well as the
cost of the compliance program, to have a material impact on the
Company's results of operations, financial condition or cash
flows. However, there can be no assurance that third parties
will convert their systems in a timely manner and in a way that
is compatible with the Company's systems.
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.
-17-
<PAGE>
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, 1998 and any subsequent material
developments in such matters are described below.
Breast Implant Litigation
- -------------------------
As previously reported in the Company's Annual Report on Form 10-
K for the fiscal year ended December 31, 1998, the Company,
together with its subsidiary, Medical Engineering Corporation
(MEC), and certain other companies, has been named as a defendant
in a number of claims and lawsuits alleging damages for personal
injuries of various types resulting from breast implants formerly
manufactured by MEC or a related company.
Of the more than 90,000 claims or potential claims against the
Company in direct lawsuits or through registration in the
national class action Revised Settlement Program, most have been
dealt with through the Revised Settlement, other settlements, or
trial. Since December 31, 1998, the Company has settled, reached
agreements to settle, or otherwise disposed of large numbers of
claims of persons with breast implants made by MEC. As of
November 1, 1999, the Company's contingent liability in respect
of breast implant claims was limited to residual unpaid Revised
Settlement Program obligations and to roughly 2,200 remaining opt-
outs who have pursued or may pursue their claims in court.
As of November 1, 1999, approximately 7,400 United States and 200
foreign breast implant recipients were plaintiffs in lawsuits
pending in federal and state courts in the United States and in
certain courts in Canada and Australia. These figures include
the claims of plaintiffs that are in the process of being settled
and/or dismissed. In these lawsuits, about 4,200 U.S. plaintiffs
and 50 foreign plaintiffs opted out of the Revised Settlement.
The lawsuits of approximately 3,200 U.S. plaintiffs who did not
opt out are expected to be dismissed as these plaintiffs are
among the estimated 74,000 women with MEC implants who chose to
participate in the nationwide settlement. Of the 4,200 opt-out
plaintiffs, an estimated 2,000 plaintiffs have claims based upon
products that were not manufactured and sold by MEC or that have
been or are in the process of being settled and/or dismissed.
Accordingly, the number of remaining plaintiffs who have pursued
or may pursue their claims in court against the Company is
roughly 2,200 as stated in the preceding paragraph.
Under the terms of the Revised Settlement Program, additional opt-
outs are expected to be minimal since the deadline for U.S. class
members to opt out has passed. In addition, the Company's
remaining obligations under the Revised Settlement Program are
limited because most payments to "Current Claimants" have already
been made, no additional "Current Claims" may be filed without
court approval, and because payments of claims to so-called
"Other Registrants" and "Late Registrants" are limited by the
terms of the Revised Settlement Program. The Company believes it
will be able to address remaining opt-out claims as well as
remaining obligations under the Revised Settlement Program within
its reserves as described in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998.
-18-
<PAGE>
Prescription Drug Litigation
- ----------------------------
The Company remains a defendant in several actions challenging
pricing on brand name prescription drugs. These actions include
several currently consolidated antitrust actions brought against
the Company and more than thirty other pharmaceutical
manufacturers, drug wholesalers and pharmacy benefit managers by
certain chain drugstores, supermarket chains and independent
drugstores; state pharmaceutical actions; and purported class
actions on behalf of consumers. The Company will continue to
defend vigorously its position in this ongoing litigation and
believes it will be able to address all remaining claims within
its reserves as described in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998.
Infant Formula Matters
- ----------------------
As previously reported in the Company's Annual Report on Form 10-
K for the fiscal year ended December 31, 1998, the Company, one
of its subsidiaries, and others have been 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 practice
laws and seeking penalties and other relief. The Company has
resolved all of these actions except for a purported statewide
class action of indirect purchasers in Louisiana in which the
plaintiffs filed a petition for certiorari in the United States
Supreme Court on jurisdictional grounds following the United
States Court of Appeals' affirmation of the district court's
dismissal of such action.
-19-
<PAGE>
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 Page
- ------------------------------- --------
10q. Form of Agreement, effective June 1, 1999,
entered into between the Registrant and each E-10q-1
of the following officers on the following
dates: Hamed M. Abdou, Ph.D., August 9, 1999;
Peter R. Dolan, July 29, 1999; Donald J. Hayden,
Jr., July 30, 1999; Richard J. Lane, August 6,
1999; John L. McGoldrick, August 10, 1999;
Michael F. Mee, July 28, 1999; Christine A.
Poon, July 29, 1999; Peter S. Ringrose, Ph.D.,
August 5, 1999; Stephen I. Sadove, July 29, 1999;
Frederick S. Schiff, July 29, 1999; John L. Skule,
August 5, 1999; Charles G. Tharp, Ph.D., July 28,
1999; and Kenneth E. Weg, July 29, 1999.
15. Independent Accountants' Awareness Letter E-15-1
27. Bristol-Myers Squibb Company Financial Data Schedule E-27-1
b) Reports on Form 8-K.
The Registrant did not file any reports on Form 8-K during the
quarter ended September 30, 1999.
-20-
<PAGE>
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: November 12, 1999 By: /s/ Harrison M. Bains, Jr.
---------------------------
Harrison M. Bains, Jr.
Vice President and Treasurer
Date: November 12, 1999 By: /s/ Frederick S. Schiff
---------------------------
Frederick S. Schiff
Vice President -
Financial Operations and Controller
-21-
THIS AGREEMENT dated as of
June 1, 1999, is made by and between BRISTOL-
MYERS SQUIBB COMPANY, a Delaware corporation
(the "Company"), (the "Executive").
WHEREAS the Company considers it essential to the
best interests of its shareholders to foster the continuous
employment of key management personnel;
WHEREAS the Board of Directors of the Company (the
"Board") recognizes that, as is the case with many publicly
held corporations, the possibility of a Change in Control
(as defined in the last Section hereof) exists and that such
possibility, and the uncertainty and questions which it may
raise among management, may result in the departure or
distraction of management personnel to the detriment of the
Company and its shareholders; and
WHEREAS the Board has determined that appropriate
steps should be taken to reinforce and encourage the
continued attention and dedication of members of the
Company's management, including the Executive, to their
assigned duties without distraction in the face of
potentially disturbing circumstances arising from the
possibility of a Change in Control.
NOW, THEREFORE, in consideration of the premises
and the mutual covenants herein contained, the Company and
the Executive hereby agree as follows:
ARTICLE I
Defined Terms
The definition of capitalized terms used in this
Agreement is provided in the last Article hereof.
ARTICLE II
Term of Agreement
This Agreement shall commence on the date hereof
and shall continue in effect through December 31, 2002;
provided, however, that commencing on January 1, 2003 and
each January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless the
Company or the Executive shall have given at least 30 days'
prior notice not to extend this Agreement or a Change in
Control shall have occurred prior to such January 1;
provided, however, if a Change in Control shall have
occurred during the term of this Agreement, this Agreement
shall continue in effect for a period of not less than
36 months beyond the month in which such Change in Control
occurred. Notwithstanding the foregoing provisions of this
Article, this Agreement shall terminate upon the Executive's
attaining his Retirement Date.
ARTICLE III
Company's Covenants Summarized
In order to induce the Executive to remain in the
employ of the Company and in consideration of the
Executive's covenants set forth in Section 4 hereof, the
Company agrees, under the conditions described herein, to
pay the Executive the "Severance Payments" described in
Section 6.01 hereof and the other payments and benefits
described herein in the event the Executive's employment
with the Company is terminated following a Change in Control
and during the term of this Agreement. No amount or benefit
shall be payable under this Agreement unless there shall
have been (or, under the terms hereof, there shall be deemed
to have been) a termination of the Executive's employment
with the Company following a Change in Control. This
Agreement shall not be construed as creating an express or
implied contract of employment and, except as otherwise
agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the
employ of the Company.
E-10Q-1
<PAGE>
ARTICLE IV
The Executive's Covenants
The Executive agrees that, subject to the terms
and conditions of this Agreement, in the event of a
Potential Change in Control during the term of this
Agreement, the Executive will remain in the employ of the
Company until the earliest of (i) a date which is six months
from the date of such Potential Change of Control, (ii) the
date of a Change in Control, (iii) the date of termination
by the Executive of the Executive's employment for Good
Reason (determined by treating the Potential Change in
Control as a Change in Control in applying the definition of
Good Reason) or by reason of death or (iv) the termination
by the Company of the Executive's employment for any reason.
ARTICLE V
Compensation other than Severance Payments
SECTION 5.01. Following a Change in Control and
during the term of this Agreement, during any period that
the Executive fails to perform the Executive's full-time
duties with the Company as a result of Disability, the
Executive shall be compensated as provided pursuant to the
terms of the Company's short- and long-term disability plans
as in effect immediately prior to the Change in Control
together with all other compensation and benefits payable to
the Executive pursuant to the terms of any compensation or
benefit plan, program or arrangement maintained by the
Company during such period.
SECTION 5.02. If the Executive's employment shall
be terminated for any reason following a Change in Control
and during the term of this Agreement, the Company shall pay
the Executive's full salary to the Executive through the
Date of Termination at the rate in effect at the time the
Notice of Termination is given, together with all other
compensation and benefits payable to the Executive through
the Date of Termination (including, without limitation, all
incentive compensation amounts owed the Executive for a
completed calendar year to the extent not yet then paid)
under the terms of any compensation or benefit plan, program
or arrangement maintained by the Company during such period.
SECTION 5.03. If the Executive's employment shall
be terminated for any reason following a Change in Control
and during the term of this Agreement, the Company shall pay
the Executive such normal post-termination compensation and
benefits to the Executive as may be provided by the
Company's retirement, insurance and other compensation or
benefit plans, programs and arrangements, as in effect
immediately prior to a Change in Control.
E-10Q-2
<PAGE>
ARTICLE VI
Severance Payments
SECTION 6.01. In lieu of any other severance
compensation or benefits to which the Executive may
otherwise be entitled under any plan, program, policy or
arrangement of the Company (and which the Executive hereby
expressly waives), the Company shall pay the Executive the
payments described in this Section 6.01 (the "Severance
Payments") upon the termination of the Executive's
employment following a Change in Control and during the term
of this Agreement in addition to the payments and benefits
described in Article V hereof, unless such termination is
(i) by the Company for Cause, (ii) by reason of death, or
(iii) by the Executive without Good Reason. The Executive's
employment shall be deemed to have been terminated following
a Change in Control by the Company without Cause or by the
Executive with Good Reason if the Executive's employment is
terminated prior to a Change in Control without Cause at the
direction of a Person who has entered into an agreement with
the Company the consummation of which will constitute a
Change in Control or if the Executive terminates his
employment with Good Reason prior to a Change in Control
(determined by treating a Potential Change in Control as a
Change in Control in applying the definition of Good Reason)
if the circumstance or event which constitutes Good Reason
occurs at the direction of such Person.
(a) In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination
and in lieu of any severance benefit otherwise payable to
the Executive, the Company shall pay to the Executive a lump
sum severance payment, in cash, equal to three or, if less,
the number of years, including fractions, from the Date of
Termination until the Executive reaches his Retirement Date,
times the sum of (i) the higher of the Executive's annual
base salary in effect immediately prior to the occurrence of
the event or circumstance upon which the Notice of
Termination is based or in effect immediately prior to the
Change in Control, and (ii) the aggregate amount of the
Executive's target annual bonus entitlement under the
Incentive Plan (or any other bonus plan of the Company then
in effect) as in effect immediately prior to the occurrence
of the circumstances giving rise to the Notice of
Termination given in respect thereof (provided that if it is
not practicable to determine the amount that the Executive's
aggregate target bonus would have been for the year in which
the Notice of Termination was given, then, for purposes of
this paragraph (a), the Executive's target annual bonus
entitlement shall be the amount of the largest aggregate
annual bonus paid to him with respect to the five years
immediately prior to the year in which the Notice of
Termination was given).
(b) Notwithstanding any provision of the
Incentive Plan or any other compensation or incentive plans
of the Company, the Company shall pay to the Executive a
lump sum amount, in cash, equal to the sum of (i) any
incentive compensation which has been allocated or awarded
to the Executive for a completed calendar year or other
measuring period preceding the Date of Termination but has
not yet been paid (pursuant to Section 5.02 hereof or
otherwise), and (ii) a pro rata portion to the Date of
Termination of the aggregate value of all contingent
incentive compensation awards to the Executive for the
current calendar year or other measuring period under the
Incentive Plan, the Award Plan or any other compensation or
incentive plans of the Company, calculated as to each such
award on a basis which assumes that at least 100% of any
performance target or goal was achieved, and otherwise on a
basis on which the Executive will receive a pro rata portion
(based on elapsed time) of the amounts he would have been
entitled to receive if he had continued to be employed by
the Company throughout the period contemplated with respect
to such award and if all other conditions for receiving the
maximum amount with respect to all such awards had been met.
E-10Q-3
<PAGE>
(c) All outstanding Options shall become
immediately vested and exercisable (to the extent not then
vested and exercisable). To the extent not otherwise
provided under the written agreement evidencing the grant of
any restricted Shares to the Executive, all outstanding
Shares which have been granted to the Executive subject to
restrictions which, as of the Date of Termination, have not
then lapsed shall lapse automatically upon the Date of
Termination and the Executive shall own such Shares free and
clear of all such restrictions.
(d) In addition to the retirement benefits to
which the Executive is entitled under the Retirement Plan
and BEP, or any successor plans thereto, the Company shall
pay the Executive an additional amount equal to the excess
of (x) the retirement pension (determined as a straight life
annuity commencing at Retirement Date) which the Executive
would have accrued under the terms of the Retirement Plan
and BEP (without regard to any amendment to the Retirement
Plan or BEP made subsequent to a Change in Control and on or
prior to the Date of Termination, which amendment adversely
affects in any manner the computation of retirement benefits
thereunder), determined as if the Executive (i) were fully
vested thereunder, and (ii) had accumulated (after the Date
of Termination) 36 additional months of age and service
credit thereunder at the Executive's highest annual rate of
compensation during the 12 months immediately preceding the
Date of Termination (but in no event shall the Executive be
deemed to have accumulated additional service credit in
excess of that provided pursuant to the Retirement Plan and
BEP) and (y) the retirement pension (determined as a
straight life annuity commencing at the Executive's
Retirement Date) which the Executive had then accrued
pursuant to the respective provisions of the Retirement Plan
and BEP, such additional amount to be paid, except as
provided in the last sentence of this Section 6.01(d), at
such time or times as the relevant benefits are payable to
the Executive under the Retirement Plan and BEP,
respectively, or any successor plans thereto; provided,
however, that if the transaction constituting the Change in
Control has not been approved by the Board prior to the
consummation thereof, the actuarial equivalent of such
additional benefits under this Section 6.01(d) shall be paid
in a cash lump sum. If the Executive has not attained
age 55 with ten years of service credit as of the Date of
Termination, the Executive may nevertheless elect to receive
(x) his vested benefit (after giving effect to the 36 months
of additional age and service credit provided in the first
sentence of this Section 6.01(d)) under the BEP
(notwithstanding any provision of the BEP to the contrary)
and (y) the incremental vested benefit which would be
accrued under the Retirement Plan (after giving effect to
the 36 months of additional age and service credit provided
in the first sentence of this Section 6.01(d)) over the
Executive's actual accrued benefit thereunder (without
giving effect to such additional credit), such amounts under
clauses (x) and (y) to be paid under the BEP either (i) in
an annuity (in the form provided under the BEP) commencing
E-10Q-4
<PAGE>
immediately following the Date of Termination, or (ii) in a
lump sum payment, the amount of which in either case shall
be the actuarial equivalent of the vested annual benefit
payable to the Executive assuming that the Executive had
attained age 55 with ten years of service credit as of the
Date of Termination (i.e., without actuarial reduction to
reflect the fact that the Executive has not attained age 55
with ten years of service as of the Date of Termination).
For purposes of this Section 6.01(d), "actuarial equivalent"
shall be determined using the same methods and assumptions
utilized under the Retirement Plan immediately prior to the
Date of Termination.
(e) For a 36-month period after the Date of
Termination, the Company shall arrange to provide the
Executive with life and health (including medical and
dental) insurance benefits and perquisites substantially
similar to those which the Executive is receiving
immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent
to a Change in Control). Benefits and perquisites otherwise
receivable by the Executive pursuant to this Section 6.01(e)
shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive
without greater cost to him than as provided by the Company
during the 36-month period following the Executive's
termination of employment (and any such benefits actually
received by the Executive shall be reported to the Company
by the Executive).
(f) Following the 36-month period described in the
first sentence of Section 6.01(e), the Executive shall be
immediately eligible to participate (although the Executive
may elect to defer commencement of such participation to
such later date as the Executive shall determine) in the
Company's retiree medical and dental plans, whether or not
the Executive has satisfied any age and service requirements
then applicable. For purposes of determining the level of
the Executive's participation thereunder, the Executive
shall be deemed to have accumulated 36 months of additional
age and service credit; it being understood that if the
Executive's age and service credit (as augmented hereunder)
do not satisfy the minimum requirements for eligibility, the
Executive shall be eligible to participate at the level
requiring the maximum contribution requirement by an
eligible retiree.
(g) In addition to the vested amounts, if any, to
which the Executive is entitled under the Savings Plan as of
the Date of Termination, the Company shall pay the Executive
a lump sum amount equal to the value of the unvested
portion, if any, of the employer matching contributions
credited to the Executive under the Savings Plan.
(h) The Company shall provide the Executive with
reasonable outplacement services consistent with past
practices of the Company prior to the Change in Control.
SECTION 6.02. Subject to the immediately
following paragraph of this Section 6.02, in the event that
the Executive becomes entitled to the Severance Payments, if
any of the Severance Payments or any other portion of the
Total Payments (as defined below) will be subject to the
Excise Tax, the Company shall pay to the Executive an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive, after deduction of any
Excise Tax on the Severance Payments and such other Total
Payments and any Federal, state and local income tax (taking
into account the loss of itemized deductions) and employment
tax and Excise Tax upon the payment provided for by this
E-10Q-5
<PAGE>
Section 6.02, shall be equal to the present value of the
Severance Payments and such other Total Payments. For
purposes of determining whether any of the Severance
Payments or other Total Payments will be subject to the
Excise Tax and the amount of such Excise Tax, (i) any other
payments or benefits received or to be received by the
Executive in connection with a Change in Control or the
Executive's termination of employment, whether pursuant to
the terms of this Agreement or any other plan, arrangement
or agreement with the Company, any Person whose actions
result in a change in control or any Person affiliated with
the Company or such Person (together with the Severance
Payments, the "Total Payments"), shall be treated as
"parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(l) of the
Code shall be treated as subject to the Excise Tax, unless,
in the opinion of tax counsel selected by the Company's
independent auditors and reasonably acceptable to the
Executive (the "Tax Counsel"), such other payments or
benefits (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of
the Code, or such excess parachute payments (in whole or in
part) represent reasonable compensation for services
actually rendered, within the meaning of
Section 280G(b)(4)(B) of the Code, in excess of the Base
Amount allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax, (ii) the amount of
the Severance Payments which shall be treated as subject to
the Excise Tax shall be equal to the lesser of (A) the total
amount of the Severance Payments and other Total Payments or
(B) the amount of excess parachute payments within the
meaning of Section 280G(b)(l) of the Code (after applying
clause (i), above), and (iii) the value of any noncash
benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in
accordance with the principles of Sections 280G(d)(3) and
(4) of the Code. For purposes of determining the amount of
the Gross-Up Payment, the Executive shall be deemed to pay
Federal income taxes at the highest marginal rate of Federal
income taxation (taking into account the loss of itemized
deductions) in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and
locality of the Executive's residence on the Date of
Termination, net of the maximum reduction in Federal income
taxes which could be obtained from deduction of such state
and local taxes. In the event that the Excise Tax is
subsequently determined to be less than the amount taken
into account hereunder at the time of termination of the
Executive's employment, the Executive shall repay to the
Company, at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the Gross-
Up Payment attributable to such reduction (plus that portion
of the Gross-Up Payment attributable to the Excise Tax and
Federal, state and local income tax imposed on the Gross-Up
Payment being repaid by the Executive to the extent that
such repayment results in a reduction in Excise Tax and/or a
Federal, state or local income tax deduction) plus interest
on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into
account hereunder at the time of the termination of the
Executive's employment (including by reason of any payment
the existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess (plus
any interest, penalties or additions payable by the
Executive with respect to such excess) at the time that the
amount of such excess is finally determined. The Executive
and the Company shall each reasonably cooperate with the
other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability
for Excise Tax with respect to the Severance Payments and
other Total Payments.
E-10Q-6
<PAGE>
Notwithstanding the provisions of the first
paragraph of this Section 6.02, (i) the Company shall have
no obligation to make the Gross-Up Payment unless the value
of the Total Payments for purposes of Section 280G of the
Code (and the regulations thereunder) equals or exceeds 110%
of the maximum amount of parachute payments which could be
paid to the Executive without any imposition of golden
parachute excise taxes under Sections 280G and 4999 of the
Code (the "110% Amount"), and (ii) if (x) any portion of the
Total Payments would be subject to the imposition of golden
parachute excise taxes under Sections 280G and 4999 of the
Code and (y) the value of the Total Payments is less than
the 110% Amount, then, to the extent necessary to make such
portion of the Total Payments not subject to such golden
parachute excise taxes (and after taking into account any
reduction in the Total Payments provided by reason of
Section 280G of the Code in any other plan, arrangement or
agreement), (A) the cash Severance Payments shall first be
reduced (if necessary, to zero), and (B) all other non-cash
Severance Payments shall next be reduced (if necessary, to
zero). For purposes of the limitation described in
clause (ii) of the preceding sentence, (i) no portion of the
Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to
the Date of Termination shall be taken into account, (ii) no
portion of the Total Payments shall be taken into account
which, in the opinion of the Tax Counsel, does not
constitute a "parachute payment" within the meaning of
section 280G(b)(2) of the Code, including by reason of
section 280(b)(4)(A) of the Code, (iii) the Severance
Payments shall be reduced only to the extent necessary so
that the Total Payments (other than those referred to in
clauses (i) or (ii) of this sentence) in their entirety
constitute reasonable compensation for services actually
rendered within the meaning of section 280G(b)(4)(B) of the
Code or are otherwise not subject to disallowance as
deductions, in the opinion of the Tax Counsel; and (iv) the
value of any non-cash benefit or any deferred payment or
benefit included in the Total Payments shall be determined
by the Company's independent auditors in accordance with the
principles of sections 280G(d)(3) and (4) of the Code.
If it is established pursuant to a final
determination of a court or an Internal Revenue Service
proceeding that, notwithstanding the good faith of the
Executive and the Company in applying the terms of the
limitation described in clause (ii) of the first sentence of
the preceding paragraph of this Section 6.02, the aggregate
"parachute payments" paid to or for the Executive's benefit
are in an amount that would result in any portion of such
"parachute payments" not being deductible by reason of
section 280G of the Code, then the Executive shall have an
obligation to pay the Company upon demand an amount equal to
the sum of (i) the excess of the aggregate "parachute
payments" paid to or for the Executive's benefit over the
aggregate "parachute payments" that could have been paid to
or for the Executive's benefit without any portion of such
"parachute payments" not being deductible by reason of
section 280G of the Code; and (ii) interest on the amount
set forth in clause (i) of this sentence at the rate
provided in section 1274(b)(2)(B) of the Code from the date
of the Executive's receipt of such excess until the date of
such payment.
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<PAGE>
SECTION 6.03. The payments provided for in
Section 6.01 (other than Section 6.01(e)) and 6.02 hereof
shall be made not later than the fifth day following the
Date of Termination; provided, however, that if the amounts
of such payments cannot be finally determined on or before
such day, the Company shall pay to the Executive on such day
an estimate, as determined in good faith by the Company, of
the minimum amount of such payments to which the Executive
is clearly entitled and shall pay the remainder of such
payments (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the
30th day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall
constitute a loan by the Company to the Executive, payable
on the fifth business day after demand by the Company
(together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code). At the time that
payments are made under this Section, the Company shall
provide the Executive with a written statement setting forth
the manner in which such payments were calculated and the
basis for such calculations including, without limitation,
any opinions or other advice the Company has received from
outside counsel, auditors or consultants (and any such
opinions or advice which are in writing shall be attached to
the statement).
SECTION 6.04. The Company also shall pay to the
Executive all legal fees and expenses incurred by the
Executive as a result of a termination which entitles the
Executive to the Severance Payments (including all such fees
and expenses, if any, incurred in disputing any such
termination or in seeking in good faith to obtain or enforce
any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code
to any payment or benefit provided hereunder and including,
but not limited to, auditors' fees incurred in connection
therewith). Such payments shall be made within five
business days after delivery of the Executive's written
requests for payment accompanied with such evidence of fees
and expenses incurred as the Company reasonably may require.
ARTICLE VII
Termination Procedures and
Compensation During Dispute
SECTION 7.01. Notice of Termination. After a
Change in Control and during the term of this Agreement, any
purported termination of the Executive's employment (other
than by reason of death) shall be communicated by written
Notice of Termination from one party hereto to the other
party hereto in accordance with Article X hereof. For
purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's
employment under the provision so indicated. Further, a
Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board which was called and
held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for
the Executive, together with the Executive's counsel, to be
heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in
clause (i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
SECTION 7.02. Date of Termination. "Date of
Termination", with respect to any purported termination of
the Executive's employment after a Change in Control and
during the term of this Agreement, shall mean (i) if the
Executive's employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time
performance of the Executive's duties during such 30 day
period), and (ii) if the Executive's employment is
terminated for any other reason, the date specified in the
Notice of Termination (which, in the case of a termination
by the Company, shall not be less than 30 days (except in
the case of a termination for Cause) and, in the case of a
termination by the Executive, shall not be less than 15 days
nor more than 60 days, respectively, from the date such
Notice of Termination is given).
E-10Q-8
<PAGE>
SECTION 7.03. Dispute Concerning Termination. If
within 15 days after any Notice of Termination is given, or,
if later, prior to the Date of Termination (as determined
without regard to this Section 7.03), the party receiving
such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute
is finally resolved, either by mutual written agreement of
the parties or by a final judgment, order or decree of a
court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); provided further,
that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such
dispute with reasonable diligence.
SECTION 7.04. Compensation During Dispute. If a
purported termination occurs following a Change in Control
and during the term of this Agreement, and such termination
is disputed in accordance with Section 7.03 hereof, the
Company shall continue to pay the Executive the full
compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary)
or, if greater, the full compensation in effect immediately
prior to the Change in Control, and continue the Executive
as a participant (on a basis at least as favorable to the
Executive as in effect immediately prior to the Change in
Control) in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving
rise to the dispute was given, until the dispute is
finally resolved in accordance with Section 7.03 hereof.
Amounts paid under this Section 7.04 are in addition to all
other amounts due under this Agreement (other than those due
under Section 5.02 hereof) and shall not be offset against
or reduce any other amounts due under this Agreement.
ARTICLE VIII
No Mitigation
The Company agrees that, if the Executive's
employment by the Company is terminated during the term of
this Agreement, the Executive is not required to seek other
employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section
6 or Section 7.04. Further, the amount of any payment or
benefit provided for in Article VI (other than
Section 6.01(e)) or Section 7.04 shall not be reduced by any
compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the
Executive to the Company, or otherwise.
ARTICLE IX
Noncompetition
In consideration for the payments and benefits
provided by the Company under this Agreement, the Executive
shall execute, concurrent with the execution of this
Agreement, a noncompetition agreement in the form attached
hereto as Exhibit A, which agreement provides that, for a
one-year period following the Executive termination of
employment with the Company or any of its subsidiaries or
affiliates, the Executive shall not engage in any
competitive activity with the Company or any of its
subsidiaries or affiliates.
E-10Q-9
<PAGE>
ARTICLE X
Successors; Binding Agreement
SECTION 10.01. In addition to any obligations
imposed by law upon any successor to the Company, the
Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of
the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such
succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder
if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except
that, for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be
deemed the Date of Termination.
SECTION 10.02. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If
the Executive shall die while any amount would still be
payable to the Executive hereunder (other than amounts
which, by their terms, terminate upon the death of the
Executive) if the Executive had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the
executors, personal representatives or administrators of the
Executive's estate.
ARTICLE XI
Notices
For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other
address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change
of address shall be effective only upon actual receipt:
To the Company:
Bristol-Myers Squibb Company
345 Park Avenue
New York, NY 10154
Attention: Senior Vice President,
Human Resources
To the Executive:
[name]
[address]
E-10Q-10
<PAGE>
ARTICLE XII
Miscellaneous
No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the
Executive and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by
either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws
of the State of New York. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to
any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable
withholding required under Federal, state or local law and
any additional withholding to which the Executive has
agreed. The obligations of the Company and the Executive
under Articles VI and VII shall survive the expiration of
the term of this Agreement.
ARTICLE XIII
Validity/Pooling
The invalidity or unenforceability or any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement,
which shall remain in full force and effect. If (i) the
Board approves a merger or consolidation of the Company
which is intended by the Board to satisfy the accounting
rules related to the pooling of interest method of
accounting (the "Pooling Rules") and (ii) any provision of
this Agreement would violate the Pooling Rules, then such
provision shall be null and void ab initio. In such event,
the Company and Executive shall negotiate, in good faith, a
replacement provision of equivalent value which does not
cause such a violation, provided, and to the extent, that
the Company's outside auditors determine that any such
replacement provision is permissible without violating the
Pooling Rules.
ARTICLE XIV
Counterparts
This Agreement may be executed in several
counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and
the same instrument.
ARTICLE XV
Settlement of Disputes; Arbitration
All claims by the Executive for benefits under
this Agreement shall be directed to and determined by the
Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered
to the Executive in writing and shall set forth the specific
reasons for the denial and the specific provisions of this
Agreement relied upon. The Board shall afford a reasonable
opportunity to the Executive for a review of the decision
denying a claim and shall further allow the Executive to
appeal to the Board a decision of the Board within 60 days
after notification by the Board that the Executive's claim
has been denied. Any further dispute or controversy arising
under or in connection with this Agreement shall be settled
exclusively by arbitration in New York, New York in
accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction;
provided, however, that the Executive shall be entitled to
seek specific performance of the Executive's right to be
paid until the Date of Termination during the pendency of
any dispute or controversy arising under or in connection
with this Agreement.
E-10Q-11
<PAGE>
ARTICLE XVI
Definitions
For purposes of this Agreement, the following
terms shall have the meanings indicated below:
(a) "Award Plan" shall mean the 1983
Bristol-Myers Squibb Stock Option Plan and the 1997 Stock
Incentive Plan.
(b) "Base Amount" shall have the meaning defined
in Section 280G(b)(3) of the Code.
(c) "Beneficial Owner" shall have the meaning
defined in Rule 13d-3 under the Exchange Act.
(d) "BEP" shall mean the Bristol-Myers Squibb
Company Benefit Equalization Plan for the Retirement Income
Plan.
(e) "Board" shall mean the Board of Directors of
the Company.
(f) "Cause" for termination by the Company of the
Executive's employment, after any Change in Control, shall
mean (i) the wilful and continued failure by the Executive
to substantially perform the Executive's duties with the
Company (other than any such failure resulting from the
Executive's incapacity due to physical or mental illness or
any such actual or anticipated failure after the issuance of
a Notice of Termination for Good Reason by the Executive
pursuant to Section 7.01) for a period of at least
30 consecutive days after a written demand for substantial
performance is delivered to the Executive by the Board,
which demand specifically identifies the manner in which the
Board believes that the Executive has not substantially
performed the Executive's duties, (ii) the wilful engaging
by the Executive in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries,
monetarily or otherwise, or (iii) the Executive is convicted
of, or has entered a plea of no lo contendere to, a felony.
For purposes of clauses (i) and (ii) of this definition, no
act, or failure to act, on the Executive's part shall be
deemed "wilful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief
that the Executive's act, or failure to act, was in the best
interest of the Company.
(g) A "Change in Control" shall be deemed to have
occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied:
(i) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by
such Person any securities acquired directly from the
Company or its affiliates) representing 20% or more of
the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of two consecutive years
(not including any period prior to the execution of
this Agreement), individuals who at the beginning of
such period constitute the Board and any new director
(other than a director designated by a Person who has
entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) of
this paragraph whose election by the Board or
nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof; or
(iii) the shareholders of the Company approve a
merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation
which would result in the voting securities of the
Company outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity), in combination
with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of
the Company, at least 75% of the combined voting power
of the voting securities of the Company or such
surviving entity outstanding immediately after such
merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no
Person acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or
(iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of
all or substantially all the Company's assets.
E-10Q-12
<PAGE>
Notwithstanding the foregoing, a Change in Control shall not
include any event, circumstance or transaction occurring
during the six-month period following a Potential Change in
Control which results from the action of any entity or group
which includes, is affiliated with or is wholly or partly
controlled by the Executive; provided, further, that such
action shall not be taken into account for this purpose if
it occurs within a six-month period following a Potential
Change in Control resulting from the action of any entity or
group which does not include the Executive.
(h) "Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
(i) "Company" shall mean Bristol-Myers Squibb
Company, a Delaware corporation, and any successor to its
business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in
determining, under Article XVI(e) hereof, whether or not any
Change in Control of the Company has occurred in connection
with such succession).
(j) "Company Shares" shall mean shares of common
stock of the Company or any equity securities into which
such shares have been converted.
(k) "Date of Termination" shall have the meaning
stated in Section 7.02 hereof.
(l) "Disability" shall have the meaning stated in
the Company's short- and long-term disability plans as in
effect immediately prior to a Change in Control.
(m) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.
(n) "Excise Tax" shall mean any excise tax
imposed under Section 4999 of the Code.
(o) "Executive" shall mean the individual named
in the first paragraph of this Agreement.
(p) "Good Reason" for termination by the
Executive of the Executive's employment shall mean the
occurrence (without the Executive's express written consent)
of any one of the following acts by the Company, or failures
by the Company to act, unless, in the case of any act or
failure to act described in paragraph (i), (v), (vi), (vii),
or (viii) below, such act or failure to act is corrected
prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(i) the assignment to the Executive of any duties
inconsistent with the Executive's status as an
executive officer of the Company or a substantial
adverse alteration in the nature or status of the
Executive's responsibilities from those in effect
immediately prior to the Change in Control;
(ii) a reduction by the Company in the Executive's
annual base salary as in effect on the date hereof or
as the same may be increased from time to time and/or
the level of the Executive's entitlement under the
Incentive Plan as in effect on the date hereof or as
the same may be increased from time to time;
(iii) the Company's requiring the Executive to be
based more than 50 miles from the Company's offices at
which the Executive is based immediately prior to a
Change in Control except for required travel on the
Company's business to an extent substantially
consistent with the Executive's business travel
obligations immediately prior to a Change in Control,
or, in the event the Executive consents to any such
relocation of his offices, the failure by the Company
to provide the Executive with all of the benefits of
the Company's relocation policy as in operation
immediately prior to a Change in Control;
(iv) the failure by the Company, without the
Executive's consent, to pay to the Executive any
portion of the Executive's current compensation (for
purposes of this paragraph (d), "current compensation"
shall mean the Executive's annual base salary as in
effect on the date hereof or as the same may be
increased from time to time and the awards earned
pursuant to the Incentive Plan) or to pay to the
Executive any portion of an installment of deferred
compensation under any deferred compensation program of
the Company, within seven days of the date such
compensation is due;
E-10Q-13
<PAGE>
(v) the failure by the Company to continue in
effect any compensation plan in which the Executive
participates immediately prior to the Change in Control
which is material to the Executive's total
compensation, including, but not limited to, the
Incentive Plan, the Award Plan and the Bristol-Myers
Squibb Restricted Stock Plan (the "Stock Option Plans")
or any substitute plans adopted prior to the Change in
Control, unless an equitable arrangement (embodied in
an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the
Company to continue the Executive's participation
therein (or in such substitute or alternative plan) on
a basis not materially less favorable, both in terms of
the amount of benefits provided and the level of the
Executive's participation relative to other
participants as existed at the time of the Change in
Control;
(vi) the failure by the Company to continue to
provide the Executive with benefits substantially
similar to those enjoyed by the Executive under any of
the Company's pension (including, without limitation,
the Company's Retirement Plan, BEP and the Company's
Savings and Investment Program, including the Company's
Benefit Equalization Plan for the Savings and
Investment Program), life insurance, medical, health
and accident, or disability plans in which the
Executive was participating at the time of the Change
in Control, the taking of any action by the Company
which would directly or indirectly materially reduce
any of such benefits or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the
time of the Change in Control, or the failure by the
Company to provide the Executive with the number of
paid vacation days to which the Executive is entitled
on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in
effect at the time of the Change in Control; or
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice
of Termination satisfying the requirements of
Section 7.01; for purposes of this Agreement, no such
purported termination shall be effective.
The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected by the
Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act
or failure to act constituting Good Reason hereunder.
Notwithstanding the foregoing, the occurrence of
an event that would otherwise constitute Good Reason
hereunder shall cease to be an event constituting Good
Reason if Notice of Termination is not timely provided to
the Company by the Executive within 120 days of the date
that the Executive first becomes aware (or reasonably should
have become aware) of the occurrence of such event.
(q) "Gross-Up Payment" shall have the meaning
given in Section 6.02 hereof.
(r) "Incentive Plan" shall mean the Company's
Executive Performance Incentive Plan.
(s) "Notice of Termination" shall have the
meaning stated in Section 7.01 hereof.
(t) "Options" shall mean options for Company
Shares granted to the Executive under the Company's Stock
Option Plans.
(u) "Person" shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof; however, a Person shall
not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any of its
subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or
(iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
E-10Q-14
<PAGE>
(v) "Potential Change in Control" shall be deemed
to have occurred if the conditions set forth in any one of
the following paragraphs shall have been satisfied:
(i) the Company enters into an agreement,
the consummation of which would result in the
occurrence of a Change in Control;
(ii) the Company or any Person publicly
announces an intention to take or to consider
taking actions which, if consummated, would
constitute a Change in Control;
(iii) any Person who is or becomes the
Beneficial Owner, directly or indirectly, of
securities of the Company representing 10% or more
of the combined voting power of the Company's then
outstanding securities, increases such Person's
beneficial ownership of such securities by 5% or
more over the percentage so owned by such Person
on the date hereof; or
(iv) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential
Change in Control has occurred.
(w) "Retirement Date" shall mean the later of
(i) the Executive's normal retirement date under the
Retirement Plan and (ii) such other date for retirement by
the Executive which has been approved by the Board at any
time prior to a Change in Control.
(x) "Retirement Plan" shall mean the Bristol-
Myers Squibb Company Retirement Income Plan.
(y) "Savings Plan" shall mean the Bristol-Myers
Squibb Company Savings and Investment Program and which, for
purposes of this Agreement, shall include the Company's
Benefit Equalization Plan for the Savings and Investment
Program.
(z) "Severance Payments" shall mean those
payments described in Section 6.01 hereof.
(aa) "Shares" shall mean shares of the common
stock, $0.10 par value, of the Company.
(bb) "Total Payments" shall mean those payments
described in Section 6.02 hereof.
BRISTOL-MYERS SQUIBB COMPANY,
by
[Name]
[Title]
[Name of Executive]
E-10Q-15
<PAGE>
Schedule A
Non-Compete/Non Solicitation Agreement and General Release
Bristol-Myers Squibb Company has offered me an Executive
Severance Agreement.
In consideration of the above-referenced Executive Severance
Agreement, I agree as follows:
1. For a one-year period commencing upon my termination, I
will not in any way, directly or indirectly, own, manage,
operate, control, accept employment or a consulting position
with or otherwise advise or assist or be actively connected
with, or have any financial interest in, directly or
indirectly, any enterprise which engages in, or otherwise
carries on, any business activity in competition with the
businesses of Bristol-Myers Squibb Company and its
subsidiaries and affiliates (referred to collectively as the
"Company"), in any geographic area in which it engages in
such business (including, without limitation, the United
States and each county in the State of California in which
the Company from time to time sells or offers its products
for sale), without the prior written consent of the Company.
I recognize that the Company's business is worldwide in
scope in that it directly advertises and solicits business
from customers wherever they may be found. It is understood
that ownership of not more than one percent (1%) of the
equity securities of a public company shall in no way be
prohibited pursuant to the foregoing provisions. I further
agree that I shall not take any action which might divert
from the Company or any of its successors or assigns any
opportunity which would be within the scope of its or their
respective present or future operations or business. I
understand that this paragraph supersedes the Non-
competition provision set forth in my Restricted Stock Award
Agreement, however in no way modifies the other provisions
of that agreement which remain in full force and effect.
2. For a one-year period commencing upon my termination, I
will not in any way, directly or indirectly, employ, solicit
for employment, or advise or recommend to any other person
that they employ or solicit for employment, any person
employed at the time by the Company.
3. I hereby waive any and all rights to sue the Company
and its past, present and future officers, directors,
employees and agents (referred to collectively as the
"Released Parties") based upon any act or event occurring
prior to my signing this Agreement. Without limitation, I
specifically release the Released Parties from any and all
claims arising out of my employment and separation from the
Company, including claims based on discrimination under
federal anti-discrimination laws such as Title VII of the
Civil Rights Act, Age Discrimination in Employment Act, The
Americans with Disabilities Act, claims for interference
E-10Q-16
<PAGE>
Agreement and Release
with my rights to benefits under section 510 of the
Employee Retirement Income Security Act and any and all
federal, state and local laws.
However, I am not giving up my right to appeal a denial
of a claim for benefits submitted under my medical or
dental coverage, life insurance or disability income
program maintained by the Company. Further, I am not
giving up my right to file for unemployment insurance
benefits at the appropriate time if I so choose, and my
signing of this release will not affect my rights, if
any, to coverage by Workers' Compensation insurance.
Nothing herein shall affect any benefits to which I am
entitled under the terms of the Executive Severance
Agreement or any claim arising out of the enforcement
of the Executive Severance Agreement.
4. I acknowledge that I have been given at least twenty-
one (21) days to consider and sign this release. I further
acknowledge that it will not be effective for a period of
seven (7) days, during which time I can change my mind and
revoke my signature. To revoke my signature, I must notify
the Company in writing, within seven days of the date I
signed this release. In the event that I revoke my
signature I will not be entitled to the consideration
described above.
Finally, I acknowledge the continuing nature of my
obligation to maintain in confidence and not to make use of
confidential information concerning the Company's business
or affairs of any nature that is not otherwise a matter of
public record. This obligation continues after the
termination of my employment.
MY SIGNATURE BELOW ACKNOWLEDGES THAT I HAVE READ THE ABOVE,
UNDERSTAND WHAT I AM SIGNING, AND AM ACTING OF MY OWN FREE
WILL. I UNDERSTAND THAT IF ANY PROVISION OF THIS AGREEMENT
IS FOUND TO BE INVALID OR UNENFORCEABLE, IT WILL NOT AFFECT
THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION. I
FURTHER AGREE THAT THIS AGREEMENT WILL BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK. THE COMPANY HAS ADVISED ME
TO CONSULT WITH AN ATTORNEY, AND I HAVE DONE SO, PRIOR TO
SIGNING THIS DOCUMENT.
SIGNATURE_____________________________
DATE__________________
E-10Q-17
Exhibit No. 15
November 9, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Commissioners:
We are aware that our report dated November 9, 1999 on our review of
interim financial information of Bristol-Myers Squibb Company for
the period ended September 30, 1999 and included in the Company's
quarterly report on Form 10-Q for the quarter then ended is
incorporated by reference in the Registration Statements on Form S-8
(Nos. 33-30856, 33-38411, 33-38587, 33-44788, 333-47403, 33-52691,
33-58187, 333-02873 and 33-30756-02), Form S-4 (No. 333-09519), and
Form S-3 (Nos. 33-33682, 333-49227 and 33-62496).
Such report is not a "report" or "part" of a registration statement
prepared or certified by PricewaterhouseCoopers LLP within the
meaning of Sections 7 and 11 of the Securities Act of 1933 and the
independent accountants' liability under Section 11 does not extend
to such report.
Yours very truly,
PricewaterhouseCoopers LLP
E-15-1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27 for Bristol-Myers Squibb Company for the period ended 9/30/99
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999<F1>
<PERIOD-END> SEP-30-1999
<CASH> 2455
<SECURITIES> 235
<RECEIVABLES> 3306<F2>
<ALLOWANCES> 0
<INVENTORY> 2052
<CURRENT-ASSETS> 8957
<PP&E> 7723
<DEPRECIATION> 3234
<TOTAL-ASSETS> 16612
<CURRENT-LIABILITIES> 5401
<BONDS> 1331
0
0
<COMMON> 219
<OTHER-SE> 8222
<TOTAL-LIABILITY-AND-EQUITY> 16612
<SALES> 14814
<TOTAL-REVENUES> 14814
<CGS> 4068
<TOTAL-COSTS> 4068
<OTHER-EXPENSES> 3096
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 95
<INCOME-PRETAX> 4312
<INCOME-TAX> 1197
<INCOME-CONTINUING> 3115
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3115
<EPS-BASIC> 1.57
<EPS-DILUTED> 1.54
<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.
</FN>
</TABLE>
