SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
Commission File Number 1-1136
BRISTOL-MYERS SQUIBB COMPANY
(Exact name of registrant as specified in its charter)
Delaware 22-079-0350
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
345 Park Avenue, New York, N.Y. 10154
(Address of principal executive offices)
Telephone: (212) 546-4000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ X ] No [ ]
At April 30, 2000, there were 1,972,590,510 shares outstanding of the
Registrant's $.10 par value Common Stock.
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BRISTOL-MYERS SQUIBB COMPANY
INDEX TO FORM 10-Q
March 31, 2000
Part I - Financial Information: Page
Item 1.
Financial Statements (Unaudited):
Consolidated Balance Sheet - March 31, 2000 and December 31, 2 - 3
1999
Consolidated Statement of Earnings and Comprehensive Income
for the three months ended March 31, 2000 and 1999 4
Consolidated Statement of Cash Flows for the three months
ended March 31, 2000 and 1999 5
Notes to Condensed Consolidated Financial Statements 6 - 7
Report of Independent Accountants 8
Item 2.
Management's Discussion and Analysis of Financial 9 - 12
Condition and Results of Operations
Part II - Other Information
Item 1.
Legal Proceedings 13 - 15
Item 4.
Submission of Matters to a Vote of Security Holders 16
Item 6.
Exhibits and Reports on Form 8-K 17
Signatures 18
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PART I FINANCIAL INFORMATION
- -----------------------------
Item 1. Financial Statements
- -----------------------------
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEET - ASSETS
(Unaudited, dollars in millions)
March 31, December
2000 31, 1999
-------- ----------
Current Assets:
Cash and cash equivalents $2,468 $2,720
Time deposits and marketable securities 212 237
Receivables, net of allowances 3,349 3,272
Finished goods 1,340 1,472
Work in process 439 302
Raw and packaging materials 267 352
------ ------
Inventories 2,046 2,126
Prepaid expenses 971 912
------ ------
Total Current Assets 9,046 9,267
------ ------
Property, Plant and Equipment 7,833 7,841
Less: Accumulated depreciation 3,283 3,220
------ ------
4,550 4,621
------ ------
Insurance Recoverable 450 468
Excess of cost over net tangible assets received
in business acquisitions 1,483 1,502
Other Assets 1,507 1,256
------ ------
Total Assets $17,036 $17,114
====== ======
The accompanying notes are an integral part of these financial statements.
2
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BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEET -
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited, dollars in millions)
March 31, December
2000 31, 1999
--------- ---------
Current Liabilities:
Short-term borrowings $365 $432
Accounts payable 1,514 1,657
Accrued expenses 2,321 2,367
Product liability 235 287
U.S. and foreign income taxes payable 882 794
------ ------
Total Current Liabilities 5,317 5,537
Other Liabilities 1,577 1,590
Long-Term Debt 1,333 1,342
------ ------
Total Liabilities 8,227 8,469
------ ------
Stockholders' Equity:
Preferred stock, $2 convertible series:
Authorized 10 million shares; issued and
outstanding 10,782 in 2000 and 10,977 in - -
1999, liquidation value of $50 per share
Common stock, par value of $.10 per share:
Authorized 4.5 billion shares; issued
2,193,990,890 in 2000 and 2,192,970,504 in 219 219
1999
Capital in excess of par value of stock 1,612 1,533
Other comprehensive income (870) (816)
Retained earnings 15,736 15,000
------ ------
16,697 15,936
Less cost of treasury stock - 220,713,423
common shares in 2000 and 212,164,851 in 1999 7,888 7,291
------ ------
Total Stockholders' Equity 8,809 8,645
------ ------
Total Liabilities and Stockholders' Equity $17,036 $17,114
====== ======
The accompanying notes are an integral part of these financial statements.
3
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BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF EARNINGS
AND COMPREHENSIVE INCOME
(Unaudited, dollars in millions except per share amounts)
Three Months
Ended March 31,
-------------
EARNINGS 2000 1999
- -------- ------ ------
Net Sales $5,260 $4,854
------ ------
Expenses:
Cost of products sold 1,379 1,305
Marketing,selling,
administrative and other 1,165 1,121
Advertising and product promotion 570 529
Research and development 468 423
------ ------
3,582 3,378
------ -------
Earnings Before Income Taxes 1,678 1,476
Provision for income taxes 457 410
------ ------
Net Earnings $1,221 $1,066
====== ======
Earnings Per Common Share
Basic $.62 $.54
Diluted $.61 $.53
Average Common Shares
Outstanding
Basic 1,976 1,985
Diluted 2,009 2,029
Dividends Per Common Share $.245 $.215
COMPREHENSIVE INCOME
- --------------------
Net Earnings $1,221 $1,066
Other Comprehensive Income:
Foreign currency translation (51) (104)
Tax effect (3) 5
------ ------
(54) (99)
------ ------
Comprehensive Income $1,167 $967
====== ======
The accompanying notes are an integral part of these financial statements.
4
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BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, dollars in millions)
Three Months
Ended March 31,
--------------
2000 1999
------ ------
Cash Flows From Operating Activities:
Net earnings $1,221 $1,066
Depreciation and amortization 187 167
Provision for restructuring (See Note 3) 120 -
Gain from product divestitures (See Note 4) (120) -
Other operating items (3) (34)
Receivables (114) (14)
Inventories 47 (113)
Accounts payable and accrued expenses (302) (237)
Income taxes 96 258
Product liability (56) (318)
Insurance recoverable 18 14
Pension contribution (See Note 5) (230) -
Other assets and liabilities (126) (68)
------- ------
Net Cash Provided by Operating Activities 738 721
------- ------
Cash Flows From Investing Activities:
Proceeds from sales of time deposits and
marketable securities 39 13
Purchases of time deposits and marketable
securities (13) (9)
Additions to fixed assets (91) (122)
Proceeds from product divestitures 180 -
Other, net (10) (28)
------- ------
Net Cash Provided by (Used in) Investing 105 (146)
Activities ------- ------
Cash Flows From Financing Activities:
Short-term borrowings (58) 59
Long-term debt (1) (4)
Issuances of common stock under stock plans 26 (24)
Purchases of treasury stock (563) (410)
Dividends paid (485) (427)
------- ------
Net Cash Used in Financing Activities (1,081) (806)
------- ------
Effect of Exchange Rates on Cash (14) (10)
------ ------
Decrease in Cash and Cash Equivalents (252) (241)
Cash and Cash Equivalents at Beginning of Period 2,720 2,244
------- ------
Cash and Cash Equivalents at End of Period $2,468 $2,003
====== ======
The accompanying notes are an integral part of these financial statements.
5
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BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, dollars in millions except per share amounts)
Note 1: Basis of Presentation
- -------------------------------
In the opinion of management, the accompanying unaudited
consolidated financial statements include all adjustments
(consisting only of normal adjustments) necessary for a fair
presentation of the financial position of Bristol-Myers Squibb
Company (the "Company") at March 31, 2000 and December 31, 1999,
the results of operations for the three months ended March 31,
2000 and 1999, and cash flows for the three months ended March
31, 2000 and 1999. These consolidated financial statements
should be read in conjunction with the consolidated financial
statements and the related notes included in the Company's 1999
Annual Report on Form 10-K. PricewaterhouseCoopers LLP, the
Company's independent accountants, have performed a review of the
unaudited consolidated financial statements included herein, and
their review report thereon accompanies this filing.
Note 2: Earnings Per Share
- --------------------------
Basic earnings per common share are computed using the weighted
average number of shares outstanding during the year. Diluted
earnings per common share are computed using the weighted average
number of shares outstanding during the year, plus the
incremental shares outstanding assuming the exercise of dilutive
stock options.
The computations for basic earnings per common share and diluted
earnings per common share are as follows:
Three Months Ended
March 31,
2000 1999
----- -----
Earnings per Common Share -
Basic:
Net Earnings $1,221 $1,066
Average Common Shares
Outstanding 1,976 1,985
Earnings Per Common Share - Basic $.62 $.54
6
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Three Months Ended
March 31,
2000 1999
----- -----
Earnings per Common Share -
Diluted:
Net Earnings $1,221 $1,066
Average Common Shares
Outstanding 1,976 1,985
Incremental Shares Outstanding
Assuming the Exercise of
Dilutive Stock Options 33 44
Average Common Shares
Outstanding 2,009 2,029
Earnings Per Common Share - $.61 $.53
Diluted
Note 3: Restructuring
- ---------------------
During the first quarter of 2000, the Company recorded a pretax
charge of $120 million in marketing, selling, administrative and
other expenses for restructuring activities. The charge related
to work-force reductions, downsizing and streamlining of
operations in certain international markets and the ConvaTec
business, and the reorganization of the Company's Global Business
Services.
Of the total restructuring charge, $77 million relates to
employee termination benefits for approximately 1,400 employees.
The remaining $43 million represents the closure of facilities,
primarily in the ConvaTec business and certain international
markets. At March 31, 2000, $77 million was included in accrued
expenses related to these activities. The Company expects to
substantially complete these restructuring activities by the end
of 2000.
Note 4: Divestitures
- --------------------
In February 2000, the Company completed the sale of three
pharmaceutical products - Estrace Cream, Ovcon 35 and Ovcon 50,
resulting in a pre-tax gain of $120 million.
Note 5: Pension Contribution
- ----------------------------
In January 2000, the Company made a contribution of $230 million
to fund its U.S. Retirement Income Plan.
7
<PAGE>
Report of Independent Accountants
To the Board of Directors
and Stockholders of
Bristol-Myers Squibb Company
We have reviewed the accompanying consolidated balance sheet
of Bristol-Myers Squibb Company and its subsidiaries as of
March 31, 2000, and the related consolidated statement of
earnings and comprehensive income and of cash flows for the
three-month periods ended March 31, 2000 and 1999. These
financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying
consolidated interim financial statements for them to be in
conformity with accounting principles generally accepted in
the United States.
We previously audited in accordance with auditing standards
generally accepted in the United States, the consolidated
balance sheet as of December 31, 1999, and the related
consolidated statements of earnings, comprehensive income
and retained earnings and of cash flows for the year then
ended (not presented herein), and in our report dated
January 24, 2000 we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated
balance sheet as of December 31, 1999, is fairly stated in
all material respects in relation to the consolidated
balance sheet from which it has been derived.
PricewaterhouseCoopers LLP
New York, New York
April 20, 2000
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
First Quarter Results of Operations
- -----------------------------------
Worldwide sales for the first quarter of 2000 increased 8% over
the prior year to $5,260 million. The consolidated sales growth
resulted from a 8% increase due to volume, a 3% increase due to
changes in selling prices and a 3% decrease due to foreign
exchange rate fluctuations. U.S. sales increased 14% and
international sales decreased 2% (a 4% increase excluding the
effect of foreign exchange).
Sales in the medicines products segment (pharmaceuticals and
consumer medicines), which is the largest segment at 72% of
total Company sales, increased 10% over the first quarter of
1999 to $3,783 million. Sales growth resulted from a 10%
increase in volume, a 3% increase in selling prices and a 3%
decrease due to foreign exchange rate fluctuations. Worldwide
pharmaceutical sales increased 12% with U.S. pharmaceutical
sales up 20% over the prior year. Consumer medicines sales
increased 2% (9% excluding foreign exchange).
GLUCOPHAGE (metformin), the leading branded oral medication for
treatment of non-insulin dependent (type 2) diabetes, continued
its strong growth rate with sales increasing 51% to $426
million. In March 2000, the U.S. marketing exclusivity of
GLUCOPHAGE was extended through September 3, 2000 based on the
Company's completion of pediatric studies which qualify for
benefits under U.S. research incentive legislation.
Sales of TAXOL* (paclitaxel), the Company's leading anti-cancer
agent, increased 17% to $385 million.
PLAVIX, a platelet aggregation inhibitor for the reduction of
stroke, heart attack and vascular death in atherosclerotic
patients with recent stroke, recent heart attack or peripheral
arterial disease, increased 128% to $201 million for the
quarter. AVAPRO, an angiotensin II receptor blocker for the
treatment of hypertension, increased 74% to $87 million. AVAPRO
and PLAVIX are cardiovascular products that were launched from
the Bristol-Myers Squibb and Sanofi S.A. joint venture.
Sales of BUSPAR*, an anti-anxiety agent, increased 24% to $163
million following a direct-to-consumer campaign launched in
December 1999. The exclusivity period for BUSPAR expires in May
2000. Sales of SERZONE*, a novel anti-depressant, increased 38%
to $87 million.
Sales of the anti-cancer agent PARAPLATIN* increased 7% to $160
million as the product continues to benefit from its use in
combination with other chemotherapy agents.
Sales of ZERIT* and VIDEX*, the Company's two antiretroviral
agents, remained at prior year levels of $151 million and $45
million, respectively.
* Indicates brand names of products which are registered
trademarks owned by the Company.
9
<PAGE>
Sales of TEQUIN*, a broad-spectrum fluoroquinolone antibiotic,
launched in December 1999, were $15 million. In just three
months on the market, TEQUIN has been prescribed to more than
200,000 people. In March 2000, the Company entered into an
agreement to have Schering-Plough co-promote TEQUIN in the
United States.
Sales of Oncology Therapeutics Network, a specialty distributor
of anti-cancer medicines and related products, reached $244
million, an increase of 21% over the prior year.
Worldwide sales of PRAVACHOL*, the Company's largest selling
product, decreased 5% to $461 million for the quarter.
Sales of EXCEDRIN* increased 5% to $62 million and sales of
BUFFERIN* increased 14% (7% excluding foreign exchange) to $33
million.
Earnings before taxes for the medicines products segment
increased 17% to $1,169 million in 2000. As a percentage of
sales, earnings before taxes for this segment improved to 30.9%
in 2000 from 29.2% in 1999 primarily due to improvements, as a
percentage of sales, in cost of products sold.
Sales in the beauty care products segment decreased 4% to $549
million. The decline in sales resulted from a 5% decrease in
volume, a 1% increase in selling prices and no effect due to
foreign exchange. Haircolor sales increased 3% with increases in
NICE 'N EASY* of 4% to $48 million and HYDRIENCE* of 9% to $24
million. AUSSIE* products added $32 million to Beauty Care
sales, an increase of 10% over the prior year. HERBAL ESSENCES*,
a complete line of shampoos, conditioners, styling aids, body
wash and facial care, decreased 5% to $151 million. Clairol
continues to be the number one hair products company in the U.S.
Earnings before taxes for the beauty care segment increased 17%
to $76 million in 2000 from $65 million in 1999 primarily due to
a decrease, as a percentage of sales, in advertising expenses.
In April, the Company reached an agreement to sell Matrix
Essentials to Cosmair, Inc., a wholly-owned U.S. subsidiary of
L'Oreal S.A. The transaction is expected to close sometime
during the second quarter.
Sales in the nutritional products segment increased 13% to $506
million. Sales growth resulted from a 12% increase in volume, a
1% increase in selling prices and no effect due to foreign
exchange rate fluctuations. The Company's Mead Johnson
subsidiary continues to build on its U.S. and worldwide
leadership position in the infant formula market. ENFAMIL*, the
Company's largest-selling infant formula, recorded sales of $204
million, an increase of 9% from the prior year. Adult consumer
nutritional sales increased 41% as a result of a 39% increase in
sales of BOOST* to $32 million and $15 million in sales of
VIACTIV* Soft Calcium Chews. Earnings before taxes for the
nutritional segment increased to $120 million in 2000 from $101
million in 1999, and as a percentage of sales, increased to
23.7% from 22.5% in 1999 primarily due to a decrease, as a
percentage of sales, in cost of products sold and sales force
expenses.
Medical device segment sales increased 5% to $422 million, due
to volume increases of 7% and a 2% decrease due to foreign
exchange. Zimmer sales increased 9% to $260 million (8%
excluding foreign exchange). Knee joint replacement sales
increased 9% to $102 million, hip replacement sales increased
13% to $80 million and fracture management sales increased 23%
to $37 million. ConvaTec sales decreased 1% to $162 million (a
4% increase excluding foreign exchange). Sales of modern wound
care products increased 2% to $57 million (7% excluding foreign
10
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exchange) while sales of ostomy products decreased 4% to $98
million. Earnings before taxes for the medical device segment
increased 11% to $80 million in 2000 from $72 million in 1999
and, as a percentage of sales, increased to 19.0% in 2000 from
17.9% in 1999, resulting from decreases, as a percentage of
sales, in research and development expenses.
Operating Expenses
- ------------------
Total expenses, as a percentage of sales, decreased to 68.1%
from 69.6% in 1999. Cost of products sold, as a percentage of
sales, decreased to 26.2% from 26.9% in 1999 primarily due to
product mix.
Marketing, selling, administrative and other expenses, as a
percentage of sales, decreased to 22.1% in the first quarter of
2000 from 23.1% in 1999. Also included in marketing, selling,
administrative and other expenses were a pre-tax gain of $120
million from the divestiture of three pharmaceutical products -
Estrace Cream, Ovcon 35 and Ovcon 50, and a $120 million
provision for restructuring. The restructuring charge related to
work-force reductions in certain of the international medicines
markets, ConvaTec and the reorganization of the Company's Global
Business Services. (See also Note 3 to the financial statements)
Expenditures for advertising and promotion in support of new and
existing products increased 8% to $570 million from $529 million
in 1999. Research and development expenditures increased 11% to
$468 million from $423 million in 1999. Pharmaceutical research
and development spending increased 13% over the prior year, and
as a percentage of pharmaceutical sales, was 12.3% in the first
quarter of 2000 and 12.2% in the first quarter of 1999. In
April, the Company voluntarily withdrew its current New Drug
Application (NDA) for VANLEV* (omapatrilat) from the U.S. Food
and Drug Administration (FDA). The Company now expects to
resubmit its application early next year. Also, in April 2000,
the Company resubmitted its NDA to the FDA for UFT(R) capsules for
use with leucovorin calcium tablets in the first-line treatment
of advanced colorectal cancer.
Earnings
- --------
Earnings before income taxes increased 14% to $1,678 million
from $1,476 million in 1999. The effective tax rate on earnings
before income taxes decreased to 27.2% in 2000 from 27.8% in
1999. The decrease in the effective tax rate is attributable to
higher operating earnings from lower tax jurisdictions. Net
earnings increased 15% to $1,221 million from $1,066 million in
1999. Basic earnings per share increased 15% to $.62 from $.54
in 1999 and diluted earnings per share increased 15% to $.61
from $.53 in 1999.
Financial Position
- ------------------
The balance sheet at March 31, 2000 and the statement of cash
flows for the three months then ended reflect the Company's
strong financial position. The Company continues to maintain a
high level of working capital, $3.7 billion at March 31, 2000,
at approximately the same level as December 31, 1999.
11
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Long-Term Debt decreased slightly to $1,333 million from $1,342
million at December 1999.
Internally generated funds continue to be the Company's primary
source for financing expenditures for new plant and equipment.
Net Cash Provided by Operating Activities increased to $738
million in 2000. Additions to fixed assets for the three months
ended March 31, 2000 were $91 million compared to $122 million
during the same period of 1999.
In January 2000, the Company made a contribution of $230
million to fund its U.S. Retirement Income Plan.
During the three months ended March 31, 2000, the Company
purchased 9.9 million shares of its common stock at a cost
of $563 million.
Business Segments
- -----------------
Three Months Ended March 31,
----------------------------
Net Earnings
Sales Before Taxes
--------------- ------------------
2000 1999 2000 1999
------ ------ ------ ------
(in millions)
Medicines Products $3,783 $3,431 $1,169 $1,001
Beauty Care Products 549 572 76 65
Nutritional Products 506 449 120 101
Medical Devices 422 402 80 72
Other - - 233 237
------ ------ ------ ------
Total Company $5,260 $4,854 $1,678 $1,476
===== ===== ===== =====
Included in earnings before taxes of each segment is a cost
of capital charge. The offset to the cost of capital charge
is included in Other. In addition, Other principally
consists of interest income, interest expense, certain
administrative expenses and allocations to the industry
segments for certain corporate programs. For the first three
months of 2000, Other also includes a provision for
restructuring of $120 million and the gain on product
divestitures of $120 million. (See also Note 3 and Note 4 to
the financial statements)
Reference is made to Part II, Item 1 - Legal Proceedings in
which developments are described for various lawsuits,
claims and proceedings in which the Company is involved.
Forward Looking Information
- ---------------------------
Certain statements in this Form 10-Q 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 the Company's Annual Report on Form 10-K for the
year ended December 31, 1999.
12
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PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
- --------------------------
Various lawsuits, claims and proceedings of a nature considered
normal to its business are pending against the Company and certain
of its subsidiaries. The most significant of these are reported in
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 and any subsequent material developments in such
matters are described below.
Breast Implant Litigation
- -------------------------
As previously reported in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, the Company, together
with its subsidiary, Medical Engineering Corporation (MEC), and
certain other companies, has been named as a defendant in a number
of claims and lawsuits alleging damages for personal injuries of
various types resulting from breast implants formerly manufactured
by MEC or a related company.
Of the more than 90,000 claims or potential claims against the
Company in direct lawsuits or through registration in the national
class action Revised Settlement Program, most have been dealt with
through the Revised Settlement, other settlements, or trial. As of
May 1, 2000, the Company's contingent liability in respect of
breast implant claims was limited to residual unpaid Revised
Settlement Program obligations and to roughly 1,550 remaining opt-
outs who have pursued or may pursue their claims in court.
As of May 1, 2000, approximately 5,800 United States and 200
foreign breast implant recipients were plaintiffs in lawsuits
pending in federal and state courts in the United States and in
certain courts in Canada and Australia. These figures include the
claims of plaintiffs that are in the process of being settled
and/or dismissed. In these lawsuits, about 3,000 U.S. plaintiffs
and 46 foreign plaintiffs opted out of the Revised Settlement.
The lawsuits of approximately 2,800 U.S. plaintiffs who did not
opt out are expected to be dismissed as these plaintiffs are among
the estimated 74,000 women with MEC implants who chose to
participate in the nationwide settlement. Of the 3,000 opt-out
plaintiffs, an estimated 1,450 plaintiffs have claims based upon
products that were not manufactured and sold by MEC or that have
been or are in the process of being settled and/or dismissed.
Accordingly, the number of remaining plaintiffs who have pursued
or may pursue their claims in court against the Company is roughly
1,550 as stated in the preceding paragraph.
Under the terms of the Revised Settlement Program, additional opt-
outs are expected to be minimal since the deadline for U.S. claim
members to opt out has passed. In addition, the Company's
remaining obligations under the Revised Settlement Program are
limited because most payments to "Current Claimants" have already
been made, no additional "Current Claims" may be filed without
court approval, and because payments of claims to so-called "Other
Registrants" and "Late Registrants" are limited by the terms of
the Revised Settlement Program. The Company believes it will be
able to address remaining opt-out claims as well as remaining
obligations under the Revised Settlement Program within its
reserves as described in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999.
13
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On March 31, 2000, the federal government filed a civil suit in
federal district court in Birmingham, Alabama, against several
parties in the breast implant litigation, including the Company.
The government claims it is entitled to reimbursement for certain
costs incurred in connection with medical treatment provided to
women with breast implants. The Company believes it will be able
to address the government lawsuit within its reserves as described
in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999.
Prescription Drug Litigation
- ----------------------------
The Company remains a defendant in several actions challenging
pricing on brand name prescription drugs. These actions include:
several currently consolidated antitrust actions brought against
the Company and more than thirty other pharmaceutical
manufacturers, drug wholesalers and pharmacy benefit managers by
certain chain drugstores, supermarket chains and independent
drugstores; state pharmaceutical actions; and purported class
actions on behalf of consumers. The Company will continue to
defend vigorously its position in this ongoing litigation and
believes it will be able to address all remaining claims within its
reserves as described in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999.
Infant Formula Matters
- ----------------------
As previously reported in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, 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. On April 3, 2000, the U.S. Supreme Court decided
to let stand the lower court's decision dismissing a case pending
in Louisiana, which had been the only open case remaining.
TAXOL* Litigation
- -----------------
As previously reported in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, 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 Schein 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
14
<PAGE>
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 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 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.
In order to pursue an immediate appellate review of the District
Court's invalidity findings, the Company voluntarily relinquished
all rights in the remaining ovarian tumor specific claims of its
patents. On April 7, 2000, the District Court granted the
Company's request for an entry of judgment. The Company
subsequently filed a notice of appeal with the Federal Circuit
Court of Appeals. If the Company is successful on appeal and the
trial that would follow a successful appeal, the Company believes
its remaining patent rights would apply to all tumor types.
It is not possible at this time to make a reasonable assessment of
the outcome of the appeal and 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.
VANLEV* Litigation
- ------------------
The Company, its Chairman of the Board and Chief Executive Officer,
Charles A. Heimbold, Jr. and its Chief Scientific Officer and
President - Pharmaceutical Research Institute, Peter S. Ringrose,
Ph.D., are defendants in a number of purported class actions filed
in April and May in the U.S. District Court for the District of New
Jersey alleging violations of federal securities laws and
regulations. Plaintiffs claim that the defendants disseminated
materially false and misleading statements and failed to disclose
information concerning the safety and expected availability of its
product VANLEV* during the period November 8, 1999 through April
19, 2000. Plaintiffs seek compensatory damages and costs and
expenses.
15
<PAGE>
PART II - OTHER INFORMATION
- ---------------------------
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The following matters were voted upon at the Annual Meeting of
Stockholders held on May 2, 2000, and received the votes set forth
below:
All of the following persons nominated were elected to serve as
directors and received the number of votes set opposite their
respective names:
For Withheld
Robert E. Allen 1,385,704,476 250,629,475
Lewis B. Campbell 1,389,533,562 246,800,389
Laurie H. Glimcher, M.D. 1,388,315,582 248,018,369
James D. Robinson 1,384,091,216 252,242,735
The appointment of PricewaterhouseCoopers LLP was ratified by a
vote of 1,622,096,652 shares in favor of the appointment, with
7,535,257 shares voting against, 6,702,042 shares abstaining and
there were no broker non-votes.
The proposal to approve the Company's 2000 Non-Employee
Directors' Stock Option Plan was approved by a vote of
1,463,265,181 shares in favor, with 156,828,923 shares voting
against, 16,239,847 shares abstaining and there were no broker
non-votes.
The stockholder-proposed resolution to recommend that the Board
of Directors take the necessary steps to reinstate the annual
election of directors received a vote of 754,765,598 shares in
favor, with 581,773,904 shares voting against, 22,762,538 shares
abstaining and 277,031,911 broker non-votes.
The stockholder-proposed resolution requesting the Board of
Directors adopt a policy of pharmaceutical price restraint
received a vote of 66,100,719 shares in favor, with
1,255,878,413 shares voting against, 37,412,433 shares
abstaining and 276,942,386 broker non-votes.
16
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
a) Exhibits (listed by number corresponding to the Exhibit Table
of Item 601 in Regulation S-K).
Exhibit Number and Description Page
- ------------------------------
10m. Bristol-Myers Squibb Company 2000
Non-Employee Directors' Stock E-10-1
Option Plan.
15. Independent Accountants' Awareness Letter. E-15-1
27. Bristol-Myers Squibb Company Financial
Data Schedule. E-27-1
b) Reports on Form 8-K.
On April 19, 2000, the Company filed a current report on Form 8-K
under Item 5 concerning the withdrawal of its New Drug
Application (NDA) for VANLEV*.
17
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
BRISTOL-MYERS SQUIBB COMPANY
(Registrant)
Date: May 15, 2000 By: /s/ Harrison M. Bains, Jr.
------------------------
Harrison M. Bains, Jr.
Vice President and Treasurer
Date: May 15, 2000 By: /s/ Frederick S. Schiff
---------------------
Frederick S. Schiff
Senior Vice President - Financial
Operations and Controller
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
2000 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1.Purpose:
The purpose of the Bristol-Myers Squibb Company 2000 Non-Employee
Directors' Stock Option Plan ("the Plan") is to secure for Bristol-Myers
Squibb Company ("the Company") and its stockholders the benefits of the
incentive inherent in increased common stock ownership by the members of
the Board of Directors ("the Board") of the Company who are Eligible
Directors as defined in the Plan.
2.Administration:
The Plan shall be administered by the Board. The Board shall have all
the powers vested in it by the terms of the Plan, such powers to include
authority (within the limitations described herein) to prescribe the form
of the agreement embodying awards of stock options made under the Plan
("Options"). The Board shall, subject to the provisions of the Plan, grant
Options under the Plan and shall have the power to construe the Plan, to
determine all questions arising thereunder and to adopt and amend such
rules and regulations for the administration of the Plan as it may deem
desirable. Any decision of the Board in the administration of the Plan, as
described herein, shall be final and conclusive. The Board may act only by
a majority of its members in office, except that the members thereof may
authorize any one or more of their number or the Secretary or any other
officer of the Company to execute and deliver documents on behalf of the
Board. No member of the Board shall be liable for anything done or omitted
to be done by such member or by any other member of the Board in connection
with the Plan, except for such member's own willful misconduct or as
expressly provided by statute.
3.Amount of Stock:
The stock which may be issued and sold under the Plan will be the
Common Stock (par value $.10 per share) of the Company, of a total number
not exceeding 750,000 shares, subject to adjustment as provided in
Paragraph 6 below. The stock to be issued may be either authorized and
unissued shares or issued shares acquired by the Company or its
subsidiaries. In the event that Options granted under the Plan shall
terminate or expire without being exercised in whole or in part, new
Options may be granted covering the shares not purchased under such lapsed
Options.
4.Eligible Directors:
The members of the Board who are eligible to participate in the Plan
are persons who serve as directors of the Company after the effective date
of the Plan and:
(a) who are not current or former employees of the Company and
(b) who are not and, in the past, have not been eligible to
receive Options on Company stock by participation as an employee in
another plan sponsored by the Company or under a contractual
arrangement with the Company.
5. Terms and Conditions of Options:
Each Option granted under the Plan shall be evidenced by an agreement
in such form as the Board shall prescribe from time to time in accordance
with the Plan and shall comply with the following terms and conditions:
(a) The Option exercise price shall be the fair market value of
the Common Stock shares subject to such Option on the date the
Option is granted, which shall be the average of the high and the
low sales prices of a Common Stock share on the date of grant as
reported on the New York Stock Exchange Composite Transactions Tape
or, if the New York Stock Exchange is closed on that date, on the
last preceding date on which the New York Stock Exchange was open
for trading.
E-10-1
<PAGE>
(b) Each year, as of the date of the Annual Meeting of
Stockholders of the Company, each Eligible Director who has been
elected or reelected or who is continuing as a member of the Board
as of the adjournment of the Annual Meeting shall automatically
receive an Option Award. The number of shares to be covered by an
individual award may not exceed 5,000 shares, with such limit
subject to the provisions of Section 6.
(c) No Option granted under the Plan shall be transferable by the
optionee other than by will or by the laws of descent and
distribution, and such Option shall be exercisable, during the
optionee's lifetime, only by the optionee. Notwithstanding the
foregoing, the Board may set forth in a Stock Option Agreement, at
the time of grant or thereafter, that the Options may be
transferred to members of the optionee's immediate family, to
trusts solely for the benefit of such immediate family members and
to partnerships in which such family members and/or trusts are the
only partners. For this purpose, immediate family means the
optionee's spouse, parents, children, stepchildren, grandchildren
and legal dependants. Any transfer of Options made under this
provision will not be effective until notice of such transfer is
delivered to the Company.
(d) No Option or any part of an Option shall be exercisable:
(i) before the Eligible Director has served one term-year as a member of
the Board since the date the Option was granted (as used herein, the
term "term-year" means that period from one Annual Meeting to the
subsequent Annual Meeting),
(ii) after the expiration of ten years from the date the Option was
granted,
(iii)unless, written notice of the exercise is delivered to the
Company specifying the
number of shares to be purchased and payment in full is made for
the shares of Common Stock being acquired thereunder at the time
of exercise; such payment shall be made
(A) in United States dollars by certified check, or bank draft, or
(B) by tendering to the Company Common Stock shares owned by the
person exercising the Option and having a fair market value
equal to the cash exercise price applicable to such Option,
such fair market value to be the average of the high and low
sales prices of a Common Stock share on the date of exercise
as reported on the New York Stock Exchange Composite
Transactions Tape or, if the New York Stock Exchange is closed
on that date, on the last preceding date on which the New York
Stock Exchange was open for trading, or
(C)by a combination of United States dollars and Common Stock
shares as aforesaid; and
(iv) unless the person exercising the Option has been, at all
times during the period beginning with the date of grant of the
Option and ending on the date of such exercise, an Eligible
Director of the Company, except that
(A)if such a person shall cease to be such an Eligible Director
for reasons other than retirement or death, while holding an
Option that has not expired and has not been fully exercised,
such person, at any time within one year after the date he
ceases to be such an Eligible Director (but in no event after
the Option has expired under the provisions of subparagraph
5(d) (ii) above), may exercise the Option with respect to any
Common Stock shares as to which such person has not exercised
the Option on the date the person ceased to be such an
Eligible Director; or
(B)if such person shall cease to be such an Eligible Director by
reason of retirement or death while holding an Option that
has not expired and has not been fully exercised, such
person, or in the case of death, the executors,
administrators or distributees, as the case may be, may at
any time following the date of retirement or death but in no
event after the expiration of the Option period set for in
the Stock Option Agreement, exercise the Option with respect
to any shares of Common Stock as to which such person has not
exercised the Option on the date the person ceased to be such
an Eligible Director, notwithstanding the provisions of
subparagraph 5(e) below.
E-10-2
<PAGE>
(C) if any person who has ceased to be such an Eligible Director for
reasons other than death, shall die holding an Option that has not
been fully exercised, such person's executors, administrators,
heirs or distributees, as the case may be, may, at any time within
the greater of
(1) one year after the date of death or
(2) the remainder for the period in
which such person could have exercised the Option had the person
not died, (but in no event under either (1) or (2) after the
Option has expired under the provisions of subparagraph 5(d) (ii)
above), exercise the Option with respect to any shares as to which
the decedent could have exercised the Option at the time of death.
In the event any Option is exercised by the executors,
administrators, legatees or distributees of the estate of a
deceased optionee, the Company shall be under no obligation
to issue stock thereunder unless and until the Company is
satisfied that the person or persons exercising the Option
are the duly appointed legal representatives of the deceased
optionee's estate or the proper legatees or distributees
thereof.
(e) Subject to subparagraph 5(d) (i) above, one-quarter (25%) of the total
number of shares of Common Stock covered by the Option shall become
exercisable beginning on the earlier of (a) the first anniversary date
of the grant of the Option or (b) the completion of one term-year
following the grant of the Option; thereafter an additional one-quarter
(25%) of the shares shall become exercisable annually on the earlier
of (a) the anniversary date of the grant of the Option or (b) the
completion of an additional term-year of service as a member of the
Board.
(f) Notwithstanding anything to the contrary herein,if an Option has been
transferred in accordance with Section 5(c), the Option shall be
exercisable solely by the transferee. The Option shall remain subject
to the provisions of the Plan, including that it will be exercisable
only to the extent that the optionee or optionee's estate would have
been entitled to exercise it if the optionee had not transferred the
Option. In the event of the death of the transferee prior to the
expiration of the right to exercise the Option, the Option shall be
exercisable by the executors,administrators, legatees and distributees
of the transferee's estate, as the case may be for a period of one year
following the date of the transferee's death but in no event be
exercisable after the expiration of the Option period set forth in the
Stock Option Agreement. The Option shall be subject to such other rules
as the Board shall determine.
6.Adjustment in the Event of Change in Stock:
In the event of changes in the outstanding Common Stock of the Company
by reason of stock dividends, recapitalizations, mergers, consolidations,
split-ups, combinations or exchanges of shares and the like, the aggregate
number and kind of shares available under the Plan, and the number, kind
and price of shares subject to outstanding Options shall be appropriately
adjusted by the Board, whose determination shall be conclusive.
7.Miscellaneous Provisions:
(a) Except as expressly provided for in the Plan, no Eligible
Director or other person shall have any claim or right to be
granted an Option under the Plan. Neither the Plan nor any action
taken hereunder shall be construed as giving any Eligible Director
any right to be retained in the service of the Company.
(b) Except as provided for under Section 5(c), an optionee's rights and
interest under the Plan may not be assigned or transferred in whole or
in part either directly or by operation of law or otherwise (except in
the event of an optionee's death, by will or the laws of descent and
distribution), including, but not by way of limitations, execution,
levy, garnishment, attachment, pledge, bankruptcy or in any other
manner, and no such right or interest of any participant in the Plan
shall be subject to any obligation or liability of such participant.
(c) No Common Stock shares shall be issued hereunder unless counsel for
the Company shall be satisfied that such issuance will be in compliance
with applicable federal, state and other securities laws and regulations.
E-10-3
<PAGE>
(d) It shall be a condition to the obligation of the Company to issue
Common Stock shares upon exercise of an Option, that the optionee (or any
beneficiary or person entitled to act under subparagraph 5(d) (iv) above)
pay to the Company, upon its demand, such amount as may be requested by
the Company for the purpose of satisfying any liability to withhold
federal,state, local or foreign income or other taxes. If the amount
requested is not paid, the Company may refuse to issue Common Stock
shares.
(e) The expenses of the Plan shall be borne by the Company.
(f) The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any other
segregation of assets to assure the issuance of shares upon
exercise of any Option under the Plan and issuance of shares upon
exercise of Options shall be subordinate to the claims of the
Company's general creditors.
(g) By accepting any Option or other benefit under the Plan, each
optionee and each person claiming under or through such person
shall be conclusively deemed to have indicated his acceptance and
ratification of, and consent to, any action taken under the Plan by
the Company or the Board.
8.Amendment or Discontinuance:
The Plan may be amended at any time and from time to time by the Board
as the Board shall deem advisable, including, but not limited to amendments
necessary to qualify for any exemption or to comply with applicable law or
regulations provided, however, that except as provided in Paragraph 6
above, the Board may not, without further approval by the shareholders of
the Company in accordance with Paragraph 10 below, increase the maximum
number of shares of Common Stock as to which Options may be granted under
the Plan, increase the number of shares subject to an Option, reduce the
minimum Option exercise price described in subparagraph 5(a) above, extend
the period during which Options may be granted or exercised under the Plan
or change the class of persons eligible to receive Options under the Plan.
No amendment of the Plan shall materially and adversely affect any right of
any optionee with respect to any Option theretofore granted without such
optionee's written consent.
9. Termination:
This Plan shall terminate upon the earlier of the following dates or
events to occur:
(a) upon the adoption of a resolution of the Board terminating the
Plan; or
(b)ten years from the date the Plan is initially approved
and adopted by the shareholders of the Company in
accordance with Paragraph 10 below.
10.Effective Date of Plan:
The Plan shall become effective as of May 2, 2000 or such later date
as the Board may determine, provided that the Company's stockholders shall
have adopted the Plan at the Company's 2000 Annual Meeting of Stockholders.
E-10-4
Exhibit No. 15
May 15, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Commissioners:
We are aware that our report dated April 20, 2000 on our
review of interim financial information of Bristol-Myers
Squibb Company (the "Company") as of and for the period ended
March 31, 2000 and included in the Company's quarterly report
on Form 10-Q for the quarter then ended is incorporated by
reference in its 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).
Such report is not a "report" or "part" of a registration
statement prepared or certified by PricewaterhouseCoopers LLP
within the meaning of Sections 7 and 11 of the Securities Act
of 1933 and the independent accountants' liability under
Section 11 does not extend to such report.
Yours very truly,
PricewaterhouseCoopers LLP
New York, New York
E-15-1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27 for Bristol-Myers Squibb
</LEGEND>
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000<F1>
<PERIOD-END> MAR-31-2000
<CASH> 2468
<SECURITIES> 212
<RECEIVABLES> 3349<F2>
<ALLOWANCES> 0
<INVENTORY> 2046
<CURRENT-ASSETS> 9046
<PP&E> 7833
<DEPRECIATION> 3283
<TOTAL-ASSETS> 17036
<CURRENT-LIABILITIES> 5317
<BONDS> 1333
0
0
<COMMON> 219
<OTHER-SE> 8590
<TOTAL-LIABILITY-AND-EQUITY> 17036
<SALES> 5260
<TOTAL-REVENUES> 5260
<CGS> 1379
<TOTAL-COSTS> 1379
<OTHER-EXPENSES> 1038
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27
<INCOME-PRETAX> 1678
<INCOME-TAX> 457
<INCOME-CONTINUING> 1221
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1221
<EPS-BASIC> .62
<EPS-DILUTED> .61
<FN>
<F2>Receivables are reported net of allowances for doubtful accounts
<F1>Items reported as "zero" are not applicable or are immaterial to the
consolidated financial position of the company
</FN>
</TABLE>
