SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock,$.10 Par Value New York Stock Exchange
Pacific Exchange, Inc.
$2 Convertible Preferred Stock, $1 Par Value New York Stock Exchange
Pacific Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]
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 [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of February 29, 2000 was $112,954,123,592. At February 29,
2000, there were 1,975,859,149 shares of common stock outstanding.
Documents incorporated by reference
Proxy Statement for Annual Meeting of Stockholders on May 2, 2000.Part III
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PART I
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Item 1. BUSINESS.
DESCRIPTION OF BRISTOL-MYERS SQUIBB COMPANY
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General:
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Bristol-Myers Squibb Company ("Bristol-Myers Squibb" or the "Company") was
incorporated under the laws of the State of Delaware in August 1933 under
the name Bristol-Myers Company as successor to a New York business started
in 1887. In 1989, the Bristol-Myers Company changed its name to Bristol-
Myers Squibb Company, as a result of a merger. The Company, through its
divisions and subsidiaries, is a major producer and distributor of
pharmaceuticals, consumer medicines, nutritionals, medical devices and
beauty care products. In general, the business of the Company's segments is
not seasonal.
BUSINESS SEGMENTS
- -----------------
Reference is made to Note 2 Acquisitions and Divestitures and Note 12
Segment Information in the Notes to Consolidated Financial Statements
included in Part II, Item 8 of this Form 10-K Annual Report.
DESCRIPTION OF SEGMENTS
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MEDICINES:
- ----------
This segment includes sales of pharmaceuticals and consumer medicines.
Sales of selected products and product categories are as follows:
1999 1998 1997
------ ------ ------
PRAVACHOL* $1,704 $1,643 $1.437
TAXOL* 1,481 1,206 941
GLUCOPHAGE 1,317 862 579
Oncology Therapeutics Network 894 657 480
BUSPAR* 605 531 443
ZERIT* 605 551 398
PARAPLATIN* 600 525 437
PLAVIX 547 144 -
CAPOTEN*/CAPOZIDE* 484 636 795
MONOPRIL* 424 380 328
CEFZIL* 402 358 318
SERZONE* 332 257 185
AVAPRO 255 123 28
EXCEDRIN* 240 241 206
VIDEX* 205 162 152
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PRAVACHOL* pravastatin sodium, an HMG Co-A reductase inhibitor
indicated for primary hypercholestermia. Patents
expire in the U.S. in October 2005 and in
international markets from 2000 through 2010.
TAXOL* paclitaxel, used in the treatment of refractory
ovarian cancer, first-line treatment of ovarian
cancer in combination with cisplatin, second-line
treatment of AIDS-related Kaposi's Sarcoma, treatment
of metastatic breast cancer after failure of
combination chemotherapy, adjuvant treatment of node
positive breast cancer and in the treatment of non-
small cell lung carcinoma with cisplatin. Certain
patent claims related to the three-hour method of
administration patents expire in 2012 in the U.S. and
2013 outside the U.S. Reference is also made to Item
3 Legal Proceedings in Part 1 of this Form 10-K
Annual Report and to Note 15 Litigation in Part 2,
Item 8, of this Form 10-K Annual Report. Hatch-
Waxman exclusivity for first-line ovarian cancer
expires April 2001, for non-small cell lung cancer in
January 2002 and for adjuvant breast cancer in
October 2002.
GLUCOPHAGE metformin, an oral anti-diabetes agent for type 2 non-
insulin-dependent diabetes. Hatch-Waxman exclusivity
expires in September 2000.
Oncology Therapeutics
Network a specialty distributor of anti-cancer medicines and
related products.
BUSPAR* buspirone, a novel anti-anxiety agent for persistent
anxiety with or without accompanying depressive
symptoms. U.S. anxiolytic use patent expires in May
2000. Other international patents expired in 1999.
ZERIT* stavudine, used in the treatment of persons with
advanced HIV disease. Patent expires in the U.S. in
June 2008 and internationally from 2007 through 2008.
PARAPLATIN* carboplatin, a chemotherapeutic agent used in the
treatment of ovarian cancer. Patent expires in the
U.S. in April 2004 and in France in June 2000.
PLAVIX clopidogrel, a platelet inhibitor, co-developed and
jointly marketed with Sanofi S.A.
CAPOTEN*/CAPOZIDE* captopril, an angiotensin converting enzyme (ACE)
inhibitor. Patents have expired in the U.S. and in
all significant international markets.
MONOPRIL* fosinopril sodium, a second-generation ACE inhibitor
with once-a-day dosing indicated for the treatment of
hypertension. U.S. patent expires in December 2002
and in international markets from 2001 through 2008.
CEFZIL* cefprozil, an oral cephalosporin used in the
treatment of respiratory infections and sinusitis.
U.S. patent expires in December 2005 and in
international
markets from 2003 through 2009.
* Indicates brand names of products which are registered trademarks
owned by the Company.
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SERZONE* nefazodone, an antidepressant treatment. Patent
expires in the U.S. in March 2003 and internationally
from 2002 through 2010.
AVAPRO irbesartan, an angiotensin II receptor antagonist
indicated for the treatment of hypertension, co-
developed and jointly marketed with Sanofi S.A.
EXCEDRIN* an analgesic with acetaminophen and caffeine.
EXCEDRIN* Migraine is indicated for the treatment of
the full migraine syndrome.
VIDEX* didanosine, an antiretroviral drug used in the
treatment of adult and pediatric patients with
advanced human immunodeficiency virus (HIV)
infection. Patent expires in the U.S. in August 2006
and internationally from 2006 through 2009.
BEAUTY CARE:
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This segment includes sales of haircoloring and hair care preparations and
other beauty care products.
1999 1998 1997
------ ------ ------
Hair care $1,250 $1,179 $794
Haircolor 905 894 841
The principal products in this segment are:
NICE 'N EASY* haircolorings
MISS CLAIROL*
HYDRIENCE*
NATURAL INSTINCTS*
ULTRESS*
LOVING CARE*
REVITALIQUE*
HERBAL ESSENCES* complete lines of shampoos and conditioners
AUSSIE*
INFUSIUM 23*
DAILY DEFENSE*
SYSTEME BIOLAGE* professional hair care products sold
MATRIX ESSENTIALS* exclusively in beauty salons
VITAL NUTRIENTS*
VAVOOM*
MUM* anti-perspirants and deodorants
SEA BREEZE* skin care products
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NUTRITIONALS:
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This segment includes sales of infant formulas and other nutritional
products.
1999 1998 1997
------ ------ ------
Infant formulas $1,233 $1,203 $1,219
The principal products in this segment are:
ENFAMIL*/ENFALAC* infant formula products
PROSOBEE*
NUTRAMIGEN*
LACTOFREE*
ENFAPRO* follow-up formula products for older babies
NEXT STEP*
ALACTA NF*
ENFAGROW*
SUSTAGEN* nutritional supplements and specialties
CHOCO MILK*
ISOCAL*
SUSTACAL*
NUTRAMENT*
BOOST*
VIACTIV*
PLUSSSZ* vitamins
POLY-VI-SOL*
POLY-VI-FLOR*
NATALINS*
MEDICAL DEVICES:
- ----------------
This segment includes sales of orthopaedic implants, ostomy and wound care
products and other medical devices.
1999 1998 1997
------ ------ ------
Orthopaedic implants $665 $596 $615
Ostomy 449 464 451
The principal products in this segment are:
NEXGEN* Complete Knee Solution
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VERSYS* Hip System
CENTRALIGN* Precoat Hip Prosthesis orthopaedic implants
ACTIVE LIFE/ ostomy care products
COLODRESS*
SUR-FIT/
COMBIHESIVE/SECURE*
DUODERM* wound care products
SOURCES AND AVAILABILITY OF RAW MATERIALS
- -----------------------------------------
In general, Bristol-Myers Squibb purchases the principal raw materials and
supplies used in each industry segment in the open market. Substantially
all such materials are obtainable from a number of sources so that the loss
of any one source of supply would not have a material adverse effect on the
Company.
PATENTS, TRADEMARKS AND LICENSES
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The Company owns or is licensed under a number of patents in the United
States and foreign countries covering products, principally in the
medicines and medical devices segments, and has also developed many brand
names and trademarks for products in each industry segment. The Company
considers the overall protection of its patent, trademark and license
rights to be of material value and acts to protect these rights from
infringement. In the years 2000 and 2001 exclusivity periods are scheduled
to expire or have expired for GLUCOPHAGE, BUSPAR* and certain TAXOL*
claims. The Company believes that no single patent or license is of
material importance in relation to the business as a whole.
COMPETITION, DISTRIBUTION AND CUSTOMERS
- ---------------------------------------
The markets in which Bristol-Myers Squibb competes are generally broad-
based and highly competitive. The principal means of competition utilized
to market the products of Bristol-Myers Squibb include quality, service,
price and product performance. The pharmaceutical products of the Medicines
segment and the products of the Medical Devices segment are promoted on a
national and international basis in medical journals and directly to the
medical profession. The Company is also utilizing direct-to-consumer
advertising for a number of its pharmaceutical products. Most of the other
products of Bristol-Myers Squibb are generally advertised and promoted on a
national and international basis through the use of television, radio,
print media, consumer offers, and window and in-store displays. Bristol-
Myers Squibb's products are principally sold to the wholesale and retail
trade both nationally and internationally. Certain products of the
Medicines and Medical Devices segments are also sold to other drug
manufacturers, hospitals and the medical profession. None of the segments
is dependent upon a single customer, or a few customers, such that the loss
of any one or more would have a material adverse effect on the segment.
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RESEARCH AND DEVELOPMENT
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Research and development is essential to Bristol-Myers Squibb's businesses,
particularly to the Medicines Segment. Pharmaceutical research and
development is carried out by the Bristol-Myers Squibb Pharmaceutical
Research Institute which has major facilities in Princeton, Hopewell and
New Brunswick, New Jersey; and Wallingford, Connecticut. Pharmaceutical
research and development is also carried out at various other facilities in
the United States and in Belgium, Canada, France, Italy, Japan, and the
United Kingdom. Management continues to emphasize leadership, innovation
and productivity as strategies for success in the Research Institute.
Bristol-Myers Squibb spent $1,843 million in 1999, $1,577 million in 1998
and $1,385 million in 1997 on Company sponsored research and development
activities. Pharmaceutical research and development spending, as a
percentage of pharmaceutical sales, was 12.6% in 1999 compared to 12.4% in
1998 and 12.0% in 1997.
REGULATION
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Most aspects of the Company's business are subject to some degree of
government regulation in the countries in which its operations are
conducted. The Company's policy is to comply fully with all regulatory
requirements applying to its products and operations. For some products,
and in some countries, government regulation is significant and, in
general, there is a trend to more stringent regulation. The Company devotes
significant time, effort and expense addressing the extensive governmental
regulatory requirements applicable to its business. Governmental
regulatory actions can result in the recall or seizure of products,
suspension or revocation of the authority necessary for the production or
sale of a product, and other civil and criminal sanctions.
In the United States, the drug, medical device, diagnostic, food and
cosmetic industries in which the Company operates have long been subject to
regulation by various federal, state and local agencies, primarily as to
product manufacture, safety, efficacy, advertising and labeling.
In addition, governmental bodies in the United States as well as other
countries have expressed concern about costs relating to health care and,
in some cases, have focused attention on the pricing of drugs and on
appropriate drug utilization. Government regulation in these areas already
exists in some countries and may be expanded significantly in the United
States and other countries in the future.
While the Company is unable to predict the extent to which its business may
be affected by future regulatory developments, it believes that its
substantial experience dealing with governmental regulatory requirements
and restrictions on its operations throughout the world and its development
of new and improved products should enable it to compete effectively within
this environment.
EMPLOYEES
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Bristol-Myers Squibb employed approximately 54,500 people at December 31,
1999.
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DOMESTIC AND FOREIGN OPERATIONS
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Reference is made to Note 10 Financial Instruments, and Note 12 Segment
Information in the Notes to Consolidated Financial Statements included in
Part II, Item 8 of this Form 10-K Annual Report.
International operations are subject to certain risks which are inherent in
conducting business abroad, including possible nationalization or
expropriation, price and exchange controls, limitations on foreign
participation in local enterprises and other restrictive governmental
actions. In addition, changes in the relative value of currencies take
place from time to time and their effects may be favorable or unfavorable
on Bristol-Myers Squibb's operations. There are currency restrictions
relating to repatriation of earnings in certain countries.
Item 2. PROPERTIES.
Bristol-Myers Squibb's world headquarters is located at 345 Park Avenue,
New York, New York, where it leases approximately 460,500 square feet of
floor space, approximately 206,300 square feet of which is sublet to
others. The headquarters for the Company's segments are as follows:
Medicines world headquarters is located in Princeton, New Jersey; Beauty
Care in Stamford, Connecticut; Nutritionals in Evansville, Indiana; and
Medical Devices in Warsaw, Indiana and Skillman, New Jersey.
Bristol-Myers Squibb manufactures products at forty-two major worldwide
locations with an aggregate floor space of approximately 13,300,000 square
feet. All facilities are owned by Bristol-Myers Squibb. The following table
illustrates the segment and geographic location of the Company's
significant manufacturing facilities.
Beauty Medical
Medicines Care Nutritionals Devices Total
--------------------------------------------------
United States 8 2 2 4 16
Europe, Mid East and Africa 7 1 1 1 10
Other Western Hemisphere 6 3 2 - 11
Pacific 4 - 1 - 5
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Total 25 6 6 5 42
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Portions of these facilities and other facilities owned or leased by
Bristol-Myers Squibb in the United States and elsewhere are used for
research, administration, storage and distribution. Bristol-Myers Squibb's
facilities are well-maintained, adequately insured and in satisfactory
condition.
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Item 3. LEGAL PROCEEDINGS.
Various lawsuits, claims and proceedings of a nature considered normal to
its businesses are pending against the Company and certain of its
subsidiaries. The most significant of these are described below.
Reference is made to Note 15 Litigation in the Notes to the Consolidated
Financial Statements included in Part II, Item 8 of this Report.
Breast Implant Litigation
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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 polyurethane-covered breast implants and
smooth-walled 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 nationwide class
action settlement approved by the Federal District Court in Birmingham,
Alabama (the "Revised Settlement"), most have been dealt with through the
Revised Settlement, other settlements, or trial. As of December 31, 1999,
the Company's contingent liability in respect of breast implant claims was
limited to residual unpaid Revised Settlement obligations and to roughly
1,700 remaining opt-outs who have pursued or may pursue their claims in
court.
As of December 31, 1999, approximately 6,700 United States and 200 foreign
breast implant recipients were plaintiffs in lawsuits pending in federal
and state courts in the United States and 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 3,660
U.S. and 49 foreign plaintiffs opted out of the Revised Settlement. The
lawsuits of the 3,040 U.S. plaintiffs who did not opt out are expected to
be dismissed since these plaintiffs are among the estimated 74,000 women
with MEC implants who chose to participate in the nationwide settlement. Of
the 3,660 opt-out plaintiffs, an estimated 1,960 have claims based upon
products that were not manufactured or 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 1,700, as stated in the preceding
paragraph.
Under the terms of the Revised Settlement, 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. Separate class action settlements have been approved in the
provincial courts of Ontario and Quebec, and an agreement has been reached
under which other foreign breast implant recipients may settle their
claims. The Company believes it will be able to address remaining opt-out
claims as well as expected remaining obligations under the Revised
Settlement Program within its reserves described below.
Breast implants were manufactured by several companies, including MEC,
which the Company acquired in 1982. Until 1991, MEC manufactured two types
of breast implants, polyurethane-covered silicone breast implants and
smooth-walled silicone breast implants. In these lawsuits, plaintiffs
typically contend that silicone in breast implants causes systemic disease
and/or local complications. Some plaintiffs with polyurethane-covered
silicone breast implants contend that the polyurethane component causes
injury, including cancer. Most of the disease claims involve non-specific
complaints such as chronic fatigue, aches and pains and other symptoms that
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commonly affect the population at large. Many women claim local
complications such as rupture, hardening or contracture, and disfigurement
or scarring. The plaintiffs typically seek compensatory damages for alleged
medical conditions and emotional distress as well as punitive damages. The
defendants have based their defense in part on the lack of credible
scientific evidence that breast implants cause disease. Many large scale
epidemiological studies have found no connection between breast implants
and the alleged diseases. Defendants also contend that warnings set forth
in the product literature adequately advised physicians and surgeons of the
risks of local complications.
The Company is a participant in the national class action Revised
Settlement Program approved on December 22, 1995, by the Honorable Sam C.
Pointer, Jr., formerly Chief Judge of the United States District Court for
the Northern District of Alabama (Lindsey, et al., v. Dow Corning, et al.,
CV-94-P-11558-S), before whom all federal breast implant cases were
consolidated for pretrial purposes. The Revised Settlement arises out of
the class action settlement approved by the Court on September 1, 1994. All
appeals from the Order approving the Revised Settlement have been
dismissed. On January 16, 1996, the Company, Baxter Healthcare Corporation
and Baxter International (collectively, Baxter), and Minnesota, Mining and
Manufacturing Company (3M) (hereinafter, the Settling Defendants) each paid
$125 million into a court-established fund as an initial reserve to pay
claims under the Revised Settlement. The Company has made and will make
additional contributions to the court-established fund.
The fifteen-year Revised Settlement, which ends on December 15, 2010,
provides benefits to those U.S. breast implant recipients who have had at
least one breast implant manufactured by one of the Settling Defendants (or
their related companies). For Current Claimants - those who submitted the
proper documentation to the Claims Office in Houston by the 1994 deadline -
benefits are payable regardless of the number of claimants seeking
compensation, and regardless of the total dollar value of approved claims.
For Other and Late Registrants - those who registered with the Claims
Office after the Current Claimant deadline - benefits are subject to an
aggregate $725 million limit for the three Settling Defendants over the
fifteen-year life of the program. The Company's individual aggregate limit
for such benefits is $400 million, $27.6 million annually for the first ten
years, and $24.8 million annually for the last five years. Amounts unused
in one year may be rolled over to pay claims in ensuing years. In the event
the dollar value of the claims subject to these limits were to exceed the
amounts available to pay claims, claimants may be afforded additional opt-
out rights but without the right to assert punitive or other statutory
multiple damage claims. The Company's obligations to make payments under
the Revised Settlement are not affected by the number of class members
electing to opt out of the settlement or the number of class members making
claims under it except to the extent of the above-mentioned dollar limits.
In addition to individual suits and the Lindsey class action, the Company
is a defendant, together with other defendants, in a class action certified
on April 11, 1996, in the Canadian province of British Columbia, on the
single issue of whether silicone gel breast implants are reasonably fit for
their intended purpose (Harrington v. Dow Corning Corporation et al.,
Supreme Court, British Columbia, C954330). A putative class action filed on
behalf of children allegedly exposed to silicone in utero and through
breast milk (Feuer, et al., v. McGhan, et al., U.S.D.C., E.D.N.Y., 93-
0146), which named all breast implant manufacturers and sought to establish
a medical monitoring fund, has been dismissed.
The Company entered into several other settlements of breast implant-
related claims. In July of 1995, the Company entered into a $20.5 million
(U.S. funds) class action settlement with plaintiff representatives in the
provinces of Ontario and Quebec. The class includes persons who have or had
MEC breast implants and who reside in Ontario and Quebec or who received
their MEC implants there. The settlement, which had minimal opt-outs, has
been approved by the provincial courts of Ontario and Quebec. In May of
1996, the Company, together with other Settling Defendants in the Revised
Settlement Program, entered into a $50 million settlement of claims
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asserted by certain health insurers based upon payments made or benefits
provided by insurers and represented health plans to participating
registrants that allegedly involve or relate to silicone gel breast
implants. The Company has contributed $22.5 million to the settlement,
which extinguishes the potential claims of the majority of the U.S.
commercial and non-governmental health care insurer market against both the
defendants and settlement class members. In November 1996, the benefits of
the Revised Settlement were extended, with certain modifications, to
foreign breast implant recipients. Pursuant to this settlement, the
Settling Defendants paid (on an equal basis) an aggregate of $25 million
into a court-approved settlement fund as an initial reserve for payment of
foreign claims. On January 5, 2000, the Court advised the parties that the
foreign settlement was overfunded, and directed the transfer of $13.4
million of the $25 million fund to the Revised Settlement. The Company's
share of the $13.4 million transferred was approximately $3 million.
The Company's insurers were notified of the breast implant claims and the
Revised Settlement, and a number reserved their rights or declined
coverage. The Company reached settlement with many of these insurers in
connection with coverage litigation filed by it in state court in Texas. In
1993, the Company offset its breast implant product liability special
charges by $1.0 billion of expected insurance proceeds (recorded as
Insurance Recoverable). Because of its belief that additional amounts of
insurance proceeds above that amount will be recovered, the Company
recorded an additional Insurance Recoverable in the fourth quarter of 1998
of approximately $100 million.
While there have been a few large judgments, defendants have won more
trials than they have lost, and the Company's trial experience has been
mostly favorable. The Company has maintained throughout this litigation
that breast implants do not cause disease, and medical and scientific data
support the Company's position. The Company's view has found support in the
trial courts. Courts in several states have ruled to exclude the testimony
of plaintiffs' experts concerning a causal link between silicone gel breast
implants and systemic illness on the ground that it fails to satisfy
standards for reliability under current U.S. Supreme Court guidelines. In
1998, a national science panel of four independent experts appointed by
Judge Pointer issued its unanimous report, based on a comprehensive review
of the medical and scientific literature, that there is no evidence linking
silicone breast implants and systemic disease. Similarly, in 1999, the
Institute of Medicine of the National Academy of Sciences - while
commenting that the frequency of local injuries is greater than expected -
concluded there is insufficient evidence to link silicone breast implants
with disease. The Company intends to dispose of the claims of remaining opt-
outs by continuing to implement its plan to settle cases at values it deems
acceptable, and to wage a vigorous defense, including taking cases to
trial, of those cases that do not settle at such values.
In the fourth quarter of 1993, the Company recorded a charge of $500
million before taxes ($310 million after taxes) in respect of breast
implant cases. The charge consisted of $1.5 billion for potential
liabilities and expenses, offset by $1.0 billion of expected insurance
proceeds. In the fourth quarters of 1994 and 1995, the Company recorded
additional special charges of $750 million before taxes ($488 million after
taxes) and $950 million before taxes ($590 million after taxes),
respectively, related to breast implant product liability claims. In the
fourth quarter of 1998, the Company recorded an additional special charge
to earnings in the amount of $800 million before taxes and increased its
insurance receivable in the amount of $100 million, resulting in a net
charge to earnings of $433 million after taxes in respect of breast implant
product liability claims.
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
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independent drugstores; state pharmaceutical actions; and purported class
actions on behalf of consumers. In the fourth quarter of 1998, the Company
recorded a special charge to earnings in the amount of $100 million before
taxes ($62 million after taxes) in respect of this prescription drug
litigation. 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.
Infant Formula Matters
- ----------------------
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. On November
29, 1999, the United States Supreme Court granted the plantiffs' petition.
TAXOL* Litigation
- -----------------
There is no composition of matter patent for paclitaxel (the active
ingredient in TAXOL*). In the United States, the Company is presently the
only manufacturer and marketer of a product containing paclitaxel. In 1997
and 1998, the Company filed several lawsuits alleging that a number of
generic drug companies infringed its patents covering certain methods of
administering paclitaxel when they filed abbreviated new drug applications
seeking regulatory approval to sell paclitaxel. The generic drug company
defendants are Boehringer Ingelheim Corp.; Ben Venue Laboratories, Inc.;
Bedford Laboratories; Immunex Corporation; Zenith Goldline Pharmaceuticals,
Inc.; Ivax Corporation; Mylan Pharmaceuticals, Inc.; Marsam
Pharmaceuticals, Inc.; and Schien Pharmaceuticals, Inc. These actions were
consolidated for discovery in the United States District Court for the
District of New Jersey. The Company does not assert a monetary claim
against any of the defendants, but seeks to prevent the defendants from
marketing paclitaxel in a manner that violates the Company's patents. The
defendants have asserted that they do not infringe the Company's patents
and that these patents are invalid and unenforceable. Some defendants also
asserted counterclaims seeking damages for alleged antitrust and unfair
competition violations.
On January 4, 2000, the District Court granted the Company's motion to
dismiss certain of the antitrust and unfair competition counterclaims. The
Company's motion for summary judgment on the remaining antitrust and unfair
competition counterclaims was denied on March 17, 2000.
On February 29, 2000, the District Court granted in part the generic
companies' summary judgment motions for invalidity by finding all claims of
the Company's patents in dispute invalid, except for claims limited to the
treatment of ovarian cancer. As a result of this ruling, the generic
companies may obtain U.S. Food and Drug Administration approval to market
paclitaxel solely for treatment of metastatic breast cancer after failure
of combination chemotherapy. The District Court's opinion left for
determination at trial the validity of the claims of the Company's patents
directed to the low dose, three-hour administration of paclitaxel for
ovarian cancer and denied the generic companies' summary judgment motion
arguing non-infringement of the Company's patents. The Company may pursue
its appeal rights in the future.
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The claims remaining in the lawsuits are currently scheduled for trial in
May 2000. It is not possible at this time to make a reasonable assessment
of the outcome of the remaining claims in these actions nor to reasonably
estimate the impact on TAXOL* sales or the amount of damages were the
Company not to prevail.
Environmental Matters
- ---------------------
The Company, together with others, is a party to, or otherwise involved in,
a number of proceedings brought by the Environmental Protection Agency or
comparable state agencies under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA or Superfund) or comparable state
laws directed at the cleanup of hazardous waste sites.
While it is not possible to predict with certainty the outcome of these
cases, it is the opinion of management that they will not have a material
adverse effect on the Company's operating results, liquidity or
consolidated financial position.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
12
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PART IA
------------
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
The following are the executive corporate officers and the other executive
officers of the Company:
Positions and Offices Presently
Name Age Held with the Company
- ---- ---- -----------------------------------
Charles A. Heimbold, Jr. 66 Chairman of the Board,Chief Executive
Officer and Director
Harrison M. Bains, Jr. 56 Treasurer and Vice President, Corporate Staff
Peter R. Dolan 44 President and Director
Donald J. Hayden, Jr. 44 Executive Vice President, E-Business and
Strategy, Corporate Staff
George P. Kooluris 55 Senior Vice President, Corporate Development,
Corporate Staff
Richard J. Lane 49 President, Worldwide Medicines Group
Sandra Leung 39 Secretary and Head of Office of Corporate
Conduct, Corporate Staff
John L. McGoldrick 59 President, Medical Devices Group and Executive
Vice President and General Counsel,Corporate
Staff
Michael F. Mee 57 Executive Vice President and Chief Financial
Officer, Corporate Staff
Christine A. Poon 47 President, International Medicines
Peter S. Ringrose, Ph.D. 53 Chief Scientific Officer and President,
Bristol-Myers Squibb Company Pharmaceutical
Research Institute
Stephen I. Sadove 48 President, Worldwide Beauty Care and
Nutritionals and Senior Vice President,
Corporate Staff
Frederick S. Schiff 52 Controller and Senior Vice President, Financial
Operations, Corporate Staff
John L. Skule 56 Senior Vice President, Corporate and
Environmental Affairs, Corporate Staff
Charles G. Tharp, Ph.D. 48 Senior Vice President, Human Resources,
Corporate Staff
Kenneth E. Weg 61 Vice Chairman and Director
13
<PAGE>
Persons who hold titles as elected corporate officers of the Company
were last elected or reelected to the office held at the general election
of officers by the Company's Board of Directors on May 4, 1999 unless
otherwise indicated. Officers of the Company serve in such capacity at the
pleasure of the Board of Directors of the Company.
CHARLES A. HEIMBOLD, JR. - From 1992 to 1996, President of the
Company. Mr. Heimbold has been a director of the Company since 1989, the
Chief Executive Officer of the Company since 1994 and Chairman of the Board
of Directors of the Company since 1995.
HARRISON M. BAINS, JR. - Mr. Bains has been Treasurer and Vice
President, Corporate Staff of the Company since 1988.
PETER R. DOLAN - From 1993 to 1995, President, Bristol-Myers Products,
a division of the Company, from 1995 to 1996, President, Mead Johnson
Nutritional Group, a division of the Company, from 1996 to 1997, President,
Nutritionals and Medical Devices Group, a division of the Company and from
1997 to 1998, President, Pharmaceutical Group - Europe, a division of the
Company, and from 1998 to 2000, Senior Vice President, Strategy and
Organizational Effectiveness, Corporate Staff. Mr. Dolan has been
President of the Company, a Director of the Company, a member of the Office
of the Chairman and Chairman of the Corporate Operating Committee since
January 2000.
DONALD J. HAYDEN, JR. - From 1994 to 1995, Vice President & General
Manager, Bristol-Myers Oncology/Immunology Division, a division of the
Company, in 1995, President Oncology & Immunology, a division of the
Company, from 1995 to 1997, Senior Vice President, Worldwide Franchise
Management and Business Development, a division of the Company, in 1997,
President, Intercontinental Pharmaceutical Group and Senior Vice President,
Worldwide Business Development, Worldwide Medicines Group, a division of
the Company, from 1997 to 1998, President, Intercontinental, Worldwide
Medicines Group, a division of the Company from 1998-2000, President,
Worldwide Medicines Group, a division of the Company. Mr. Hayden has been
Executive Vice President of the Company and a member of the Office of the
Chairman since January 2000.
GEORGE P. KOOLURIS - Mr. Kooluris has been Senior Vice President,
Corporate Development, Corporate Staff of the Company since 1994.
RICHARD J. LANE - From 1994 to 1995, consultant Schering-Plough
Corporation, a pharmaceutical company, in 1995, Senior Vice President
Marketing Operations, Sandoz Pharmaceuticals, a pharmaceutical,
nutritionals and chemicals company, from 1995 to 1997, Senior Vice
President Marketing, U.S. Pharmaceuticals, a division of the Company, in
1997, President, U.S. Primary Care, a division of the Company, from 1997 to
1998, President, U.S. Pharmaceuticals, a division of the Company, and from
1998 to 2000, President, U.S. Medicines and Global Pharmaceutical Group, a
division of the Company. Mr. Lane has been President, Worldwide Medicines
Group, a division of the Company, and a member of the Office of the
Chairman since January 2000.
SANDRA LEUNG - From 1994 to 1996, Senior Staff Attorney, Corporate
Staff, from 1996 to 1997, Assistant Counsel, Corporate Staff, from 1997 to
1999, Associate Counsel, 1999, Counsel, Corporate Staff. Ms. Leung has
been Secretary, Corporate Staff, and Head of the Office of Corporate
Conduct since 1999. Ms. Leung was elected to her current position on
September 14, 1999.
JOHN L. McGOLDRICK - From 1995 to 1997, General Counsel and Senior
Vice President, Corporate Staff of the Company and from 1997 to 1998,
General Counsel and Senior Vice President, Law and Strategic Planning,
14
<PAGE>
Corporate Staff of the Company, and General Counsel and Senior Vice
President, Corporate Staff of the Company and President, Medical Devices
Group, a division of the Company, since 1998. Mr. McGoldrick has been
Executive Vice President and General Counsel of the Company, President,
Medical Devices Group, a division of the Company, and a member of the
Office of the Chairman since January 2000.
MICHAEL F. MEE - From 1994 to 2000, Chief Financial Officer and Senior
Vice President, Corporate Staff of the Company. Mr. Mee has been Executive
Vice President and Chief Financial Officer, Corporate Staff of the Company
and a member of the Office of the Chairman since January 2000.
CHRISTINE A. POON - From 1994 to 1995, President & General Manager -
Canada, Pharmaceutical Group - Intercontinental, a division of the Company,
in 1995 Vice President OPS-Planning - Intercontinental & President, Canada,
a division of the Company, from 1995 to 1996, Vice President, Northern
Region Latin America, Intercontinental, a division of the Company, from
1996 to 1997, Senior Vice President, Intercontinental Northern Region &
Canada, a division of the Company, in 1997, President, Latin America and
Canada, Worldwide Pharmaceutical Group, a division of the Company and
President, Medical Devices Group, a division of the Company from 1997 to
1998. Ms. Poon has been President, Intercontinental Medicines Group,
division of the Company since 1998.
PETER S. RINGROSE, Ph.D. - From 1994 to 1996, Senior Vice President,
Worldwide Discovery and Medicinal Research Development, Europe of Pfizer
Inc., a health care company. From 1997-2000, President, Bristol-Myers
Squibb Pharmaceutical Research Institute, a division of the Company. Dr.
Ringrose has been Chief Scientific Officer of the Company and a member of
the Office of the Chairman since January 2000.
STEPHEN I. SADOVE - From 1994 to 1996, President, Worldwide Clairol, a
division of the Company, from 1996 to 1997, President, Worldwide Beauty
Care, a division of the Company. Mr. Sadove has been President, Worldwide
Beauty Care and Nutritionals, a division of the Company, since 1997 and
Senior Vice President, Corporate Staff since 1998. Mr. Sadove has been a
member of the Office of the Chairman since January 2000.
FREDERICK S. SCHIFF - From 1990 to 1997, Controller and Vice
President, Corporate Staff of the Company, from 1997 to 2000 Controller and
Vice President, Financial Operations, Corporate Staff of the Company. Mr.
Schiff has been Controller and Senior Vice President, Financial Operations,
Corporate Staff of the Company since March 2000.
JOHN L. SKULE - From 1993 to 1997, Vice President, Public Affairs,
Corporate Staff of the Company. Mr. Skule has been Senior Vice President,
Corporate and Environmental Affairs, Corporate Staff of the Company since
1998.
CHARLES G. THARP, Ph.D. - Dr. Tharp has been Senior Vice President,
Human Resources, Corporate Staff of the Company since 1993.
KENNETH E. WEG - From 1993 to 1996, President, Bristol-Myers Squibb
Pharmaceutical Group, a division of the Company, and from 1997 to 1998,
President, Worldwide Medicines Group, a division of the Company, and
Executive Vice President of the Company from 1995 to 1999. Mr. Weg has been
a Director of the Company since 1995, a member of the Office of the
Chairman since 1998 and Vice Chairman of the Company since 1999.
In addition to the positions and offices heretofore listed, all of the
foregoing executive corporate officers and other executive officers of the
Company are directors and/or officers of one or more affiliates of the
Company, with the exception of Mr. Skule and Dr. Tharp.
15
<PAGE>
PART II
------------
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.
MARKET PRICES
- -------------
Bristol-Myers Squibb common and preferred stocks are traded on the New York
Stock Exchange and the Pacific Exchange, Inc. (symbol: BMY). A quarterly
summary of the high and low market prices is presented below:
1999 1998
----------------- -------------------
High Low High Low
Common:
First Quarter $66 3/16 $58 1/2 $54 1/4 $44 29/32
Second Quarter 70 7/16 57 7/16 59 7/32 49 19/32
Third Quarter 75 15/16 64 5/8 62 19/32 48 15/16
Fourth Quarter 77 15/16 60 1/8 66 29/32 46 1/8
Preferred:
There were no trades of the Company's preferred stock except in the
first quarter of 1999 and 1998 when the stock traded at a price of $1,000
and $906, respectively.
HOLDERS OF COMMON STOCK
- -----------------------
The approximate number of record holders of common stock at December 31,
1999 was 120,358.
The number of record holders is based upon the actual number of holders
registered on the books of Bristol-Myers Squibb at such date and does not
include holders of shares in "street names" or persons, partnerships,
associations, corporations or other entities identified in security
position listings maintained by depository trust companies.
16
<PAGE>
DIVIDENDS
- ----------------
Dividend payments per share in 1999 and 1998 were:
Common Preferred
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- -------
First Quarter $.21 1/2 $.19 1/2 $.50 $.50
Second Quarter .21 1/2 .19 1/2 .50 .50
Third Quarter .21 1/2 .19 1/2 .50 .50
Fourth Quarter .21 1/2 .19 1/2 .50 .50
-------- -------- ----- -----
$.86 $.78 $2.00 $2.00
===== ===== ===== =====
In December 1999, the Board of Directors of the Company declared a
quarterly dividend of $.245 per share on the common stock of the Company,
payable on February 1, 2000 to shareholders of record as of January 8,
2000. The 2000 indicated annual payment of $.98 per share represents the
twenty-eighth consecutive year that the Company has raised the dividend on
its common stock.
17
<PAGE>
Item 6. SELECTED FINANCIAL DATA.
FIVE-YEAR FINANCIAL SUMMARY
OPERATING RESULTS
- -----------------
(in millions, except per share amounts)
1999 1998 1997 1996 1995
Net Sales $20,222 $18,284 $16,701 $15,065 $13,767
------- ------- ------- ------- -------
Expenses:
Cost of products sold 5,539 4,856 4,464 3,965 3,637
Marketing, selling and 4,578 4,418 4,173 3,925 3,670
administrative
Advertising and product 2,409 2,312 2,241 1,946 1,646
promotion
Research and development 1,843 1,577 1,385 1,276 1,199
Other(*) 86 853 (44) (60) 1,213
------- ------- ------- ------- -------
14,455 14,016 12,219 11,052 11,365
------- ------- ------- ------- -------
Earnings Before Income 5,767 4,268 4,482 4,013 2,402
Taxes(*)
Provision for income taxes 1,600 1,127 1,277 1,163 590
------- ------- ------- ------- -------
Net Earnings(*) $4,167 $3,141 $3,205 $2,850 $1,812
===== ===== ===== ===== =====
Dividends paid on common
and preferred stock $1,707 $1,551 $1,515 $1,507 $1,495
Earnings per common share - 2.10 1.58 1.61 1.42 .89
Basic(*)
Earnings per common share - 2.06 1.55 1.57 1.40 .89
Diluted(*)
Dividends per common share .86 .78 .76 .75 .74
(*) Includes a gain on the sale of a business of $201 million before
taxes, $125 million after taxes, in 1998; and $225 million before
taxes, $140 million after taxes, in 1997. Includes a special charge
for prescription drug pricing litigation of $100 million before
taxes, $62 million after taxes, or $.03 per common share, basic and
diluted, in 1998. Includes a special charge for pending and future
product liability claims of $700 million before taxes, $433 million
after taxes, or $.22 per common share, basic, and $.21 per common
share, diluted, in 1998; $950 million before taxes, $590 million
after taxes, or $.29 per common share, basic and diluted in 1995.
Includes a provision for restructuring of $201 million before taxes,
$125 million after taxes, in 1998; $225 million before taxes, $140
million after taxes, in 1997; and $310 million before taxes, $198
million after taxes, in 1995.
18
<PAGE>
Item 6. SELECTED FINANCIAL DATA. (Con't.)
FIVE-YEAR FINANCIAL SUMMARY
FINANCIAL POSITION AT DECEMBER 31
- ---------------------------------
(in millions, except per share amounts)
1999 1998 1997 1996 1995
Current assets $9,267 $8,782 $7,736 $7,528 $7,018
Property, plant and equipment 4,621 4,429 4,156 3,964 3,760
Total assets 17,114 16,272 14,977 14,685 13,929
Current liabilities 5,537 5,791 5,032 5,050 4,806
Long-term debt 1,342 1,364 1,279 966 635
Total liabilities 8,469 8,696 7,758 8,115 8,107
Stockholders' equity $8,645 $7,576 $7,219 $6,570 $5,822
Average common shares 1,984 1,987 1,992 2,007 2,024
outstanding - Basic
Average common shares
outstanding - Diluted 2,027 2,031 2,042 2,035 2,032
Reference is made to Note 2 Acquisitions and Divestitures, Note 7
Property, Plant and Equipment and Note 15 Litigation, appearing in the
Notes to Consolidated Financial Statements included in Part II, Item 8 of
this Form 10-K Annual Report.
19
<PAGE>
Item 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Summary
In 1999, Bristol-Myers Squibb surpassed $20 billion in annual global sales
and achieved record levels of sales and earnings. All four of the Company's
business segments achieved record levels of sales, bringing the worldwide
sales to $20.2 billion, an 11% increase over 1998. Domestic sales,
representing 63% of worldwide sales, increased 15% to $12.8 billion, while
international sales increased 3% to $7.4 billion. Sales growth resulted from
a 9% increase due to volume and a 2% increase from changes in selling prices.
Exchange rate fluctuations had no effect on worldwide sales, but did have an
unfavorable effect of 2% on international sales, primarily due to Latin
American and European currencies.
The Company's most important product lines experienced double-digit sales
increases on a worldwide basis. In fact, three products, PRAVACHOL*,
TAXOL* (paclitaxel) and GLUCOPHAGE exceeded $1 billion in sales, while six
additional products exceeded over one-half billion dollars in annual
sales. Bristol-Myers Squibb had 64 product lines with more than $50
million in annual sales, including 35 with more than $100 million in
annual sales.
Earnings before income taxes, excluding the 1998 special charge described
below, increased 14% to $5.8 billion in 1999. Net earnings, on this basis,
increased 15% to $4.2 billion; basic and diluted earnings per share each
increased 15% to $2.10 and $2.06, respectively. Over the past five years
net earnings and diluted earnings per share, excluding special charges,
have increased at compound annual growth rates of 12% and 13%,
respectively. In 1999, the Company reported 15% diluted earnings per share
growth over the prior year for each of the first three quarters and
excluding the 1998 special charge, a 16% growth rate in the fourth
quarter.
In 1999, consistent with the mission of the Company to extend and enhance
human life and develop the highest quality products, the Company invested
more than $1.8 billion in research and development, a 17% growth over the
prior year and growing at an annualized rate of 11% over the past
five years. This continuing investment has led to the discovery of
innovative new products and the development of new indications for
existing products including: VANLEV* (omapatrilat), a novel cardiovascular
compound for the treatment of hypertension, which is the first
antihypertensive ever to receive priority review from the U.S. Food and
Drug Administration (FDA) under the Prescription Drug User Fee Act;
a GLUCOPHAGE/glyburide product and GLUCOPHAGE XR Extended Release
Tablets, both for diabetes; VANIQA*, a topical treatment for excessive facial
hair in women; TEQUIN*, an advanced antibiotic for the treatment of multiple
common infections; an easier-to-digest, enteric-coated treatment form of VIDEX*
for HIV/AIDS; and TAXOL*,for adjuvant treatment of node-positive breast cancer.
Bristol-Myers Squibb's financial position remains strong. At December 31,
1999, the Company held almost $3.0 billion in cash, time deposits and
marketable securities. Cash provided by operating activities reached $4.5
billion, the highest in the last 10 years. Returns to shareholders
included dividend distributions of $1.7 billion and stock repurchases of
$1.4 billion. Dividends per common share were $.86 in 1999, increasing
from $.78 per share paid in 1998. The Company has continued to lower its
dividend payout ratio, which represents cash dividends paid per common
share divided by diluted earnings per common share, that amounted to 42%,
43% and 48% in 1999, 1998 and 1997, respectively, excluding the 1998
special charge. In December 1999, the Company announced a dividend
increase, the 28th consecutive year that dividends have increased, and
expanded the share repurchase program authorization by an additional
$2 billion. The 2000 indicated annual payment is $.98 per common share,
20
<PAGE>
a 14% increase over 1999, following a 10% dividend increase in 1999. As
further evidence of its strong financial position, Bristol-Myers Squibb is
one of only seven U.S. industrial companies to receive a triple-A
credit rating from both Moody's and Standard & Poor's.
Net Sales and Earnings
Worldwide sales increased 11% in 1999 to $20.2 billion, compared with
increases of 9% and 11% in 1998 and 1997, respectively. The consolidated
sales growth in 1999 resulted from a 9% increase due to volume, a 2%
increase due to changes in selling prices and no change due to foreign
exchange rate fluctuations. In 1998, the 9% increase in sales reflected a
10% increase due to volume, a 3% decrease due to foreign exchange rate
fluctuations and a 2% increase due to changes in selling prices. In 1997,
the 11% increase in sales reflected a 14% increase due to volume, a 3%
decrease due to foreign exchange rate fluctuations and no changes overall
from pricing activity. Domestic sales increased 15% in both 1999 and 1998,
and 14% in 1997, while international sales increased 3% in 1999 (5%
excluding foreign exchange), 2% in 1998 (9% excluding foreign exchange)
and 7% in 1997 (15% excluding foreign exchange). In general, the
businesses of the Company's industry segments are not seasonal.
Earnings before income taxes, excluding the 1998 charge described below,
increased 14% to $5,767 million from $5,068 million in 1998. Net earnings
on this basis increased 15% to $4,167 million compared to $3,636 million
in 1998. Basic earnings per share increased 15% to $2.10 from $1.83 in the
prior year and diluted earnings per share increased 15% to $2.06 from
$1.79. Net earnings margins, excluding the 1998 special charge, increased
to 20.6% in 1999 from 19.9% in 1998. As described in the notes to the
financial statements, in the fourth quarter of 1998, the Company recorded
a special charge of $800 million before taxes, $495 million after taxes,
or $.24 per diluted share, to augment the reserve for breast implant
liability and for prescription drug pricing litigation, offset by expected
insurance recoveries. The breast implant component of the charge was $700
million before taxes ($800 million of liability offset by insurance
receivables of $100 million), and the prescription drug pricing component
was $100 million before taxes. As a result of the special charge, 1998 net
earnings were $3,141 million, basic earnings per share were $1.58 and
diluted earnings per share were $1.55. In 1998, net earnings, excluding
the 1998 special charge, were $3,636 million, a 13% increase over 1997.
Basic earnings per share were $1.83 and diluted earnings per share were
$1.79, both increasing 14% over 1997. Net earnings margins, excluding the
special charge, increased to 19.9% in 1998 from 19.2% in 1997.
The effective income tax rate on earnings before income taxes was 27.7% in
1999, compared to 28.3% in 1998, excluding the special charge, and 28.5%
in 1997. The effective income tax rate has decreased since 1997 due to
increased income in lower tax rate jurisdictions.
As described in Note 2 to the financial statements, in 1999, the Company
acquired CAL-C-TOSE*, a leading nutritional milk modifier product in
Mexico. In 1998, the Company acquired Redmond Products, Inc., a leading
hair care manufacturer in the U.S. In 1998, the Company also acquired
Phytoervas, a line of premium retail hair care products in Brazil, and
Dong-A Biotech Co., Ltd., a marketer and distributor of pharmaceutical
products in South Korea. In 1997, the Company acquired Abeefe S.A., Peru's
largest pharmaceutical manufacturer and marketer. The Company also, in
1997, acquired CHOCO MILK*, Mexico's leading milk-based nutritional
supplement, and SAL DE UVAS PICOT*, a leading effervescent antacid product
in Mexico.
As described in Note 2 to the financial statements, in the fourth quarter
of 1999, the Company completed the sale of Laboratori Guieu, SpA, an
Italian-based gynecological, pediatric and dermatological products
business. In the first quarter of 1998, the Company divested its Ban brand
of anti-perspirants and deodorants. In the second quarter of 1998, the
Company divested A/S GEA, a Denmark-based generic drug business, and
21
<PAGE>
Hexachimie, a specialty chemical manufacturer based in France. In the
fourth quarter of 1997, the Company divested Linvatec Corporation, its
arthroscopy and powered surgical instrument business.
In January 2000, the Company announced its intention to sell its Matrix
Essentials, Inc. subsidiary, a manufacturer of professional hair care
products sold exclusively through beauty salons.
Expenses
Total costs and expenses, as a percentage of sales, improved over the last
three years to 71.5% in 1999 compared with 72.3% in 1998, excluding the
1998 special charge, and 73.2% in 1997.
As a percentage of sales, cost of products sold increased to 27.4% in 1999
compared to 26.6% in 1998, principally due to sales growth of lower margin
products from the Oncology Therapeutics Network (OTN), a specialty
distributor of anti-cancer medicines and related products. In 1998, cost
of products sold as a percentage of sales remained at the prior year's
level of 26.6% compared to 26.7% in 1997. Accordingly, the Company has
maintained its cost of goods sold as a percentage of sales consistently
over the last three years, excluding
its oncology distribution business.
Advertising and promotion expenses increased 4% over the prior year to
$2,409 million in 1999, primarily due to the continued support of
PRAVACHOL*, EXCEDRIN*, GLUCOPHAGE and PLAVIX in the Medicines segment and
for promotional campaigns related to existing products and new product
launches in the Beauty Care and Nutritional segments, including ENFAMIL*,
BOOST*, ULTRESS*, VIACTIV* Soft Calcium Chews and AUSSIE LAND*. In 1998,
advertising and promotion expenses increased 3% to $2,312 million from
$2,241 million in 1997. As a percentage of sales, advertising and
promotion expenses decreased to 11.9% in 1999 from 12.6% in 1998 and 13.4%
in 1997, reflecting an improvement in the effectiveness of the advertising
and promotion spending. This decreasing trend is primarily due to
reductions in direct-to-consumer advertising and increases in medical
education efforts in the Medicines segment.
Marketing, selling and administrative expenses, as a percentage of sales,
decreased to 22.6% in 1999 from 24.2% in 1998 and 25.0% in 1997. This
decreasing trend is a result of slower rates of increase in marketing,
sales force and general administrative expenses as compared to revenue
increases in the same period.
The Company's investment in research and development totaled $1,843
million in 1999, an increase of 17% over 1998, and an increase to 9.1% in
1999 as a percentage of sales, from 8.6% in 1998 and 8.3% in 1997. This
spending level reflects the Company's commitment to research over a broad
range of therapeutic areas and to clinical development of new products.
Over the past five years, research and development expenses have increased
at a compound annual growth rate of 11%. In 1999, research and development
spending dedicated to pharmaceutical products increased 18%, and was 12.6%
of pharmaceutical sales compared to 12.4% and 12.0% in 1998 and 1997,
respectively.
In 1999, eight regulatory approvals were obtained and 10 dossiers were
filed in the U.S. Most notably, in December 1999, the Company received FDA
approval for TEQUIN*, an advanced antibiotic for the treatment of multiple
common infections, including those of the respiratory tract. The Company
also received marketing clearance for new indications for several
products, including: in October 1999, the use of TAXOL* by injection for
adjuvant treatment of node-positive breast cancer following standard
chemotherapy; and, in September 1999, ZERIT* and VIDEX* were approved for
use as first-line components of a combination antiretroviral therapy
regimen for HIV-infected patients. In January 2000, the Company submitted
a New Drug Application (NDA) for VIDEX* (didanosine) a once-daily, easier-
to-digest, enteric-coated form of VIDEX*. In December 1999, the Company
22
<PAGE>
submitted a filing for VANLEV* (omapatrilat) in the U.S., European Union
and Canada. VANLEV* is the most clinically developed member of a new class
of cardiovascular compounds developed for the treatment of hypertension.
In 1999, the Company also initiated filings to gain marketing approval for
two antidiabetic drugs - a new oral antidiabetic combination drug that
leverages the benefits of two widely prescribed oral antidiabetic
medications, GLUCOPHAGE (metformin) and glyburide, a well-established
sulfonylurea antidiabetic, and GLUCOPHAGE XR (metformin hydrochloride)
Extended Release Tablets, a once-daily version of GLUCOPHAGE. A NDA for
VANIQA*, a topical treatment for excessive facial hair in women, was filed
in September 1999. In 1999, the Company announced a number of research
alliances, collaborations and commercialization agreements with other
companies, including a development, commercialization and collaboration
agreement with Otsuka Pharmaceutical Co., Ltd., for aripiprazole, a novel
drug under study in Phase III trials as a treatment for schizophrenia; an
alliance with Millennium Predictive Medicine, Inc., a subsidiary of
Millennium Pharmaceutical, Inc., in the emerging field of cancer
pharmacogenomics; and a licensing agreement and research collaboration
with OXiGENE, Inc., to develop and commercialize combretastatin anti-tumor
vascular targeting agents.
The Company recorded $201 million and $225 million in gains from the sale
of businesses in 1998 and 1997,
respectively. The Company also recorded restructuring charges of $201
million in 1998 and $225 million in 1997. These restructuring charges
consisted primarily of asset write-downs and employee-related costs
related to the consolidation and closure of plants and facilities.
Business Segments
All four of the Company's business segments - Medicines, Beauty Care,
Medical Devices and Nutritionals - reported sales increases during the
year.
Sales in the Medicines segment (Pharmaceuticals and Consumer Medicines),
which is Bristol-Myers Squibb's largest segment at 71% of the total
Company, increased 14% to $14,309 million in 1999. Sales growth resulted
from a 12% increase due to volume and a 3% increase from selling prices,
offset by a 1% decrease due to the effect of foreign exchange rate
fluctuations. Domestic sales increased 23% and international sales
increased 5%, excluding foreign exchange, primarily due to volume growth.
Sales of PRAVACHOL*, the Company's largest selling product, increased 4%
to $1,704 million. International sales increased 8% (10% excluding foreign
exchange) to $671 million. Domestic sales increased 1% to $1,033 million,
reflecting intensifying competition. The product's U.S. market share
leveled off at 15% for the year. In 1999, the results of the Prospective
Pravastatin Pooling Project, the largest statin drug analysis, found that
PRAVACHOL* consistently helps reduce the risk of recurrent coronary events
in women, older patients and patients with diabetes. The Company also
announced the launch of the Pravastatin or Atorvastatin Evaluation and
Infection Therapy, or PROVE IT, trial, the first major clinical trial to
compare the effects of PRAVACHOL* versus Lipitor in reducing the risk of
heart attacks and other cardiac events. This clinical trial also seeks to
further examine the role of infection in atherosclerosis.
Sales of TAXOL*, the Company's leading anti-cancer agent, increased 23% to
$1.5 billion as the product continued to benefit from increased use in
ovarian, breast and non-small cell lung cancer following standard
chemotherapy. In October 1999, the FDA approved the use of TAXOL* by
injection for adjuvant treatment of node-positive breast cancer following
standard chemotherapy. There is no composition of matter patent for
paclitaxel (the active ingredient in TAXOL*). In the United States, the
Company is presently the only manufacturer and marketer of a product
containing paclitaxel. In 1997 and 1998, the Company filed several
lawsuits alleging that a number of generic drug companies infringed its
patents covering certain methods of administering paclitaxel when they
23
<PAGE>
filed abbreviated new drug applications seeking regulatory approval to
sell paclitaxel. The defendants have asserted that they do not infringe
the Company's patents and that these patents are invalid and
unenforceable. Some defendants also asserted counterclaims seeking
damages for alleged antitrust and unfair competition violation. On January
4, 2000, the District Court granted the Company's motion to dismiss
certain of the antitrust and unfair competition counterclaims. The
Company's motion for summary judgment on the remaining antitrust and
unfair competition counterclaims was denied on March 17, 2000. On February
29, 2000, the District Court granted in part the generic companies'
summary judgment motions for invalidity by finding all claims of the
Company's patents in dispute invalid, except for claims limited to the
treatment of ovarian cancer. As a result of this ruling, the generic
companies may obtain U.S. Food and Drug Administration approval to market
paclitaxel solely for treatment of metastatic breast cancer after failure
of combination chemotherapy. The District Court's opinion left for
determination at trial the validity of the claims of the Company's patents
directed to the low dose, three-hour administration of paclitaxel for
ovarian cancer and denied the generic companies' summary judgment motion
arguing non-infringement of the Company's patents. The Company may pursue
its appeal rights in the future. The claims remaining in the lawsuits are
currently scheduled for trial in May 2000. It is not possible at this
time to make a reasonable assessment of the outcome of the remaining
claims in these actions nor to reasonably estimate the impact on TAXOL*
sales or the amount of damages were the Company not to prevail.
GLUCOPHAGE sales increased 53% to $1,317 million. GLUCOPHAGE, the leading
branded oral medication for treatment of non-insulin dependent (type 2)
diabetes, had a 1999 market share of 31.3%, up from 26.9% in the prior
year. In May 1999, the FDA approved AVANDIA in combination with GLUCOPHAGE
for the treatment of type 2 diabetes. AVANDIA is a product of SmithKline
Beecham, and is being co-promoted by Bristol-Myers Squibb in the U.S. The
Hatch-Waxman legislation exclusivity for GLUCOPHAGE expires in September
2000.
PLAVIX, a platelet aggregation inhibitor for the reduction of stroke,
heart attack and vascular death in atherosclerotic patients, reached sales
of $547 million for the year compared to $144 million in the prior year.
Sales of AVAPRO, an angiotensin II receptor blocker for the treatment of
hypertension, increased 107% to $255 million. AVAPRO and PLAVIX are
cardiovascular products that were launched from the Bristol-Myers Squibb
and Sanofi S.A. joint venture.
Sales of ZERIT* and VIDEX*, the Company's two anti-retroviral agents,
increased 10% to $605 million and 27% to $205 million, respectively.
ZERIT* is the most commonly prescribed thymidine nucleoside reverse
transcriptase inhibitor in HIV therapy in the U.S. In 1999, ZERIT* and
VIDEX* received regulatory approvals for use as first-line components of a
combination antiretroviral therapy regimen for HIV-infected patients.
Also, in November, the FDA approved once-daily dosing for VIDEX*.
Sales of BUSPAR*, the Company's novel anti-anxiety agent, increased 14% to
$605 million, while sales of SERZONE*, a novel antidepressant, increased
29% to $332 million. The exclusivity period for BUSPAR* expires in May
2000.
Sales of PARAPLATIN*, which is used in combination therapy for the
treatment of ovarian cancer, increased 14% to $600 million.
Sales of CEFZIL*, an oral cephalosporin used in the treatment of
respiratory infections and sinusitis, increased 12% to $402 million.
MONOPRIL*, a second-generation angiotensin converting enzyme (ACE)
inhibitor with once-a-day dosing, had increased sales of 12% reaching $424
million.
24
<PAGE>
Sales from the Oncology Therapeutics Network, a specialty distributor of
anti-cancer medicines and related products, reached $894 million for the
year, an increase of 36% over 1998.
International sales of MAXIPIME*, a fourth-generation injectable
cephalosporin, increased 28% to $133 million. Effective January 1, 1999,
Dura Pharmaceuticals, Inc. was appointed the exclusive domestic
distributor for MAXIPIME*.
Sales of EXCEDRIN* remained at prior year levels of $240 million. In
October 1999, the FDA expanded the EXCEDRIN* Migraine indication from the
treatment of mild to moderate migraine pain to encompass the severe pain
and associated symptoms of the full migraine syndrome. Sales of BUFFERIN*
increased 18% to $147 million due to increased sales in Japan, while sales
of EFFERALGAN*, an effervescent analgesic sold primarily in France,
increased 9% to $166 million.
Sales of captopril, an ACE inhibitor sold primarily under the trademark
CAPOTEN*, declined 24% to $484 million due to the loss of patent
exclusivity in international markets.
In 1998, Medicines segment sales increased 12% over 1997 levels. Increases
in sales of PRAVACHOL*, TAXOL*, PARAPLATIN*, ZERIT*, MONOPRIL*, BUSPAR*,
CEFZIL*, GLUCOPHAGE, SERZONE*, VIDEX*, AVAPRO, PLAVIX and EXCEDRIN* were
partially offset by decreases in sales of CAPOTEN*.
The margin on earnings before taxes in the Medicines segment improved to
28.1% in 1999 from 27.1% in 1998, as reductions, as a percentage of sales,
in sales force expenditures, advertising and promotion spending and
general administrative expenses were partially offset by increases in cost
of products sold. In 1998, the margin on earnings before taxes of 27.1%
remained at the prior year level as increases in research and development
and sales force expenditures were offset by decreases in advertising and
promotional spending and general administrative expenses.
Sales in the Beauty Care segment increased 3% in 1999 to $2,381 million,
reflecting a 2% increase due to volume, a 2% increase due to pricing and a
1% decrease due to foreign exchange rate fluctuations. International sales
increased 7% (9% excluding the effect of foreign exchange) and domestic
sales increased 1%. A softening in market demand in combination with other
operating factors, including the introduction of a new demand management
manufacturing system, slowed domestic shipments during the year. The
Company's Clairol division continues to be the number one hair products
Company in the U.S. Hair care product sales increased 6% in 1999,
primarily due to sales of the HERBAL ESSENCES* complete line of shampoos,
conditioners, styling aids, body wash and facial care. Sales of the HERBAL
ESSENCES* line increased 14% to $637 million due to the launch of the
HERBAL ESSENCES* facial care line in the U.S. and the launch of the HERBAL
ESSENCES* hair care line in Japan, Germany and Brazil. HERBAL ESSENCES* is
the number three brand in the total shampoo and conditioner market in the
U.S., and is number four in body wash. Sales of DAILY DEFENSE* increased
44% to $118 million following its launch into international markets. Sales
of AUSSIE* products were $124 million, an increase of 15% over the prior
year. Haircolor sales increased 1% with increases in NICE 'N EASY* of 3%
to $187 million and NATURAL INSTINCTS* of 9% to $94 million, partially
offset by a decrease of 8% in HYDRIENCE* to $92 million.
In 1998, sales in the Beauty Care segment increased 22% from 1997 levels,
primarily due to increased sales of hair care products, led by HERBAL
ESSENCES*.
The margin on earnings before taxes in the Beauty Care segment decreased
to 10.4% in 1999, from 14.9% in 1998, primarily due to an increase, as a
percentage of sales, in cost of products sold reflecting a change in
25
<PAGE>
product mix, higher levels of operating costs, and slower product
shipments compared to the prior year. Increased promotional expenditures
for new product introductions and support for existing products, including
ULTRESS* and AUSSIE LAND*, also contributed to the decline. In 1998, the
margin on earnings before taxes improved to 14.9% from 14.2% in 1997
primarily due to higher volumes and manufacturing efficiencies, partially
offset by investment spending behind new product introductions.
Sales in the Medical Devices segment increased 4% to $1,682 million,
excluding sales from a 1998 distribution agreement with the acquirer of
Zimmer's divested arthroscopy and powered surgical instrument business.
Including the sales from the 1998 distribution agreement, Medical Devices
sales increased 2%, reflecting a 1% increase due to volume, a 1% increase
due to the effect of foreign exchange and no effect from changes in
selling prices. Domestic sales increased 2% and international sales
increased 3% (1% excluding the effect of foreign exchange). Worldwide
sales of knee prosthetic joint replacements in the Company's Zimmer
division increased 11% and hip replacement sales increased 12%. The
Company's ConvaTec division is the worldwide market share leader in ostomy
and advanced wound care products. ConvaTec sales decreased 1% to $719
million while remaining at prior year levels excluding foreign exchange.
Sales of ostomy products decreased 3% and sales of wound care products
were slightly below prior year levels.
In 1998, worldwide sales in the Medical Devices segment, excluding the
December 1997 divestiture of Zimmer's arthroscopy and surgical powered
instrument business, increased 7%.
The margin on earnings before taxes in the Medical Devices segment
improved to 21.7% in 1999 from 20.4% in 1998, primarily due to a decrease
in cost of products sold as a result of improved manufacturing processes.
The margin on earnings before taxes in the Medical Devices segment
improved to 20.4% in 1998 from 19.1% in 1997, due to decreases, as a
percentage of sales, in other marketing and general administrative
expenses, partially offset by increases in cost of products sold due to
higher costs for products sold under a distribution agreement with the
acquirer of Linvatec.
Sales in the Nutritionals segment increased 5% to $1,850 million,
reflecting a 5% increase due to volume, a 1% decrease due to the effect of
foreign exchange rate fluctuations primarily in Latin America and a 1%
increase due to changes in selling prices. International sales increased
2% (5% excluding the effect of foreign exchange), and domestic sales
increased 7%. Mead Johnson continues to be the leader in the worldwide and
U.S. infant formula markets. Total infant formula sales increased 2% to
$1,233 million (3% excluding foreign exchange). Sales of ENFAMIL*, the
Company's largest selling infant formula, increased 9% to $735 million
worldwide. Adult consumer nutritional sales increased 27% as a result of a
32% increase in sales of BOOST*, and $29 million in sales of VIACTIV* Soft
Calcium Chews launched in December 1998.
In 1998, worldwide sales of Nutritionals decreased 2% from 1997 levels,
primarily due to decreases in infant formula sales partially offset by
growth of NUTRAMIGEN*, LACTO FREE*, BOOST* and CHOCO MILK*.
The margin on earnings before taxes in the Nutritionals segment decreased
to 20.3% in 1999 from 21.1% in 1998, primarily due to increased
advertising and promotion expenditures for ENFAMIL*, BOOST* and VIACTIV*
Soft Calcium Chews. The margin on earnings before taxes in the
Nutritionals segment improved to 21.1% in 1998 from 20.1% in 1997 due to
decreases, as a percentage of sales, in cost of products sold, resulting
from improved manufacturing efficiencies.
Geographic Areas
Bristol-Myers Squibb products are available in virtually every country in
26
<PAGE>
the world; its largest markets are the U.S., France, Japan, Germany and
Canada.
Sales in the United States, net of inter-area sales, increased 15% in
1999. Sales in the Medicines and Beauty Care segments comprised 72% and
12%, respectively, of the region's sales. Products with strong growth in
the region included GLUCOPHAGE, TAXOL*, ENFAMIL*, BUSPAR*, PLAVIX,
PARAPLATIN* and AVAPRO. The margin on earnings before taxes decreased to
24.2% in 1999 from 25.3% in 1998 primarily due to increases, as a
percentage of sales, in cost of products sold. In 1998, sales in the
United States increased 15%, net of inter-area sales, primarily due to
growth of products from the Medicines segment including GLUCOPHAGE,
TAXOL*, PRAVACHOL* and hair care products from the Beauty Care segment.
The margin on earnings before taxes increased to 25.3% in 1998 from 23.4%
in 1997 primarily due to decreases, as a percentage of sales, in cost of
products sold, advertising and general administrative expenses.
Sales in Europe, Mid-East and Africa, net of inter-area sales, increased
2% (4% excluding foreign exchange). The Medicines segment comprised nearly
79% of sales in the region. Products with strong growth in the region
included PRAVACHOL*, TAXOL*, PLAVIX, AVAPRO and DAILY DEFENSE*. Increases
in sales of these products were partially offset by decreases in sales of
ostomy supplies and of CAPOTEN*, due to the loss of exclusivity and
generic competition. The margin on earnings before taxes increased to
25.2% in 1999 from 23.4% in 1998, primarily due to improved sales force
effectiveness as evidenced by lower sales force expense, as a percentage
of sales, and a decrease in promotional expenses. In 1998, sales in
Europe, Mid-East and Africa, net of inter-area sales, increased 4% (6%
excluding foreign exchange), due to sales growth of products, including
TAXOL*, ZERIT*, PRAVACHOL* and HERBAL ESSENCES*. These increases were
partially offset by decreases in sales of CAPOTEN* due to loss of
exclusivity. The margin on earnings before taxes decreased to 23.4% in
1998 from 23.8% in 1997 due to increases, as a percentage of sales, in
promotional expenses.
Sales in Other Western Hemisphere countries, net of inter-area sales and
excluding foreign exchange, increased 6% in 1999. The Medicines and Beauty
Care segments comprised nearly 57% and 21%, respectively, of the region's
sales. Including foreign exchange, sales decreased 5% primarily resulting
from decreases in sales of CAPOTEN* and PRAVACHOL*, partially offset by
growth in HERBAL ESSENCES*, ENFAMIL*, DAILY DEFENSE*, AVAPRO and PLAVIX.
The margin on earnings before taxes decreased to 6.5% in 1999 from 12.8%
in 1998 as a result of the currency devaluation in Brazil and regional
economic downturns. In 1998, sales in Other Western Hemisphere countries,
net of inter-area sales, increased 11% (20% excluding foreign exchange),
due to the introduction of HERBAL ESSENCES* and CHOCO MILK* to the region.
The margin on earnings before taxes decreased to 12.8% in 1998 from 14.2%
in 1997, reflecting increases, as a percentage of sales, in cost of
products sold.
Sales in the Pacific region, net of inter-area sales, increased 17% in
1999 (8% excluding foreign exchange). The favorable effect from foreign
exchange was primarily experienced in Japan. The Medicines and
Nutritionals segments comprised 49% and 20%, respectively, of the region's
sales. Products with strong growth included BUFFERIN*, TAXOL*, HERBAL
ESSENCES* and PARAPLATIN*. TAXOL* sales improved 90% over the prior year
following the Japanese Ministry of Health and Welfare clearance of new
indications for TAXOL* as a treatment for breast and non-small cell lung
cancers. In 1999, margin on earnings before taxes increased to 4.9%
primarily due to a decrease, as a percentage of sales, in advertising and
promotion spending. As a result of economic downturns and unfavorable
fluctuations in exchange rates, earnings before taxes in the Pacific
region were minimal in 1998 and sales, net of inter-area sales, decreased
11%. Excluding foreign exchange, sales in 1998 increased 5% as a result of
increases in TAXOL* and HERBAL ESSENCES*, partly offset by decreases in
infant formulas and CAPOTEN*.
27
<PAGE>
Financial Instruments
Cash and cash equivalents, time deposits and marketable securities totaled
almost $3.0 billion at December 31, 1999, compared to $2.5 billion and
$1.8 billion at December 31, 1998 and 1997, respectively. Working capital
continued to improve in 1999 with $3.7 billion at December 31, 1999,
compared to $3.0 billion and $2.7 billion at December 31, 1998 and 1997,
respectively. Cash and cash equivalents, time deposits and marketable
securities, and the conversion of other working capital items are expected
to fund near-term operations of the Company.
The Company is exposed to market risk due to changes in currency exchange
rates. To reduce this risk, 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.
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. The Company's
primary foreign currency exposures in relation to the U.S. dollar are the
European currencies and the Japanese yen.
The table below summarizes the Company's outstanding foreign exchange
option contracts as of December 31, 1999. The fair value of option
contracts, which will change over time, is estimated based on currency
rates and other relevant market factors. The fair value of option
contracts should be viewed in relation to the fair value of the underlying
hedged transactions and the overall reduction in exposure to adverse
fluctuations in foreign currency exchange rates.
Weighted
Average
Dollars in Millions Strike Notional Carrying Fair
Price Amount Value Value Maturity
Option Contracts
Purchased
Right to Sell:
Euro 1.07 $971 $10 $56 2000
Mexican Peso 11.16 212 6 - 2000
Canadian Dollar 1.48 111 1 - 2000
British Pound 1.64 66 1 2 2000
Brazilian Real 1.94 63 5 2 2000
Australian Dollar 0.65 53 1 1 2000
Greek Drachma 316.26 40 1 2 2000
Swiss Franc 1.48 28 - 2 2000
Other Currencies Various 77 3 4 2000
Right to buy:
Japanese Yen 114.49 123 - 19 2000
British Pound 1.61 18 - 1 2000
----- ---- ----
$1762 $28 $89
===== ==== ====
28
<PAGE>
At December 31, 1998, the Company held right-to-sell option contracts with
an aggregate notional amount, carrying value and fair value of $1,042
million, $22 million and $18 million, respectively. These contracts
primarily related to option contracts with the right to sell French francs
and Deutsche marks. Other contracts at December 31, 1998 included right-to-
buy option contracts, primarily to buy Japanese yen for U.S. dollars and
British pounds for Deutsche marks, as well as other option contracts, that
include the right to buy and sell several currencies. These contracts had
an aggregate notional amount, carrying value and fair value of $265
million, $5 million and $13 million, respectively.
The Company maintains cash and cash equivalents, time deposits and
marketable securities with various financial institutions. These financial
institutions are located primarily in the U.S. and Europe. Company policy
is designed to limit exposure to any one financial institution.
Recently Issued Accounting Standards
In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, Accounting for Derivative
Instruments and Hedging Activities - Deferral of the effective date of
FASB Statement No. 133. This statement defers the effective date of SFAS
133, Accounting for Derivative Instruments and Hedging Activities, to
fiscal years beginning after June 15, 2000. This statement requires that
companies recognize all derivatives as either assets or liabilities on the
balance sheet and measure these instruments at fair value. The Company
will adopt this statement on January 1, 2001 and is currently evaluating
its impact on the Company's existing accounting policies and financial
reporting disclosures.
Euro Conversion
On January 1, 1999, certain members of the European Union established
fixed conversion rates between their
existing currencies and the European Union's common currency, known as the
euro. It is planned that by July 1, 2002, the participating countries will
withdraw all currencies and exclusively use the euro.
The Company has committed resources to conduct assessments and to take
corrective actions to ensure it is prepared for the introduction of the
euro. The Company is actively addressing the many areas involved with the
introduction of the euro, including information management, finance, legal
and tax. This review includes the conversion of information technology,
business and financial systems, evaluating currency risk and the effect on
the Company's financial instruments, as well as the impact on the pricing
and distribution of Company products.
The Company believes the effect of the introduction of the euro, as well
as any related cost of conversion, will not have a material impact on the
results of operations, financial condition and cash flows.
Financial Position
Cash and cash equivalents, time deposits and marketable securities at
December 31, 1999 were denominated primarily in U.S. dollar instruments
with near-term maturities. The average interest yield on cash and cash
equivalents was 5.9% at December 31, 1999, while interest yields on time
deposits and marketable securities averaged 4.8% at December 31, 1999.
Short-term borrowings and long-term debt at December 31, 1999 are
denominated primarily in U.S. dollars; however, the Company had $177
million of commercial paper outstanding at December 31, 1999. This
29
<PAGE>
commercial paper has original maturities not exceeding 270 days and is
denominated in Euros and U.S. dollars. Also included is Japanese yen long-
term debt of $280 million.
Internally generated cash provided by operations was $4.5 billion in 1999,
$4.1 billion in 1998 and $2.5 billion in 1997. Cash provided by operations
continued to be the Company's primary source of funds to finance operating
needs and expenditures for new plants and equipment. As part of the
Company's ongoing commitment to improve plant efficiency and maintain
superior research facilities, the Company has invested $2.3 billion in
capital expansion over the past three years. Cash flow from operations
also included product liability payments, net of insurance recoverable
receipts of $667 million in 1999, $519 million in 1998 and $561 million in
1997.
Cash provided by operations also was used over the past three years to pay
dividends of $4.8 billion, to finance $4.1 billion of the Company's share
repurchase program and to fund business acquisitions at a cost of $613
million. The Company's share repurchase program authorizes the Company to
purchase common stock from time to time in the open market or through
private transactions as market conditions permit. During 1999, the Company
purchased 22.3 million shares of common stock at a cost of $1.4 billion,
bringing the total shares acquired since the program's inception to 299.6
million. In December 1999, the Company announced a $2 billion increase in
the stock repurchase program authorization. During the past three years,
the Company has repurchased 86.5 million shares at a cost of $4.1 billion.
In May 1999, at the annual meeting of stockholders, the stockholders
approved the increase in the number of shares of common stock authorized
to 4.5 billion shares.
Employment levels of 54,500 at December 1999 essentially remained at prior
year levels of 54,700. Sales per employee improved to $371 thousand in
1999 from $335 thousand in 1998 and $310 thousand in 1997.
Return on Stockholders' Equity improved over the last three years and was
51.4% in 1999, 49.2% in 1998, excluding the special charge, and 46.5% in
1997.
Forward Looking Information
Certain statements in this Form 10-K Annual Report may constitute forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements involve a number of risks,
uncertainties and other factors that could cause actual results to differ
materially from expected and historical results. Certain factors that may
affect the Company's operations and prospects are discussed in Exhibit 99
to this Form 10-K Annual Report.
30
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF EARNINGS and COMPREHENSIVE INCOME
(in millions, except per share amounts)
Year Ended December 31,
--------------------------
EARNINGS 1999 1998 1997
- --------------- ------- ------- ------
Net Sales $20,222 $18,284 $16,701
------ ------- ------
Expenses:
Cost of products sold 5,539 4,856 4,464
Marketing, selling, administrative and other 4,578 4,418 4,173
Advertising and product promotion 2,409 2,312 2,241
Research and development 1,843 1,577 1,385
Special Charge - 800 -
Provision for restructuring - 201 225
Gain on sale of businesses - (201) (225)
Other 86 53 (44)
------ ------- -----
14,455 14,016 12,219
------ ------- -----
Earnings Before Income Taxes 5,767 4,268 4,482
Provision for income taxes 1,600 1,127 1,277
------ ------- -----
Net Earnings $4,167 $3,141 $3,205
===== ===== =====
Earnings Per Common Share
Basic $2.10 $1.58 $1.61
Diluted $2.06 $1.55 $1.57
Average Common Shares Outstanding
Basic 1,984 1,987 1,992
Diluted 2,027 2,031 2,042
Dividends Per Common Share $.86 $.78 $.76
COMPREHENSIVE INCOME
- --------------------
Net Earnings $4,167 $3,141 $3,205
Other Comprehensive Income:
Foreign currency translation (212) (86) (195)
Tax effect 18 (3) 23
------ ------- -----
Total Other Comprehensive Income (194) (89) (172)
------- ------- ------
Comprehensive Income $3,973 $3,052 $3,033
===== ===== =====
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(in millions)
Year Ended December 31,
--------------------------
1999 1998 1997
------ ------ ------
Retained Earnings, January 1 $12,540 $10,950 $9,260
Net earnings 4,167 3,141 3,205
------ ------ ------
16,707 14,091 12,465
Less dividends 1,707 1,551 1,515
------- ------- -------
Retained Earnings, December 31 $15,000 $12,540 $10,950
====== ====== ======
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEET
ASSETS
(dollars in millions)
December 31,
-------------------------
1999 1998 1997
----- ----- -----
Current Assets:
Cash and cash equivalents $2,720 $2,244 $1,456
Time deposits and marketable securities 237 285 338
Receivables, net of allowances 3,272 3,190 2,973
Inventories 2,126 1,873 1,799
Prepaid expenses 912 1,190 1,170
------- ------- -------
Total Current Assets 9,267 8,782 7,736
------- ------- -------
Property, Plant and Equipment, net 4,621 4,429 4,156
Insurance Recoverable 468 523 619
Excess of cost over net tangible assets
received in business acquisitions 1,502 1,587 1,625
Other Assets 1,256 951 841
------- ------- -------
Total Assets $17,114 $16,272 $14,977
===== ===== =====
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(dollars in millions)
December 31,
-------------------------
1999 1998 1997
LIABILITIES ------- ------- -------
- -----------
Current Liabilities:
Short-term borrowings $432 $482 $543
Accounts payable 1,657 1,380 1,017
Accrued expenses 2,367 2,302 1,939
Product liability 287 877 865
U.S. and foreign income taxes payable 794 750 668
------- ------ -------
Total Current Liabilities 5,537 5,791 5,032
Other Liabilities 1,590 1,541 1,447
Long-Term Debt 1,342 1,364 1,279
------- ------ -------
Total Liabilities 8,469 8,696 7,758
------- ------ -------
STOCKHOLDERS' EQUITY
- --------------------
Preferred stock, $2 convertible series:
Authorized 10 million shares; issued
and outstanding 10,977 in 1999, 11,684
in 1998 and 12,936 in 1997, - - -
liquidation value of $50 per share
Common stock, par value of $.10 per share:
Authorized 4.5 billion shares; issued
2,192,970,504 in 1999, 2,188,316,808 219 219 108
in 1998 and 1,083,253,703 in 1997
Capital in excess of par value of stock 1,533 1,075 544
Other Comprehensive Income (816) (622) (533)
Retained earnings 15,000 12,540 10,950
------- ------ -------
15,936 13,212 11,069
Less cost of treasury stock - 212,164,851
common shares in 1999, 199,550,532 in 1998 7,291 5,636 3,850
and 90,069,383 in 1997
------- ------ -------
Total Stockholders' Equity 8,645 7,576 7,219
------- ------ -------
Total Liabilities and Stockholders' Equity $17,114 $16,272 $14,977
====== ====== ======
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in millions)
Year Ended December
31,
--------------------------
1999 1998 1997
------- ------- -------
Cash Flows From Operating Activities:
Net earnings $4,167 $3,141 $3,205
Depreciation and amortization 678 625 591
Special Charge - 800 -
Provision for restructuring - 201 225
Gain on sale of businesses - (201) (225)
Other operating items (79) (1) 33
Receivables (176) (253) (479)
Inventories (317) (139) (288)
Accounts payable and accrued expenses 243 242 (179)
Income taxes 738 414 318
Product liability (726) (715) (795)
Insurance recoverable 59 196 234
Other assets and liabilities (117) (190) (164)
-------- -------- -------
Net Cash Provided by Operating Activities 4,470 4,120 2,476
------- ------- -------
Cash Flows From Investing Activities:
Proceeds from sales of time deposits and 51 309 530
marketable securities
Purchases of time deposits and marketable (4) (256) (363)
securities
Additions to fixed assets (709) (788) (767)
Proceeds from sale of business 134 417 370
Acquisition of businesses (266) (93) (254)
Other, net 35 65 (48)
------- ------- --------
Net Cash Used in Investing Activities (759) (346) (532)
-------- -------- --------
Cash Flows From Financing Activities:
Short-term borrowings (26) (81) 81
Long-term debt (54) 73 328
Issuances of common stock under stock plans 8 140 117
Purchases of treasury stock (1,419) (1,561) (1,162)
Dividends paid (1,707) (1,551) (1,515)
-------- -------- --------
Net Cash Used in Financing Activities (3,198) (2,980) (2,151)
-------- ------- -------
Effect of Exchange Rates on Cash (37) (6) (18)
------- ------- -------
Increase (Decrease) in Cash and Cash 476 788 (225)
Equivalents
Cash and Cash Equivalents at Beginning of 2,244 1,456 1,681
Period ------- ------- -------
Cash and Cash Equivalents at End of Period $2,720 $2,244 $1,456
===== ===== =====
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 1 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.
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.
Excess of Cost over Net Tangible Assets - The excess of cost over net
tangible assets received in business acquisitions is being amortized on
a straight-line basis over periods not exceeding 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 that the excess of cost over net tangible assets is appropriately
valued.
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.
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
36
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 2 ACQUISITIONS AND DIVESTITURES
- -------------------------------------
In June 1999, the Company acquired Cal-C-Tose, a nutritional milk
modifier. In September 1999, the Company entered into a development
and commercialization agreement for aripiprazole, a novel drug under
study in Phase III trials as a treatment for schizophrenia, with
Otsuka Pharmaceutical Co., Ltd. In December 1999 the Company
completed the sale of Laboratori Guieu, a gynecological, pediatric
and dermatological products business headquartered in Milan Italy.
The gain on the sale was not material.
In 1998 the Company acquired Redmond Products, Inc., a leading hair
care manufacturer in the United States, and Phytoervas, a line of
premium retail shampoos and conditioners in Brazil. The Company also
in 1998 acquired Dong-A-Biotech Co., Ltd., a marketer and distributor
of pharmaceutical products in South Korea. In 1998, the Company
divested its Ban brand of anti-perspirants and deodorants, A/S GEA, a
Denmark-based generic drug business, and Hexachimie, a specialty
chemical manufacturer based in France, resulting in a combined pretax
gain of $201 million.
In 1997, the Company completed the sale of Linvatec Corporation, its
arthroscopy and surgical powered instrument business, resulting in a
pretax gain of $225 million. The Company acquired Abeefe S.A.,
Peru's largest pharmaceutical manufacturer and marketer of a broad
range of prescription and nonprescription anti-infective,
respiratory, anti-inflammatory and dermatological products. The
Company also acquired CHOCO MILK*, Mexico's leading milk-based
nutritional supplement, and SAL DE UVAS PICOT*, a leading
effervescent antacid product in Mexico.
Note 3 EARNINGS PER SHARE
- --------------------------
The computations for basic earnings per common share and diluted
earnings per common share are as follows:
Earnings per Common Share - Basic:
- -----------------------------------
Year Ended
December 31,
-------------
Dollars in Millions (Except per Share 1999 1998 1997
Amounts) ------ ------ ------
- -------------------------------------
Net Earnings $4,167 $3,141 $3,205
==== ==== ====
Average Common Shares Outstanding 1,984 1,987 1,992
==== ==== ====
Earnings Per Common Share - Basic $2.10 $1.58 $1.61
==== ==== ====
37
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Earnings per Common Share - Diluted:
- ------------------------------------
Year Ended December 31,
-------------------------
Dollars in Millions (Except per Share 1999 1998 1997
Amounts) ------ ------ ------
- -------------------------------------
Net Earnings $4,167 $3,141 $3,205
==== ==== ====
Average Common Shares Outstanding 1,984 1,987 1,992
Incremental Shares Outstanding Assuming the
Exercise of Dilutive Stock Options 43 44 50
----- ----- -----
Average Common Shares Outstanding 2,027 2,031 2,042
===== ===== =====
Earnings Per Common Share - Diluted $2.06 $1.55 $1.57
===== ===== =====
Note 4 OTHER INCOME AND EXPENSES
- ---------------------------------
Year Ended December 31,
---------------------------
1999 1998 1997
------ ------ ------
Interest income $107 $87 $106
Interest expense (130) (154) (118)
Other - net (63) 14 56
----- ----- -----
$(86) $(53) $44
==== ==== ====
Cash payments for interest were $119 million, $157 million and $110
million in 1999, 1998 and 1997, respectively.
38
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 5 PROVISION FOR INCOME TAXES
- ----------------------------------
The components of earnings before income taxes were:
December 31,
---------------------------
1999 1998 1997
----- ----- -----
U.S. $3,644 $2,623 $2,858
Non-U.S. 2,123 1,645 1,624
----- ------ ------
$5,767 $4,268 $4,482
===== ===== =====
The provision for income taxes consisted of:
December 31,
---------------------------
1999 1998 1997
----- ----- -----
Current:
U.S. $780 $827 $633
Non-U.S. 405 346 471
----- ----- -----
1,185 1,173 1,104
===== ===== =====
The components of prepaid and deferred income taxes consisted of:
December 31,
---------------------------
1999 1998 1997
----- ----- -----
Deferred:
U.S. 365 (64) 220
Non-U.S. 50 18 (47)
----- ------ -----
415 (46) 173
----- ------ -----
$1,600 $1,127 $1,277
===== ===== =====
39
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Income taxes paid during the year were $805 million, $654 million and
$898 million in 1999, 1998 and 1997, respectively.
The Company's provision for income taxes in 1999, 1998 and 1997 was
different from the amount computed by applying the statutory United
States Federal income tax rate to earnings before income taxes, as a
result of the following:
% of Earnings
Before Income Taxes
----------------------
1999 1998 1997
----- ----- -----
U.S. statutory rate 35.0% 35.0% 35.0%
Foreign (5.0) (4.4) (2.6)
Effect of operations in Puerto Rico (1.8) (2.5) (2.9)
Special charge - (.6) -
State and local taxes .6 .6 .6
Other (1.1) (1.7) (1.6)
----- ----- -----
27.7% 26.4% 28.5%
===== ===== =====
Prepaid taxes at December 31, 1999, 1998 and 1997 were $567 million, $809
million and $818 million, respectively. The deferred income tax
liability, included in Other Liabilities, at December 31, 1999, 1998 and
1997 was $445 million, $277 million and $352 million, respectively.
The components of prepaid and deferred income taxes consisted of:
December 31,
----------------------
1999 1998 1997
----- ----- -----
Depreciation $(278) $(278) $(278)
Postretirement and pension benefits 120 195 191
Product liability (13) 248 154
Restructuring 25 55 77
Other 268 312 322
----- ----- -----
$122 $532 $466
==== ==== ====
40
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The Company has settled its United States Federal income tax returns
with the Internal Revenue Service through 1991.
United States Federal income taxes have not been provided on
substantially all of the unremitted earnings of non-U.S.
subsidiaries, since it is management's practice and intent to
reinvest such earnings in the operations of these subsidiaries. The
total amount of the net unremitted earnings of non-U.S. subsidiaries
was approximately $4.4 billion at December 31, 1999.
Note 6 INVENTORIES
- -------------------
December 31,
----------------------
1999 1998 1997
------ ------ ------
Finished goods $1,472 $1,209 $1,153
Work in process 302 236 197
Raw and packaging materials 352 428 449
----- ----- -----
$2,126 $1,873 $1,799
===== ===== =====
Note 7 PROPERTY, PLANT AND EQUIPMENT
- -------------------------------------
December 31,
----------------------
1999 1998 1997
----- ----- -----
Land $170 $176 $180
Buildings 3,096 2,875 2,631
Machinery, equipment and fixtures 4,093 3,885 3,646
Construction in progress 482 572 544
----- ----- -----
7,841 7,508 7,001
Less accumulated depreciation 3,220 3,079 2,845
----- ----- -----
$4,621 $4,429 $4,156
===== ===== =====
41
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 8 SHORT-TERM BORROWINGS AND LONG-TERM DEBT
- ------------------------------------------------
Included in short-term borrowings were amounts due to banks,
primarily foreign banks, of $245 million, $272 million and $524
million at December 31, 1999, 1998 and 1997, respectively, and
current installments of long-term debt of $10 million, $43 million
and $19 million at December 31, 1999, 1998, and 1997, respectively.
Also included in short-term borrowings at December 31, 1999 and 1998,
was $177 million and $167 million, respectively, of commercial paper
outstanding. This commercial paper has original maturities not
exceeding 270 days and is denominated in euros and U.S. dollars. The
average interest rate on short-term borrowings was 6.76% and on
current installments of long-term debt was 6.81% at December 31,
1999.
During 1999, the Company renewed two credit facilities, aggregating
$500 million, with a syndicate of lenders as support for its
commercial paper program. The credit facilities consist of a $250
million, 364-day credit facility, which may be renewed annually with
the consent of the lenders for an additional 364-day period and a
$250 million, four- and five-year credit facility, extendible at each
anniversary date with the consent of the lenders. There were no
borrowings outstanding under the credit facilities at December 31,
1999. In addition, the Company has unused short-term lines of credit
with foreign banks of $420 million.
The components of long-term debt were:
December 31,
----------------------
1999 1998 1997
----- ----- -----
6.80% Debentures, due in 2026 $345 $345 $344
7.15% Debentures, due in 2023 344 344 343
6.875% Debentures, due in 2097 296 296 296
Various Rate Yen Term Loans, due in 2003 71 71 70
2.14% Yen Notes, due in 2005 62 55 -
1.73% Yen Notes, due in 2003 62 54 -
3.51% Deutsche Mark Interest on Yen
Principal Term Loan, due in 2005 57 50 49
5.75% Industrial Revenue Bonds, due in 2024 34 34 34
5.00% Yen Term Loan, paid in 1999 - 29 29
Various Rate Term Loans, paid in 1999 - - 26
2.83% Yen Term Loan, due in 2002 28 25 24
Capitalized Leases 22 29 26
Other, 4.30% to 10.25%,due in varying
amounts through 2014 21 32 38
------ ------- -------
$1,342 $1,364 $1,279
===== ===== =====
42
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 9 STOCKHOLDERS' EQUITY
- ----------------------------
Changes in capital shares and capital in excess of par value of stock
were:
Shares of Common Stock Capital in
----------------------- Excess of
Par Value
of Stock
(dollars in
millions)
Issued Treasury
---------- ----------- ------
Balance, December 31, 1996 1,082,496,016 81,806,550 $382
Issued pursuant to stock plans
and options 738,151 (8,514,867) 162
Conversions of preferred stock 19,536 - -
Purchases - 16,777,700 -
---------- ----------- ------
Balance, December 31, 1997 1,083,253,703 90,069,383 544
Effect of two-for-one stock split 1,083,253,703 90,069,383 (108)
Issued pursuant to stock plans
and options 16,931,302 (11,189,998) 700
Conversions of preferred stock 21,230 - -
Purchases - 30,601,764 -
Other 4,856,870 - (61)
---------- ----------- ------
Balance, December 31, 1998 2,188,316,808 199,550,532 1,075
Issued pursuant to stock plans
and options 4,641,700 (9,694,871) 458
Conversions of preferred stock 11,996 - -
Purchases - 22,309,190 -
---------- ----------- ------
Balance, December 31, 1999 2,192,970,504 212,164,851 $1,533
============= =========== ======
Each share of the Company's preferred stock is convertible into 16.96
shares of common stock and is callable at the Company's option. The
reductions in the number of issued shares of preferred stock in 1999,
1998 and 1997 were due to conversions into shares of common stock.
Dividends per common share were $.86 in 1999, $.78 in 1998 and $.76
in 1997.
43
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Stock Compensation Plans
- ------------------------
Under the Company's 1997 Stock Incentive Plan, officers, directors and
key employees may be granted options to purchase the Company's common
stock at no less than 100% of the market price on the date the option
is granted. Options generally become exercisable in installments of 25%
per year on each of the first through the fourth anniversaries of the
grant date and have a maximum term of 10 years. Additionally, the plan
provides for the granting of stock appreciation rights whereby the
grantee may surrender exercisable options and receive common stock
and/or cash measured by the excess of the market price of the common
stock over the option exercise price. The plan also provides for the
granting of performance-based stock options to certain key executives.
Under the terms of the 1997 Stock Incentive Plan, as amended,
additional shares are authorized in the amount of 0.9% of the
outstanding shares per year through 2002. The plan incorporates the
Company's long-term performance awards.
In addition, the 1997 Stock Incentive Plan provides for the granting of
up to 20,000,000 shares of common stock to key employees, subject to
restrictions as to continuous employment except in the case of death or
normal retirement. Restrictions generally expire over a five-year
period from date of grant. Compensation expense is recognized over the
restricted period. At December 31, 1999, a total of 2,135,524
restricted shares were outstanding under the plan.
Under the TeamShare Stock Option Plan, all full-time employees,
excluding key executives, meeting certain years of service requirements
are granted options to purchase the Company's common stock at the
market price on the date the options are granted. The Company has
authorized 62,000,000 shares for issuance under the plan. As of
December 31, 1999, a total of 23,579,400 shares have been exercised
under the plan.
The Company applies Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations
in accounting for its plans. Accordingly, no compensation expense has
been recognized for its stock-based compensation plans other than for
restricted stock and performance-based awards. Had compensation cost
for the Company's other stock option plans been determined based upon
the fair value at the grant date for awards under these plans
consistent with the methodology prescribed under Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation,
the Company's net income and earnings per share would have been reduced
by approximately $198 million, or $.10 per common share, basic and
diluted, in 1999, $136 million, or $.07 per common share, basic and
diluted, in 1998 and $85 million, or $.04 per common share, basic and
diluted, in 1997. The fair value of the options granted during 1999,
1998 and 1997 was estimated as $17.37 per common share, $11.80 per
common share and $6.41 per common share, respectively, on the date of
grant using the Black-Scholes option-pricing model with the following
assumptions:
44
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
1999 1998 1997
------ ------ ------
Dividend yield 2.4% 3.1% 4.3%
Volatility 21.8% 18.2% 19.3%
Risk-free interest rate 5.5% 6.3% 6.5%
Assumed forfeiture rate 3.0% 3.0% 3.0%
Expected life (years) 7 7 7
Stock option transactions were:
Weighted
Average
Shares of Common Stock Exercise
----------------------- Price of
Shares
Under Plan
Available Under
for Option Plan
---------- ----------- ------
Balance, December 31, 1996 18,329,358 70,028,732 $34.27
Authorized 9,006,205 - -
Granted (11,347,801) 11,347,801 65.77
Exercised - (12,787,811) 30.34
Lapsed 2,284,788 (2,287,820) 45.63
---------- -----------
Balance, December 31, 1997 18,272,550 66,300,902 40.08
Effect of two-for-one stock split 18,272,550 66,300,902 -
Authorized 17,877,318 - -
Granted (35,498,350) 35,498,350 51.40
Exercised - (36,697,942) 16.30
Lapsed 2,382,746 (2,382,746) 34.27
---------- -----------
Balance, December 31, 1998 21,306,814 129,019,466 29.47
Authorized 19,898,896 - -
Granted (24,221,950) 24,221,950 65.39
Exercised - (20,425,070) 20.41
Lapsed 3,552,037 (3,552,037) 42.51
---------- -----------
Balance, December 31, 1999 20,535,797 129,264,309 $37.27
========== ===========
45
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The following table summarizes information concerning currently
outstanding and exercisable options:
Options Outstanding Options Exercisable
------------------------------------- ------------------------
Range of Number Weighted Weighted Number Weighted
Exercise Outstanding Average Average Exercisable Average
Prices Remaining Exercise Exercise
Contractual Price Price
Life
$10 - $20 36,055,360 4.10 $15.61 36,050,360 $15.61
$20 - $30 23,777,750 6.29 24.32 19,415,975 24.57
$30 - $40 12,441,697 7.19 33.68 6,530,637 33.68
$40 - $50 4,319,338 8.09 45.70 158,263 44.10
$50 - $60 29,924,664 8.18 51.73 5,012,685 51.00
$60 - up 22,745,500 9.19 66.49 152,319 61.10
----------- ----------
129,264,309 67,320,239
=========== ==========
At December 31, 1999, 204,705,699 shares of common stock were reserved
for issuance pursuant to stock plans, options and conversions of
preferred stock.
Note 10 FINANCIAL INSTRUMENTS
- ------------------------------
Foreign exchange option contracts and, to a lesser extent, forward
contracts, are used to hedge anticipated foreign currency transactions,
primarily intercompany inventory purchases expected to occur within the
next year.
The Company has exposures to net foreign currency denominated assets and
liabilities, which approximated $2,179 million, $2,310 million and
$2,070 million at December 31, 1999, 1998 and 1997, respectively,
primarily in Europe, Japan and Canada. The Company mitigates the effect
of these exposures through third-party borrowings.
The risk of loss associated with the types of foreign exchange option
contracts entered into by the Company is limited to premium amounts paid
for the option contracts. Premiums are deferred in Prepaid Expenses and
amortized in the consolidated statement of earnings (in the Other
caption) over the time frame of the underlying hedged transaction. Gains
related to the option contracts, which qualify as hedges of foreign
currency anticipated transactions, are recognized in earnings when the
hedged transactions are recognized. Gains and losses on foreign exchange
forward contracts are recognized in the basis of the underlying
transaction being hedged.
46
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The notional amounts of the Company's foreign exchange option contracts
at December 31, 1999, 1998 and 1997 were $1,762 million, $1,307 million
and $1,279 million, respectively.
The Company does not anticipate any material adverse effect on its
financial position resulting from its involvement in these
instruments, nor does it anticipate non-performance by any of its
counterparties.
At December 31, 1999, 1998 and 1997, the carrying value of all
financial instruments, both short- and long-term, approximated their
fair values.
Note 11 LEASES
- ---------------
Minimum rental commitments under all noncancelable operating
leases, primarily real estate, in effect at December 31, 1999 were:
Years Ending December 31,
- -------------------------
2000 $109
2001 97
2002 80
2003 60
2004 46
Later years 141
------
Total minimum payments 533
Less total minimum sublease rentals 111
------
Net minimum rental commitments $422
===
Operating lease rental expense (net of sublease rental income of
$24 million in 1999, $27 million in 1998 and $26 million in 1997)
was $90 million in 1999, $105 million in 1998 and $124 million in
1997.
47
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 12 SEGMENT INFORMATION
- ----------------------------
The major product categories for each business segment are as
follows:
Year Ended December 31,
----------------------
1999 1998 1997
------ ------ ------
Medicines
PRAVACHOL* $1,704 $1,643 $1.437
TAXOL* 1,481 1,206 941
GLUCOPHAGE 1,317 862 579
Oncology Therapeutics Network 894 657 480
BUSPAR* 605 531 443
ZERIT* 605 551 398
PARAPLATIN* 600 525 437
PLAVIX 547 144 -
Beauty Care
Hair care 1,250 1,179 794
Haircolor 905 894 841
Nutritionals
Infant formulas 1,233 1,203 1.219
Medical Devices
Orthopaedic implants 665 596 615
Ostomy 449 464 451
Inter-area sales, which are usually billed at or above manufacturing
costs, by geographic area, were:
December 31,
----------------------
1999 1998 1997
------ ------ ------
United States $1,647 $1,434 $1,370
Europe, Mid-East and Africa 937 843 762
Other Western Hemisphere 46 29 32
Pacific 25 16 24
------ ------- -------
Total inter-area eliminations $2,655 $2,322 $2,188
===== ===== =====
The Medicines Segment represents pharmaceuticals and consumer medicines
businesses. In addition, the segment information reflects certain internal
organizational changes made in 1999. Prior year data has been restated
accordingly.
48
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
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. In 1998, Other includes the gain on sale of
businesses of $201 million and the provision for restructuring of $201
million. In 1997, Other includes the gain on sale of a business of $225
million and the provision for restructuring of $225 million. Other assets
principally consist of cash and cash equivalents, time deposits and
marketable securities, and certain other assets.
BUSINESS SEGMENTS Net Sales Earnings Before Taxes
- ----------------- ------------------------ ----------------------
1999 1998 1997 1999 1998 1997
----- ----- ----- ----- ----- -----
Medicines $14,309 $12,573 $11,211 $4,018 $3,402 $3,033
Beauty Care 2,381 2,305 1,895 247 343 269
Nutritionals 1,850 1,759 1,793 375 371 360
Medical Devices 1,682 1,647 1,802 365 336 345
----- ----- ----- ----- ----- -----
Net sales and earnings
before taxes $20,222 $18,284 $16,701 $5,005 $4,452 $4,007
===== ===== ===== ===== ===== =====
GEOGRAPHIC AREAS Net Sales Earnings Before Taxes
- ---------------- -------------------------- -----------------------
1999 1998 1997 1999 1998 1997
----- ----- ----- ----- ----- -----
United States $14,445 $12,527 $11,014 $3,491 $3,164 $2,581
Europe, Mid-East and
Africa 5,040 4,873 4,653 1,268 1,139 1,109
Other Western Hemisphere 1,681 1,749 1,586 110 223 225
Pacific 1,711 1,457 1,636 83 2 52
Inter-area eliminations (2,655) (2,322) (2,188) 53 (76) 40
----- ----- ----- ----- ----- -----
Net sales and earnings
before taxes $20,222 $18,284 $16,701 5,005 4,452 4,007
===== ===== =====
Special Charge - (800) -
Other 762 616 475
----- ----- -----
$5,767 $4,268 $4,482
===== ===== =====
49
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
BUSINESS SEGMENTS Year-End Assets
- ----------------- ----------------------
1999 1998 1997
------ ------ ------
Medicines $8,769 $8,296 $7,964
Beauty Care 1,121 1,058 833
Nutritionals 1,190 1,094 1,113
Medical Devices 1,185 1,174 1,225
------ ------- -------
Identifiable segment assets $12,265 $11,622 $11,135
====== ====== ======
GEOGRAPHIC AREAS Year-End Assets
- ---------------- ----------------------
1999 1998 1997
----- ------ ------
United States $6,989 $6,657 $6,417
Europe, Mid-East and Africa 3,622 3,533 3,426
Other Western Hemisphere 1,425 1,238 1,063
Pacific 943 942 989
Inter-area eliminations (714) (748) (760)
------ ------- -------
Identifiable geographic assets $12,265 $11,622 $11,135
Other assets 4,849 4,650 3,842
------ ------- -------
$17,114 $16,272 $14,977
====== ====== ======
BUSINESS SEGMENTS Capital Expenditures Depreciation
- ----------------- -------------------------- -----------------
1999 1998 1997 1999 1998 1997
--- ------ ----- ------ ----- -----
Medicines $457 $535 $524 $279 $272 $244
Beauty Care 58 71 58 35 29 22
Nutritionals 56 59 61 43 38 42
Medical Devices 44 33 24 32 36 46
--- ------ ----- ------ ----- -----
Business segment total 615 698 667 389 375 354
94 90 100 49 38 43
--- ------ ----- ------ ----- -----
$709 $788 $767 $438 $413 $397
=== === === === === ===
50
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 13 RETIREMENT PLANS
- -------------------------
The Company and certain of its subsidiaries have defined benefit
pension plans and defines contribution plans for regular full-time
employees. The principal pension plan is the Bristol-Myers Squibb
Retirement Income Plan. The Company's funding policy is to contribute
amounts to provide for current service and to fund past service
liability. Plan benefits are primarily based on years of credited
service and on the participants' compensation. Plan assets principally
consist of equity and fixed income securities.
Cost for the Company's defined benefit plans included the following
components:
Year Ended December 31,
----------------------
1999 1998 1997
----- ------ ------
Service cost - benefits earned during the year $161 $132 $135
Interest cost on projected benefit obligation 217 207 203
obligation
Expected earnings on plan assets (285) (258) (231)
Net amortization and deferral 4 (1) 10
---- ---- ----
Net pension expense $97 $80 $117
==== ==== ====
The weighted average actuarial assumptions for the Company's pension
plans were as follows:
December 31,
-------------------------
1999 1998 1997
------ ------ ------
Discount rate 7.8% 7.0% 7.5%
Compensation increase 4.8% 4.3% 4.5%
Long-term rate of return 10.0% 10.0% 10.0%
51
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Changes in benefit obligation and plan assets were:
Year Ended December 31,
----------------------
1999 1998 1997
---- ---- ----
Benefit obligation at beginning of year $3,216 $2,928 $2,734
Service cost - benefits earned during the year 161 132 135
year
Interest cost on projected benefit obligation 217 207 203
Actuarial (gains) and losses (203) 160 45
Benefits paid (254) (211) (189)
----- ----- -----
Benefit obligation at end of year $3,137 $3,216 $2,928
===== ===== =====
December 31,
----------------------
1999 1998 1997
----- ------ ------
Fair value of plan assets at beginning of year $3,137 $2,949 $2,596
Actual earnings on plan assets 561 359 504
Employer contribution 46 40 38
Benefits paid (254) (211) (189)
------ ------ ------
Fair value of plan assets at end of year $3,490 $3,137 $2,949
===== ===== =====
December 31,
----------------------
1999 1998 1997
----- ----- -----
Plan assets in excess of (less than)
projected benefit obligation $353 $(79) $21
Unamortized net assets at adoption (2) (33) (47)
Unrecognized prior service cost 37 48 56
Unrecognized net (gains) and losses (385) 87 13
----- ----- -----
Net amount recognized $3 $23 $43
==== ==== ====
Amounts recognized in the consolidated balance sheet
consist of:
Prepaid benefit cost 181 187 194
Accrued benefit liability (190) (190) (173)
Other asset 12 26 22
----- ----- -----
Net amount recognized $3 $23 $43
==== ==== ====
52
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The projected benefit obligation, accumulated benefit obligation, and
fair value of plan assets for the pension plans with accumulated
benefit obligations in excess of plan assets were $319 million, $245
million and $56 million, respectively, as of December 31, 1999, $288
million, $230 million and $40 million, respectively, as of December 31,
1998 and $271 million, $208 million and $37 million, respectively, as
of December 31, 1997. This is primarily attributable to an unfunded
benefit equalization plan.
The principal defined contribution plan is the Bristol-Myers Squibb
Savings and Investment Program. The Company's contribution is based on
employee contributions and the level of company match. Company
contributions to the plan were $49 million in 1999, $45 million in 1998
and $40 million in 1997.
Note 14 POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS
- ---------------------------------------------------------
The Company provides comprehensive medical and group life benefits to
substantially all U.S. retirees who elect to participate in the
Company's comprehensive medical and group life plans. The medical plan
is contributory. Contributions are adjusted periodically and vary by
date of retirement and the original retiring company. The life
insurance plan is non-contributory. Plan assets principally consist of
equity securities and fixed income securities.
Cost for the Company's postretirement benefit plans included the
following components:
Year Ended December 31,
----------------------
1999 1998 1997
----- ----- -----
Service cost - benefits earned during the year $10 $8 $9
Interest cost on accumulated postretirement 36 35 36
benefit obligation
Expected earnings on plan assets (13) (11) (9)
Net amortization and deferral 1 (3) (2)
----- ----- -----
Net postretirement benefit expense $34 $29 $34
==== ==== ====
53
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The weighted average actuarial assumptions for the Company's
postretirement benefit plans were as follows:
December 31,
----------------------
1999 1998 1997
------ ------ ------
Discount rate 7.8% 7.0% 7.5%
Long-term rate of return 10.0% 10.0% 10.0%
Changes in benefit obligation and plan assets were:
Year Ended December 31,
-----------------------
1999 1998 1997
----- ----- -----
Benefit obligation at beginning of year $507 $495 $482
Service cost - benefits earned during the
year 10 8 9
Interest cost on accumulated post-
retirement benefit obligation 36 35 36
Plan participants' contributions 2 2 2
Plan amendments (9) (1) -
Actuarial (gains) and losses 16 6 (2)
Benefits paid (41) (38) (32)
----- ----- -----
Benefit obligation at end of year $521 $507 $495
==== ==== ====
December 31,
----------------------
1999 1998 1997
----- ------ ------
Fair value of plan assets at beginning of
year $128 $113 $89
Actual earnings on plan assets 24 15 20
Employer contribution 39 36 34
Plan participants' contributions 2 2 2
Benefits paid (41) (38) (32)
----- ----- ------
Fair value of plan assets at end of year $152 $128 $113
==== ==== ====
54
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
December 31,
----------------------
1999 1998 1997
------ ------ ------
Accumulated postretirement benefit
obligation in excess of plan assets $(369) $(379) $(382)
Unrecognized prior service cost (6) 3 4
Unrecognized net earnings (55) (60) (65)
----- ----- -----
Accrued postretirement benefit expense $(430) $(436) $(443)
==== ==== ====
For measurement purposes, an annual rate of increase in the per capita
cost of covered health care benefits of 7% for participants was assumed
for 2000; the rate was assumed to decrease gradually to 5% in 2007 and to
remain at that level thereafter.
A one-percentage-point change in assumed health care cost trend rates
would have the following effects:
1-Percentage- 1-Percentage-
Point Point
Increase Decrease
---------- ------------
Effect on the aggregate of the service and
interest cost components of net postretirement
benefit expense $1 $(1)
Effect on the accumulated postretirement
benefit obligation $21 $(19)
Note 15 LITIGATION
- -------------------
Various lawsuits, claims and proceedings of a nature considered normal to
its businesses are pending against
the Company and certain of its subsidiaries. The most significant of
these are described below. Reference is made to Item 3 Legal Proceedings
in Part 1 of this Form 10-K Annual Report.
Breast Implant
- --------------
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 polyurethane-covered
breast implants and smooth-walled 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 nationwide class action settlement approved by the Federal District
Court in Birmingham, Alabama (the "Revised Settlement"), most have been
dealt with through the Revised Settlement, other settlements, or trial.
55
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
As of December 31, 1999, the Company's contingent liability in respect
of breast implant claims was limited to residual unpaid Revised
Settlement obligations and to roughly 1,700 remaining opt-outs who have
pursued or may pursue their claims in court.
As of December 31, 1999, approximately 6,700 United States and 200
foreign breast implant recipients were plaintiffs in lawsuits pending in
federal and state courts in the United States and 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 3,660 U.S. and 49 foreign plaintiffs opted out of the Revised
Settlement. The lawsuits of the 3,040 U.S. plaintiffs who did not opt
out are expected to be dismissed since these plaintiffs are among the
estimated 74,000 women with MEC implants who chose to participate in the
nationwide settlement. Of the 3,660 opt-out plaintiffs, an estimated
1,960 have claims based upon products that were not manufactured or 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 1,700, as stated in the preceding paragraph.
Under the terms of the Revised Settlement, 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. Separate class action settlements
have been approved in the provincial courts of Ontario and Quebec, and
an agreement has been reached under which other foreign breast implant
recipients may settle their claims. The Company believes it will be able
to address remaining opt-out claims as well as expected remaining
obligations under the Revised Settlement program within its reserves
described below.
In the fourth quarter of 1993, the Company recorded a charge of $500
million before taxes ($310 million after taxes) in respect of breast
implant cases. The charge consisted of $1.5 billion for potential
liabilities and expenses, offset by $1.0 billion of expected insurance
proceeds. In the fourth quarters of 1994 and 1995, the Company recorded
additional special charges of $750 million before taxes ($488 million
after taxes) and $950 million before taxes ($590 million after taxes),
respectively, related to breast implant product liability claims. In the
fourth quarter of 1998, the Company recorded an additional special charge
to earnings in the amount of $800 million before taxes and increased its
insurance receivable in the amount of $100 million, resulting in a net
charge to earnings of $433 million after taxes in respect of breast
implant product liability claims. During 1999, 1998 and 1997, cash
payments, net of insurance receipts, of $631 million, $551 million and
$549 million, respectively, were made related to the breast implant
product liability claims. At December 31, 1999, $354 million was included
in current and other liabilities for breast implant product liability
claims.
Prescription Drug
- -----------------
As of December 31, 1999, 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 30 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. In the fourth quarter of 1998, the Company recorded a special
56
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
charge to earnings in the amount of $100 million before taxes ($62
million after taxes) in respect of this prescription drug litigation.
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. During 1999, cash payments of $59 million were
made related to the pricing litigation claims.
TAXOL*
- ------
There is no composition of matter patent for paclitaxel (the active
ingredient in TAXOL*). In the United States, the Company is presently the
only manufacturer and marketer of a product containing paclitaxel. In
1997 and 1998, the Company filed several lawsuits alleging that a number
of generic drug companies infringed its patents covering certain methods
of administering paclitaxel when they filed abbreviated new drug
applications seeking regulatory approval to sell paclitaxel. These
actions were consolidated for discovery in the United States District
Court for the District of New Jersey. The Company does not assert a
monetary claim against any of the defendants, but seeks to prevent the
defendants from marketing paclitaxel in a manner that violates the
Company's patents. The defendants have asserted that they do not infringe
the Company's patents and that these patents are invalid and
unenforceable. Some defendants also asserted counterclaims seeking
damages for alleged antitrust and unfair competition violations.
On January 4, 2000, the District Court granted the Company's motion to
dismiss certain of the antitrust and unfair competition counterclaims.
The Company's motion for summary judgment on the remaining antitrust and
unfair competition counterclaims was denied on March 17, 2000.
On February 29, 2000, the District Court granted in part the generic
companies' summary judgment motions for invalidity by finding all claims
of the Company's patents in dispute invalid, except for claims limited to
the treatment of ovarian cancer. As a result of this ruling, the generic
companies may obtain U.S. Food and Drug Administration approval to market
paclitaxel solely for treatment of metastatic breast cancer after failure
of combination chemotherapy. The District Court's opinion left for
determination at trial the validity of the claims of the Company's
patents directed to the low dose, three-hour administration of paclitaxel
for ovarian cancer and denied the generic companies' summary judgment
motion arguing non-infringement of the Company's patents. The Company may
pursue its appeal rights in the future.
The claims remaining in the lawsuits are currently scheduled for trial in
May 2000. It is not possible at this time to make a reasonable
assessment of the outcome of the remaining claims in these actions nor to
reasonably estimate the impact on TAXOL* sales or the amount of damages
were the Company not to prevail.
While it is not possible to predict with certainty the outcome of these
cases, it is the opinion of management that they will not have a material
adverse effect on the Company's operating results, liquidity or
consolidated financial position.
57
<PAGE>
Note 16 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
- ------------------------------------------------------
(in millions, except per share amounts)
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
1999: ------- ------- ------- ------- -------
Net Sales $4,854 $4,920 $5,040 $5,408 $20,222
Gross Profit 3,549 3,559 3,638 3,937 14,683
Net Earnings 1,066 952 1,097 1,052 4,167
Earnings Per Common Share
Basic .54 .48 .55 .53 2.10
Diluted .53 .47 .54 .52 2.06
1998:
Net Sales $4,446 $4,430 $4,523 $4,885 $18,284
Gross Profit 3,294 3,224 3,332 3,578 13,428
Net Earnings 927 835 966 413 3,141
Earnings Per Common Share
Basic .47 .42 .49 .21 1.58
Diluted .46 .41 .47 .20 1.55
* In 1998, the first quarter results included a gain on the sale of a
business of $125 million ($78 million after taxes) and a provision for
restructuring of $125 million ($78 million after taxes). The second
quarter results included a gain on the sale of businesses of $76 million
($47 million after taxes) and a provision for restructuring of $76
million ($47 million after taxes). The fourth quarter results included a
charge of $800 million ($495 million after taxes; or $.25 per common
share - basic and $.24 per common share - diluted) for litigation of
breast implant and prescription drug pricing cases, offset by expected
insurance recoveries.
58
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors
and Stockholders of
Bristol-Myers Squibb Company
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 61 present fairly, in all material
respects, the financial position of Bristol-Myers Squibb Company and its
subsidiaries at December 31, 1999, 1998 and 1997, and the results of
their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United
States. In addition, in our opinion, the financial statement schedule
listed in the index appearing under Item 14(a)(2) on page 61 presents
fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements.
These financial statements and the financial statement schedule are the
responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements and the financial
statement schedule based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in
the United States, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PRICEWATERHOUSECOOPERS LLP
New York, New York
January 24, 2000
59
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
------------
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) Reference is made to the Proxy Statement for the Annual Meeting of
Stockholders on May 2, 2000 with respect to the Directors of the
Registrant which is incorporated herein by reference and made a
part hereof in response to the information required by Item 10.
(b) The information required by Item 10 with respect to the Executive
Officers of the Registrant has been included in Part IA of this
Form 10-K Annual Report in reliance on General Instruction G of
Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K.
Item 11. EXECUTIVE COMPENSATION.
Reference is made to the Proxy Statement for the Annual Meeting of
Stockholders on May 2, 2000 with respect to Executive Compensation
which is incorporated herein by reference and made a part hereof in
response to the information required by Item 11.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Reference is made to the Proxy Statement for the Annual Meeting of
Stockholders on May 2, 2000 with respect to the security ownership of
certain beneficial owners and management which is incorporated herein
by reference and made a part hereof in response to information required
by Item 12.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Reference is made to the Proxy Statement for the Annual Meeting of
Stockholders on May 2, 2000 with respect to certain relationships and
related transactions which is incorporated herein by reference and made
a part hereof in response to the information required by Item 13.
60
<PAGE>
PART IV
-------------
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Page
Number
------
(a)
1. Financial Statements 31-35
Notes to Consolidated Financial Statements 36-58
Report of Independent Accountants 59
2. Financial Statement Schedules
Schedule Page
Number Number
-------- ------
Valuation and qualifying accounts II S-1
All other schedules not included with this additional financial data
are omitted because they are not applicable or the required
information is included in the financial statements or notes
thereto.
3. Exhibit List
The Exhibits listed below are identified by numbers corresponding to the
Exhibit Table of Item 601 of Regulation S-K. The Exhibits designated by
two asterisks (**) are management contracts or compensatory plans or
arrangements required to be filed pursuant to this Item 14. Unless
otherwise indicated, all Exhibits are part of Commission File Number 1-
1136.
3a. Restated Certificate of Incorporation of Bristol-Myers Squibb
Company (incorporated herein by reference to Exhibit 4a to
Registrant's Registration Statement on Form S-3, Registration
Statement No. 33-33682, dated March 7, 1990, as amended through May
5, 1999 by Certificate of Amendment, filed herewith).
3b. Bylaws of Bristol-Myers Squibb Company, as amended through January
20, 2000, filed herewith.
4a. Letter of Agreement dated March 28, 1984 (incorporated herein by
reference to Exhibit 4 to Form 10-K for the fiscal year ended
December 31, 1983).
4b. Indenture, dated as of June 1, 1993, between Bristol-Myers Squibb
Company and The Chase Manhattan Bank (National Association), as
trustee (incorporated herein by reference to Exhibit 4.1 to the Form
8-K dated May 27, 1993, and filed on June 3, 1993).
4c. Form of 7.15% Debenture Due 2023 of Bristol-Myers Squibb Company
(incorporated herein by reference to Exhibit 4.2 to the Form 8-K
dated May 27, 1993, and filed on June 3, 1993).
61
<PAGE>
4d. Form of 6.80% Debenture Due 2026 of Bristol-Myers Squibb Company
(incorporated herein by reference to Exhibit 4e to the Form 10-K for
the fiscal year ended December 31, 1996).
4e. Form of 6.875% Debenture Due 2097 of Bristol-Myers Squibb Company
(incorporated herein by reference to Exhibit 4f to the Form 10-Q for
the quarterly period ended September 30, 1997).
4f. Five Year Competitive Advance and Revolving Credit Facility
Agreement dated as of March 17, 1998 among Bristol-Myers Squibb
Company, the Borrowing Subsidiaries (as defined in the Agreement),
the Lenders listed in Schedule 2.1 to the Agreement, The Chase
Manhattan Bank as Administrative Agent and Citibank, N.A., as
Administrative Agent (incorporated herein by reference to Exhibit 4f
to the Form 10-K for the fiscal year ended December 31, 1997).
4g. 364-Day Competitive Advance and Revolving Credit Facility agreement
dated as of March 17, 1998 among Bristol-Myers Squibb Company, the
Borrowing Subsidiaries (as defined in the Agreement), the Lenders
listed in Schedule 2.1 to the Agreement, The Chase Manhattan Bank as
Administrative Agent and Citibank, N.A., as Administrative Agent
(incorporated herein by reference to Exhibit 4g to the Form 10-K for
the fiscal year ended December 31, 1997).
**10a. Bristol-Myers Squibb Company 1997 Stock Incentive Plan,
effective as of May 6, 1997 and as amended effective November 3,
1998 (incorporated herein by reference to Exhibit 4g to the Form 10-
K for the fiscal year ended December 31, 1998).
**10b. Bristol-Myers Squibb Company Executive Performance Incentive
Plan (incorporated herein by reference to Exhibit 10b to the Form 10-
K for the fiscal year ended December 31, 1996).
**10c. Bristol-Myers Squibb Company 1983 Stock Option Plan, as amended
and restated as of January 1, 1997, as amended November 3, 1998
(incorporated herein by reference to Exhibit 4g to the Form 10-K for
the fiscal year ended December 31, 1998).
**10d. Squibb Corporation 1982 Option, Restricted Stock and
Performance Unit Plan, as amended (incorporated herein by reference
to Exhibit 10b to the Form 10-K for the fiscal year ended December
31, 1993).
**10e. Squibb Corporation 1986 Option, Restricted Stock and
Performance Unit Plan, as amended (as adopted, incorporated herein
by reference to Exhibit 10k to the Squibb Corporation Form 10-K for
the fiscal year ended December 31, 1988, File No. 1-5514; as amended
effective July 1, 1993, and incorporated herein by reference to
Exhibit 10c to the Form 10-K for the fiscal year ended December 31,
1993).
**10f. Bristol-Myers Squibb Company Performance Incentive Plan, as
amended (as adopted, incorporated herein by reference to Exhibit 2
to the Form 10-K for the fiscal year ended December 31, 1978; as
amended as of January 8, 1990, incorporated herein by reference to
Exhibit 19b to the Form 10-K for the fiscal year ended December 31,
1990; as amended on April 2, 1991, incorporated herein by reference
to Exhibit 19b to the Form 10-K for the fiscal year ended December
31, 1991; as amended effective January 1, 1994, incorporated herein
by reference to Exhibit 10d to the Form 10-K for the
fiscal year ended December 31, 1993; and as amended effective
January 1, 1994, incorporated herein by reference to Exhibit 10d to
the Form 10-K for the fiscal year ended December 31, 1994).
62
<PAGE>
**10g. Benefit Equalization Plan of Bristol-Myers Squibb Company and
its Subsidiary or Affiliated Corporations Participating in the
Bristol-Myers Squibb Company Retirement Income Plan or the Bristol-
Myers Squibb Puerto Rico, Inc. Retirement Income Plan, as amended
(as amended and restated as of January 1, 1993, as amended effective
October 1, 1993, incorporated herein by reference to Exhibit 10e to
the Form 10-K for the fiscal year ended December 31, 1993; and as
amended effective February 1, 1995, incorporated herein by reference
to Exhibit 10e to the Form 10-K for the fiscal year ended December
31, 1996).
**10h. Benefit Equalization Plan of Bristol-Myers Squibb Company and
its Subsidiary or Affiliated Corporations Participating in the
Bristol-Myers Squibb Company Savings and Investment Program, as
amended (as amended and restated as of May 1, 1990, incorporated
herein by reference to Exhibit 19d to the Form 10-K for the fiscal
year ended December 31, 1990; as amended as of January 1, 1991,
incorporated herein by reference to Exhibit 19g to the Form 10-K for
the fiscal year ended December 31, 1990; as amended as of January 1,
1991, incorporated herein by reference to Exhibit 19e to the Form 10-
K for the fiscal year ended December 31, 1991, as amended as of
October 1, 1994, incorporated herein by reference to Exhibit 10f to
the Form 10-K for the fiscal year ended December 31, 1994).
**10i. Squibb Corporation Supplementary Pension Plan, as amended (as
previously amended and restated, incorporated herein by reference to
Exhibit 19g to the Form 10-K for the fiscal year ended December 31,
1991; as amended as of September 14, 1993, and incorporated herein
by reference to Exhibit 10g to the Form 10-K for the fiscal year
ended December 31, 1993).
**10j. Bristol-Myers Squibb Company Restricted Stock Award Plan, as
amended (as adopted on November 7, 1989, incorporated herein by
reference to Exhibit 10t to the Form 10-K for the fiscal year ended
December 31, 1989; as amended on December 4, 1990, incorporated
herein by reference to Exhibit 19a to the Form 10-K for the fiscal
year ended December 31, 1990; as amended effective July 1, 1993,
incorporated herein by reference to Exhibit 10h to the Form 10-K for
the fiscal year ended December 31, 1993; as amended effective
December 6, 1994, incorporated herein by reference to Exhibit 10h to
the Form 10-K for the fiscal year ended December 31, 1994).
**10k. Bristol-Myers Squibb Company Retirement Income Plan for Non-
Employee Directors, as amended to March 5, 1996 (incorporated herein
by reference to Exhibit 10k to the Form 10-K for the fiscal year
ended December 31, 1996).
**10l. Bristol-Myers Squibb Company 1987 Deferred Compensation Plan
for Non-Employee Directors, as amended to January 13, 1998,
(incorporated herein by reference to Exhibit 10l to the Form 10-K
for the fiscal year ended December 31, 1997).
**10m. Bristol-Myers Squibb Company Non-Employee Directors' Stock Option
Plan, as amended (as approved by the Stockholders on May 1, 1990,
incorporated herein by reference to Exhibit 28 to Registration
Statement No. 33-38587 on Form S-8; as amended May 7, 1991,
incorporated herein by reference to Exhibit 19c to the Form 10-K for
the fiscal year ended December 31, 1991), as amended January 12,
1999 (incorporated herein by reference to Exhibit 4g to the Form 10-
K for the fiscal year ended December 31, 1998).
**10n. Squibb Corporation Deferral Plan for Fees of Outside Directors,
as amended (as adopted, incorporated herein by reference to Exhibit
10e to the Squibb Corporation Form 10-K for the fiscal year ended
63
<PAGE>
December 31, 1987, File No. 1-5514; as amended effective December
31, 1991, incorporated herein by reference to Exhibit 10m to the
Form 10-K for the fiscal year ended December 31, 1992).
**10o. Amendment to all of the Company's plans, agreements, legal
documents and other writings, pursuant to action of the Board of
Directors on October 3, 1989, to reflect the change of the Company's
name to Bristol-Myers Squibb Company (incorporated herein by
reference to Exhibit 10v to the Form 10-K for the fiscal year ended
December 31, 1989).
**10p. Employment agreement of March 12, 1999 for Charles A. Heimbold,
Jr. (incorporated herein by reference to Exhibit 4g to the Form 10-K
for the fiscal year ended December 31, 1998).
**10q. Form of Agreement, effective June 1, 1999, entered into
between the Registrant and each of the following officers on
the following dates: 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. (incorporated herein by reference to
Exhibit 10q to the Form 10-Q for the quarterly period ended
September 30, 1999).
21. Subsidiaries of the Registrant (filed herewith).
23. Consent of PricewaterhouseCoopers LLP(filed herewith).
27. Bristol-Myers Squibb Company Financial Data Schedule (filed
herewith).
99. Additional Exhibit (filed herewith).
(b) Reports on Form 8-K
None.
64
<PAGE>
SIGNATURES
--------------------
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BRISTOL-MYERS SQUIBB COMPANY
(Registrant)
By /s/ Charles A. Heimbold, Jr.
----------------------------------
Charles A. Heimbold, Jr.
Chairman of the Board and
Chief Executive Officer
March 30, 2000
----------------------------------
Date
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
------------ -------- ----
Chairman of the Board,
Chief Executive Officer
And Director (Principal
/s/ Charles A. Heimbold, Jr. Executive Officer) March 30, 2000
- ------------------------------
(Charles A. Heimbold, Jr.)
Chief Financial Officer
and Executive Vice President
Corporate Staff (Principal
/s/ Michael F. Mee Financial Officer) March 30, 2000
- ------------------------------
(Michael F. Mee)
Controller and Senior Vice
President, Financial Operations,
Corporate Staff (Principal
/s/ Frederick S. Schiff Accounting Officer) March 30, 2000
- ------------------------------
(Frederick S. Schiff)
65
<PAGE>
Signature Title Date
- -------- ------ ----
/s/ Robert E. Allen Director March 30, 2000
- -----------------------------
(Robert E. Allen)
/s/ Lewis B. Campbell Director March 30, 2000
- -----------------------------
(Lewis B. Campbell)
/s/ Vance D. Coffman Director March 30, 2000
- -----------------------------
(Vance D. Coffman)
/s/ Peter R. Dolan President and Director March 30, 2000
- -----------------------------
(Peter R. Dolan)
/s/ Ellen V. Futter Director March 30, 2000
- -----------------------------
(Ellen V. Futter)
/s/ Louis V. Gerstner, Jr. Director March 30, 2000
- -----------------------------
(Louis V. Gerstner, Jr.)
/s/ Laurie H. Glimcher, M.D. Director March 30, 2000
- -----------------------------
(Laurie H. Glimcher, M.D.)
/s/ Leif Johansson Director March 30, 2000
- -----------------------------
(Leif Johansson)
/s/ James D. Robinson III Director March 30, 2000
- -----------------------------
(James D. Robinson III)
/s/ Louis W. Sullivan, M.D. Director March 30, 2000
- -----------------------------
(Louis W. Sullivan, M.D.)
Vice Chairman,
/s/ Kenneth E. Weg and Director March 30, 2000
- ----------------------------
(Kenneth E. Weg)
66
<PAGE>
EXHIBIT INDEX
-----------------------
The Exhibits listed below are identified by numbers corresponding to
the Exhibit Table of Item 601 of Regulation S-K. The Exhibits designed
by two asterisks (**) are management contracts or compensatory plans
or arrangements required to be filed pursuant to this Item 14. An
asterisk (*) in the Page column indicates that the Exhibit has been
previously filed with the Commission and is incorporated herein by
reference. Unless otherwise indicated, all Exhibits are part of
Commission File Number 1-1136.
Exhibit Number and Description Page
------------------------------ -----
3a. Restated Certificate of Incorporation of Bristol-Myers Squibb E-1-1
Company (incorporated herein by reference to Exhibit 4a to
Registration Statement No. 33-33682 on Form S-3, dated March
7, 1990, as amended through May 5, 1999 by Certificate of
Amendment filed herewith).
3b. Bylaws of Bristol-Myers Squibb Company, as amended through E-2-1
January 20, 2000.
4a. Letter of Agreement dated March 28, 1984 (incorporated *
herein by reference to Exhibit 4 to Form 10-K for the fiscal
year ended December 31,1983).
4b. Indenture, dated as of June 1, 1993, between Bristol-Myers *
Squibb Company and The Chase Manhattan Bank (National
Association),as trustee (incorporated herein by reference to
Exhibit 4.1 to the Form 8-K dated May 27, 1993, and filed on
June 3, 1993).
4c. Form of 7.15% Debenture Due 2023 of Bristol-Myers Squibb *
Company (incorporated herein by reference to Exhibit 4.2 to the
Form 8-K dated May 27, 1993, and filed on June 3, 1993).
4d. Form of 6.80% Debenture Due 2026 of Bristol-Myers Squibb *
Company (incorporated herein by reference to Exhibit 4e to the
Form 10-K for the fiscal year ended December 31, 1996).
4e. Form of 6.875% Debenture Due 2097 of Bristol-Myers Squibb *
Company (incorporated herein by reference to Exhibit 4f to the
Form 10-Q for the quarterly period ended September 30, 1997).
67
<PAGE>
Exhibit Number and Description Page
------------------------------ -------
4f. Five Year Competitive Advance and Revolving Credit Facility *
Agreement dated as of March 17, 1998 among Bristol-Myers Squibb
Company, the Borrowing Subsidiaries (as defined in the
Agreement), the Lenders listed in Schedule 2.1 to the Agreement,
The Chase Manhattan Bank as Administrative Agent and
Citibank, N.A., as Administrative Agent.
4g. 364-Day Competitive Advance and Revolving Credit Facility
Agreement dated as of March 17, 1998 among Bristol-Myers Squibb
Company, the Borrowing Subsidiaries (as defined in the Agreement
the Lenders listed in Schedule 2.1 to the Agreement, The Chase
Manhattan Bank as Administrative Agent and Citibank, N.A.,
as Administrative Agent.
** 10a. Bristol-Myers Squibb Company 1997 Stock Incentive Plan, *
effective as of May 6, 1997 and as amended effective
November 3, 1998 (incorporated herein by reference to Exhibit
10a to the Form 10-K for the fiscal year ended December 31,
1998).
** 10b. Bristol-Myers Squibb Company Executive Performance Incentive *
Plan (incorporated herein by reference to Exhibit 10b to the
Form 10-K for the fiscal year ended December 31, 1996).
** 10c. Bristol-Myers Squibb Company 1983 Stock Option Plan, as *
amended and restated as of January 1, 1997, as amended
November 3, 1998 (incorporated herein by reference to Exhibit
10c to the Form 10-K for the fiscal year ended December 31,
1998).
** 10d. Squibb Corporation 1982 Option, Restricted Stock and *
Performance Unit Plan, as amended (incorporated by reference
to Exhibit 10b to the Form 10-K for the fiscal year ended
December 31, 1993).
** 10e. Squibb Corporation 1986 Option, Restricted Stock and Performance *
Unit Plan, as amended (as adopted, incorporated herein by
reference to Exhibit 10k to the Squibb Corporation Form 10-K
for the fiscal year ended December 31, 1988, File No. 1-5514,
as amended July 1, 1993, incorporated herein by reference to
Exhibit 10c to the Form 10-K for the fiscal year ended December
31, 1993).
68
<PAGE>
Exhibit Number and Description Page
------------------------------ ------
** 10f. Bristol-Myers Squibb Company Performance Incentive Plan, as *
amended (as adopted, incorporated herein by reference to
Exhibit 2 to the Form 10-K for the fiscal year ended
December 31, 1978; as amended as of January 8, 1990,
incorporated herein by reference to Exhibit 19b to the Form
10-K for the fiscal year ended December 31, 1990; as amended
on April 2, 1991, incorporated herein by reference to
Exhibit 19b to the Form 10-K for the fiscal year ended
December 31, 1991; as amended effective on January 1,1994,
and incorporated herein by reference to Exhibit 10d to
the Form 10-K for the fiscal year ended December 31, 1994).
** 10g. Benefit Equalization Plan of Bristol-Myers Squibb Company *
and its Subsidiary or Affiliated corporations Participating
in the Bristol-Myers Squibb Company Retirement Income Plan
or the Bristol-Myers Squibb Puerto Rico, Inc. Retirement
Income Plan, as amended (as amended and restated as of January
1, 1993, as amended effective October 1, 1993, incorporated
herein by reference to Exhibit 10e to the Form 10-K for the
fiscal year ended December 31, 1993 and amended effective
February 1, 1995, incorporated by reference to Exhibit 10e to
the Form 10-K for the fiscal year ended December 31, 1995).
** 10h. Benefit Equalization Plan of Bristol-Myers Squibb Company *
and its Subsidiary or Affiliated Corporation Participating
in the Bristol-Myers Squibb Company Savings and Investment
Program, as amended (as amended and restated as of
May 1, 1990, incorporated herein by reference to Exhibit 19d
to the Form 10-K for the fiscal year ended December 31, 1990;
as amended as of January 1, 1991, incorporated herein by
reference to Exhibit 19g to the Form 10-K for the fiscal year
ended December 31, 1990; as amended as of January 1, 1991,
incorporated herein by reference to Exhibit 19e to the Form 10-
K for the fiscal year ended December 31, 1991; as amended as of
October 1, 1994, incorporated herein by reference to Exhibit
10f of the Form 10-K for the fiscal year ended December 31, 1994).
** 10i. Squibb Corporation Supplementary Pension Plan, as amended (as *
previously amended and restated, incorporated herein by
reference to Exhibit 19g to the Form 10-K for the fiscal year
ended December 31, 1991; as amended on September 14, 1993,
incorporated by reference to Exhibit 10g to the Form 10-K
for the fiscal year ended December 31, 1993).
69
<PAGE>
Exhibit Number and Description Page
------------------------------ ------
** 10j. Bristol-Myers Squibb Company Restricted Stock Award Plan, as *
amended (as adopted on November 7, 1989, incorporated herein
by reference to Exhibit 10t to the Form 10-K for the fiscal
year ended December 31, 1989; as amended on December 4, 1990,
incorporated herein by reference to Exhibit 19a to the
Form 10-K for the fiscal year ended December 31, 1990; as
amended July 1, 1993, incorporated by reference to Exhibit 10h
to the Form 10-K for the fiscal year ended December 31, 1993;
as amended effective December 6, 1994, incorporated by
reference to Exhibit 10h to the Form 10-K for the fiscal year
Ended January 31, 1994).
** 10k. Bristol-Myers Squibb Company Retirement Income Plan for *
Non-Employee Directors, as amended to March 5,1996
(incorporated herein by reference to Exhibit 10k to the
Form 10-K for the fiscal year ended December 31, 1996).
** 10l. Bristol-Myers Squibb Company 1987 Deferred Compensation *
Plan for Non-Employee Directors, as amended to January 13,
1998, (incorporated herein by reference to Exhibit 10l to
the Form 10-K for the fiscal year ended December 31, 1997).
** 10m. Bristol-Myers Squibb Company Non-Employee Directors' Stock *
Option Plan, as amended (as approved by the Stockholders on
May 1, 1990, incorporated herein by reference to Exhibit 28
to Registration Statement No. 33-38587 on Form S-8; as amended
May 7, 1991, incorporated herein by reference to Exhibit 19c to
the Form 10-K for the fiscal year ended December 31, 1991; as
amended January 12, 1999, incorporated herein by reference to
Exhibit 10m to the Form 10-K for the fiscal year ended December
31, 1998).
** 10n. Squibb Corporation Deferral Plan for Fees of Outside Directors, *
as amended (as adopted, incorporated herein by reference to
Exhibit 10e to the Squibb Corporation Form 10-K for the
fiscal year ended December 31, 1987, File No. 1-5514; as
amended effective December 31, 1991, incorporated herein
by reference to Exhibit 10m to the Form 10-K for the fiscal
year ended December 31, 1992).
70
<PAGE>
Exhibit Number and Description Page
------------------------------ ------
** 10o. Amendment to all of the Company's plans, agreements, legal *
documents and other writings, pursuant to action of the Board
of Directors on October 3, 1989, to reflect the change of the
Company's name to Bristol-Myers Squibb Company (incorporated
herein by reference to Exhibit 10v to the Form 10-K for the
fiscal year ended December 31, 1989).
** 10p. Employment agreement of March 12, 1999 for Charles A. *
Heimbold, Jr. (incorporated herein by reference to Exhibit
10p to the Form 10-K for the fiscal year ended December 31,
1998).
** 10q. Form of Agreement, effective June 1, 1999, entered into *
between the Registrant and each of the following officers on
the following dates: 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. (incorporated herein by reference to
Exhibit 10q to the Form 10-Q for the quarterly period ended
September 30, 1999).
21. Subsidiaries of the Registrant. E-3-1
23. Consent of PricewaterhouseCoopers LLP. E-4-1
27. Bristol-Myers Squibb Company Financial Data Schedule. E-5-1
99. Additional Exhibit E-6-1
71
<PAGE>
SCHEDULE II
---------------------
BRISTOL-MYERS SQUIBB COMPANY
VALUATION AND QUALIFYING ACCOUNTS
(dollars in millions)
Additions
Balance at charged to Deductions- Balance at
beginning costs and bad debts end
Description of period expenses written off of period
- ----------- ----------- ---------- ------------ -----------
Allowances for
discounts and
doubtful accounts:
For the year ended
December 31, 1999 $147 $65 $44 $168
For the year ended
December 31, 1998 $109 $57 $19 $147
For the year ended
December 31, 1997 $107 $19 $17 $109
S-1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
* * * * *
Bristol-Myers Squibb Company, a corporation organized
and existing under and by virtue of the General Corporation
Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of
December 1, 1998 resolutions were duly adopted setting forth
a proposed amendment to the Certificate of Incorporation of
said corporation, declaring said amendment to be advisable
and calling a meeting of the stockholders of said
corporation for consideration thereof. The resolution
setting forth the proposed amendment is as follows:
RESOLVED, That the Certificate of Incorporation of
this corporation be amended by changing the FOURTH
Article thereof so that, as amended said Article
shall be and read as follows:
"FOURTH: the total number of shares of all
classes of stock which the corporation shall have
authority to issue is four billion, five-hundred
ten million (4,510,000,000) shares consisting of:
1. 4,500,000,000 shares of Common Stock of the par value
of Ten Cents ($0.10) per share, and
2. 10,000,000 shares of Preferred Stock of the par value
of
One Dollar ($1.00) per share."
SECOND: That thereafter, pursuant to resolution of
its Board of Directors, the Annual Meeting of Stockholders
of said corporation was duly called and held May 4, 1999,
upon notice in accordance with Section 222 of the General
Corporation Law of the
E-1-1
<PAGE>
State of Delaware, at which meeting the necessary number of
shares as required by statute were voted in favor of the
amendment.
THIRD: That said amendment was duly adopted in
accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this
certificate to be signed by Alice C. Brennan, its Vice
President and Secretary, this 5th day of May, 1999.
By: /s/ Alice C. Brennan
______________________
Vice President & Secretary
E-1-2
--------------------------------------------------------------------------
BRISTOL-MYERS SQUIBB COMPANY
---------------
BYLAWS
As Adopted on November 1, 1965
And as Amended to January 20, 2000
---------------
--------------------------------------------------------------------------
E-2-1
<PAGE>
INDEX
BYLAW NO. SUBJECT Page No.
1. Principal Office E-2-5
2. Other Offices E-2-5
3. Seal E-2-5
4. Meetings of Shareholders -- Date and Time E-2-5
5. Meetings of Shareholders -- Place E-2-6
6. Meetings of Shareholders -- No Action By Written
Consent, Call E-2-6
7. Meetings of Shareholders -- Notice E-2-6
8. Meetings of Shareholders -- Quorum E-2-6
9. Meetings of Shareholders -- Presiding Officer and
Secretary E-2-7
10. Meetings of Shareholders -- Voting E-2-7
11. Meetings of Shareholders -- Voting List E-2-7
12. Annual Meeting of Shareholders -- Statement of Business
and Condition of Company E-2-7
13. Meetings of Shareholders -- Inspectors of Election E-2-7
14. Board of Directors -- Powers E-2-8
15. Board of Directors -- Number, Election, Term, Resignation
or Retirement, Removal and Filling Vanancies E-2-8
16. Board of Directors -- Location of Meetings and Books E-2-9
17. Board of Directors -- Scheduling of Regular Meetings E-2-9
18. Board of Directors -- Scheduling of Special Meetings E-2-9
E-2-2
<PAGE>
BYLAW NO. SUBJECT Page No.
19. Board of Directors -- Waiver of Meeting Notice and
Action by Consent E-2-9
20. Board of Directors -- Quorum for Meeting E-2-9
21. Board of Directors -- Meeting Procedure E-2-10
22. Board of Directors -- Fees E-2-10
23. Board of Directors -- Indemnification E-2-10
24. Committees of the Board -- Executive, Audit, Others E-2-11
25. Committees of the Board -- Minutes and Reports E-2-12
26. Officers E-2-12
27. Officers -- Election and Term E-2-12
28. Appointment of Other Officers, Committees or Agents E-2-13
29. Officers -- Removal E-2-13
30. Officers -- Resignation E-2-13
31. Officers -- Unable to Perform Duties E-2-13
32. Officers -- Vacancy E-2-13
33. The Chairman of the Board -- Powers and Duties E-2-13
34. Vice Chairman of the Board -- Powers and Duties E-2-13
35. Duties of President E-2-13
36. Vice Presidents -- Powers and Duties E-2-14
37. The Treasurer -- Powers and Duties E-2-14
E-2-3
<PAGE>
BYLAW NO. SUBJECT Page No.
38. The Secretary -- Powers and Duties E-2-14
39. The Controller -- Powers and Duties E-2-14
40. Assistant Treasurers and Assistant Secretaries --
Powers and Duties E-2-14
41. Officers -- Compensation E-2-14
42. Contracts, Other Instruments, Authority to Enter
Into or Execute E-2-15
43. Loans and Negotiable Paper E-2-15
44. Checks, Drafts, etc. E-2-15
45. Banks -- Deposit of Funds E-2-15
46. Stock Certificates -- Form, Issuance E-2-15
47. Stock -- Transfer E-2-15
48. Stock Certificates -- Loss, Replacement E-2-16
49. Record Dates E-2-16
50. Registered Shareholders E-2-16
51. Fiscal Year E-2-17
52. Notices E-2-17
53. Notices -- Waiver E-2-17
54. Amendments of Bylaws E-2-17
E-2-4
<PAGE>
BYLAWS
of
BRISTOL-MYERS SQUIBB COMPANY
OFFICES.
1. The registered office of the Company shall be in the City of Wilmington,
County of New Castle, State of Delaware, and the name of the resident agent
in charge thereof is The Corporation Trust Company.
2. The Company may also have offices at such place or places as the Board of
Directors may from time to time appoint or the business of the Company may
require.
SEAL.
3. The corporate seal shall have inscribed thereon the name of the Company,
the year of its organization and the words "Corporate Seal, Delaware." Said
seal may be used in causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
MEETINGS OF SHAREHOLDERS.
4. The annual meeting of the shareholders for the election of directors and
for the transaction of any other proper business shall be held at such time
as the Board of Directors may determine. For nominations or other business
to be properly brought before any annual meeting by a shareholder, a
shareholder must give timely notice in writing thereof to the Secretary of
the Company and, in the case of business other than nominations, such other
business must be a proper matter for shareholder action. To be considered
timely, a shareholder's notice must be received by the Secretary at the
principal executive offices of the Company not less than 120 calendar days
before the date of the Company's proxy statement released to shareholders in
connection with the prior year's annual meeting. If the annual meeting for
the election of directors is not held on the date designated therefor, the
directors shall cause the meeting to be held as soon thereafter as convenient.
A shareholder's notice shall set forth: (a) as to each person whom the
shareholder proposes to nominate for election or re-election as a director,
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, including such person's written
consent to being named in the proxy statement as a nominee and to serving as
a director if elected; (b) as to any other business that the shareholder
proposes to bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such business of such
shareholder and the beneficial owner, if any, on whose behalf the proposal
is made and (c) as to
E-2-5
the shareholder giving the notice and the beneficial owner, if any, on
whose behalf the nomination or proposal is made (i) the name and address of
such shareholder, as they appear on the Company's books, and of such
beneficial owner, (ii) the number of shares of stock held of record and
beneficially by such shareholder and such beneficial owner, (iii) the name
in which all such shares of stock are registered on the stock transfer books
of the Company, (iv) a representation that the shareholder intends to appear
at the meeting in person or by proxy to submit the business specified in such
notice, (v) a brief description of the business desired to be submitted to
the annual meeting, including the complete text of any resolutions intended to
be presented at the annual meeting, and the reasons for conducting such
business at the annual meeting, (vi) any personal or other material interest
of the shareholder in the business to be submitted, and (vii) all other
information relating to the proposed business which may be required to be
disclosed under applicable law. In addition, a shareholder seeking to submit
such business at the meeting shall promptly provide any other information
reasonably requested by the Company. The chairman of the meeting shall
determine all matters relating to the efficient conduct of the meeting,
including, but not limited to, the items of business, as well as the
maintenance of order and decorum. The chairman shall, if the facts warrant,
determine and declare that any putative business was not properly brought
before the meeting in accordance with the procedures prescribed by this bylaw,
in which case such business shall not be transacted. Notwithstanding the
foregoing provisions of this bylaw, a shareholder who seeks to have any
proposal included in the Company's proxy materials shall comply with the
requirements of Rule 14a-8 under Regulation 14A of the Securities Exchange
Act of 1934.
5. Meetings of the shareholders may be held at such places either within or
without the State of Delaware as the Board of Directors may determine.
6. Any action required or permitted to be taken by the stockholders of the
Company must be effected at a duly called annual or special meeting of such
stockholders and may not be effected by any consent in writing by such
stockholders. Except as otherwise required by law and subject to the rights
under Article FOURTH of the Certificate of Incorporation of the Company of
the holders of any class or series of stock having a preference over the
Common Stock as to dividends or upon liquidation, special meetings of
stockholders of the Company may be called only by the Chairman of the Board
or by the Board of Directors pursuant to a resolution approved by a majority
of the entire Board of Directors.
7. Except as hereinafter provided or as may be otherwise required by law,
notice of the place, date and hour of holding each annual and special meeting
of the shareholders shall be in writing and shall be delivered personally or
mailed in a postage prepaid envelope, not less than ten days before such
meeting, to each person who appears on the books of the Company as a
shareholder entitled to vote at such meeting, and to any shareholders who,
by reason of any action proposed at such meeting, would be entitled to have
their shares appraised if such action were taken. The notice of every special
meeting, besides stating the time and place of such meeting, shall state
briefly the purpose or purposes thereof; and no business other than that
specified in such notice or germane thereto shall be transacted at the
meeting, except with the unanimous consent in writing of the holders of record
of all of the shares of the Company entitled to vote at such meeting. Notice
of any meeting of shareholders shall not be required to be given to any
shareholder entitled to participate in any action proposed to be taken at
such meeting who shall attend such meeting in person or by proxy or who
before or after any such meeting shall waive notice thereof in writing or by
telegram, cable or wireless. Notice of any adjourned meeting need not be given.
8. At all meetings of shareholders of the Company, except as otherwise
provided by law, the holders of a majority in number of the outstanding shares
of the Company, present in person or by proxy and entitled to vote thereat,
shall constitute a quorum for the transaction of business. In the absence of
a quorum the holders of a majority in number of the shares of stock so present
or represented and entitled to vote may adjourn the meeting from time to time
until a quorum is present. At any such adjourned meeting at which a quorum
is present any business may be transacted which might have been transacted at
the meeting as originally called.
E-2-6
<PAGE>
9. The Chairman of the Board shall preside as chairman at every meeting of
shareholders. The Chairman of the Board may designate another officer of the
Company or any shareholder to preside as chairman of a meeting of shareholders
in place of the Chairman of the Board and in the absence of the Chairman of
the Board and an officer or shareholder designated by the Chairman of the
Board to preside as chairman of the meeting, the Board of Directors may
designate an officer or shareholder to preside as chairman of the meeting.
In the event the Chairman of the Board and the Board of Directors fail to so
designate a chairman of the meeting the shareholders may designate an officer
or shareholder as chairman. The Secretary shall act as secretary of the
meeting, or, in the absence of the Secretary, the presiding officer shall
appoint a secretary of the meeting.
10. At each meeting of the shareholders every shareholder of record entitled
to vote thereat shall be entitled to one vote for each share of the Company
standing in that shareholder's name on the books of the Company provided that
no share of stock shall be voted at any election of directors which shall
have been transferred on the books of the Company later than the record date
announced by the Board of Directors or fixed by operation of these bylaws
The vote on shares may be given by the shareholder entitled thereto in person
or by proxy duly appointed by an instrument in writing subscribed by such
shareholder or that shareholder's duly authorized attorney (or in any other
manner prescribed by the General Corporation Law of the State of Delaware),
and delivered to the secretary of the meeting; provided, however, that no
proxy shall be valid after the expiration of three years from the date of
its execution unless the shareholder executing it shall have specified
therein the length of time it is to continue in force, which shall be for
some limited period. At all meetings of shareholders, a quorum being present,
all matters, except as otherwise provided by law or by the Certificate of
Incorporation of the Company or these bylaws, shall be decided by the holders
of a majority in number of the shares of stock of the Company present in
person or by proxy and entitled to vote. A share vote may be by ballot and
each ballot shall state the name of the shareholder voting and the number
of shares owned by that shareholder and shall be signed by such shareholder
or by that shareholder's proxy. Except as otherwise required by law or by
these bylaws all voting may be viva voce.
11. The Secretary or other officer in charge of the stock ledger of the
Company shall prepare and make at least ten days before every meeting of
shareholders a complete list of the shareholders entitled to vote at the
meeting arranged in alphabetical order and showing the address of each
shareholder and the number of shares registered in the name of each
shareholder. Such list shall be open to the examination of any shareholder
for any purpose germane to the meeting during ordinary business hours for a
period of at least ten days prior to the meeting either at a place within
the city where the meeting is to be held, which place shall be specified in
the notice of the meeting, or if not so specified at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof and may be inspected
by any shareholder who is present. The stock ledger shall be the only
evidence as to who are the shareholders entitled to examine the stock
ledger, the list required by this bylaw, or the books of the Company or to
vote in person or by proxy at any meeting of shareholders.
12. The Board of Directors shall present at each annual meeting, and when
called for by vote of the shareholders at any special meeting of the
shareholders, a full and clear statement of the business and condition of
the Company.
13. At all elections of directors and when otherwise required by law, the
chairman of the meeting shall appoint two inspectors of election. The
inspectors shall be responsible for receiving, tabulating and reporting the
result of the votes taken. No director or candidate for the office of
director shall be appointed such inspector. The chairman of the meeting shall
open and close the polls.
E-2-7
<PAGE>
DIRECTORS.
14. The property, business and affairs of the Company shall be managed by
or under the direction of the Board of Directors, which may exercise all
such powers of the Company and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these bylaws
directed or required to be exercised or done by the shareholders.
15. (a) The Board of Directors shall consist of twelve directors. Directors
need not be shareholders. The number of directors may be determined by a
majority vote of the entire Board of Directors.
(b) Except as otherwise provided by the Certificate of Incorporation, by
these bylaws or by law, at each meeting of the shareholders for the election
of directors at which a quorum shall be present, the persons receiving a
plurality of the votes cast shall be directors. Such election shall be by
ballot.
(c) The directors, other than those who may be elected by the holders of any
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, shall be classified, with respect to the time
for which they severally hold office, into three classes, as nearly equal in
number as possible, as determined by the Board of Directors, one class to be
originally elected for a term expiring at the annual meeting of stockholders
to be held in 1985, another class to be originally elected for a term expiring
at the annual meeting of stockholders to be held in 1986, and another class
to be originally elected for a term expiring at the annual meeting of
stockholders to be held in 1987, with the directors of each class to hold
office until their successors are elected and qualified. At each annual
meeting of the stockholders, the successors of the class of directors whose
term expires at that meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the third year
following the year of their election. No decrease in the number of directors
constituting the Board of Directors or change in the restrictions and
qualifications for directors shall shorten the term of any incumbent director.
(d) Except as otherwise provided in the Certificate of Incorporation or in
these bylaws, each director shall continue in office until the expiration of
his term of office and until a successor shall have been elected and shall
have qualified, or until the director shall have resigned, or, in the case of
a director who is an employee of the Company, until the director shall have
resigned from employment with the Company or the director's employment shall
have been terminated by the Company. In addition, a director who is not an
employee of the Company or who is the Chief Executive Officer of the Company
or a retired Chief Executive Officer of the Company shall retire from the
position of director at the Annual Meeting following attainment of age 70; an
employee who is a director of the Company (other than the Chief Executive
Officer or a retired Chief Executive Officer) shall retire from the position
of director on the effective date of the director's retirement as an employee
of the Company. Any director of the Company may resign at any time by giving
written notice to the Chairman of the Board or to the Secretary of the Company.
Such resignation shall take effect at the time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. Exceptions to the requirements for the
retirement of a director may be made by the Board of Directors.
(e) Subject to the rights under Article FOURTH of the Certificate of
Incorporation of any class or series of stock having a preference over the
Common Stock as to dividends or upon liquidation to elect directors under
specified circumstances, any director or entire class of directors or the
entire Board of Directors may be removed from office, with or without cause,
only by the affirmative
E-2-8
<PAGE>
vote of the holders of at least 75% of the outstanding shares of stock of
the Company entitled to vote generally in the election of directors, voting
together as a single class.
(f) Subject to the rights under Article FOURTH of the Certificate of
Incorporation of the Company of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation
to elect directors under specified circumstances, newly created directorships
resulting from any increase in the number of directors and any vacancies on
the Board of Directors resulting from death, resignation, retirement,
disqualification, removal or other cause shall be filled only by the
affirmative vote of a majority of the remaining directors then in office,
even though less than a quorum of the Board of Directors. Any director elected
in accordance with the preceding sentence shall hold office for the remainder
of the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified.
16. The directors may hold their meetings and keep the books of the Company
at such place or places as they may from time to time determine.
17. Regular meetings of the Board of Directors may be held at such time as
may be fixed from time to time by resolution of the Board of Directors.
Unless required by said resolution, notice of any such meeting need not be
given.
18. Special meetings of the Board of Directors shall be held whenever called
by direction of the Chairman of the Board or any of three of the directors
for the time being in office. Notice of each such special meeting shall be
mailed, postage prepaid, to each director, addressed to the director at the
director's residence or usual place of business, at least two days before
the day on which the meeting is to be held, or shall be sent to the director
at such place by telegraph, cable, or wireless, or be delivered personally
or by telephone, not later than the day before the day on which the meeting
is to be held. Every such notice shall state the time and place but, except
as provided by these bylaws or by resolution of the Board of Directors, need
not state the purposes of the meetings.
19. Anything in these bylaws or in any resolution adopted by the Board of
Directors to the contrary notwithstanding, notice of any meeting of the
Board of Directors need not be given to any director, if, before or after
any such meeting, notice thereof shall be waived by such director in writing
or by telegraph, cable or wireless. Any meeting of the Board of Directors
shall be a legal meeting without any notice having been given or regardless
of the giving of any notice or the adoption of any resolution in reference
thereto, if all the directors shall be present thereat or shall have so
waived notice thereof. Any action required or permitted to be taken at any
meeting of the Board of Directors may be taken without a meeting, if prior
to such action a written consent thereto is signed by all members of the
Board and such written consent is filed with the minutes of proceedings of
the Board of Directors.
20. Five of the directors in office at the time of any regular or special
meeting of the Board of Directors shall constitute a quorum for the
transaction of business at such meeting and except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation or by
these bylaws, the act of a majority of the directors present at any such
meeting at which a quorum is present shall be the act of the Board of
Directors. In the absence of a quorum a majority of the directors present
may adjourn any meeting from time to time until a quorum is present. Notice
of any adjourned meeting need not be given. The directors shall act only as
a board and the individual directors shall have no power as such.
E-2-9
<PAGE>
21. At each meeting of the Board of Directors the Chairman of the Board
shall preside. The Chairman of the Board may designate another member of
the Board of Directors to preside as chairman of a meeting in place of the
Chairman of the Board and in the absence of the Chairman of the Board and
any member of the Board of Directors designated by the Chairman of the Board
to preside as chairman of the meeting a majority of the directors present
may designate a member of the Board of Directors as chairman to preside at
the meeting. The Secretary of the Company or, in the absence of the
Secretary, a person appointed by the chairman of the meeting, shall act as
secretary of the Board of Directors. The Board of Directors may adopt such
rules and regulations for the conduct of their meetings and the management of
the affairs of the Company as they shall deem proper and not inconsistent
with the law or with these bylaws. At all meetings of the Board of Directors
business shall be transacted in such order as the Board of Directors may
determine.
22. Each director shall be paid such fee, if any, for each meeting of the
Board attended and/or such annual fee as shall be determined from time to
time by resolution of the Board of Directors, provided that nothing herein
contained shall be construed to prevent any director from serving the Company
in any other capacity and receiving compensation therefor.
23. (a) Definitions. As used herein, the term "director" shall include each
present and former director of the Company and the term "officer" shall
include each present and former officer of the Company as such, and the
terms "director" and "officer" shall also include each employee of the
Company, who, at the Company's request, is serving or may have served as a
director or officer of another corporation in which the Company owns directly
or indirectly, shares of capital stock or of which it is a creditor. The
term "officer" also includes each assistant or divisional officer. The term
"expenses" shall include, but not be limited to, reasonable amounts for
attorney's fees, costs, disbursements and other expenses and the amount or
amounts of judgments, fines, penalties and other liabilities.
(b) Indemnification Granted. Each director and officer shall be and hereby
is indemnified by the Company, to the full extent permitted by law, against:
(i) expenses incurred or paid by the director or officer in connection with
any claim made against such director or officer, or any actual or threatened
action, suit or proceeding (civil, criminal, administrative, investigative or
other, including appeals and whether or not relating to a date prior to the
adoption of this bylaw) in which such director or officer may be involved as
a party or otherwise, by reason of being or having been a director or officer
of the Company, or of serving or having served at the request of the Company
as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action taken or not taken by such director or officer in such capacity, and
(ii) the amount or amounts paid by the director or officer in settlement of
any such claim, action, suit or proceeding or any judgment or order entered
therein, however, notwithstanding anything to the contrary herein where a
director or officer seeks indemnification in connection with a proceeding
voluntarily initiated by such director or officer the right to indemnification
granted hereunder shall be limited to proceedings where such director or
officer has been wholly successful on the merits.
E-2-10
<PAGE>
(c)Miscellaneous.
(i) Expenses incurred and amounts paid in settlement with respect to any
claim, action, suit or proceeding of the character described in
paragraph (b)(i) above may be advanced by the Company prior to the final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amounts as shall not ultimately be determined to be
payable to such recipient under this bylaw.
(ii) The rights of indemnification herein provided for shall be severable,
shall not be exclusive of other rights to which any director or officer now
or hereafter may be entitled, shall continue as to a person who has ceased
to be an indemnified person and shall inure to the benefit of the heirs,
executors, administrators and other legal representatives of such a person.
(iii) The provisions of this bylaw shall be deemed to be a contract between
the Company and each director or officer who serves in such capacity at any
time while such bylaw is in effect.
(iv) The Board of Directors shall have power on behalf of the Company to
grant indemnification to any person other than a director or officer to such
extent as the Board in its discretion may from time to time determine.
COMMITTEES OF THE BOARD.
24. (a) The Board of Directors may, by resolution or resolutions, passed by a
majority of the whole Board of Directors, designate an Executive Committee
(and may discontinue the same at any time) to consist of three or more of the
Directors of the Company. The members shall be appointed by the Board of
Directors and shall hold office during the pleasure of the Board of Directors;
provided, however, that in the absence or disqualification of any member of
the Executive Committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not the member or members
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or
disqualified member. The Executive Committee shall have and may exercise,
during the intervals between the meetings of the Board of Directors, all of
the powers of the Board of Directors in the management of the business and
affairs of the Company (and shall have power to authorize the seal of the
Company to be affixed to all papers which may require it), except that the
Executive Committee shall have no power to (i) elect Directors to fill any
vacancies or appoint any officers; (ii) fix the compensation of any officer
or the compensation of any Director for serving on the Board of Directors or
on any committee; (iii) declare any dividend or make any other distribution
to the shareholders of the Company; (iv) submit to shareholders any action
that needs shareholder authorization; (v) amend or repeal the bylaws or adopt
any new bylaw; (vi) amend or repeal any resolution of the Board of Directors
which by its terms shall not be so amendable or repealable; (vii) take any
final action with respect to the acquisition or disposition of any business
at a price in excess of $20,000,000.
(b) The Board of Directors shall, by resolution or resolutions, passed by a
majority of the whole Board of Directors designate an Audit Committee to
consist of three or more non-employee directors of
E-2-11
<PAGE>
the Company free from any relationship that, in the opinion of the Board of
Directors, would interfere with the exercise of independent judgment as a
Committee member. Any director who is a former employee of the Company may
not serve on the Audit Committee. The members of the Audit Committee shall
be appointed by and hold office during the pleasure of the Board of Directors.
A majority of the members of the Audit Committee will constitute a quorum for
the transaction of business. It shall be the duty of the Audit Committee
(i) to recommend to the Board of Directors a firm of independent accountants
to perform the examination of the annual financial statements of the Company;
(ii) to review with the independent accountants and with the Controller the
proposed scope of the annual audit, past audit experience, the Company's
internal audit program, recently completed internal audits and other matters
bearing upon the scope of the audit; (iii) to review with the independent
accountants and with the Controller significant matters revealed in the
course of the audit of the annual financial statements of the Company;
(iv) to review on a biennial basis that the Company's Standards of Business
Conduct have been communicated by the Company to all key employees of the
Company and its subsidiaries throughout the world with a direction that all
such key employees certify that they have read, understand and are not aware
of any violation of the Standards of Business Conduct; (v) to review with
the Controller any suggestions and recommendations of the independent
accountants concerning the internal control standards and the accounting
procedures of the Company; (vi) to meet on a regular basis with a
representative or representatives of the Internal Audit Department of the
Company and to review the Internal Audit Department's Reports of Operations;
(vii) to report its activities and actions to the Board of Directors at
least once each fiscal year.
(c) The Board of Directors may, by resolution or resolutions passed by a
majority of the whole Board of Directors, designate such other committees
as may be deemed advisable (and may discontinue the same at any time), to
consist of two or more of the directors of the Company. The members shall
be appointed by and shall hold office during the pleasure of the Board of
Directors, and the Board of Directors shall prescribe the name or names of
such committees, the number of their members and their duties and powers.
(d) Any action required or permitted to be taken at any meeting of any
committee may be taken without a meeting, if prior to such action a written
consent thereto is signed by all members of the committee and such written
consent is filed with the minutes of proceedings of the committee.
25. All committees shall keep written minutes of their proceedings and report
the same to the Board of Directors when required.
OFFICERS.
26. The officers of the Company shall be a Chairman of the Board, a Vice
Chairman of the Board, a President, two or more Vice Presidents (which shall
include Senior Vice President, Executive Vice President and other Vice
President titles), a Treasurer, a Secretary, a Controller, and such other
officers as may be appointed in accordance with these bylaws. The Secretary
and Treasurer may be the same person, or a Vice President may hold at the
same time the office of Secretary, Treasurer, or Controller.
27. The officers of the Company shall be chosen by the Board of Directors.
Each officer shall hold office until a successor shall have been duly chosen
and shall have qualified or until the death or retirement of the officer or
until the officer shall resign or shall have been removed in the manner
hereinafter provided. The Chairman of the Board and the Vice Chairman of the
Board shall be chosen from among the directors.
E-2-12
<PAGE>
28. The Board of Directors may appoint such other officers, committees or
agents, as the business of the Company may require, including one or more
Assistant Treasurers and one or more Assistant Secretaries, each of whom
shall hold office for such period, and have such authority and perform such
duties as are provided in these bylaws or as the Board of Directors may from
time to time determine. The Board of Directors may delegate to any officer
or committee the power to appoint and to remove any such subordinate officer
or agent.
29. Subject to the provisions of any written agreement, any officer may be
removed, either with or without cause, by a vote of the majority of the whole
Board of Directors at a regular meeting or a special meeting called for the
purpose. Any officer, except an officer elected by the Board of Directors,
may also be removed, with or without cause, by any committee or superior
officer upon whom such power of removal may be conferred by the Board of
Directors.
30. Subject to the provisions of any written agreement, any officer may
resign at any time by giving written notice to the Board of Directors, the
Chairman of the Board or the Secretary of the Company. Any such resignation
shall take effect at the time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary
to make it effective.
31. Except as otherwise provided in these bylaws, in the event any officer
shall be unable to perform the duties of the office held, whether by reason
of absence, disability or otherwise, the Chairman of the Board may designate
another officer of the Company to assume the duties of the officer who is
unable to carry out the duties of the office; in the event the Chairman of
the Board shall be absent and unable to perform the duties of the office of
Chairman of the Board, the Chairman of the Board shall designate another
officer to assume the duties of the Chairman of the Board; if another officer
has not been designated by the Chairman of the Board to assume the duties of
the Chairman of the Board, then the Board of Directors shall designate
another officer to assume the duties of the Chairman of the Board; in the
event the Chairman of the Board shall be disabled and unable to perform the
duties of the office of Chairman of the Board, then the Board of Directors
shall designate another officer to assume the duties of the Chairman of the
Board. Any officer designated to assume the duties of another officer shall
have all the powers of and be subject to all the restrictions imposed upon
the officer whose duties have been assumed.
32. A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled for the unexpired portion
of the term in the manner prescribed by these bylaws for the regular
appointment or election to such office.
33. The Chairman of the Board shall be the chief executive officer of the
Company and shall have general supervision of the business and operations
of the Company, subject, however, to the control of the Board of Directors.
The Chairman of the Board shall preside at all meetings of the shareholders
and of the Board of Directors. The Chairman of the Board shall perform all
of the duties usually incumbent upon a chief executive officer of a
corporation and incident to the office of the Chairman of the Board. The
Chairman of the Board shall also have such powers and perform such duties
as are assigned by these bylaws and shall have such other powers and perform
such other duties, not inconsistent with these bylaws, as may from time to
time be assigned by the Board of Directors.
34. The Vice Chairman shall have such powers and perform such duties as are
assigned by these bylaws and shall have such other powers and perform such
other duties, not inconsistent with these bylaws, as from time to time may be
assigned by the Board of Directors or the Chairman of the Board.
35. The President shall have such powers and perform such duties as are
assigned by these bylaws and shall have such other powers and perform such
other duties, not inconsistent with these bylaws, as from time to time
E-2-13
<PAGE>
may be assigned by the Board of Directors or the Chairman of the Board.
36. Each Vice President shall have such powers and perform such duties as
are assigned by these bylaws and shall have such other powers and perform
such other duties, not inconsistent with these bylaws, as from time to time
may be assigned by the Board of Directors or the Chairman of the Board.
37. The Treasurer shall have charge and custody of, and be responsible for,
all funds of the Company. The Treasurer shall regularly enter or cause to
be entered in books to be kept by the Treasurer or under the Treasurer's
direction for this purpose full and adequate account of all moneys received
or paid by the Treasurer for the account of the Company; the Treasurer shall
exhibit such books of account and records to any of the directors of the
Company at any time upon request at the office of the Company where such
books and records shall be kept and shall render a detailed statement of
these accounts and records to the Board of Directors as often as it shall
require the same. The Treasurer shall also have such powers and perform such
duties as are assigned the Treasurer by these bylaws and shall have such
other powers and perform such other duties, not inconsistent with these bylaws,
as from time to time may be assigned by the Board of Directors.
38. It shall be the duty of the Secretary to act as Secretary of all meetings
of the Board of Directors and of the shareholders of the Company, and to keep
the minutes of all such meetings in the proper book or books to be provided
for that purpose; the Secretary shall see that all notices required to be
given by or for the Company or the Board of Directors or any committee are
duly given and served; the Secretary shall be custodian of the seal of the
Company and shall affix the seal, or cause it to be affixed, to all documents,
the execution of which on behalf of the Company, under its seal shall have
been duly authorized in accordance with the provisions of these bylaws. The
Secretary shall have charge of the share records and also of the other books,
records, and papers of the Company relating to its organization and management
as a corporation and shall see that the reports, statements and other
documents required by law are properly kept and filed; and shall in general
perform all the duties usually incident to the office of Secretary. The
Secretary shall also have such powers and perform such duties as are assigned
by these bylaws, and shall have such other powers and perform such other
duties, not inconsistent with these bylaws, as from time to time may be
assigned by the Board of Directors.
39. The Controller shall perform the usual duties pertaining to the office of
the Controller. The Controller shall have charge of the supervision of the
accounting system of the Company, including the preparation and filing of
all reports required by law to be made to any public authorities and
officials, and shall also have such powers and perform such duties, not
inconsistent with these bylaws, as from time to time may be assigned by the
Board of Directors.
40. The Assistant Treasurers and the Assistant Secretaries shall have such
powers and perform such duties as are assigned to them by these bylaws and
shall have such other powers and perform such other duties, not inconsistent
with these bylaws, as from time to time may be assigned to them by the
Treasurer or the Secretary, respectively, or by the Board of Directors.
41. The compensation of the Chairman of the Board, Vice Chairman of the Board,
President, Vice President, Treasurer, Secretary and Controller shall be fixed
by the Board of Directors. The compensation of such other officers as may be
appointed in accordance with the provisions of these bylaws may be fixed by
the Chairman of the Board. No officer shall be prevented from receiving such
compensation by reason of also being a director of the Company.
E-2-14
<PAGE>
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
42. The Board of Directors except as in these bylaws otherwise provided, may
authorize any officer or officers, agent or agents, in the name of and on
behalf of the Company, to enter into any contract or execute and deliver any
instrument, and such authority may be general or confined to specific
instances; and, unless so authorized by the Board of Directors or expressly
authorized by these bylaws, no officer or agent or employee shall have any
power or authority to bind the Company by any contract or engagement or to
pledge its credit or to render it pecuniarily liable for any purpose or to
any amount.
43. No loans shall be contracted on behalf of the Company and no negotiable
paper shall be issued in its name unless authorized by resolution of the
Board of Directors. When authorized by the Board of Directors, any officer
or agent of the Company thereunto authorized may effect loans and advances at
any time for the Company from any bank, trust company, or other institution,
or from any firm, corporation or individual, and for such loans and advances
may make, execute and deliver promissory notes, bonds, or other certificates
or evidences of indebtedness of the Company and, when authorized so to do,
may pledge, hypothecate or transfer any securities or other property of the
Company as security for any such loans or advances. Such authority may be
general or confined to specified instances.
44. All checks, drafts and other orders for the payment of moneys out of the
funds of the Company and all notes or other evidences of indebtedness of the
Company shall be signed on behalf of the Company in such manner as shall from
time to time be determined by resolution of the Board of Directors.
45. All funds of the Company not otherwise employed shall be deposited from
time to time to the credit of the Company in such banks, trust companies or
other depositories as the Board of Directors may select or as may be selected
by any officer or officers, agent or agents of the Company to whom such power
may from time to time be delegated by the Board of Directors; and for the
purpose of such deposit, the Chairman of the Board, the Vice Chairman of the
Board, the President, a Vice President, the Treasurer, the Controller, the
Secretary or any other officer or agent or employee of the Company to whom
such power may be delegated by the Board of Directors, may endorse, assign
and deliver checks, drafts and other orders for the payment of moneys which
are payable to the order of the Company.
CERTIFICATES AND TRANSFERS OF SHARES.
46. The shares of the Company shall be represented by certificates or shall
be uncertificated. Each registered holder of shares, upon request to the
Company, shall be provided with a certificate of stock, representing the
number of shares owned by such holder. Certificates for shares of the Company
shall be in such form as shall be approved by the Board of Directors. Such
certificates shall be numbered and registered in the order in which they are
issued and shall be signed by the Chairman of the Board, the Vice Chairman
of the Board, the President or a Vice President and the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer. Where any
such certificate is countersigned by a transfer agent, other than the Company
or its employee, or by a registrar, other than the Company or its employee,
any other signature on such certificate may be a facsimile, engraved, stamped
or printed. In the event that an officer whose facsimile signature appears
on such certificate ceases for any reason to hold the office indicated and
the Company or its transfer agent has on hand a supply of share certificates
bearing such officer's facsimile signature, such certificates may continue to
be issued and registered until such supply is exhausted.
47. Transfers of shares of the Company shall be made only on the books of the
Company by the holder thereof, or by the holder's attorney thereunto duly
authorized and on either the surrender of the certificate or certificates
E-2-15
<PAGE>
for such shares properly endorsed or upon receipt of proper transfer
instructions from the registered owner of uncertificated shares. Every
certificate surrendered to the Company shall be marked "Cancelled," with the
date of cancellation, and no new certificate shall be issued in exchange
therefor until the old certificate has been surrendered and cancelled, except
as hereinafter provided. Uncertificated shares shall be cancelled and
issuance of new equivalent uncertificated shares shall be made to the person
entitled thereto and the transaction shall be recorded upon the books of the
Company.
48. The holder of any shares of the Company shall immediately notify the
Company of any loss, destruction or mutilation of the certificate therefor
and the Company may issue a new certificate in the place of any certificate
theretofore issued by it alleged to have been lost, destroyed or mutilated.
The Board of Directors may, in its discretion, as conditions to the issue of
any such new certificate, require the owner of the lost or destroyed
certificate or the owner's legal representatives to make proof satisfactory
to the Board of Directors of the loss or destruction thereof and to give the
Company a bond in such form, in such sum and with such surety or sureties as
the Board of Directors may direct, to indemnify the Company against any claim
that may be made against it on account of any such certificate so alleged to
have been lost or destroyed.
DETERMINATION OF RECORD DATE.
49. In order that the Company may determine the shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof
or entitled to receive payment of any dividend or other distribution or
allotment of any rights or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix in advance a record date which shall
not be more than 60 nor less than 10 days before the date of such meeting nor
more than 60 days prior to any other action.
If no record date is fixed:
(i) The record date for determining shareholders entitled to notice of or to
vote at a meeting of shareholders shall be at the close of business on the
day next preceding the day on which notice is given, or if notice is waived,
at the close of business on the day next preceding the day on which the
meeting is held.
(ii) The record date for determining shareholders for any other purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
A determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders shall apply to any adjournment of the meeting
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
REGISTERED SHAREHOLDERS.
50. The Company shall be entitled to treat the holder of record of any share
or shares of stock as the holder in fact thereof and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
share on the part of any other person, whether or not it shall have express
or other notice thereof, save as expressly provided by the laws of Delaware.
E-2-16
<PAGE>
FISCAL YEAR.
51. The fiscal year shall begin on the first day of January and end on the
thirty-first day of December in each year.
NOTICES.
52. Whenever under the provision of these bylaws notice is required to be
given to any director or shareholder, it shall be construed to mean personal
notice, but such notice may be given in writing, by mail, by depositing the
same in a post office or letter box, in a postpaid sealed wrapper, addressed
to such director or shareholder at such address as appears on the books of
the Company, or, in default of other address, to such director or shareholder,
at the General Post Office in the City of Wilmington, Delaware, and such
notice shall be deemed to be given at the time when the same shall be thus
mailed.
53. Any notice required to be given under these bylaws may be waived in
writing, signed by the person or persons entitled to said notice, whether
before or after the time stated therein.
AMENDMENTS.
54. Except as otherwise provided in the Certificate of Incorporation of the
Company and consistent therewith, these bylaws may be altered, amended or
repealed or new bylaws may be made by the affirmative vote of the holders
of record of a majority of the shares of the Company entitled to vote, at
any annual or special meeting, provided that such proposed action shall be
stated in the notice of such meeting, or, by a vote of the majority of the
whole Board of Directors, at any regular meeting without notice, or at any
special meeting provided that notice of such proposed action shall be stated
in the notice of such special meeting.
E-2-17
EXHIBIT 21
-------------------
BRISTOL-MYERS SQUIBB COMPANY
SUBSIDIARY LIST
2309 Realty Corporation
3130827 CANADA INC.
345 Park Corporation
77 Wilson St., Corp.
A.G. Medical Services, P.A.
Alive & Well, Inc.
Allard Laboratories, Inc.
Allard Labs Acquisition LLC
Apothecon BV
Apothecon Farmaceutica Ltda.
Apothecon, Inc.
Apothecon, S.A.
Astel Laboratoires S.A.R.L.
B-MS Finance Limited
B-MS GeneRx
B-MSF SAS
B. L. Pharmaceuticals (Proprietary) Limited
Blisa Acquisition LLC
Blisa, Inc.
BMS Holdings
BMS Investco SAS
BMS Music Company
BMS-Generiques SA
BMSIC Pharma Handels GmbH & Co. KG
BMSIC Pharma-Handels Verwaltungs GmbH
Boclaro Inc.
Bristol (Iran) S.A.
Bristol Arzneimittel G.m.b.H.
Bristol Caribbean, Inc.
Bristol Foundation
Bristol Iran Private Company Limited
Bristol Laboratories Corporation
Bristol Laboratories Inc.
Bristol Laboratories International, S.A.
Bristol Laboratories Medical Information Systems Inc.
Bristol Pharmaceutical Information Center, S.A.
Bristol-Myers (Bangladesh) Inc.
Bristol-Myers (Japan) Limited
Bristol-Myers (Private) Limited
Bristol-Myers (Zaire) Ltd.
E-3-1
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
SUBSIDIARY LIST
Bristol-Myers Award Superannuation Pty. Ltd.
Bristol-Myers Barceloneta, Inc.
Bristol-Myers Company Limited
Bristol-Myers de Mexico, S. de R. L. de C.V.
Bristol-Myers Ges.m.b.H.
Bristol-Myers International s.r.l.
Bristol-Myers Lion Ltd.
Bristol-Myers Middle East S.A.L.
Bristol-Myers Nederland Inc.
Bristol-Myers Oncology Therapeutic Network, Inc.
Bristol-Myers Overseas Corporation
Bristol-Myers Overseas Corporation (Guam Branch)
Bristol-Myers Overseas Corporation (Korea - Branch)
Bristol-Myers Pakistan (Pvt.) Limited
Bristol-Myers S.A.
Bristol-Myers Squibb (China) Investment Co., Ltd.
Bristol-Myers Squibb (Hong Kong) Limited
Bristol-Myers Squibb (Israel) Limited
Bristol-Myers Squibb (Malaysia) Sendirian Berhad
Bristol-Myers Squibb (N.Z.) Limited
Bristol-Myers Squibb (Phil.) Inc.
Bristol-Myers Squibb (Proprietary) Limited
Bristol-Myers Squibb (Russia)
Bristol-Myers Squibb (Singapore) Pte. Limited
Bristol-Myers Squibb (Taiwan) Ltd.
Bristol-Myers Squibb (Thailand) Ltd.
Bristol-Myers Squibb (West Indies) Ltd.
Bristol-Myers Squibb A.E.B.E.
Bristol-Myers Squibb A.G.
Bristol-Myers Squibb Aktiebolag
Bristol-Myers Squibb Argentina, S.A.
Bristol-Myers Squibb Asia/Pacific, Inc. (Singapore - Branch)
Bristol-Myers Squibb Auslandsbeteiligungs Holding, GmbH
Bristol-Myers Squibb Australia Pty. Ltd.
Bristol-Myers Squibb B.V.
Bristol-Myers Squibb Belgium, S.A.
Bristol-Myers Squibb Brasil, S.A.
Bristol-Myers Squibb Bulgaria EOOD
Bristol-Myers Squibb Business Services Limited
Bristol-Myers Squibb Canada Inc.
Bristol-Myers Squibb Caribbean Company
Bristol-Myers Squibb Caribbean Holdings, L.L.C.
E-3-2
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
SUBSIDIARY LIST
Bristol-Myers Squibb de Colombia S.A.
Bristol-Myers Squibb de Costa Rica, S.A.
Bristol-Myers Squibb de Guatemala, S. A.
Bristol-Myers Squibb de Mexico, S de R.L. de C.V.
Bristol-Myers Squibb de Venezuela, S.A.
Bristol-Myers Squibb Delta Holdings, L.L.C.
Bristol-Myers Squibb Dominicana, S.A.
Bristol-Myers Squibb Ecuador C.A.
Bristol-Myers Squibb Europa PLC
Bristol-Myers Squibb Europe Headquarters SARL
Bristol-Myers Squibb Export SA
Bristol-Myers Squibb Farmaceutica Portuguesa Limitada
Bristol-Myers Squibb Foreign Sales Corporation
Bristol-Myers Squibb G.m.b.H.
Bristol-Myers Squibb Ges. m.b.H.
Bristol-Myers Squibb Global Properties Ltd.
Bristol-Myers Squibb Holding Germany GMBH
Bristol-Myers Squibb Holdings B.V.
Bristol-Myers Squibb Holdings Limited
Bristol-Myers Squibb Holdings Limited (Ireland - Branch)
Bristol-Myers Squibb Holdings Limited (Kenya - Branch)
Bristol-Myers Squibb Ilaclari Limited Sirketi
Bristol-Myers Squibb Ilaclari, Inc.
Bristol-Myers Squibb Ilaclari, Inc. (Turkey - Branch)
Bristol-Myers Squibb International Company
Bristol-Myers Squibb International Corporation
Bristol-Myers Squibb International Corporation (Belgium - Branch)
Bristol-Myers Squibb International Corporation (Egypt - Branch)
Bristol-Myers Squibb International Corporation (Spain - Branch)
Bristol-Myers Squibb International Insurance Company
Bristol-Myers Squibb International Limited
Bristol-Myers Squibb Investco, Inc.
Bristol-Myers Squibb K.K.
Bristol-Myers Squibb Korea Ltd.
Bristol-Myers Squibb Laboratories Company
Bristol-Myers Squibb Manufacturing
Bristol-Myers Squibb MEA S.A. (Saudi Arabia - Branch)
Bristol-Myers Squibb MEA S.A. (Switzerland)
Bristol-Myers Squibb MEA S.A.(Egypt - Branch)
Bristol-Myers Squibb Norway Ltd.
Bristol-Myers Squibb Pakistan (Pvt.) Ltd.
Bristol-Myers Squibb Peru S.A.
E-3-3
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
SUBSIDIARY LIST
Bristol-Myers Squibb Pharmaceuticals Limited (England)
Bristol-Myers Squibb Pharmaceuticals Limited (Ireland)
Bristol-Myers Squibb Products S.A.
Bristol-Myers Squibb Puerto Rico, Inc.
Bristol-Myers Squibb Research Foundation Africa
Bristol-Myers Squibb S.p.A.
Bristol-Myers Squibb Service Ltd.
Bristol-Myers Squibb Sp. z o.o.
Bristol-Myers Squibb Spol. s r.o.
Bristol-Myers Squibb Superannuation Plan Pty. Ltd.
Bristol-Myers Squibb Zentrum Fuer Forschung Und Fortbildung Im
Gesundheitswesen G.m.b.H.
Bristol-Myers Squibb, S.A.
Bristol-Myers Zimmer Award Superannuation Plan
Cancer Research, Inc.
Carboplant Spezialimplante GmbH
CJG Partners, L.P.
Clairol (China) Ltd.
Clairol Brazil Ltda.
Clairol GmbH.
Clairol Incorporated
Clairol International S.r.l.
Clairol Limited
Comercializadora RPM, S. De R.L. De C.V.
Compania Bristol-Myers Squibb de Centro America (El Salvador Branch)
Compania Bristol-Myers Squibb de Centro America (Honduras Branch)
Compania Bristol-Myers Squibb de Centro America (Nicaragua Branch)
Compania Bristol-Myers Squibb de Centro America (Panama Branch)
Convatec Limited
Convatec Spot s r.o.
Convatec Vertriebs G.m.b.H.
Convatec, S.A.
CRBM GIE
Delmed S.A.
Dong-A-Biotech Co., Ltd.
Duart Industries, Ltd.
E. R. Squibb & Sons de Venezuela, C.A.
E. R. Squibb & Sons Inter-American (Chile - Branch)
E. R. Squibb & Sons Inter-American Corporation
E. R. Squibb & Sons Inter-American Corporation (Colombia - Branch)
E. R. Squibb & Sons Inter-American Corporation (PRico - Branch)
E. R. Squibb & Sons Limited
E-3-4
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
SUBSIDIARY LIST
E. R. Squibb & Sons, Inc.
E. R. Squibb & Sons, Inc. (England - Branch)*
Elektrochemische Ges.Hirschfelde M.b.H.
ESS Partners, L.P.
EWI Corporation
G.I.E. Centre de Recherche de Biologie Moleculaire
G.I.E. Institut de Recherche Squibb
Grove Insurance Company Ltd.
Grove Limited
Grove Products (Far East) Limited
Grove Products (Far East) Limited (India - Branch)
Heyden Farmaceutica Portugesa Limitada
Iris Acquisition Corp.
JG Partners, L.P.
Kingsdown Medical Consultants Limited
Laboratoire Oberlin
Laboratoires Convatec S.A.
Laboratoires Guieu France S.a.r.l.
Laboratoires UPSA, SAS
Lawrence Laboratories
Linson Investments Limited
Linson Pharma Inc.
Listo B.V.
Little Sycamore Limited
Logics International, Inc.
Matrix Essentials Itallia SRL
Matrix Essentials, Inc.
Mead Johnson & Company
Mead Johnson (Guangzhou) Ltd.
Mead Johnson (Manufacturing) Jamaica Limited
Mead Johnson A.E.B.E.
Mead Johnson B.V.
Mead Johnson de Mexico, S. de R.L. de C.V.
Mead Johnson Farmaceutica Limitada
Mead Johnson International Limited (Argentine - Branch)
Mead Johnson International Limited (Canada)
Mead Johnson International Limited (Colombia - Branch)
Mead Johnson Jamaica Ltd.
Mead Johnson Limited
Mead Johnson Nutritional GmbH
Mead Johnson Pharmaceutical, Inc.
Mead Johnson S.p.A.
E-3-5
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
SUBSIDIARY LIST
MEC Subsidiary Corporation
Medical Engineering Corporation
Monarch Crown Corporation
Oncogen Limited Partnership
Oncology Therapeutics Network Automated Technologies, Inc.
Oncology Therapeutics Network Corporation
Oncology Therapeutics Network Joint Venture, L.P.
Orthoplant Endoprothetik GmbH
Osmat S.A.
OTN Funding Corp.
OTN Online, Inc.
OTN Parent Corp.
Oy Bristol-Myers Squibb (Finland) AB
P. T. Squibb Indonesia
Pharmagen
Pharmavit Rt.
PRB Partners, L.P.
Princeton Pharmaceuticals, S.A.
Recherche et Propriete Industrielle
Redmond Products de Mexico, S. De R.L. De C.V.
Redmond Products Distributing, Inc.
Redmond Products International, Inc.
Redmond Products, Inc.
Route 22 Real Estate Holding Corporation
RPI Management, Inc.
S+G Implants G.m.b.H.
S.O.F.C.A.
Salorpharma G.m.b.H.
Sanofi Pharma Bristol-Myers Squibb SNC
Schuppert Meubelen Holten B.V.
Sino-American Shanghai Squibb Pharmaceuticals Limited
Societe Francaise de Complements Alimentaires
Squibb (Far East) Limited
Squibb (Far East) Limited (Taiwan - Branch)
Squibb (Nigeria) Limited
Squibb (Thailand) Limited
Squibb ApS
Squibb Convatec Medical Products Co. Ltd.
Squibb Development Limited
Squibb Farmaceutica Portuguesa, Limitada
Squibb Industria Farmaceutica, S.A.
Squibb Manufacturing, Inc.
E-3-6
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
SUBSIDIARY LIST
Squibb Middle East S.A. (Egypt - Branch)
Squibb Middle East S.A. (Jordan - Branch)
Squibb Middle East S.A. (Panama)
Squibb Overseas Investments, Inc.
Squibb Pacific Limited
Squibb Pharma G.m.b.H.
Squibb Properties, Inc.
Squibb Surgicare Limited
Squibb-von Heyden G.m.b.H.
Stamford Holdings B.V.
Swords Holdings I, L.L.C.
Swords Holdings II, L.L.C.
Swords Laboratories
T S V Corporation
Tallosa, S.A.
The B-M Group (Proprietary) Limited
Unterstuetzungskasse Bristol-Myers Squibb G.m.b.H.
Upsamedica LDA
Upsamedica SA NV
Upsamedica SpA
Von Heyden Pharma G.m.b.H.
Wallingford Research, Inc.
Westwood-Intrafin, S.A.
Westwood-Squibb Holdings, Inc.
Westwood-Squibb Pharmaceuticals, Inc.
Zimmer B.V.
Zimmer Caribe, Inc.
Zimmer Chirurgie G.m.b.H.
Zimmer Europe Limited
Zimmer Limited
Zimmer New Zealand Limited
Zimmer of Canada Limited
Zimmer Pte. Ltd.
Zimmer S. A. S.(France)
Zimmer S.A. (Spain)
Zimmer S.R.L.
Zimmer SAS
Zimmer, Inc.
E-3-7
Exhibit 23
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
---------------------------------------------------------------------
We hereby consent to the incorporation 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 and 333-02873), Post-Effective
Amendment No. 2 on Form S-8 (No. 33-30756-02) to Form S-4 (No. 333-
09519), Form S-3 (Nos. 33-33682 and 333-49227) and Pre-Effective
Amendment No. 1 on Form S-3 (No. 33-62496) of Bristol-Myers Squibb
Company of our report dated January 24, 2000 relating to the
financial statements and the financial statement schedule, which
appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
- --------------------------------------------
PRICEWATERHOUSECOOPERS LLP
New York, New York
March 30, 2000
E-4-1
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<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 2720
<SECURITIES> 237
<RECEIVABLES> 3440
<ALLOWANCES> 168
<INVENTORY> 2126
<CURRENT-ASSETS> 9267
<PP&E> 7841
<DEPRECIATION> 3220
<TOTAL-ASSETS> 17114
<CURRENT-LIABILITIES> 5537
<BONDS> 1342
0
0
<COMMON> 219
<OTHER-SE> 8426
<TOTAL-LIABILITY-AND-EQUITY> 17114
<SALES> 20222
<TOTAL-REVENUES> 20222
<CGS> 5539
<TOTAL-COSTS> 5539
<OTHER-EXPENSES> 4252
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 130
<INCOME-PRETAX> 5767
<INCOME-TAX> 1600
<INCOME-CONTINUING> 4167
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4167
<EPS-BASIC> 2.10
<EPS-DILUTED> 2.06
</TABLE>
EXHIBIT 99.1
-------------------
CAUTIONARY STATEMENT PURSUANT TO PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 - "SAFE HARBOR" FOR FORWARD
LOOKING STATEMENTS.
The Company is hereby filing a cautionary statement identifying
important factors that could cause the Company's actual results to
differ materially from those projected in forward looking
statements made by or on behalf of the Company. There are several
communications made by or on behalf of the Company (including, but
not limited to, the Annual Report to Stockholders, Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q and other filings
pursuant to the Securities Exchange Act of 1934, as amended, and
any other public statements made by the Company) which contain
statements relating to goals, plans and projections regarding its
financial position, results of operations, market position and
product development, among other things, which are based on current
expectations that involve inherit risks and uncertainties,
including factors that could delay, divert or change any of them
in the next several years.
These important factors include -
New government laws and regulations, such as (i) health
care initiatives, (ii) changes in the FDA and foreign
regulatory approval processes which may cause delays in
approving new products, and (iii) tax changes such as the
phasing out of tax benefits heretofore available in the
United States and certain foreign countries.
Difficulties in developing new products; new products
developed by competitors which have lower prices or superior
performance features or which are otherwise competitive with
the Company's current products; and generic competition as
the Company's products lose patent protection, as well as
possible issues with licensors.
Legal difficulties including negative results relating
to patents; adverse decisions in litigation including the
breast implant cases and other product liability cases; the
inability to obtain adequate insurance with respect to this
type of liability; and recalls of pharmaceutical products or
forced closing of manufacturing plants.
Increasing pricing pressures worldwide from managed care
buyers and institutional and governmental purchasers; and
changes of business and economic conditions including, but
not limited to, changes in interest rates and fluctuation of
foreign currency exchange rates.
No assurance can be given that any goal or plan set forth in
forward looking statements can be achieved and readers are
cautioned not to place undue reliance on such statements, which
speak only as of the date made. The Company undertakes no
obligation to release publicly any revisions to forward looking
statements as a result of future events or developments.
E-6-1
